Narayana Murthy on Infosys after Nilekani

Nandan Nilekani has stepped down as Co- Chairman from the Infosys board to head the National ID Project as a Cabinet Minister. Speaking on life at Infosys after Nandan Nilekani, Infosys Chairman Narayana Murthy said there would now exist a Chinese wall between Nilekani and Infosys but his absence would surely create a huge void at Infosys.

Murthy said that he would retire in 2011 and added that the next chairman of Infosys could be a non-Infoscion and neither could he rule out someone of foreign origin. The nomination committee will decide on the future chairman, he said.

Here is a verbatim transcript of the exclusive show on CNBC-TV18, Remembering Nandan, with NR Narayana Murthy and Udayan Mukherjee. Also watch the accompanying video.

Udayan Mukherjee: We are calling this special appointment ‘Remembering Nandan,’ in a good way, because Nandan will no longer adorn the offices and headquarters of Infosys. This week a big transition happened at the Infosys headquarters. One of its favourite sons chose to walk away after almost 30 years of service for a bigger cause, a bigger cause to serve the nation, not just the company that he has served so well over the last many years––more than two decades.

NR Narayana Murthy––the founder and mentor of all these leading gentlemen at Infosys––talks about Nandan Nilekani. Thursday must have been a very emotional day for Murthy as he bid farewell to one of his favourite colleagues––I would imagine who adorned the Number 2 jersey, as they say, at Infosys. Number 1 and Number 2 jerseys will no longer be adorned by any of Infosys’ founders because NS Raghavan and Nandan Nilekani are no longer part of the company.

Q: What is this 1, 2 and 4 jersey numbers and how come you are 4 and Nandan is 2?

A: Even though I founded the company I had promised Patni Computer Systems (PCS)––my boss at PCS––that I would complete all my obligations to the company and then only leave. Although I resigned on December 29, 1980 I completed my obligation on March 17, 1982 and left the company on the morning of March 18, 1982 when I had gotten back both the bank guarantees that the company had given. So that’s how Raghavan became number one and Nandan became number two and Dinesh was number three and then I was number four and while we gave the employee numbers Gopalakrishnan and Shibulal were in the US and they became five and six, respectively, and Ashok Arora became seven.

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Q: So number one and number two will never be worn again by any Infosys employee?

A:As a matter of principle––yes. Nobody else will be assigned those numbers.

Q: Would you call Nandan one of your favourite colleagues amongst the founders as well?

A: Yes. I have liked all of them. There is no doubt at all but certainly Nandan was one person with whom I had lot more interactions. We used to argue quite a lot. We used to differ quite a lot. We used to appreciate each other quite a lot. It was, in some sense, a pretty close relationship.

Q: Was it a special affection because he was the youngest of the lot as well of the founding members of Infosys? He is 53. He is quite young as he walks away from Infosys.

A: He is probably the youngest of the founders. Nandan was born in 1956, Gopalakrishnan in 1955––though he was actually born in 1956 because probably his parents must have admitted him in a school saying that he is a year older as they wanted him to go to school pretty early because he was, probably, creating a lot of nuisance at home. So poor fellow is registered as 55 years old, I think Shibulal is also 55 years old, Dinesh is 55 years old, Mohan is 58 years old, Srinath is 59 or 60 years something like that.

Q: So the founders are not even waiting for the age of 60 years which is the cut-off for them to walk away. Raghavan walked away at 57 years, Nandan at 53. Is there a feeling that once you are done with giving your best to Infosys, you walk your own way?

A: Nothing like that. I did complete my 60 years and even today, even though I am 63 years, even though I am a non-Executive Chairman, I am very passionate about Infosys. I spend 12–14 hours a day here whenever I am in India. Even when I am outside India we have lots of discussions––all strategic matters are discussed. So I think it is the set of circumstances as such. Raghavan probably wanted to take is easy. He didn’t want to take the responsibility of the CEO after me because there was a possibility that he could have been considered but he did not want to be because he felt that a younger person should take that responsibility and once that happened he realized that he could as well take it easy. As far as Nandan is concerned, I think he was very passionate about serving a public cause––having a role at the national level––and we at Infosys felt that when he is passionate about something like that why not encourage him.

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Q: Was there any reluctance at the board level because Nandan was very integral to the operations as well just a few years back? Was there some attempt to hold him back, to persuade him to stay on with Infosys for a few more years?

A: Ideally, we would all have liked him to continue till he was 60. That is the year in which he had to retire. But realising that he is very passionate about getting into a new orbit, realising that his heart was in making a difference to a larger number of people in the country, we all felt that we should encourage him.

Q: Is that what your own inclinations are as well that if a duty of a national profile were to be offered to you, you would also choose the country over the company?

A: I had this opportunity in 1999. But that was the time that we had just taken the company to NASDAQ, and I said no, my duty should first be Infosys. So, I didn’t take it up.

I was 53 then in 1999 when I had a very similar opportunity, in fact, in the government. But I said I will continue with Infosys.

Q: So, you chose differently from Nandan?

A: Yes, but it all depends on the circumstances. It all depends on how you want to make a difference and in what context you want to make a difference. There is no set formula here.

Q: How integral was Nandan to operations because I believe that even as you’ve relinquished your executive responsibilities you continue to meet clients, you meet them very regularly, as Nandan would have as well?

A:Sure.

Q: Don’t you think it makes a big difference that Nandan is no longer there to interface with clients?

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A: Certainly, I think it will make a difference. But the beauty of this organisation is that heals pretty quickly. Then it rises up to the challenge. We have Ashok Vemuri, BG Srinivasan, Kakal (Chandrasekhar Kakal), Subash Dhar, V Balakrishnan and Mohandas Pai. I was in Germany last week and I met five CEOs, then I was in New York and met two CEOs.

While it is true that the departure of somebody as important as Nandan does leave an important void, the beauty of the organisation is that it quickly fills that hole and moves on.

Q: No one doubts the depth of management at Infosys, but even then when we talk to people they say Nandan has left and in two years Mr. Murthy would leave, and those shoes are very big to fill even from a client’s perspective because whatever else you say about the quality of management, Mr. Murthy and Nandan really embodied or reflected Infosys.

A: No, but let me give you another instance. Phaneesh Murthy was one of the finest sales people that this country has produced. He was my favourite. When he left Infosys, not just outside people, many of us felt that it may be extremely difficult to fill that void because he was truly an extraordinary individual.

But we managed that. We managed it so well, because other people stepped-up to the plate. For example, Mohan (Mohandas Pai) was in London for some meeting and he came back yesterday and he had gone there for some important negotiations and Mohan did a wonderful job. So, I think that while it is true that important people play a very important role or people like Nandan play a very important role, the beauty of the organisation is that it will step-up to the plate pretty quickly.

Q: You had that moment of self-doubt when Phaneesh was leaving that maybe it might cause a little bit of a ripple in the organisation?

A: Oh I did, I did. Of course, I did. But that is when it was a very difficult decision to take, but we did take. But now it is all past.

Q: Was it an emotional moment yesterday for you?

A: It was a very emotional moment for all of us for various reasons. Somebody that you have walked this journey with for 30 years––I recruited Nandan into PCS in 1979––in fact it really is 30 years and six months.

Secondly, his mother had come. This was the first time she had come to the campus. For example, my mother has not visited our campus. So Nandan’s mother, an extraordinary lady, she was there. I remember Nandan’s father, who was––he is no more––one of the most extraordinary people that I have come across. He was highly public spirited, very nationalistic, and all of that.

Thirdly, my wife Sudha was there. She doesn’t ordinarily come to the campus. Then all the wives were there. Nandan’s children were there. My son, because he is so passionate about Infosys, he is right now in Seattle, he went to our office at 4 o’clock in the morning.

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Q:To see the webcast?

A: Yes. He was working––he is a Microsoft fellow and doing his PhD at Harvard. Upto 2 o’clock he was in the office to watch the webcast. So, in that sense, it was a very emotional moment. All the families were there and it was emotional.

Q: Is it like Nandan is not so much your colleague but a part of your family?

A: Nandan, especially, is like part of our family for a very simple reason––both my wife Sudha and Nandan come from Dharwad and they are like brothers and sister. Nandan never had a sister––Sudha is like a sister to him and Nandan is like the second brother, Srinivas being the other brother who is a professor at Caltech. So Sudha and Nandan have been very close. In that sense it was different certainly for me.

Q: What was your equation with Nandan at Infosys? Was it like a mentor and a disciple? Was it like an elder brother and younger brother? Were you friends? What was your equation with him?

A: It was you can say that till couple of years back it was like boss and his colleague. Later on, I would say more like mentor but Nandan is one person with whom I had lots of laughter, lots of fun yet I was his biggest critic. I would stand up and say no I don’t agree with you but this is what you did here was not right, etc. and he had the grace to accept it. That’s what I liked about him. I was his biggest critic and he was always very graceful about it.

Q:Was he your biggest critic as well? Would he ever stand up to you and say Murthy you should have done this differently?

A:He hasn’t done that. It is to his credit.

Q:Out of respect or do you think otherwise?

A:No, because I tell you there is a very important thing here. Before I do anything important I always consult people. Even if I want to write an important letter, let us say to the Prime Minister or President of the country or something, I run it through a couple of my colleagues or at least three or four of them, many times because I believe in an enlightened democracy. I am very open minded to accept inputs from many people. Generally, I avoid putting myself in difficult situation.

Q:What was Nandan’s biggest attribute according to you?

A: I think the finest articulator that I have come across. His command over English is clearly the best at Infosys. He wrote the bestseller and as I said yesterday that’s a fact––that’s by the number of copies that his book sold but when you look at opinion, in my opinion, that book is a best book on contemporary India and the issues of contemporary India. So I would say that is his strength––articulation is his strength.

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Q:Is there a gap in the new leadership of Infosys that somebody as charismatic and articulate as Nandan is not at the helm. I am not saying this is not articulate but is that a gap?

A: Not really because Mohan is extremely articulate. He may not be as good in English as Nandan but with the depth of his knowledge, I call him the resident Socrates––his wisdom, his knowledge, his ability. He is a lawyer and a Chartered Accountant too. His ability to argue is just extraordinary. Bala for that matter, not so much in English but the kind of weighty arguments that he brings to the table, the way he marshals those arguments, the way he puts them across. He is another wonderful person. Ashok Vemuri is a fantastic articulator. So I think we have a host of people there.

Q:You think Nandan is the right man for the unique identification data (UID) projects. He loves it and you understand his passion for the project. He is the right chosen man for the project in your eyes?

A: I would think so because he is a big picture man; he is a wonderful networker; he understands technology and technology policy. He is a middle-of-the-road person, he is a consensus builder, and he has a very pleasant personality. So I would think that it is an excellent choice.

But then it is a task that is to be executed within the government and that is not an easy task. We all have to accept that. We should give Nandan that benefit of doubt, that poor fellow he is going from an enlightened democracy, from a synthetic place like Infosys where everything is ordered and ordained to be in a particular way into a place where there is lot of chaos, where there is a lot of conflicting interest, where there is a lot of vested interest, where consensus building is not easy. So we have to judge him after normalizing the situation for what it is.

Q:What is the future leadership and board of Infosys going to look like? You will be going in a couple of year’s time.

A: I will be–Claude Smadja will be retiring next year, myself and Marti G. Subrahmanyam will be retiring in 2011 then probably Deepak should be retiring in 2012 or 2013 then Rama and David perhaps in 2015 and even Jeff perhaps in 2015.

Q:But 2012 onwards what is the Infosys board going to look like with so many of the influential members going away. Will new members from the executive management step- up because Infosys believes in in-house representation in the board?

A:We haven’t come to a definitive conclusion but the discussion on the board are at this point of time veering towards a belief that we have to get to a smaller manageable board. We have to get to ask few executives on the board as possible and as few independent directors as would be needed. So, I think as we get-off the board I do think that there will be a shrinking of the board size. But it is not a done deal but this is thinking.

Q:Have you ever conceived of a time where a non-Infoscion will be a chairman of the Infosys board?

A:Yes. I think again this is not a done deal. I do believe that after I leave we are very likely to see a non-Infoscion founder as the Chairman of Infosys.

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Q:That is interesting. Could it be a non-Indian as well?

A: It could be, absolutely.

Q:You are open to that?

A:Yes, absolutely.

Q: Could it be KV Kamath who already sits on your board, a non-Infoscion, very good pedigree and excellent track record. Is he being groomed in a sense to take over from you because he is sharing your stature in industry?

A: I have tremendous admiration and affection for KV (Kamath). I have worked as an independent director of ICICI Bank before I went on to Reserve Bank of India (RBI). I was the Chairman of the Governance Committee. I had lots of interaction. KV made a wonderful presentation on his dream of making ICICI bank a universal bank and he has done it. So he is one of the finest leaders that this country has produced.

But at this point of time we have not decided. I just said that the thinking at this point in time is that after I retire on August 20, 2011 that we should look at an outsider as a chairman. So I cannot say who it will be because that is for the Nominations Committee to decide. Jeff Lehman is the chairman of the Nominations Committee. He is a wonderful fellow. I do not think you would like it if I usurped his powers and say Mr. X or Ms. Y will be the Chairperson.

Q:What will your equation with Nandan be now because he will not come to the campus?

A: My daughter Akshata is getting married on August 30 in Bangalore. I have requested him to come for the marriage. I am sure he will come. Then as one of the contributors to Infosys’ Science Foundation, he will definitely attend the awards function on January 4, 2010 when the Prime Minister will award the five prizes. These two, I am certain.

But then I think as far as possible the Infosys people and Nandan will try to keep a certain distance because we want to make sure that he is absolutely free to operate very successfully in his new role.

Q:Are you alluding to the point that there might be some conflict of interest?

A:No, there will never be a conflict of interest because Infosys will never do anything unethical; Nandan will never do anything unethical. We don’t even want to be seen. This is my own predilection that we should have as little contact.

Q:Chinese wall––just lead your own lives now, Infosys the company and Nandan Nilekani the individual?

A:I would think so. Yes, definitely.

Q:Was there a personal gift that you gave him for farewell yesterday?

A: I was the one who suggested the jersey. Actually, it was my son Rohan. He asked me, what gift are you people giving? I said we are going to give him a laptop. He said come on, that is funny. All these American football stars and baseball stars when they retire, they get their jersey with a number and he said why don’t you do that?

So, I said, Rohan that is a wonderful idea and then I suggested it and then when he came for tea before the function, he came in his shirt and all of that. I said Nandan, I would like you to change to a dress and I gave him the t-shirt and he put on the t-shirt.

Q:White and with blue and the number 2 at the back?

A:Yes.

Q:With Infosys written on it, is it?

A:Yes. Nandan and then the number and Infosys in the front.

Q: He would have worn it very proudly?

A:He did, oh yes. In fact he asked, I hope I have a few more t-shirts like this. We said don’t worry you will have. I think then probably it was Shibu (Shibulal) who gave him four or five more such t-shirts, yes.

Q:That is what he walked away with?

A: No, and then we had made this ceramic cups with Nandan’s photograph and some Infosys stuff and all. We gave to his children; we gave to his wife, and his mother.

Q:But he will always be remembered in Infosys as one of its favourite blue-eyed boys, right?

A: Oh absolutely.