Case - Moral Campus at Infosys PDF

INS486
The Moral Compass:
Values-Based Leadership at Infosys
04/2014-5391
This case was written by Anupam Agrawal, Doctoral Student, Manfred F. R. Kets de Vries, the Raoul de Vitry
d'Avaucourt Chaired Clinical Professor of Leadership Development at INSEAD and Director of INSEAD Global
Leadership Centre, and Elizabeth Florent-Treacy, Research Programme Manager. It is intended to be used as a basis
for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Unless otherwise indicated, all quotations are from interviews conducted by Anupam Agrawal at Infosys.
Additional material about INSEAD case studies (e.g., videos, spreadsheets, links) can be accessed at
cases.insead.edu.
Copyright © 2006 INSEAD
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This document is authorized for use only in Dr. Bhaskar Bhowmick's TEL_Autumn2022-23 at Indian Institute of Technology - Kharagpur from Aug 2022 to Feb 2023.
What inspires me most are the values that the Infosys leaders stand for. As
individuals and as business leaders, I think they have done a wonderful job
keeping the company’s internal value systems alive and contemporary. The firm
has a soul – and it is visible to us. We connect.
Piyush Jain, Product Engineering Division
A snapshot from the early days: Murthy is at the extreme left, K. Gopalakrishnan is in the middle,
and N.S. Raghavan and S.D. Shibulal are on the right.
The Bluff
A debate had been raging for hours in a meeting room at Infosys Technologies, a small
entrepreneurial firm in Bangalore, India. The seven founding entrepreneurs had just received
a buyout offer from an overseas firm for US$1 million. Infosys was not doing very well that
year, 1990, primarily due to extremely tight regulations on imports and foreign currency
transactions, and the founders knew they might not get another offer as good as this one. On
the other hand, there were signs that the Indian government was planning to open up and
liberalise the economy. Should the founders – the sole owners of Infosys – sell? (It was, after
all, a comfortable return on their original start-up investment of US$230, borrowed from their
wives). Or should they hang on to Infosys and try to ride the wave of change?
After discussing all the options, they still couldn’t reach a consensus. It seemed as if the
discussion was going nowhere. Finally, N.R. Narayana Murthy, CEO at that time, told his
partners, “I have supreme confidence in the capability of Infosys to succeed. I am willing to
buy all of you out and continue alone. But if you choose to continue with me, we will take the
company public in five years.” There was dead silence for a few minutes. Murthy explained in
more detail why he thought there was light at the end of the tunnel. One by one, all the
directors agreed not to sell. Years later, Murthy admitted,
We had a calm discussion; I listened to people, and I just bluffed that I was
willing to buy them out. I knew that the people I was dealing with were all
extraordinary. And they also generally shared the same values. It was not such a
difficult decision to reach, in the end.
India opened its economy in 1991, making it possible for Indian companies to move goods,
services, people and currency more freely across national borders. Infosys went public (in
Copyright © INSEAD 1
India) in 1993, two years ahead of Murthy’s predicted schedule. The market capitalisation of
Infosys on 31 March 2009 was US $21 billion.1
From Humble Beginnings to India's Darling

The collective leadership [among the founders] in Infosys was for a cause that
was a lot bigger than all of us. Infosys leadership is about having a dream, and
executing that dream – always conscious of a larger cause that benefits others
rather than the leaders themselves.
K. Dinesh, Founder, Infosys
Infosys provides software services, which is not the same business as developing and
marketing software products. The web-surfing experience of a typical internet user is a good
illustration of the difference. To browse or surf on the internet, a user connects to an internet
service provider (ISP), such as AOL in the US, BSNL in India, Orange in France, etc. The
ISPs use a package of software and hardware to take the user where he or she wants to go on
the web. Lucent, Cisco and Nortel are among the providers of various types of hardware, like
the remote access servers used by the ISPs to provide a dial-up internet connection. The user
would also go through a server to a media gateway for Voice over Internet Protocol (VoIP), in
other words, to make that free Skype phone call. Infosys does the testing and development of
these software and hardware linkages.
Infosys does not compete with companies like Lucent or Cisco; it does not sell hardware or
provide internet services. Infosys is in a central position, integrating the needs of vendors and
service providers using existing solutions, or even suggesting new product development.
Thus, Infosys provides a two directional value add – or to put it differently, Infosys is like a
good matchmaker, who can introduce an internet user to the right person and plan the
wedding. It does the necessary integration software development, feature enhancements,
testing, release and third level support. Infosys provides similar solutions in the financial
sector, which is its biggest business, as well as to the company’s 460 clients in a broad
spectrum of other industries and sectors (see Appendix 1).
Infosys was started in 1981 by Narayana Murthy and six colleagues, all employees of Patni
Computer Systems in Pune. They were a real team. Murthy said, “We had what I would call a
mutually exclusive, but collectively exhaustive, set of skills, expertise and experience.”2 The
first three employees recruited by Infosys were engineers from the Indian Institute of
Technology (IIT), who were surprised to discover that Infosys headquarters were in a
bedroom of Murthy’s flat. Even in the early days, the firm had more clients abroad than in
India; the first international office was opened in the US in 1987. It opened development
centres in other cities of India in 1995, and its first UK office in 1996.
Lessons learned
Throughout the 1990s, Infosys acquired over 300 new clients, many of them American giants
like Citigroup, Gap, Dell and Cisco Systems. But in 1995, Infosys lost a major client. A
1 Infosys data
2 Interview: N.R. Narayana Murthy, CEO, Infosys Technologies, Ivey Business Journal, September/October
2001, pp. 52-55.
negotiation for higher rates for its services failed when GE, the source of 25% of revenues
(and 8% of profits) for Infosys, refused the rate hike in favour of a more competitive offer
from another company. Within 48 hours Infosys disclosed to financial analysts that the two
companies had “parted as friends” and explained how the lost GE profits would be replaced.
For Infosys, the incident became a lesson in pursuing de-risking in its business (see
Appendices 1, 2, 7 and 8). In addition, it also established Infosys as a benchmark in the
industry for fast disclosure and transparency, and boosted its share price. As K. Dinesh
quipped, “When in doubt, disclose!”
As demand grew exponentially for the services it provided, Infosys burnished its reputation
for good corporate governance. Even before its listing on the US NASDAQ stock exchange in
March 2000, Infosys was the first company in India to use the more stringent US Generally
Accepted Accounting Principles (GAAP), and by 2006 had published its accounts in line with
eight different GAAPs (Australia, Britain, Canada, France, Germany, India, Japan and the
US).
In 2001, the industry was hit by the dot com crash. That year, a host of companies revoked job
offers they had made to engineers about to graduate from technical universities. Infosys had
recruited 1,500 engineers and, against all logic, decided to honour the commitment to hire
them all, even though there was very little work for any one of them in the company. The
tangible and intangible consequences were severe. Not only did Infosys take a hit to the books
in a difficult year but employee satisfaction plummeted to unprecedented levels. The malaise
showed up in internal Infosys employee surveys and also in external standards of
measurement. Infosys slid down the many “Best Company to Work for” lists and “Best
Employer” surveys conducted around 2001-2002. Looking back, Murthy commented:
Many companies fired employees. HR managers of IT companies stood at the

gates taking the employee identity cards and giving marching orders. We said,
‘We cannot do this – it is not our employees’ fault. It is our mistake.’ We, the
Infosys founders, would have paid salaries from our own pockets, but our
accountants wouldn’t let us.
When you have so many people and so little work, they get bored and
disappointed. But we have to live by our promises. The good part of that episode
was that we came across as honest, decent people, who live by our commitments.
The goodwill we earned at the campuses is inimitable.
Although they had miscalculated their requirements in terms of employees, Infosys was one
of the few IT firms to predict the downturn of the markets in late 2001. Murthy recalled:
In October 2001, after surveying clients and other experts, we forecast that our
growth in revenue for fiscal year 2001-2002 would drop to about 30% – down
from about 90% the previous year. Our own industry analysts said that our sector
would grow by 45%, and some of our competitors predicted growth of more than
50%. As it turned out, in 2001-2002 our top line grew by 3%, the sector growth
rate was about 25%, and our competitors grew by 20 to 25%.
By the mid-2000s, Infosys was consistently ranked as India’s most respected firm – across all
industries. The company was ranked at No. 10 on the Business Week “Information
Technology 100” list of the world’s top technology companies in 2005.3 Infosys recruiters at
engineering schools reported one million applications for the company’s 10,000 job vacancies
in 2005 alone. By 2006, it had more than 52,000 employees worldwide and was a pioneer in
strategic offshore outsourcing of software services. It had revenues of more than US$2 billion
in 2005-2006, an increase of 30% on 2004 figures.
Riding to Work – The Infosys campus at Bangalore has 700 bicycles for on-campus commuting
The Infosys Business Model

The basic value adding process of the software outsourcing services industry, which Infosys
calls the Global Delivery Model (GDM), is based on two core principles:
(a) Divide the overall work into its logical components
(b) Distribute these components strategically throughout the world to create maximum value
This is basically the principle of sending work to where it can be done best, at lowest cost and
with the least amount of acceptable risk. In simple terms, Infosys divides the IT project work
into two components: onsite and offshore. Onsite projects – which require frequent client
interaction for testing or approvals, or proximity to the market – are handled at the customer
site, or at a nearby Infosys Proximity Development Centre. These projects can also evolve
from infrastructure bottlenecks that require onsite intervention. (Examples of onsite work
include defining architecture requirements and process mapping). Offshore development
centres, located mostly in India, cover activities that can be executed without constant
3 http://www.businessweek.com/pdfs/2005/05_25_it100.pdf
interaction with end users or clients. In general, most projects can be carried out with more
offshore than onsite work. (Examples of offshore work include software code development,
solution design and report building. See Appendix 2).
The keystone of the GDM architecture is the difference in time zones between onsite and
offshore work sites. Due to asynchronous time zones, work on linked project components can
continue round the clock, with much faster project completion rates. The GDM, which
provides Infosys with an excellent competitive lever, is now used by most Indian firms in the
software outsourcing industry.
The cost arbitrage delivered by Infosys’ GDM takes several forms. Since the GDM brings the
value of low cost to the door, firms can invest in pilot projects which they couldn’t have
afforded otherwise. In addition, the best talent for the job can be found on demand in one of
the global offices – 24 hours a day. Work can be done in Malaysia or the UK, depending on
the location of the appropriate people. Overall, the GDM brings down costs and speeds up
execution.
Managing for the Future
Infosys operates in an industry that moves with such speed that tomorrow is already “so
yesterday”. To stay at the cutting edge, a high tech company must have a corporate culture of
continuous change. How does Infosys prepare for the future? To put Murthy’s vision of
“Speed, Imagination and Excellence in execution” into practice, Infosys created systemic
processes for managing the future and making speed, imagination and excellence part of the
daily routine.
Infosys delinked capability development and delivery. It set up enterprise delivery units and
capability groups which look at the way new standards are evolving (see Appendix 10). For
example, there are capability groups in areas such as system integration, architecture
consulting or package evaluation and implementation. These capability groups support
various delivery units which write the code, test and release the product. When a particular
delivery unit needs to work with a client on a certain business issue, including technological
or scenario changes, the unit brings in capability groups to do the evaluation and develop
custom applications.
There are challenges associated with delinking the solution research and delivery. Two sets of
people are involved: one group implements current solutions and the other does future-
oriented research. Fundamentally, one group has a measurable output, the other does not.
Infosys developed a way to make sure that the performance of these separate groups is
appropriately recognised. A core set of high-performers are identified and challenged to do
something new while continuing what they are currently working on. When a new technology
is “on the anvil”, a slow ramp-up begins, and more senior engineers are added to the group.
New trainees are gradually promoted to senior engineers, with the possibility of later joining a
new technology group in their turn. In this way both the existing business and future business
core groups are dynamically rejuvenated.
This process is integrated with customer relationship processes. With a repeat business rate of
over 90% (see appendix 3), Infosys has had longstanding relationships with most of its
customers. The customers in turn treat Infosys engineers as a part of their overall system, and
include them in decisions on new technologies. Principal architects from Infosys become
involved with parent companies like Nortel and Cisco to think over what should be done next.
This is the engine that fuels the management of the future at Infosys.
Explosive Growth
Infosys grew at a scorching pace (see Appendices 4 and 5) in the mid-2000s. In 2006, Nandan
said, “It took us 23 years to reach the first billion dollars in revenues, while we reached the
next billion dollars in 23 months.”4 This growth was driven by the global demand for IT
services.
Fast growth comes at a cost. Infosys management identified issues of concern, particularly in
customer delivery and human resources. These range from delays in delivery due to shortage
of people and slower response to customer needs to delays in getting people up to speed faster
so that they can be productive. In response, mechanisms were built to handle the need for
well-trained employees. Renu Rana, Group Project Manager, explained:
We could afford to be choosy about whom we took in earlier years. Not today. The
challenge for us is to make sure that we develop internal systems so that
irrespective of the intake of technical quality [of newly hired employees], we can
train people. We have therefore shifted the focus of recruitment from technical
skills to mainly the ‘learnability’ factor.
As the numbers grow, we also develop the associated infrastructure. For example,
we have software certification centres on the Infosys campus. This boosts
motivation, as it takes less effort to reach the same goal. We build up ‘the best in
class’ from within, through systematic processes and infrastructure investments.
These investments in training – in certifications, in upgrading skills, and so on – have had a

direct effect on employees’ commitment to the organisation. The indirect effect is the lowest
levels of attrition in the Indian software industry. Rana commented, “The loyalty that is built
through the investments we make in our people is long lasting.” Ruchi Vaidya, Senior Project
Manager, concurred:
We offer internal and external certifications; some are mandatory at certain levels
for promotion. There is a twin benefit – individually, the person earns an industry
standard certification as well as skill enhancement. But at the customer end, it is
even more beneficial – for example, we can tell the customer that a certain
number of Cisco certified engineers are working on a project.
4 http://www.infosys.com/investor/reports/quarterly/2005-2006/Q4/IndianGAAP-PressRelease.pdf
The canal and boats at the Infosys Campus, Bangalore
The Core Values of Infosys

I think good habits [are those which] bring pleasure and happiness to you but do
not cost any money. Once you have such habits, you will not become a victim of
money. If you do not become a victim of money, then you can stand for integrity,
honesty, decency and respect. This is what I truly believe in.
Narayana Murthy, Chairman and Chief Mentor
Infosys emphasises ethical business practices in all its operations. The values that Infosys
leadership dwells upon are not highbrow stuff; the codified values are acronymed CLIFE –
Customer delight, Leadership by example, Integrity and transparency, Fairness, and pursuit of
Excellence (see Appendix 11). Although this list makes them appear deceptively simple, these
values, and the impetus to build them into the bedrock of Infosys corporate culture, did not
come out of the blue.
The Mind of the Leader – Murthy on Himself
Narayana Murthy is a humble man who lives a simple and frugal life. He believes that wealth
creation should be legal, ethical, environmentally sound and sustainable. He believes that as
evangelists of capitalism, business leaders must adopt value-based leadership. His values of
transparency, transaction-based behaviour, and keeping a clear conscience are apparent in his
interactions with Infosys employees, at all levels. Talking about himself, Murthy discussed his
philosophy of life:
I am a very average person in all respects. I believe that if you work hard then
you can move to the top of your band. I also believe that most of us can achieve
excellence in what we do, by being smart, by having good ideas, through
innovation, or through focusing on execution. I am an action-oriented person. I
don’t believe in rhetoric.
Murthy’s childhood was spent in a close-knit family in a very simple household. He was born
on 20 August 1946 in Kolar District, Karnataka, India, the fifth of eight children, in a lower
middle-class Hindu family. He said:
My father was a teacher. He used to tell us, 'Embrace such values that tomorrow
will not make you a slave of money. Read books.’
When I was young, in the evening we would sit in a park where there were
loudspeakers playing music (we did not have a radio at home). My father used to
say, ‘You do not need any money for this. Sit there, enjoy!’
My father advised us to meet good people and hold conversations with them. That
does not cost any money.
In 1967, Murthy obtained his degree in electrical engineering from the University of Mysore,
then, harbouring dreams of building hydroelectric power plants (Nehru’s “temples of modern
India”), he went on to earn a master’s degree from IIT Kanpur in 1969.
Like most Indians at that time, Murthy in his student years was full of Nehru’s socialist ideals
of centrally planned economies and redistribution of wealth. He left India in 1972 to take up a
job in Paris designing a 400-terminal operating system for handling air cargo at Charles de
Gaulle Airport. He describes the three-and-a-half years that he spent there as “the most
influential years of my life. I observed that, in a Western country, even the socialists
understood that wealth has to be first created before it can be distributed.” The final stop on
Murthy’s journey from socialist to committed capitalist occurred during his return to India on
the Sofia Express at the town of Nis on the Yugoslavian-Bulgarian border. After striking up a
conversation with a fellow passenger, Murthy was abruptly arrested and thrown in jail, where
he spent 60 hours. He was eventually freed because he was from a “friendly country”. In his
retelling of this story, Murthy said, “I felt that if this [communist] system treated friends this
way, then I did not want anything to do with it. The experience really shook me.”5
Later on in his life, Murthy would speak of a number of lessons he learned from his
experiences in the West as a young man, and later as an adult. These include: respect for the
public good, acknowledging the accomplishments of others, accountability, dignity of labour,
professionalism, intellectual independence and honouring contracts.6 Murthy’s wife Sudha,
also an IT engineer (they married in 1978), said that as a young man, “His dreams
encompassed not only himself but a generation of people. It was about doing something
worthy, exemplary and honourable. It was about creation and distribution of wealth.”7
5 “Values First”, India-seminar.com

6 “What we must learn from the West” acceptance speech for the Lal Bahadur Shastri National Award for
Excellence in Public Administration and Management Sciences, 2001
7 “The Making of Murthy (Infosys?)”, Mumbai-Central.com
Values-Based Leadership in Action
“Leading by example is the primary actionable element of a leader’s routine.” Murthy told us.
Infosys values are modelled in the day-to-day behaviour of the top executives. Murthy and
other founders of Infosys lead simple lives. Murthy is one of India’s richest men – the Murthy
family’s wealth exceeds US$500 million – yet he and his wife still live in the same two-
bedroom apartment in which they have lived since 1982. The same is true of the other co-
founders of Infosys, all of whom are among the wealthiest men in India,8 thanks to their
Infosys shares.
The second practice apparent at Infosys – whether in formal meetings or at the company food
courts – is the respect and decency with which Infoscions (as employees call themselves),
treat one another. Pluralism is the third practice, and it builds on the foundation of respect.
Decision making is frequently collective, and dissent and debate form a necessary part of
daily operations. However, the debate is always – without exception – courteous and
dignified. Murthy is fond of saying, “You can disagree with me as long as you are not
disagreeable.” The freedom to challenge any decision is central to the spirit of pursuit of
excellence at Infosys. Dinesh remarked, “If six people, with their different backgrounds and
experiences, evaluate the same data and debate a decision, then there is very little chance that
the decision will turn out to be wrong.”
The fourth practice is focus on delivery and action. A particular phrase that most Infosys
leaders swear by is “Walking the talk”. This action orientation is visible in small signals.
When Infoscions talk about “openness”, one can see that they mean it: no one closes their
doors. Murthy’s office is always open, and the same is true for all the other founders. A few
areas are closed to outsiders – like the SETlabs division which does basic research – but once
you are in, the rooms are open.
Murthy said, “I truly believe in leadership by example. I have realised that it is the most
powerful way of creating trust in your ideas. Before telling somebody to do something, you
must do it yourself.” Murthy put these words into action in myriad ways. For example, he
used to travel frequently on company buses. When complaints were made about bus travel,
Murthy’s comments on the subject were taken seriously. Murthy smiled, “People could not
say, ‘What do you know about bus travel?’ So it is very important to walk the talk if you want
people to trust you.”
Interestingly, these values not only influenced the overall ethos at Infosys but also other
processes – like recruitment and selection and budgeting – in subtle ways. Satyendra Kumar,
Head of Quality at Infosys, explained:
We are not flamboyant or flashy. For example, we avoid five-star hotels, although
we stay in decent places. None of us fly business class in the domestic sector, let
alone first class. That occasionally creates issues – people who join Infosys from
different cultures or other large companies sometimes have difficulty in adjusting
here.
There are three additional routines that support “values-based leadership” at Infosys. The first
routine is the actionable element of respect for the individual. For example, all the top leaders
at Infosys, including Murthy, read their e-mails and reply to each query from every employee.
8 http://www.business-standard.com/special/billion/2005/bill05_02.pdf
These mails can range from business issues to personal grievances or simple queries. Murthy
said:
I look at all my emails myself and respond the same day. This keeps me awake late
at night, but it is fine. I do this because I believe that a sure way of respecting
others is to spend time looking at what their issues are, and then make an honest
attempt to solve them.
If I write to you about an issue that I feel strongly about, and you do not even
reply, then I would know that I am dealing with a pretentious person. On the other
hand, if you looked at the issue and gave cogent arguments in a polite manner,
then I would be willing to accept the argument even if it runs counter to my
feeling.
The second routine is the practice of making data-based decisions, or as Murthy calls it,
“transaction based” decisions, whereby previous decisions do not affect current ones. Data-
based decision making fosters trust in leadership, since it makes sure that good ideas take
precedence over personalities. While this routine is second nature to many firms, it is
somewhat unusual in the hierarchical Indian organisational culture, where “who says it” is
often more important than “what is said”. Murthy explained, “If we want to create an
environment of high aspirations and innovation, then people must be confident that they are in
a meritocracy. There cannot be any biases, cliques, or cronyism. People must be able to say
from the heart, ‘If I have a good idea, it will be listened to.’”
The third routine lies at the heart of the culture of constant innovation at Infosys. Infosys
leadership focuses on making its own innovations obsolete. This is done by widely
disseminating its innovations – not merely within the firm but across the industry – after
Infosys has taken the initial advantage. Infosys uses its own new idea for about six months,
and then the idea is posted on the web where it is accessible to all. Murthy explained, “Human
beings have a tendency to rest on their laurels. And that is very dangerous. [At Infosys] we
strive for sustained advantage, and for that we need to constantly innovate. We proactively
disseminate our innovations, and we make them obsolete.”
These three routines – respect for the individual, data-based decision making and embracing
constant change by forcing people to share their innovations – provide a critical mass of best
practices within Infosys.
Trust in Leadership
From the early days, the Infosys founders were all aligned on a critical concept – if the
organisation wants the best performance from the employees, the leaders must be able to
reach out to their hearts. According to Murthy, “Trustworthy leadership is the core idea at
Infosys. In my view, people should say about their leader – from within, and not forced – ‘I
will walk on water for [him or her].’” He expanded, “Leadership is about creating a worthy
dream and helping people achieve it. This is the primary responsibility of a leader. To make
sure that people follow, the leaders have to be very trustworthy. Trust is the enabler of
leadership.” Piyush Jain of the Product Engineering Division explained,
If I feel that I am not getting the right kind of growth, management is willing to
listen and make changes. People here are quite open to discussing issues, with
data, and then acting to resolve the issue. There are no dogmas or egos
surrounding anyone. That is powerful. The humility with which the top people
approach issues is many a time spellbinding. You want an appointment with
Murthy, Nandan, or Shibu?9 You send a message and you are on the agenda. It is
as simple as that.
Leadership Development
Infosys also established a systematic pattern of succession planning. The board members
remained the primary leaders, followed by a three-tier leadership structure for high-potential
managers.
Potential leaders were first tested on how quickly they could learn new concepts and then
were asked to apply those concepts to unfamiliar situations. Second, the candidates’ values,
emotional stability and energy were evaluated. Third, their reaction to stress was tested in
simulation exercises, and feedback on their ability to handle stress was requested from their
peers and superiors. The selection process also favoured the candidates’ communication
ability, and their focus on the triple criteria of excellence, speed, and attention to execution
details.
Forty-five Tier 1 leaders were selected by the board members from a pool of about 250
candidates. The Tier 1 leaders and several directors selected 135 Tier 2 leaders. The Tier 1
and Tier 2 leaders then chose 405 Tier 3 leaders, for a total of 585 people in the top leadership
channel. Core leadership philosophies and values were reinforced at these levels through
leadership mentoring and training.
Murthy had confidence in the selection process and in the future of leadership at Infosys. He
told us, “The potential future leaders of Infosys are self confident and emotionally stable.
They can handle tough situations, and they have a stable and aligned value system.”
The actionable element of preparing future leaders was woven into specific everyday routines
at Infosys. Business unit Review Councils meet every quarter for business review and
strategic decision making. Nearly half of the people in these councils are potential leaders. A
select group of under-30-year-old employees are also included in these councils.
Murthy explained, “By involving youngsters in important decisions and discussions, we get
the contemporary view, from the trenches.” Dinesh added, “People under 30 are our eyes and
ears for the events in the field. In the Review Councils, they bring up issues that need
resolution. For example, in a recent meeting, one of the counter-intuitive issues brought
forward was that, while empowerment in Infosys is good, some young people are not
comfortable with so much responsibility!”
To highlight leadership role models, annual excellence award ceremonies recognise and
reward success. People are given awards based on two dimensions: 1) success at making
Infosys more relevant to its customers, investors and employees; and 2) influential high
performance results. Excellence awards are heavily publicised – the award ceremony is
telecast live to Infosys offices around the world.
9 S. D. Shibulal, Founder, Member of the Board and Head – Worldwide Customer Sales & Delivery.
What Lies Ahead?
In 2006, Murthy described how he would like Infoscions to evolve. He said,
I am very impatient for a very simple reason. I travel a lot and I see how fast other
countries are progressing. I come back to India and I am not able to understand
why we are still arguing about silly things. When people say something cannot be
done, I get upset. I tell them the constraints are in their mind.
My friend Mashelkar says, ‘All of us are fighting a continuous battle between our
mind – which is the thinking engine – and our mindset – our preconceived
notions. Only those of us who win the battle of mind (i.e., the engine) over our
database (i.e., our preconceived notions) will progress.10
What are the future challenges for this showcase of India? The technologies are changing fast,
major software organisations are opening up their own development centres in Bangalore, and
more and more entrepreneurs in India are entering the IT services industry, following the path
pioneered by Infosys.
Murthy outlined three major challenges,
First, we are not as multicultural as I would like us to be.
Second, we have to learn to handle unpleasant situations better. We Indians have

a tendency to say yes. We still say yes to almost everything the client demands –
but ultimately it may not be in the best interest of the client.
Third, I would say, we have to move up the value chain in terms of improving our
per capita income from projects. We need to do more, faster than we are doing
today.
As Infosys grows, these challenges will become more potent, on the business front and on the
human front. Infosys customers will demand not only excellence in execution but also thought
leadership. They will expect partnership and initiative from Infosys in the race to remain at
the forefront of technology. Moving up the value chain will require investment in developing
mid-level leadership capable of taking the organisation through this kind of complex
transformation. The challenge lies in not only redefining the leadership system but making it
vibrant and dynamic, able to navigate the rocky landscapes that the Infosys engineers are
bound to encounter: uncertainty in the technological domain and ever-increasing complexity
as technologies blend into one another.
On the human front, explosive growth will demand much greater attention to the integration
of new stakeholders. Integrating multiple nationalities (as of 2006, there were 59 nationalities
within Infosys), lateral entries and suppliers with the values-based leadership model may
continue to be an issue. Furthermore, as the technological pace increases, the investment in
human resources and training may need to be much more dynamic to align workforce
capabilities with changing business needs.
10 R. A. Mashelkar is the Chairman of the Council of Scientific and Industrial Research of India.
Given their success thus far, it is probably safe to assume that the systematic business
processes within Infosys will be able to handle these leadership and technical challenges.
Over the next few years, a new, multicultural group of leaders – with their own experiences,
beliefs and values – will begin to replace the old guard, including Murthy, at Infosys.
Will values-based leadership – an innovation developed and tested at Infosys – one day
become obsolete? What could replace it?
Exhibit 1
De-Risking Strategy
Total No.of Clients – 538. Largest business with a single client accounts for 9.1% of
revenues.
Top 10 clients account for 31% of revenues.
Exhibit 2
GDM – Offshore vs. Onsite Effort and Revenues
Offsite Onsite
Effort 73.9% 26.1%
Revenues 49.3% 50.7%
Exhibit 3
Repeat Business Rates, 2002 - 2008
2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003

Repeat Business 97% 95.3% 92.1% 95.4% 93.4% 91.9%
Exhibit 4
Growth: Revenues in US$ million
4500 4176
4000
3500
3090
3000
Revenues (US $ M n)
2500 2152
2000
1592
1500
1023
1000 753.8
545.05
413.8
500
68.3 121 203.4
0
98
99
00
01
02
03
04
05
06
07
08
19
19
20
20
20
20
20
20
20
20
20
Exhibit 5
Growth: Client Base and Employees
600 100000
91187
90000
500
80000
72241 70000
No. of employees
400
No. of clients
60000
300
52715 50000
39700 40000
200
30000
25634
15356 20000
100
10000
9831 10738
0 37665389 0
FY1999FY2000FY2001FY2002FY2003FY2004FY2005FY2006FY2007FY2008
Exhibit 6
Culture: Non-Indian Employee Base
Over the past four years, roughly 3% of Infosys employees are non-Indian. These (~3000
employees) represent over 70 nationalities.
Exhibit 7
Employee Attrition Rate – 13.4%
Exhibit 8
Revenues by Segment
Financial services 35.77%

Manufacturing 14.72%
Telecom 21.55%
Retail 11.78%
Others 16.16%
Exhibit 9
Revenues by Geography
North America 63.2%

Europe 26.3%
India 1.6%
ROW 8.7%
Exhibit 10
Units and Development Centres at Infosys
Infosys is broadly structured into Industry Business Units (IBUs) and Enterprise Capability
Units (ECUs). There are support functions in addition to these. Infosys has 54 development
centres, of which 27 are in India.
Industry Business Units (IBUs)
The Industry Business Units resolve business problems in specific industries. They are
vertically aligned, decentralised, and work with customers to create business solutions in the
following domains:
• Automotive and Aerospace (ANA)

• Banking and Capital Markets (BCM)
• Communication Service Providers (CSP)
• Energy, Utilities and Resources (REU)
• Hi Tech and Discrete Manufacturing (HTDM)
• Insurance Healthcare & Life Sciences (IHL)
• Retail
• Transportation and Services (TNS)
Enterprise Capability Units (ECUs)
The Enterprise Capability Units collaborate with and cut across the business units to deliver
enhanced value to clients through various service offerings.
• Domain Competency Group (DCG)
• Enterprise Solutions (ES)
• Global Alliances
• Independent Validation Solutions (IVS)
• Infrastructure Management Services (IMS)
• Product Lifecycle and Engineering Solutions (PLES)
• Product Engineering (PE)
• Systems Integration (SI)
• Software Engineering and Technology Labs (SETLabs)
• Microsoft Technology Center (MTC)
• Strategic Global Sourcing (SGS)
Exhibit 11
CLIFE: The Infosys Codified Values

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INS486

The Moral Compass:

Values-Based Leadership at Infosys

Piyush Jain, Product Engineering Division

From Humble Beginnings to India's Darling

K. Dinesh, Founder, Infosys

Many companies fired employees. HR managers of IT companies stood at the

The Infosys Business Model

(a) Divide the overall work into its logical components

Managing for the Future

These investments in training – in certifications, in upgrading skills, and so on – have had a

The Core Values of Infosys

Narayana Murthy, Chairman and Chief Mentor

The Mind of the Leader – Murthy on Himself

5 “Values First”, India-seminar.com

Murthy outlined three major challenges,

First, we are not as multicultural as I would like us to be.

Second, we have to learn to handle unpleasant situations better. We Indians have

2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003

Financial services 35.77%

North America 63.2%

Industry Business Units (IBUs)

• Automotive and Aerospace (ANA)

Enterprise Capability Units (ECUs)

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