At25 Infosys An Indian Success Story

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The Associated PressBANGALORE IndiaBy RAJESH MAHAPATRAAP Business Writer

At 25 Infosys an Indian successstory

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JUL 30 356 PM ET It began in 1981 in a town in

western India

Seven young middle-class friends from the western

town of Pune most of them co-workers at a small

software company quit their jobs to chase a dream tobuild a global software company in a country with few

computer-users and a socialist-style economy that

rarely rewarded entrepreneurship

And the risk has paid off

Twenty-five years on repeated surveys say InfosysTechnologies Ltd now headquartered in the high-techcity of Bangalore is Indias most admired company and the outsourcing giant isthe countrys best-known brand in the global market

Starting Sunday the company that writes software for such firms as Goldman

Sachs and JC Penny is celebrating its 25th anniversary in the southern Indian

city of Mysore at its new engineering training center

Among other events the celebrations will include remotely ringing Mondays bell

to open trading on the Nasdaq Stock Market in New York -- the first time an

Indian company will do so and the latest in a string of Infosys firsts

Infosys was Indias first global company with more than 90 percent of its $21

billion in annual revenues coming from overseas It was also the first in India to

adopt a code of corporate transparency offer stock options to employees and list

shares in the United States -- on the Nasdaq in 1999

Today many young Indian engineers shun offers from global giants like IBM to

work at Infosys where just one of every 100 applicants is accepted

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We have demonstrated that it is possible to be world-class from India said

Chairman NR Narayan Murthy who as a principal founder had to borrow

money from his wife to set up the company with just 10000 rupees (then $1000)

Today no matter where you go in India if you talk to entrepreneurs in the

country they would say We want to be like Infosys said Murthy who was

ranked by Time magazine among the worlds 25 most influential businessmen in

2001

That said the company faces formidable challenges

With the founders still dominating Infosys top rungs -- and with most of them in

their early 50s -- a number of high-level executives have left in recent years

frustrated by their inability to rise

Also competition is mounting quickly Where Infosys and its Indian peers once

had much of the software outsourcing industry to themselves companies such as

IBM and Accenture are now spending enormous sums to create and expand their

own Indian operations

Infosys will find it difficult to keep its profit margins at current levels because

industry salaries are rising fast said Shankar Sharma director of First Global a

Bombay-based brokerage firm

This is one area where we definitely see a problem Sharma said The top line

may continue to be robust but (profit) margins will shrink

But there have always been challenges

Infosys culture is hardly typical of India a country where businesses long thrived

on government protection and tax manipulation and where the corporate world

was dominated by a tiny clique of family-owned conglomerates

Even today Infosys isnt Indias biggest software company Tata Consultancy

Services -- an arm of a family conglomerate -- has yearly sales of nearly $3

billion

And while its competition thrived on government contracts in those early

outsourcing days Infosys always looked abroad for customers

That wasnt easy There were no venture capital firms then to pump up the

company and India had many currency restrictions

Through the 1980s there were few big contracts The founders kept their salaries

low says Nandan Nilekani now the companys chief executive who in the early





A Rankings

os Hiring Grads

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days would share a scooter with co-founder SD Shibulal as they drove around

Bangalore scouting business

But they had ambition

Even when they were a small company they had a global vision said Avinash

Vashistha chief executive of Tholons a Washington DC-based offshore

consulting and investment advisory firm The company was never distracted from

its vision You dont often see that happening here

The first major break came in 1991 with a contract from Canadian

telecommunication equipment maker Nortel Networks Vashistha said As the

months passed a few more contracts trickled in slowly bringing the company into

global reckoning

Still revenues totaled just $100 million in 1999 a fraction of its rivals earnings

But when the dotcom bubble burst in 2000 it proved a blessing as scores of cost-

slashing US companies began shifting software development and back-office

work to India with its low wages and educated work force

Between 1999 and 2004 Infosys revenues grew tenfold reaching $1 billion

With many experts doubting the company could sustain such growth revenue

doubled in the following two years -- now totaling a little over $2 billion annually

It didnt always go so well When Infosys shares were first offered on the Indian

stock market in 1993 there were not enough buyers

But $1 invested in the company then is now worth $3300

Copyright 2006 by The Associated Press All rights reserved This material may not be publishedbroadcast rewritten or redistributed

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al Flow

onomics Unbound

e On Media

t Property

esting Insights

w Tech in Asia

ssbaumOnDesign

ch Beat

rking Parents

ECHNOLOGY

Power Ratings

duct Reviews

ch Stats

dstrom Tech

ven

UTOS

me Page

to Reviews

ssic Cars

r Care amp Safety

brids

NNOVATION

amp DESIGN

me Page

hitecture

nd Equity

to Design

me Room

MALLBIZ

art Answers

ccess Stories

days Tip

NVESTING

esting Europe

nual Reports

50

P Picks amp Pans

ck Screeners

e SampP Stock Report

COREBOARDS

t Growth 100

tual Funds

o Tech 100

P 500

-SCHOOLS

dergrad Programs

A Blogs

A Profiles

We have demonstrated that it is possible to be world-class from India said

Chairman NR Narayan Murthy who as a principal founder had to borrow

money from his wife to set up the company with just 10000 rupees (then $1000)

Today no matter where you go in India if you talk to entrepreneurs in the

country they would say We want to be like Infosys said Murthy who was

ranked by Time magazine among the worlds 25 most influential businessmen in

2001

That said the company faces formidable challenges

With the founders still dominating Infosys top rungs -- and with most of them in

their early 50s -- a number of high-level executives have left in recent years

frustrated by their inability to rise

Also competition is mounting quickly Where Infosys and its Indian peers once

had much of the software outsourcing industry to themselves companies such as

IBM and Accenture are now spending enormous sums to create and expand their

own Indian operations

Infosys will find it difficult to keep its profit margins at current levels because

industry salaries are rising fast said Shankar Sharma director of First Global a

Bombay-based brokerage firm

This is one area where we definitely see a problem Sharma said The top line

may continue to be robust but (profit) margins will shrink

But there have always been challenges

Infosys culture is hardly typical of India a country where businesses long thrived

on government protection and tax manipulation and where the corporate world

was dominated by a tiny clique of family-owned conglomerates

Even today Infosys isnt Indias biggest software company Tata Consultancy

Services -- an arm of a family conglomerate -- has yearly sales of nearly $3

billion

And while its competition thrived on government contracts in those early

outsourcing days Infosys always looked abroad for customers

That wasnt easy There were no venture capital firms then to pump up the

company and India had many currency restrictions

Through the 1980s there were few big contracts The founders kept their salaries

low says Nandan Nilekani now the companys chief executive who in the early





A Rankings

os Hiring Grads

W EXTRAS

Digital

Mobile

Online Alerts

shboard Widgets

dcasts

S Feeds

prints Permissions

nferences

estor Workshops

search Services











global reckoning























Buy a link now











A Rankings

os Hiring Grads

W EXTRAS

Digital

Mobile

Online Alerts

shboard Widgets

dcasts

S Feeds

prints Permissions

nferences

estor Workshops

search Services











global reckoning























Buy a link now











Buy a link now








At25 Infosys An Indian Success Story

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