In 1981 a group of 7 engineers in Pune (India) came together with US$250 of capital and a passion for computing. They created Infosys, which has grown to become a business with almost 230,000 employees, revenues of US$11.8 billion and a market capitalisation of almost US$50 billion.
Infosys catalysed many of the changes that turned India into an IT and software powerhouse, and to this day is one of the world’s greatest examples of scaling a business.
Senapathy “Kris” Gopalkrishnan was one of 7 engineers who co-founded Infosys. He is now the Chairman of Axilor Ventures, and was former executive vice chairman (former co-chairman) of Infosys. Kris served as President of the Confederation of Indian Industry (2013-14) and is one of India’s most celebrated and accomplished entrepreneurs.
I caught up with Kris during the visit of a trade-delegation to Manchester in April 2019 to learn more about his entrepreneurship story, and the opportunity India presents.
Q: What is the opportunity today in India?
[Kris Gopalakrishnan]: India presents a very unique opportunity today; the size of the country, the stage of its development… every aspect of life, of business, is changing. We cannot use the existing models of development, because those existing models have brought us pollution, disparity of income, and significant challenge. Consumption-led economic development has been the narrative of the 20th century.
Let me give you a couple of examples:
In India today, only 3.5% of the 1.4 billion population owns cars, it’s a very small number – but if you have visited India, you will see our roads, our cities, are already choking under the weight of traffic and pollution. Imagine what would happen if 20% of the population owned cars? The country would be a parking lot! We need new models of how cities should be organised…
Next, have a look at visual effects, entertainment and movies. We have a consuming public of 1.4 billion people who want to be entertained! In fact, the reason for the telecommunications revolution in India is the appetite for entertainment, movies and things like that.
Today, India has a telecommunications infrastructure where unlimited voice calls and 1GB of data per day is £3 a month, and if you agree to take a 12 month+ subscription? You’ll get the smartphone thrown in.
Every sector in India is ripe for innovation…..
India will have 200 million people over the age of 65 in 20 years, and 1 in 4 of them will develop some form of neurological deficit. For medical research, this is both a challenge and an opportunity – as is the population with ageing related disorders, Type 2 diabetes, hypertension, cardiovascular disease and so on.
We are now collecting a huge amount of data about the population. And that again is an opportunity.
Q: Can you talk us through those early days of Infosys?
[Kris Gopalakrishnan]: We started Infosys in 1981, when the personal computer was first introduced by IBM. We were right there at the beginning of the computer becoming popular, becoming ubiquitous, and we saw a need for applications to be developed. Indian industry saw the opportunity to work with the Global 2000 Companies to develop software and we used a model that worked to our skills. India was producing a large number of engineering graduates, highly educated and willing to learn new skills. This allowed them to become global employees, and that’s the hunger that we tapped into.
We started developing software in India for clients abroad; initially we would actually ship tapes using courier! That was remote software development! In 1989, we installed our first data communication link and started working online- luckily, this was also the time the Indian economy opened up… followed by the explosive growth of the internet in 1994/5, and then the Y2K bug which required the Global 2000 Companies to modify 100% of their software! This was a problem with no value-addition, it was a bug that needed to be fixed, and which needed to be fixed at the lowest possible cost- India was the only place that could be done at scale! And when they saw the quality of the work India could deliver, many of these businesses continued working with us – that was the pillar of explosive growth for the Indian software industry.
Q: How did you scale Infosys from a startup, to having over 200,000 employees, so fast?
[Kris Gopalakrishnan]: Not in our wildest dreams did we ever think Infosys could grow as big as it did. This was a different world, a different era. We needed permission to travel outside India, and we needed permission to take more than U$20 with us, and even then needed to submit detailed expenses back to the government. This was a time when a telephone connection would take 2 years to install…..
Scaling any business is about creating a model, debugging the model, making sure you understand the ingredients that need to be scaled up, and making sure you have a process to scale. All of this needs to be wrapped-up in a financial model that allows the scale to be funded. In our case, we grew without external funding until we went public, initially in India, in 1993.
We also needed a recruitment engine, we needed a large number of people to apply to the company so that we could choose the best. To do this, we said we would be one of the first companies in India to offer stock options to every employee. This created a buzz, and the best people started to apply to us. We combined this with our own education and training infrastructure to bridge the gap between what academic institutions produced, and what we needed as an industry.
It was also critical for us to implement quality systems early to ensure that every single project we executed could be delivered at the highest quality level, and monitored. All of our work has to live our values… we use the acronym ‘C LIFE‘. C stands for Customer Value, L is Leadership by Example, then Integrity, Fairness and Excellence in Execution. And it’s practiced every single day, that’s the culture and the value.
We also decided to list on the US financial market. Firstly, it’s the most competitive financial market in the world- and if you can succeed there, it gives us and our clients confidence… Secondly, it was our way of competing using financial markets. When a customer sees that a company from India is performing in the financial markets better than their local partner, their attention is caught. We leveraged the financial markets for building brand, for competing in the marketplace etc., and that’s how we built the company for scale.
In 1993 we were 300 employees and a revenue of 10 million. We hit the first billion dollars in 2003. Second billion dollars in 2005. Today of course, Infosys is about 11-12 billion.
Q: What has been the role of philanthropy in your journey?
[Kris Gopalakrishnan]: We are first generation entrepreneurs, with middle class values, coming from middle class backgrounds, we never expected to be so wealthy! Our first reaction therefore is to share…. And we did this first by giving stock options to all our employees, we shared the wealth with them and us founders were left with a minority stake in the business.
As the business grew and we had the opportunity to give back, we set-up the Infosys Foundation and committed to give a percentage of our profit to the foundation’s work.
When each of the founders and each one of the senior leaders in the company started making money themselves, they started returning back to society and giving back. Personally, I feel I started doing my own thing after 2014 when I stepped down. So that’s one thing I look back and think that I should have probably started even earlier. Giving back.
Q: What do you look for as an investor when you are looking for opportunities?
[Kris Gopalakrishnan]: As investors, we all have mental models for what we like, but nobody can predict success. For me, I start with seeing how passionate the founder is, and whether the idea resonates with me. I then start to look at whether the idea is something the world needs, whether the financial model is developed, and also how we can help him build and scale.
The gut-feel is important, but we also have a network today of 200 founders and 40 venture funds; and when we evaluate any idea, we invite 2-3 VC friends, and 2-3 founders to sit through the process and give us feedback; Sometimes we are right.
Q: What are the differences in entrepreneurship between UK & India?
[Kris Gopalakrishnan]: Entrepreneurship has become a global phenomenon, there’s an excitement about startups across the world.
In India affordability and improving life are also key pillars of entrepreneurship- coming from the circumstances and context of the country; for example, India has 1,000 radiologists for a population of 1.4 billion. Your first reaction as an entrepreneur is to think how we can automate X-Ray reading, we don’t have radiologists! How can we take healthcare to villages? We need telemedicine! 50% of the population earn less than $2 a day, how can we make healthcare affordable to them?
Telecommunication costs in India crashed because of this. In the UK, the cost of making a call is- say- 10p, 90% of people can afford it. In India, 10p is only affordable for 10% of the population, 90% cannot afford it, so the price has to come down to 0.1p to address the requirements of 90% of the population.
When you innovate under constraints like this, you go to a different level- that’s the opportunity India provides.
Q: What is the role of failure in Indian entrepreneurship?
[Kris Gopalakrishnan]: Failure is still culturally difficult in India – there’s a stigma attached to it, and also our social security infrastructure is minimal. Most people are just getting out of poverty, or getting into becoming middle-class, and so if they have a disaster, it’s a big problem.
I always tell people to not risk their own money, and to get venture funding. You should fail fast and spend as little money as possible to get your ideas validated.
At Infosys for example, way back in 1998, we closed down a foray into hardware manufacturing. So nobody knows, many people don’t know that Infosys ventured into hardware. And we closed it down because that’s not a business we were good at – we couldn’t sell it and make money so we closed it down. In fact, we even contemplated selling Infosys in 1989, we had an offer on the table for $1 million. And we had a serious discussion, whether we wanted to take that money and move on with life. Luckily for us, we didn’t take that offer and we continued to strive.
Q: What is the opportunity for UK investors in India?
[Kris Gopalakrishnan]: Irrespective of Brexit, I feel there’s significant opportunity for the UK and India to collaborate. We have a similar legal-system, similar education infrastructure, and lots of cultural alignment. We need to take the best of the two countries and see how we can create win-win relationships.
For example, how can the depth of life-sciences research in the UK be applied to address the issues and challenges that India faces? How can the learnings of running the NHS help to bring inclusive healthcare to India? In the other direction… how can the foundational technologies of identity and mobile finance from India impact the UK.
I look back at my lifetime, 1980, Indian economy was $180 billion – in 2018, $2.6 trillion. It’s a massive jump, which means a massive amount of wealth is created. In the next 20 years, Indian economy will be a $5 trillion economy. Almost double. Huge amount of wealth to be created, and there’s enough for everybody to take advantage of in that.
I was in the right place at the right time. I benefitted because I rode the wave. Here’s a wave you can ride – India’s growth. Because a developed economy will grow slower. India will continue to grow at 7-8% in the foreseeable future, so how can you tap into high growth economy and benefit from that? That’s the question.
Q: Who has inspired you, in your journey?
[Kris Gopalakrishnan]: At different stages of your life, you will have different inspirations.
While I was studying, some of my teachers were inspirational – especially because I had to change courses multiple times and pick things up.
When I started working, I was inspired by those people who built the computer field. In 1978, when I was studying at IIT Madras we hosted John Bardeen who twice won the Nobel Prize in Physics! He is the inventor of transistor. I didn’t know about him at the time, but my Professor told me to go and pick him up from the airport as the university was giving him an Honorary Doctorate; just think about that, a young person like me had 6 hours of time with someone like that, it was mind-blowing.
Today, I am inspired by people like Bill Gates, by his philanthropy and how he’s eliminating infectious diseases around the world.
When I look at youngsters today, youth, I get inspired because of the passion. I believe that the youth today are much, much more knowledgeable than we are, and sometimes I get really inspired by the things they are able to do at a much younger age. I was still trying to figure out the world when I was 30, but at 13 they are able to figure out the world.
Mr Senapathy “Kris” Gopalakrishnan served as the Vice-Chairman of Infosys from 2011 to 2014 and the chief executive officer and managing director of Infosys from zoo7 to 2011. Kris is one of the co-founders of Infosys.
Recognized as a global business and technology thought Leader, he was voted the top CEO (IT Services category) in Institutional Investors inaugural ranking of Asia’s Top Executives and selected as one of the winners of the second Asian Corporate Director Recognition Awards by Corporate Governance Asia in 2011. He also was selected to Thinkers 50, an elite List of global business thinkers, in 2009. He was elected president of India’s apex industry chamber Confederation of Indian Industry (CII) for 2013-14, and served as one of the co-chairs of the World Economic Forum in Davos in January 2014.
In January 2011, the Government of India awarded Mr. Gopalakrishnan the Padma Bhushan, the country’s third-highest civilian honour.
Mr Gopalakrishnan serves on the Board of Governors of Indian Institute of Technology, Madras, Indian Institute of Management, Bangalore, is the Chairman for the Board of Governors of IIIT- Bangalore, and is on the Board of Trustees of Chennai Mathematical Institute.
Mr. Gopalakrishnan holds a masters degrees in physics and computer science from the Indian Institute of Technology, Madras.