It’s a war for talent at this moment: Kris Gopalakrishnan

Kris Gopalakrishnan, MD and CEO, Infosys Technologies, has carried on the legacy of a company that has defined the IT sector in India. Even during the slowdown, Infosys kept hiring and maintained an operating margin of over 30%, a fact that even other IT firms still cannot fathom. In a conversation with Amit
Tripathi, he talks, among other things, about the downturn he faced at the start of his career.

Tell us more about your Patni days…
The first interesting fact about my Patni days is that I was not recruited by Narayana Murthy. I think he was out of the country and Ashok Patni came to the campus in IIT Madras and recruited me and I don’t remember, one more person. I had other offers too. Like the standard offers from Tata. I had the opportunity to go to other companies also. But when I looked at the offer from Patni, what I liked was, one, the technology was really up and coming, mid-range systems and things like that… second, it was a small team. I felt that I will be able to contribute more.

In the early 80s, professions such as probationary officer in banks or IAS were the norm…
Yes, very true.

Were you not interested in them?
I was interested in technology. First, I was interested in physics, that’s why I did an MSc in Physics. Even from my school days, I was interested in science and math and things like that. But then, when I got exposed to computers in IIT Madras, when I was doing my MSc Physics, they had a course in the campus for FORTRAN (a programming language mostly for Mainframe computing). I got hooked on to computers and switched my line to computer science. I did not know much about it, what scope it would have.
What interested me was the technology, honestly. So I felt that I should continue to be in the area of computer science.
So I joined Patni, where I met Narayana Murthy. He was the head
of the software division in Patni at that point.

Two people with similar interest — maths and physics…
Narayana Murthy is more interested in math I was more interested in Physics, that’s the difference. I am also very interested in computer science. The impact of computers on our lives in the last 60 years has been unprecedented. We are living through a period of rapid change which has impact on us. Change that has significant impact on us.

How big was Patni then…
It would be about 100 people then. They had a computer centre. They had other operations. There was a sales team, a hardware division and a software division. Actually, as soon as I joined Patni, they sent us to the US. So we have actually done ourselves what we ask our people to do. We worked on projects in the US. That experience even today helps to understand the industry.

But those must have been very different days compared to today…
Yeah, definitely very different. Those were very early days of compunting, very early days of looking at India as an option and very early days of how computers were being used for business purposes.

Then most of you were more attuned to technology rather than business…
See I strongly believe that in the initial part of your career, you must specialise. You need to develop depth first before you create breadth. General management is about breadth, management of people, finances and things like that. And so I was involved on the technical side and quite a bit of my early days at Infosys were on the technology side.
Coming back to Patni, so we did that project in the US. It was for banks. It is interesting now to look back, because the thrift banks (similar to co-operative banks in India) in US collapsed during that time. There was a banking crisis during 79-80 and our projects were affected. In fact, they were cancelled after six months and we were sent back.

In Patni you developed the distributed computing model for the Rourkela steel plant…
Once back in India due to the crisis, I got assigned to develop distributed computing for the Rourkela steel plant. Its one of the most complex things you can think about. Because you are putting a small computer, a micro-computer at the furnace and there, no manual intervention is possible. You have to do it remotely. You have to download the operating system remotely, you have to remotely download the software and you have to manage the system remotely. I got to work on that project and the experience was fantastic. We were happy that the system got delivered, installed and was in use for a long time. I think we delivered the project in mid-1981, and 12-13 years hence, it was still in use.

And how was this switch from a financial service-centric job to a manufacturing-focused one…
Even in the financial services space, my work was mostly on the technology side, building the underlying technology infrastructure. Here again, the problem was more technical — downloading the operating system, remotely operating the machine, etc, so it was mostly technical.

And what has changed in terms of client engagement?
Those days, there was clearly a can-do attitude. It was early days. The field had not evolved into multiple expert areas. Then, you had to do everything yourself. That teaches you a lot in a much shorter time. You develop deep expertise because you have to read up,
understand, learn and then do. That helped a lot.

You headed KSA-Infosys in the US…
So we started Infosys and in early days, we were working through another company in the US, KSA. Then we decided to form this JV and through the JV, market our services. So I went to Atlanta to head that operation for Infosys and stayed there for seven years through 1994. The goal was to set up sales and marketing for Infosys, get ourselves known.

IBM and Accenture have carved a dominant place due to their long-time client relationships. Are you looking to do the same?
We took certain decisions in the beginning. We said that we will not have anybody in between ourselves and the clients. We will directly sell, directly manage our clients and we should be visible, our brand should be visible and in the contract, it should be Infosys. That has helped us create that sales engine and create that brand.
Second, if you want to be in charge, or if you want to be the master of your destiny, owning that sales engine is extremely important, otherwise somebody else controls your destiny. Sales is what allows you to forecast your revenues and achieve your revenue numbers. Without sales, somebody else will have to sell and they will decide whether you achieve the numbers or not.
Third, we understood that we have to establish the brand of Infosys in a B2B environment, since we sell to enterprises and not to consumers. We know exactly the number of people we need to touch. We know that we have to touch the CIO and the client organisation, we have to touch certain academic institutions from where we recruit, we need to touch the financial and technology analysts, we need to touch the media and news people because they report about this industry. All in all, the total number of such people would be 10,000. That’s it. We consciously work on building and developing this network. That again helped us. We have been working at it since day one, that’s 30 years.

So its not just client engagement, it’s the entire ecosystem... 
Yes, it’s entire ecosystem engagement — the academic institution, government, analysts, media, all those who influence and matter. Our entire sales and marketing focus is to touch these 10,000 people.

Does this mean ever increasing selling, general & administrative (SG&A) expenses…
SG&A expenses are mostly on a dedicated service engine for our clients. So the other groups do not require a one to one ratio.

Have the IBMs and Accentures gone the same way?
Not really. Multinationals do a lot of advertisements. You won’t see us doing advertisements because of our firm belief that in a B2B business, I know exactly whom I need to touch.

You are chairman of IIITM, Kerala, and hold posts in other educational institutions. How do see the challenge of sourcing people for your firm and others, when demand is returning?
Sourcing people is a challenge everywhere, I can tell you that. In the US, in Europe, in India, everywhere. See, things are turning around and sourcing people really means getting the right resources, talent, enabling them… retaining them will be the biggest challenge facing us and our peers.

But in India we have a huge number of engineers flowing out
every year…
Let me give you the numbers. This industry is today employing about 20 lakh people. Let us assume the industry grows by 10%. So you need additional 2 lakh people. This is additional 2 lakh people — this can’t be people being promoted, because there are no net additions then. Of that, at least 20-30% will have to be experienced people because if you take all fresh people, then existing experienced people will be stretched more. Where are those experienced people going to come from? So that is the challenge facing the industry. It is true globally. It is compounded by the fact that your current knowledge is not relevant tomorrow. Technology is changing rapidly. Today, people talk about iPad, iPhone, the programming paradigm is different, collaboration is through social networks, it’s constantly changing.
So even experienced people will have to continuously learn in this industry. You can not rest and take it easy. That is another challenge for this industry. It is a very, very big challenge because our traditional model of learning is that you take a university degree and you use that through the entire lifetime. You don’t normally go back into learning, certifications, and things like that. Whereas in IT industry, I strongly believe that learning is continuous, you have to go for certifications, you have to commit to lifelong learning.
That’s a challenge. Over and above 20% growth and things like that will make numbers very large. When the numbers were very small, the industry was half this size. And as we grow larger and larger, this problem becomes even worse. Part of this problem is being offset by recruiting in markets outside India, especially for the experiences. That experience is very important. That experience is not for technology alone. We are becoming more and more consulting driven. So we need consultants. We are looking at broadening our services footprint, starting new services, things like learning services, BPO, infrastructure management and we need new people who understand these services. So the need for experienced manpower is very complicated.

How are you addressing this?
What normally happens is that you recruit from each other (laughs) and whoever is the better brand, whoever is able to attract people, gets an upper hand. It is a difficult thing. Ideally, these people are created by retraining people with experience in other areas and other fields. Experience is a combination of knowledge about technology and knowledge about how to manage customers and other people. Now, that we can take from other industries and train them on technology. That’s how we have been creating this experience pool.

The IT industry did not recruit for a year. Did that have an impact on people sourcing?
Yes, very much. Now that IT sector growth has returned, everybody is going after people from other companies. We are all fighting. It’s a war for talent at this moment. That’s why I am saying it’s not good for the industry because we are not growing the industry. If we are able to bring in additional resources from other industries, this industry will grow. If you take from each other, no new net addition is happening then. Off course at the entry level it is growing, so the pyramid is broadening.

Are you saying IT needs to poach from other industries such as infrastructure, manufacturing etc?
Yes, for people who have project management experience, who have customer management experience, who understand the construction industry or who understand banking. Give them the technical knowledge and they can be on the operations.

Some industry heads say IT industry weans away engineers and that engineers are not needed for IT?
Not true. Just like any sector we require engineers, we require people with good problem-solving skills, we require people with ability to manage clients, we require people who have the learnability and by and large, engineers are the people who fit this bill.
Since this is highly technical field, again, engineering knowledge is very, very important, be it civil engineering or mechanical. Any engineering discipline today uses computers. We don’t have sufficient number of computer science people to grow this industry, so we will have to go into other fields of engineering and get people.

But you also recruit non-engineering graduates like BSc, etc?
Very little. We do recruit, but the numbers are not very large. By and large the engine for growth is recruitment of engineers.

During such times of resource crunch you do not have much alternative than looking at non-engineers and training them…
So we do that. We have a longer training programme targeted towards BScs and other non-engineering disciplines, and it takes time to get them up to certain speed. And they take longer time to mature.

Can you clear the air on the recent rumour on Infosys’s interest in Logica?
We have stated that there are no discussions going on with Logica, (pauses) currently. That’s all I can say now. We don’t know about future. Currently, there are no discussions going on with Logica. We have always stated that we are looking at acquisitions. The probability is higher for smaller acquisitions than larger ones, because smaller firms are easier to integrate, less risky and we feel a lot more confident about small acquisitions than larger acquisitions.
When I say small acquisition, typically the size can be 10% of our revenues. That’s kind of a thumb rule. If a bigger target is in front if us, we will evaluate, but there is less probability of going to the next stage.