by CIO Staff

Infosys Chairman Murthy Steps Down

Aug 21, 20063 mins
Mergers and Acquisitions

N.R. Narayana Murthy, cofounder of Indian outsourcer Infosys Technologies and a pioneer of the Indian outsourcing industry, stepped down on Sunday as the company’s chairman.

Murthy, who was Infosys’ first chief executive officer (CEO) when the company was established in 1981, moved to the position of executive chairman of the company in 2002, making way for younger leadership. Nandan Nilekani, also a cofounder, took over as CEO, while another cofounder, S. Gopalakrishnan, was appointed as chief operating officer.

Murthy, who reached the company’s retirement age at 60 on Sunday, continues as non-executive chairman and chief mentor of Infosys. “I will dedicate myself to social causes,” Murthy said in an in interview earlier this year. He dismissed widespread speculation that he may take a shot at a political career.

Murthy and six other cofounders quit their jobs in the software industry to start Infosys in 1981, with a combined investment of 10,000 Indian rupees (about US$1,000 at the exchange rate at the time). Most new Indian businesses at the time were usually set up to take advantage of a government license or preferential access to largely government-controlled markets.

Infosys, however, chose the less proven route of offering IT services to customers abroad. The company, which is located in Bangalore, is the second-largest Indian outsourcer after Tata Consultancy Services. In the fiscal year that ended March 31, Infosys crossed the $2 billion revenue mark to post revenue of $2.15 billion, up 35 percent over revenue of $1.6 billion in the previous fiscal year.

Murthy was a socialist in his younger days. While employed in France, he campaigned during Francois Mitterrand’s unsuccessful bid for the French presidency in 1974. He became disillusioned with socialism after he was detained and kept in inhuman conditions at a railway station in communist Bulgaria on his way back to India. His crime: He had a conversation with a Bulgarian on the train.

Murthy’s new prescription for countries like India was to create a large number of high-quality and well-paying jobs. “If we had to create jobs, if we had to create wealth, we had to do it in the private sector,” Murthy said.

Infosys employed 58,409 people as of June 30. It was the first company in India to offer stock options to employees. Murthy now describes himself as “an evangelist for capitalism.”

Murthy steps down at a time when Indian outsourcing companies face competition for staff and business from multinational services companies such as IBM and Accenture. “This is a confirmation of the benefits of our model,” said Murthy, adding that he doesn’t see the presence of multinational service companies in India as a threat to Infosys.

Murthy and family own about 5.9 percent of Infosys, which has a market capitalization of more than $20 billion.

The son of a schoolteacher, Murthy is known for his frugal lifestyle. “This is the way I have always lived and been comfortable with,” Murthy said. “You can’t lead a fake life.”

However, Murthy admitted he likes to buy the latest electronic gadgets.

-John Ribeiro, IDG News Service (Bangalore Bureau)

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