Infy's Four Fast Man: (From left) N.R. Narayana Murthy, Chairman and Chief Mentor, T.V. Mohandas Pai, Chief Financial Officer, Nandan Nilekani, President and CEO, and S. Gopalakrishnan (Kris), COO

18 kilometres from Bangalore's city-centre, down Hosur Road with its glass-and-chrome monuments to the city's reigning business is a company that sees itself as India's Wal-Mart. If Bangalore is the heart of the IT Nation India wants to be, the traffic-clogged road is one of its main arteries (and it is in sore need of a bypass). Heads of state have travelled down this technology boulevard to visit the company, as have chief executives of multinational corporations, ambassadors of and journalists from countries large and small, Indian politicians and businessmen, schoolchildren out on field trips, even the odd film star or two. All have marvelled at the manicured lawns, the extensive food-courts, a Grecian amphitheatre aptly named Pythagoras, a futuristic experience theatre, and the other architectural wonders that have to be described thus simply because most Indian companies cannot claim to have anything of the kind, and nearly all of the few that can were inspired by this company. There's little visible evidence, though, of its link with Wal-Mart. The retail giant closed 2003 with revenues of $256.33 billion (around Rs 1,200,000 crore, 43 per cent of India's Gross Domestic Product for 2003-04), profits of $9.05 billion (around Rs 42000 crore), and 1.4 million employees. The Bangalore company closed 2003-04 with revenues of Rs 4852.95 crore, profits of Rs 1,243.63 crore, and 25,634 employees.

It isn't bravado that makes Infosys Technologies see itself as India's Wal-Mart, explains the company's CEO Nandan M. Nilekani; it is sound business logic. Nilekani is a cheery 49-year old; a graduate of Indian Institute of Technology, Bombay, he is one of the company's six co-founders, and since March 2002 has served as its CEO, President, and Managing Director. He has obviously thought long and hard about the Wal-Mart thing and launches into a rather professorial exposition of the strategy. At the core of this explanation are what Nilekani terms business platforms, "scalable engines" that help a company do something well, very well. "Wal-Mart has a scalable engine for retailing," he says. "Dell has one for (direct selling) technology products." Nilekani peppers his discourse with facts: Wal-Mart did not start selling groceries till 1998 but now accounts for 15 per cent of groceries sold in the US; Wal-Mart started selling petrol (gasoline in its lingo) in 1997 and now accounts for 7 per cent of the commodity sold in the US. "We have a scalable engine for software services," he concludes. "Scalability is the name of the game," adds N.R. Narayana Murthy, Chairman and Chief Mentor, Infosys, who does his reputation of being an obsessive long-term manager no harm at all by observing that it is possible that the company will employ 50,000 people in India and 20,000 in China in the next three-to-five years (the company has subsidiaries in China and Australia). "We have a 4,000-bed training campus," he says, referring to the Infosys Leadership Institute in Mysore. "Three-to-four years from now, we may well have to train 40,000 people."

There's a price to pay for the single-minded pursuit of scale: the product or service the company sells becomes a commodity, and profit margins plummet. To avoid this fate, Infosys has embarked on a six-pronged differentiation strategy: applying the global delivery model that works so well for it in application development to consulting (it invested $20 million, around Rs 925 crore, and created Infosys Consulting in April this year); bundling business processes, technology, and transactions into one service that delivers business productivity; experimenting with the global delivery model of the future; evangelising a new model of sourcing; offering companies business solutions; and leveraging alliances with technology companies big and small (think Microsoft, think Yantra) to ensure that solutions are built around existing technologies, when available. Some of these, explains S. Gopalakrishnan, Chief Operating Officer, Infosys, will help the company "bid for larger projects". Others, will establish it as a thought leader in the outsourcing space. And still others, "disrupt the business of consulting the same way we did the business of application development."

Some strands of this Wal-Mart-plus strategy are almost as old as, well, Infosys' Heritage Building (1994-vintage). Others are more recent, but it is only now that everything has come together into a greater whole. It is almost as if, for the first time since the early 2000s when India's software services companies discovered that they too were vulnerable to long-term business cycles, Infosys has a clear idea of where it wants to be in the future, and how it plans to get there.

The software services business looks simple from the outside as indeed, most businesses, including magazine publishing do. Companies slap together a development team in India, nab contracts in the US, Europe, or Japan (everywhere else is largely an afterthought even today), offshore the work to India, then, after the project is done implement it onsite with a small team. The seeming simplicity of this model has been the undoing of entrepreneurs, including defecting senior executives from companies such as Infosys, Wipro, and TCS, who jumped into the business with dollar dreams in their eyes. Companies, analysts, and consultants who track trends in the industry have come around to the view that the prerequisites for success in the software business can be distilled into two key skills: the ability to offer a range of services and offer them in increasing volumes and the ability to take a process, offshore it, and then deliver the desired result to the customer (this part is roughly what the industry calls the Global Delivery Model).

THE SCALE INITIATIVES

The company has built the processes to recruit the kind of numbers it will need. Last year, Infosys received over 1 million applications, tested around 130,000 candidates, and hired around 10,000. This year, it will hire between 8,000 and 10,000 Infosys can build a full-fledged campus (500,000 square feet of built-up area) in six to nine months. As on June 30, 2004, the company had work in progress of some 2.7 million square feet Process Repository@Infosys for Delivering Excellence, PRIDE isn't just something that helps everyone work the Infosys way; it also doubles up as a development environment Some 60-65 per cent of Infosys' processes are completely digital Late last year, Infosys broke itself up into what one executive calls "many small Infosyses", some 17 independent business units (IBUs) and Enterprise Capability Units (ECUs). Nilekani claims this has created "multiple engines of growth" Infosys can train numbers and how! Its leadership institute at Mysore can accommodate 4,000 people (in residential programmes). Last year, the company ran around 1,500 management development and 2,000 technical development programmes

DIFFERENTIATION INITIATIVES

Infosys Consulting, Inc. is what Nilekani terms a "quasi-acquisition model". Rather than acquire a consulting firm in the US, the company has hired a selection of senior consultants, many brands in their own right, and incentivised them to grow the offshore business The company's new structure makes it possible for the business units to develop and market business solutions unique to their industries Infosys Australia is working on a new global delivery model that involves substantial work being done onshore Infosys is playing evangelist to a new model of sourcing it calls modular outsourcing Infosys is leveraging partnerships with Microsoft, Oracle, and SAP Infosys and Progeon, its IT-enabled services subsidiary, are working on delivering business productivity by bundling business processes, technology, and transactions

FIVE TO EIGHT YEAR STRATEGIC PLANNING PROCESS

ANNUAL STRATEGIC PLANNING: Identification of themes relevant to the company. STRATEGIC IMPLEMENTATION: InfyPlus, a change management programme COMPETITIVE ANALYSIS: A five-year model of the competition (factors in types of competition, such as other Indian companies and multinationals, and individual competitors, such as Wipro and IBM) SCENARIO PLANNING: A what-if exercise that looks at everything from the rupee-dollar dynamics to new technologies

THREE-YEAR BUSINESS PLANNING PROCESS

BUSINESS PLANNING: Each business unit has a very specific plan. GOAL ALIGNMENT: A mechanism to ensure units are moving towards stated goals PORTFOLIO MANAGEMENT: An analysis of the business units; investment-decisions are based on this FIVE-YEAR MODELLING: A quantitative model of the company (refined enough to come up with the implications of a particular decision on profitability)

CURRENT YEAR OPERATIONS ASSURANCE PROCESS

RESOURCE PLANNING: Space and infrastructure requirements BUDGETING: A process involving quarterly realignment for the following four quarters RISK MANAGEMENT: A robust model that incorporates an eight-step risk management process and which can combat four types of fisk (strategic, operational, reporting, and compliance) at four levels (entity, business division, functional, and subsidiary) OPERATIONAL REVIEW

If this magazine were a management journal-it thankfully isn't that-this is where this composition would depart from the style of popular business journalism and launch into a jargon-filled description of how Infosys has, or is in the process of institutionalising these two abilities. We will remain content with a graphical representation of the thrumming corporate planning engine that makes it possible (See the Five to Eight Year Strategic Planning Process on page 43). This is the domain of Sanjay Purohit, a 38-year-old engineer who once worked for Tata Sons auditing the quality processes of all companies belonging to the Tata Group. These days, he is the custodian of a planning process that spans three time-horizons, one year, three years, and five-to-eight years, and, among other things maintains a highly refined mathematical model of Infosys (Want to know the impact of a certain decision on the company's profitability in two years? Ask Purohit) and rudimentary ones of around 10 competitors, Indian and multinational (Wipro, TCS, and IBM are there). One of Purohit's responsibilities is to ensure that the three temporal horizons are aligned. Another is to run the whole process like a democracy. For instance, his department starts work on the five-to-eight year strategic planning process every July; it scans the environment, studies the competition, crunches its models and then makes a presentation to the board; this is followed by a presentation to the company's top 80, then top 200 managers.

Bigger, not necessarily better: TCS' S. Ramadorai (L) and Wipro's Azim Premji head firms that are larger than Infosys

The best strategy, to paraphrase management theorist Alfred Chandler-Honest, this is the last reference to management in this article; this writer's own preference in Chandlers is more Raymond than Alfred-is wasted without the right structure. In November 2003, Infosys restructured itself into 17 independent business units (IBUs) and enterprise capability units (ECUs).

The result of this strategy-structure interplay (each IBU or ECU, for instance, has its own detailed three-year business plan) is a set of requirements: of skills that need to be acquired, markets that need to be penetrated, people who need to be hired, campuses that need to be built, and money that needs to be spent. Mohandas Pai, the company's CFO who doubles up as the man responsible for infrastructure, acquires land and builds campuses on the basis of this. Hema Ravichandar, Infosys' head of hr tweaks her recruitment engine-it processed over a million applications in 2003-04-accordingly. And everything, the building, the hiring, the training, revolves around a process that is, more often than not, digital. Then, that's only apt.

Sivshankar J. is a techie's techie. The ever-smiling bearded 44-year- old is the company's head of information systems and he and his team of 200 have digitised almost 65 per cent of Infosys' internal processes. In layspeak that means that in the case of most processes, the company has a nervous system that ensures that something is done just the way it is meant to be, every time. A sample: if a project manager forgets to get the budget for a project approved, he cannot get anyone working on the project to travel; worse, the people assigned to the project automatically revert to the bench. Now, an organisation of 200 can have one or two people who track such things manually; an organisation of 25,000 cannot; it needs systems, and it needs systems that can talk to other systems. The project-travel-bench example is part of a larger order to receipt (OTR) system and Sivshankar is quick to point out that the system gives enough time for the project manager to get his project approved. "The system will block the ticket but it will not issue it," he says. "The objective is not to get in the way."

Sometime in July 2003, Nilekani thought it would be a good idea to extend this systems-driven approach to work processes. The result, which went live in March this year is PR@IDE (Process Repository @Infosys for Delivering Excellence). From creating a proposal for a customer to designing an integration process to assimilate an acquisition, PR@IDE is an online, and much-more advanced version of everything from the ubiquitous style manual floating around newspaper offices to the renowned Toyota Production System, the pinnacle of manufacturing perfection. It is also linked to the company's knowledge management system and can not only list the tools that can be used in a process, but take the user to the relevant development environment. That's something: in an industry well-known for chaotic processes, it ensures that everyone within the company works the Infosys way, right down to the code jocks.

Circa June 2004, Infosys has enough benefits of scale to display. Differentia-tion, Nilekani admits, will take some time to pay off, maybe two or three years. And when it does it will likely manifest itself as an increase in the company's revenue productivity (revenue per employee). This, when the analyst community is convinced that the company is ahead of its peers on this metric. "In terms of margins (profitability) and employee productivity, Infosys is well ahead of Wipro and TCS," says Chandan Desai, a director at Mumbai-brokerage TAIB Securities. Nilekani is right: Infosys Consulting is four months old; the emphasis on business solutions has been around for some time, but has come into its own only after the November 2003 restructuring; the global delivery model of the future is a recent project (it is happening at Infosys Australia, which the company acquired earlier this year); the modular outsourcing thingamajig was unveiled by the company last May and the integrated it and it-enabled services offering is of recent vintage too.

Hema Ravichandar HR Head/Infosys

Her department processed over a million applicants last year, and hired 10,000

That could explain why a senior executive at one of the main competitors dismisses Infosys as a company still "over-dependant on application, maintenance and development" and "hugely exposed to banking, insurance, and financial services". Both are accurate observations: for the three months ended June 30, 2004, development and maintenance accounted for 55 per cent of Infosys' revenues; insurance, banking and financial services for 34 per cent. Wipro has a more diversified revenue pie and TCS is far bigger. Still, Infosys is a favourite on D-street. Analysts point to the company's performance in 2001-02 and 2002-03, when most other software companies, including its peers stumbled, as reason for this bias. "While TCS has the scale, Infosys has the efficiency," says Sandeep Shenoy, the head of research at Mumbai brokerage Pioneer Intermediaries, who expects the latter to overtake the former in terms of revenues and profits in the next two-to-three years. Infosys' senior managers refuse to be drawn into a who-is-bigger discussion, but it is evident that they are convinced the Wal-Mart-plus approach will work. "The results are there," says Murthy referring to the fact that the company has grown in times good and bad. He pauses, as if running all the initiatives the company is working on through his mind. "It will happen."

-additional reporting by Narendra Nathan