Nikkei Asia Prizes 2001

Narayana Murthy

Top exec stresses nobility of labor Unassuming entrepreneur emphasizes respect over mere profits

BY KAZUKI KAGAYA
Senior staff writer

Narayana Murthy, chairman and chief executive officer of Infosys Technologies Ltd., is renowned in India as a self-made man. In a nation where conglomerates control most major businesses, Murthy turned a small software development venture he set up with his friends 20 years ago into one of the field's leading companies, with sales of 55 billion yen in fiscal 2000.

In addition to his business success, Murthy's management style of distributing the company's profits to employees through a stock-option program has earned him praise and respect.

Murthy was born in 1946 in a small town near Bangalore in southern India, which was at the time a British colony. His father, a junior-high school teacher, had four other children in addition to Narayana.

The family was not wealthy, but the parents were enthusiastic about the education of their children, according to Murthy. "My parents wanted me to become a public servant but I dreamed of becoming an engineer who constructs power stations and other major projects," Murthy recalled.

Murthy's interests shifted to electronics once he entered university. He used a computer for the first time in 1967 as a graduate student, and immediately realized its potential.

One of the major turning points in Murthy's life came in the early 1970s, when he went to Paris to develop a cargo handling system for an international airport at the request of a French software company. It was his first trip abroad.

India had a socialist government at the time, and much of its economy was subject to central control. Murthy was a left-wing activist and mingled with French communists during his stay in Paris but his ideas changed while traveling around Europe. "I realized that the only way to pull India out of poverty was to create more jobs. To create more jobs, we needed to set up new companies," he said.

After returning to India, he set up Infosys Technologies in 1981 with six engineer friends on a shoestring budget of just $250. "Unlike conglomerates, we could only raise a small amount of money. In addition, we had to fight inefficient, bureaucratic systems and policies," Murthy recalled. It took a year just to get a phone line installed in the office. Nearly 30 trips to central government agencies in New Delhi and two years were needed to get permission to import computers.

But economic reform in 1991 changed things dramatically. "Imports, overseas travel, fund-raising and various other restrictions were eased. Economic reform provided a great boost to start-ups like us," Murthy said.

Following deregulation, IBM Corp. of the U.S. and other foreign information-technology companies expanded into India. "Foreign companies are our customers overseas but they are our rivals in the domestic market. Through competition, our technological level has improved," he said.

Infosys Technologies grew sharply throughout the 1990s. The company was recognized repeatedly by U.S. magazines and others as among the world's best in terms of quality control and customer satisfaction. In 1999, the company became the first Indian firm to list on the Nasdaq Stock Market.

One of the major factors enabling Infosys Technologies to improve its technological level was the stock-options program the company introduced in 1994. Some 10,000 employees have obtained company shares through the system. Approximately 2,000 of them have reached the million-rupee club, thanks to the rise in the share price.

Murthy is also keen on charities. Part of Infosys Technologies' profit goes toward running a charitable organization that makes donations to educational institutions. In addition, Murthy donates his own money to such causes as relief for people affected by the major earthquake that hit the western part of India in January.

Murthy is often described as a man of simple tastes. He does not drive expensive cars and works from early in the morning until late at night, even now. Soft-spoken, Murthy does not possess the air of arrogance that highly successful people often have. "In business management, it is more important to earn respect than to increase profits. I want to stress the nobility of labor," Murthy said.

When interviewed by a Nihon Keizai Shimbun reporter at the headquarters of Infosys Technologies in Bangalore after receiving the Nikkei Asia Prize for Regional Growth, Murthy said India's future is in the hands of young people, and it gives him great pleasure to be considered a hero of India's youth.