Murthy's law

Infosys chairman, Narayana Murthy give his views on the India versus China debate in the tech battle of the future.

Looking forward 10 or 20 years, how big a part of the Indian economy will software and technology become percentage-wise?

The ambition of the Indian political leaders, corporate leaders and the bureaucracy is that by 2008 we should have software exports of about $50 billion and a domestic market of $20 billion. If we have Indian GDP growth of around 6-7%, you are looking at a GDP of $800 billion. Then if you include IT-enabled services, you are looking at $85 billion of knowledge-economy contribution, and that's about 10%. That is not bad. It will also be about 40% of total exports.

Can Indian tech companies move up the value chain and produce much more proprietary, world class software?

Infosys is producing world class customized applications for our customers. But if your question is: would India be in a position to produce products of its own, that's a different question. India has primarily been involved in software development because that's where its competitive advantages lie. The large talent, the English-speaking capabilities, the conceptual thinking, and the timezone differences that allow us to produce 24 hours, these are our inherent advantages in developmental software. These are not marketing advantages, or brand equity advantages. Indian firms have to learn to sell themselves better. It will happen, but it will take time.

You think the lack of branding and marketing skills are the big problem?

Absolutely. It is the problem, along with large scale distribution.

From a cultural perspective, why do think branding is such a problem for Indian firms?

India has always glorified inward-looking attitudes, such meditation and soul-searching. That's why. But it is changing.

Tata has created a voice-activated email. Surely this is an example of India conceptualizing and creating products higher up the value chain?

There are so many small companies operating in India that have very good ideas. It is one thing to have very good ideas, but another to take it to the market and make it a success on a global level. That requires a lot of skills which are still scarce in India. But it will happen.

How will India position itself vis-a-vis China in the technology revolution?

China has been extraordinarily successful in attracting investments in hardware; on the other hand, India has concentrated in software. I think these two countries will become stronger in these areas. At this point in time, India has very clear advantages over China in software thanks to English, and the focus of Indian companies on quality processes and methodologies, and in project management. We have five to seven year advantage as long as we keep using speed and imagination in our execution.

How does India break into the Chinese software market, which is based around ideograms rather than the Roman alphabet?

I am great admirer of China, and my feeling is it would be great to bring some Indian and Chinese companies together. As far as attacking the domestic Chinese market is concerned, the Chinese people could do the front-ending, and the rest of the job  the back-ending and project management  could be done by Indian staff. As far as the exports are concerned, the Indians could do the front-ending, the project management and the Chinese could do the back-ending (the technology part). So we two nations can bring great complementary strengths to the table. But someone has to bring them together.

Do you see there being competition between Roman alphabet-based softwares and Chinese ideogram software  in terms of which becomes the standard?

My view is that voice-activated methods have to become the primary method to interact with computers. That's how you will transcend the problems of developing countries and that's where the large populations are. In a country like India, less than 50% of people are literate, so this will be important. We also need systems that will automatically translate one language to another. If we did that we will open up a great market in the developing countries.

Is India positioned to be the creator of this piece of very complex software?

There is no doubt at all. My own company is working with several US companies and Japanese ones in very advanced leading edge applications  although I am not at liberty to discuss them. Certainly the Indian companies and Indian people are very skilled in these applications.

Will the US continue to be the leader in technology or can it be displaced by Asia?

You know, the US has something unique: it is an open society, and it absorbs different cultures extremely well, and it is competitive, and creates innovation. I don't know if any other country can replicate this. It is difficult for me to imagine any other country replacing the US as the heaven for opportunities even by 2020. I think the US will continue to be the leader in innovation, simply because it attracts the best people from around the world.

We have gone through a tech boom and bust. Are you optimistic that things will improve?

I am basically an optimist. I have seen great times and not so great times. When we started this company in 1981 with $250, we were long on hope, on energy, optimism and hard work. Today we have a market capitalization of $6 billion. Thus I have got to be an optimist and believe in future opportunities. The fact we have gone through some downturn does not worry me.

I am sure there will be good times ahead. In the Hindu culture, the way we celebrate the New Year festival is to eat sugar and neem, which is bitter. We as children would try to resist and try and take only sugar, the good stuff. My father would say no. You have to take an equal amount of neem and sugar  that symbolizes that you are prepared to take the good and not so good during the coming year. So as a person who believes in that, I am not fazed at all.

This is one of five keynote interviews in the special 5th Anniversary issue of FinanceAsia. The other keynote interviews are with BG Lee (Singapore's Deputy Prime Minister), John Bond (Chairman, HSBC), Jaime Augusto Zobel de Ayala (President, Ayala Corp) and Kim Jung Tae (CEO, Kookmin Bank)

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