Infosys looks beyond Nasdaq 100

Global ambitions for pioneering Indian firm

The news in early December that Infosys would become the first Indian company to join the likes of Dell, Google, and Microsoft on the Nasdaq 100 generated considerable media buzz both in the United States and in India ( The news was proof, if any was needed, that Indian firms were at last stepping into the upper ranks of global technology players, and that the trend toward offshore development, which fueled Infosys' growth, was no passing fad.

For the senior executives running Infosys, however, the Nasdaq 100 award was the fruit of plans sewn decades earlier, long before Infosys became the first Indian firm listed on Nasdaq in 1999. Following his company's ascension to the upper ranks of U.S. technology companies, CFO V. Balakrishnan spoke with InfoWorld Senior Editor Paul F. Roberts about Infosys's plans to keep on growing.

Infoworld: Your company recently celebrated its 25th anniversary. Tell us a bit about Infosys' history and how you came to join the company.

V. Balakrishnan: Infosys started in 1981 with a capitalization of around $200. Now it's $30 billion. I joined the company in 1991, when we had a couple hundred employees. Now it's close to 60,000 employees.

IW: What is the significance of Infosys being named to the Nasdaq 100?

VB: Our aim from the beginning was to be on one of the global indexes. It gives you mainstream recognition and higher liquidity and visibility in the market. We've increased our liquidity in the U.S. Right now, it's around 20 percent [of Infosys' market capitalization], or $5.6 billion. Nasdaq has also recognized India as a powerhouse in technology. It also clearly says that offshore players can get global recognition. So in that sense, we achieved our long-term goal.

How have things changed from the early days at Infosys?


VB: Looking back in the period from 1981 to 1991, there were a lot of government controls about how you could raise capital and use telecommunications links. When the economy started to open up and the government freed up those controls, the whole market opened up. From 1991 to 2000, the technology industry and Infosys grew at 60 percent year over year. Today, there are around $30 billion in technology imports from India. By 2010, that will be close to $60 billion, including services and products.

IW: You were the first Indian firm to be listed on Nasdaq back in 1999. What differences do you see in the Western markets' attitude toward Infosys and other Indian firms between 1999 and 2006?

VB: The perception has changed. In 1999, not many people knew about Infosys. Listing [on Nasdaq] helped us create a brand [in the U.S.]. Now, everyone knows about us. We’re a major player with a market capitalization larger than [IT consulting firm] Accenture's, so our visibility is definitely higher. Today, around 98 percent of our revenue comes from outside India. So, as a global company, we need to increase our profile globally in countries like the U.S. The more you do that, the more global funds invest in you.

IW: Increasingly, U.S. companies such as IBM are growing their footprint in India. Do you worry that they could undercut your competitiveness?

VB: I think today customers are pushing large global legacy players to have an offshore capability. They want the same advantages they get from us. But these firms will have to do it slowly. If they do it too aggressively, it will hurt them. They've got to integrate Indian delivery centers into their global sales models. So today, India is a cost center for them. They've got a lot of short-term challenges to handle and short-term pain and integration issues. It will be very interesting to see how that the whole model will evolve in the next few years.

IW: How will Infosys respond to the challenge from companies such as IBM?

VB: We're changing our mind-set and getting strong domain experts who can talk to customers in their own language. Customers want end-to-end players that can scale up to meet their demands quickly. At the same time, we've got to liberate our model, so the services we do, whether application development or BPO [business process outsourcing] leverage re-useable solutions.

IW: Infosys got hit hard after the dot-com bubble burst in 2000. Do you think the company has diversified enough that you're insulated from a big downturn like that?

VB: The dot-com bubble bursting affected every player in the business. Still, our business grew by 32 or 34 percent in 2000. I think you have to watch out for the U.S. economy right now. I'm not seeing any impact on the ground of a U.S. slowdown. We've estimated 40 to 41 percent growth in revenue in dollar terms, and we're on target to achieve that. But this industry is difficult to predict for the next 10 years. There aren't many companies that could give you guidance for the next one year. We're projecting to grow by around 35 or 40 percent for the next three years to $60 billion by 2010. I think that looks achievable.

IW: You've noted that India only accounts for around 2 percent of your business. Do you expect that to change in the near future?

VB: The Indian market is still evolving and we're in the initial stages. I don't think the Indian market is ready for service players today, but our economy is growing at 8 or 10 percent. So it could become interesting in the next two or three years.

IW: Are there things the government can do today to help the process along?

VB: I think most of the liberalization has already happened. As for the country as a whole, being a democracy is a big plus point. But Indian companies have to spend more on IT and be ready to pay value for service players like [Infosys].