Infosys CEO Kris Gopalakrishnan Describes Exciting Times

I chatted Monday afternoon with Kris Gopalakrishnan, who’s been chief executive of IT outsourcing firm Infosys (INFY) for barely two months. He was most passionate about a few broad themes in the changing technology landscape. “One of the biggest changes you will see is the rise of appliances, and appliance-to-person communications on the Internet,” he said.

He gave as an example the fact that consumers can now get real-time traffic updates from handheld devices talking with global positioning satellites that in turn talk to computers monitoring the roadways of the world. More and more people talking with more and more devices, which are all talking amongst themselves.

The soft-spoken Gopalakrishnan (bio is posted here) took over from the more well-known Nandan Nilekani. The New York Times’s Tom Friedman made Nilekani famous by ascribing to him the observation that outsourcing makes the modern world a “flat” world, in labor terms. Nilekani had taken over from N.R. Narayana Murthy, Infosys’s CEO for its first 20 years to 2002, but both of the latter two gentlemen still serve on the company’s board and show up to guide the company’s vision and culture.

All of which puts Gopalakrishnan in a unique position, as one of the few remaining founding employees in the executive suite, to try and build the management bench of a company growing by leaps and bounds with young Indian engineers fresh out of school.

Which is no mean feat when the company is growing in every possible direction. Infosys will Tuesday officially announce the opening of a facility in Monterey, Mexico to service Spanish-speaking clients in this hemisphere. And it has about 700 people working in facilities in China (Gopalakrishnan says the skills of Chinese software engineers is excellent, and improving dramatically these days).

At the same time, Gopalakrishnan expects U.S.-based employees will represent an increasing percentage of the company’s total headcount, because as deals with existing customers get bigger and more important, some of the work’s got to be done here. Which brings its own special dilemma: Does Infosys buy a firm here in the States, as its competitor Wipro (WIT) did last week with the acquisition of Infocrossing (IFOX), a firm that hosts clients’ computers in its data centers?

“Acquisitions can bring you clients,” as well as U.S.-based labor, Gopalakrishnan conceded. “But you are then in a financing business,” he observes, meaning, Infosys would be spending money on real-estate for data centers and for clients’ computers, in such a deal, and, “it’s not really clear we are going to be better at financing in that way than are our clients.”

The other option is to ship more Indian workers overseas to “near-shoring” positions in the States. While Infosys will hire some U.S. workers in coming years, Indian IT graduates are not only more plentiful, they also still study some of the exotic, aging technologies of the past that Infosys’s clients still require: things such as COBOL and CICS and other computer programs of the mainframe era.

“American engineers who know those technologies are retiring and it's not as much a part of the U.S. engineering curriculum,” which is caught up with technologies of the Internet. Infosys will run smack up against the limits on HB1 visas for foreign workers, which cap how many can be brought here. Amazingly, the company has no lobbyists on retainer in D.C., according to Gopalakrishnan.

Amidst all this, some of the challenges on a daily basis are prosaic: why hasn’t the company won more business in managing companies’ IT infrastructure remotely, from India? I asked. Because IBM (IBM) gets that business thanks to its years of so-called managed services, says Gopalakrishnan. “We need more references in that area to win more business,” he said. That, and continuing to refine Infosys’s rep as what is basically a big IT shop, but one that does its job better than Infosys’s clients.

Big banks have large IT staffs, but the implication Gopalakrishnan made was that Infosys is more adroit at seeing where programming is science, rather than a bespoke art, and turning those observations into codes inculcated into the company’s work ethic. Process, method, re-use, the gradual refining of software development is what Infosys is going after.

My overall impression is that with Infosys spreading its wings in many directions, the company has no limit to growth opportunities it can pursue both in India and in the developing world, and even here in the U.S. But it also means the challenges for the company become more diverse and complex, from increasing headcount thousands of miles from home, to dealing with higher attrition rates in China, to calculating just how much growth can be achieved internally versus through buying businesses, to cultivating the next group of executives who will take the helm after Gopalakrishnan. Exciting, modern times for a still-young company.

Comments

[Sameer Rao]

Going ahead, all outsourcing firm will have to address/approach the near-shore way of doing business with their client. This is not just true from the cost/timezone perspective but more from a geo-political and socio-economic point of view. The emerging markets (BRIC nations) are quite different from the well-set/developed markets (US, West Europe). The developed market being free for outsourcing/offshore development had a open arms approach for getting foreign individuals working on long-term visa and at the same time allow firms to outsource work to "developing" nations.

The emerging markets on the other-hand know the position they command i.e.-
1. They have the man-power within their locale (nationals)
2. They have resource by ways of increased FDI + growing sectors (IT, Energy,...)
3. Developed nations (or firms from developed nations) would be looking at them for more investment/growth opportunities.
4. With all these its quite possible that BRIC nations would put condition of FTEs working within their boundaries amount of work done from outside of their boundary. The social/political pressures would be high from developing nations to keep work on their soil..which will be a major impact.