ECONOMY: "There is a fundamental shift in the distribution of global economic power"
World Economic Forum
Interview by World Economic Forum with Nandan Nilekani, President, CEO and Managing Director, Infosys Technologies
What will be the major opportunity and challenge for your business in the coming year and why?
As Infosys Technologies expands into new geographies, we face a new set of opportunities and challenges. The first is the increase in the competitive intensity of the marketplace. When we began, we were a niche player, below the radar screen. Our offering was seen as another service, to be used as an alternative way of doing the existing work. Moreover, the huge investment boom of the bubble era masked the inherently disruptive nature of our offering. At that time there was enough business for all. Today, in a far more difficult scenario, where our global customers are unable to raise volumes or prices, the “offshore” model has become mainstream.
The second challenge is, conversely, to get more local. As we morph from being merely global to a true multinational, we need to plant more local roots. This includes more local hiring (either organically or through acquisition), and becoming a more embedded part of the countries and communities where we operate. Infosys, today, has employees from 53 nationalities. Creating a multicultural outlook is part of our effort to truly leverage the power of globalization and achieve long-term survival.
The third challenge is to become a company that is seen by customers as a trusted advisor and strategic partner. We have to learn to be more consultative, to be proactive with business solutions that meet the customer’s challenges, and to interact with felicity with our counterparts in the boardroom. Our whole effort today, be it changes in the organization structure, investments in business solutions, alliances and acquisitions, or training of client-facing people - everybody in the company is geared towards this change. An important part of this is to define a new model of outsourcing that resonates with our customers’ needs, protects their strategic interests, and is based on the global delivery model we pioneered.
In addition, we also have to work towards continuously increasing efficiency and speed. We have to continuously increase our productivity by leveraging technology and by ensuring an effective knowledge management framework.
Rank on a scale of one to ten the following issues that pose the greatest risk to your company (with one being the greatest risk)
China - 7
Pandemics - 5
Climate change - 9
Proliferation of weapons of mass destruction - 10
Natural catastrophes - 8
Stagflation - 3
Oil shocks - 2
Terrorism - 4
Over regulation - 1
US dollar decline - 6
How are China and India redefining the global economic order, and how is your company responding to their emergence?
What`s happening right now is basically a fundamental shift in the distribution of global economic power. If you go back to the 1830`s, India and China were 50 percent of the world`s G.D.P., and then they missed the entire revolution of industry. When you take a long view of this game, it`s just part of the process. While China has benefited from its manufacturing revolution, the services revolution of India has been significant in stimulating overall growth.
We believe China offers both a market for services as well as a source to develop software given its huge talent pool. The local talent pool provides an opportunity to service markets in Japan, Korea, etc. We have a subsidiary in China, which is an important part of our growth strategy. I am optimistic that we will gain immensely from the rise of these two giants.
How does your business respond creatively to a rapidly changing global landscape?
At Infosys, we have always anticipated and responded to change. In fact, we have driven change by pioneering our global delivery model since the 1980s. Today, it does not seem unusual to outsource work to another, far-off location. We believed that this was the way the future would look and started working on our model at a very early stage.
Today offshoring is mainstream. The incumbent players entering this terrain will have to restructure existing business, compensation and operating models and reduce high-priced onsite staff to make way for the offshore resources. The challenge is not about adding cheaper offshore staff to supplement existing practices but incorporating offshore resources and their process-centric delivery expertise into the company`s DNA.
Our model has shown that almost every possible IT service can be delivered using the global delivery model (GDM), be it plain application development, to higher-end services such as ERP implementation, systems integration and even consulting. The GDM model has changed the low cost positioning to high quality services and process expertise.
The challenge for us will be to manage scale as we grow. We need to increase our global presence, attract the best of breed global talent, enhance our domain and consulting skills and add new services to our portfolio.
Are you optimistic or pessimistic about the direction of Europe in the coming year?
We are very positive about our prospects in Europe, which has, in the recent past, seen a plethora of activity on the outsourcing front. We believe Infosys is well poised, on the basis of our disruptive model, to make it as one of the leading service providers in Europe. The markets, particularly on the Continent, are increasingly warming up to this service delivery paradigm, and that is reflected in the sorts of deals we have seen in the last few quarters, including ABN AMRO and Alstom.
Currently, we are hitting annual growth rates of more than 60 percent which is not only faster than the “Infosys” growth rate, but is way above the growth rates being experienced by other players in this market.
How do you propose bridging the public-private trust deficit and aligning the interests of business with those of government and global society?
The best way to bridge the trust deficit is through action. I have always been a firm believer in the immense value of public-private partnerships through my own personal involvement in many such ventures.
Currently, at Infosys, we are building our Campus Connect programme, which is a public-private partnership we have built with various universities to help equip students with skills that they can immediately apply in the workplace. This programme is a true example of how to align the interests of business, society and government to the benefit of all parties concerned.
While business is assured of getting a workforce with the right skills, society benefits from having its youth transition smoothly between education and employment. Finally, the government benefits from the gainful employment of its workforce.
What value do you get from the Annual Meeting in Davos?
The Annual Meeting in Davos provides an opportunity for me to meet like-minded leaders who have a clear vision for the way our world should be and who believe in designing effective action plans to implement that vision. I am amazed each time by the innovative ideas that are discussed at the Annual Meeting as well as by the enthusiasm shown by the participants in changing our world for the better. As global leaders, we do feel a shared sense of responsibility in bringing our various talents together to make a positive contribution to the rest of the world.
Courtesy of World Economic Forum (www.weforum.org)