Narayan Murthy: the father of India’s IT boom

Narayan Murthy was a pioneer in bringing American business methods to bear in his home country of India. But now the advocate for “compassionate capitalism” is embroiled in controversy.

Narayan Murthy is often described as “the father of India’s IT boom”. He’s also the father-in-law of the UK’s chancellor, Rishi Sunak, who has occasionally faced “awkward questions” about the wealth and business dealings of his super-rich relations, says The Independent. A year ago, Sunak was under scrutiny following claims that he had failed to declare his wife Akshata’s multi-million-pound business portfolio in the official register of ministerial interests, although the matter came to nothing. 

An American company in India 

The issue barely caused a ripple in India given the “strength” of the family’s reputation for business ethics built up over decades. Far more damaging for Murthy, 75, has been a recent entanglement with Amazon in pursuit of an online market potentially worth $1trn, says Bloomberg. After widespread protests, the two parties are now disbanding their lucrative seven-year-old joint venture, Prione. The business (jointly owned by Amazon and Murthy’s private investment firm, Catamaran Ventures) “began by helping local merchants get online to sell their wares”, but quickly became “a dominant vendor” itself under the Amazon Cloudtail name.

Allegations of being “in cahoots” with Amazon and “hurting the interests of his country” are at odds with Murthy’s status as a business pioneer and role model. He remains the most prominent of the seven co-founders who began the outsourcing giant, Infosys, in Pune in 1981 with just $250 in starting capital – eventually growing it to become one of India’s largest companies with $12bn in revenues and more than 200,000 employees, says the Financial Times. Infosys broke new ground in other ways too: from the get-go it “sought to distinguish itself from existing Indian businesses by promoting high governance standards, transparency and ‘compassionate capitalism’”. 

The son of a village-school physics teacher, Murthy “originally aspired to run a hydropower station” but became “fascinated with computers” while studying at the elite Indian Institute of Technology in the 1960s, says Bloomberg. Returning to India in 1974 after a spell working in Paris following graduation, he set up his first venture, Softronics, which focused on providing IT services to the local market – but soon realised that prospects were limited.

The impetus for starting Infosys was to tap the growing international market, says the FT. Its core success came from helping multinationals, including Cisco, Pfizer and Reebok, “manage their clunky IT systems”. When it floated in 1993, Infosys was described by US admirers as “an American company in India” – paving the way for a host of other Indian firms who made the country the IT services world capital during the outsourcing boom. 

A descent into bloody scraps

Murthy often describes Infosys as “his middle child” – and was praised for his acumen over standing back from it when he urged the company’s “old guard” to hand control of the company to outside management. Yet it has proved anything but a success, says the FT. In recent years, “simmering tension” over the succession and Infosys’s business direction has “spilled into public view multiple times” and the company – now routinely described as “embattled” – has been “rocked by damaging whistleblower allegations”. Exacerbating these tensions is the evident decline of the global outsourcing industry, described by one analyst as a “more bloody” business than it was a decade ago, with “everyone… fighting for deals”. 

Sunak likes to quote one of his father-in-law’s favourite sayings: “In God we trust, but everyone else needs to bring data to the table”. Despite a recent stock rally, the data hasn’t made for pretty reading of late.

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