Thursday, October 25, 2007

Infosys: the startup business that made India proud

NR Narayana Murty has acquired legendary status not only for spearheading a group that turned a startup business into a $4 billion colossus in 25 years, but also for the ethics that he and Infosys stand for.

He will receive the ET Lifetime Achievement Award for corporate excellence in a couple of day’s time. In an interview to the paper he talks about his unique recipe for success (see excerpt below).

But a lot of people are interested in knowing how you made Infosys such a success?

In 1981, when I sat down with my six colleagues, I said three things to them. One, this company would make profits from day one, because we will spend less than we earn. Two, we will declare dividends from year one and three we will pay taxes from that dividend and put that back as equity. We were starting with an equity of only Rs 10,000 and we wanted to go public in 10 years. So we had to grow the equity from Rs 10,000 to Rs 2-3 crore. I am so happy and so grateful that everybody agreed.

Each year we would declare dividend and immediately put that back in the company after paying taxes. It was sometimes very painful. These people didn’t have cars and telephones and when the moment of taking that cheque from them came, I used to feel bad about what I was doing to them.

But I did not see a trace of disappointment in any one of them. They took such low compensation when they went to the US because I had the stupid rule that we had to make profits from day one.

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