SD Shibulal, COO at Indian outsourcing giant Infosys, will soon step up to the role of CEO and lead the transformation to Infosys 3.0. Jon Bernstein talks to the man aiming to build ‘tomorrow’s enterprise’
SD Shibulal finds himself in a rather peculiar position. Preparing to take charge of the company he helped found 30 years ago, he already knows the date of his own departure.
Shibulal was named CEO of Infosys, the Indian consulting and services company, in early June and will formally take over on 21 August, but given he is now 56 he will have to vacate his post by 1 March 2015, his 60th birthday.
So, why retire so soon? "Infosys has a retirement age of 60," he straight bats. "It’s a decision we took a long time back." But why give yourself so little time in the top job when business leaders around the world are working well into their seventh decade?
"In India, even if you look at the public sector, the retirement age is between 55 and 60. I would think this must have something to do with it," he says.
"[Remember] the average life expectancy used to be much lower. And, anyway, companies like Infosys have very strong leadership at all levels so everybody really needs to get a chance… new people do bring in new ideas, new philosophies, new ways of thinking," he adds.
Shibulal is a tall man whose greying moustache the only physical indication that retirement age is approaching. He walks at speed, invariably with an entourage in his wake. When we talk, it is across a low table in his spacious office in Infosys’s 85-acre campus in Bangalore, southern India.
Located in the heart of Electronics City (one the country’s two high-tech hubs; the other is in Hyderabad), the campus has echoes of its Silicon Valley counterparts, but in many respects it has greater ambition and scale.
There is a replica Sydney Opera House and a Louvre Pyramid – which serve as a food hall and media centre, respectively – among the architectural offerings. There is also a vast innovation centre, mainly tinted glass and steel but with a huge, round window at its centre that is universally referred to as ‘the washing machine’.
The experience is oddly alienating. The Bangalore campus certainly doesn’t feel like the India on the other side of security gates and can barely be described as India-lite; rather, it feels part of that nation-less state called ‘Globalisation’.
Regardless, the 20,000 employees appear to want for nothing once inside this gated community – there are even 2,700 bicycles to get them from one side of the campus to the other, and more than 1,000 green, logo-ed umbrellas offering protection from the rain in monsoon season and from the sun during the rest of the year.
Part of the Infosys campus in Bangalore
The Bangalore campus, one of 11 across India, is designed not only to be a place of work – from call centres to R&D labs – but also a symbol of the company’s success: these are "the temples of modern Indian", to borrow former Prime Minister Jawaharlal Nehru’s phrase from an earlier era.
Today the firm turns over $6bn a year, employs 131,000 people operating in 64 locations around the world and boasts engineering campuses from Monterrey to Shanghai. Almost all, 97%, of its revenue comes from outside India; two-thirds from the United States and nearly a quarter from Europe.
According to company fable, Infosys Technologies Ltd began life in 1981 with just RS1,000 (£140) in seed funding. There were seven founders and Shibulal, with a master’s degree in Physics and working knowledge of several programming languages, was among them.
His stay at Infosys hasn’t been uninterrupted. In 1991 he left to take up a post at Sun Microsystems where he helped create that firm’s first e-commerce product. He returned to Infosys in 1997 to establish and head up its Internet Consultancy division.
A decade later he was named chief operating officer and now he is the fourth of the seven founders to become chief executive. Once he and S Gopalkrishnan, his immediate predecessor as CEO, exit in less than four years’ time, none of the company’s founders will remain.
Man with a plan
Understandably for a man in a hurry, Shibulal has a plan.
"In the last 12 months we have rolled out a new strategy called Building Tomorrow’s Enterprise," he says of a proposition also referred to as Infosys 3.0. "From our perspective, it is about creating the next-generation consulting and systems-integration company. If you look at the industry there is a convergence happening. The Indian firms were traditionally pioneers of the global delivery model and are now moving into consulting, systems integration and the cloud space.
"Infosys 3.0 is meant to create the next-generation global consulting and systems-integrations corporation on a platform of the global delivery model, consulting and cloud. If there’s one thing I want to say at the end of this, I will want to say that I moved Infosys closer to that objective," he adds.
The "global delivery model" is shorthand for taking a piece of work, breaking it down into its constituent parts, doing each part where it makes sense and is most cost-effective, and putting it back together again. It describes the platform on which India’s transition to an IT powerhouse was built.
Other subcontinent firms such as HCL Infosystems, Wipro and Tata Consultancy Services have prospered by using it too, and it’s immortalised in Thomas Friedman’s 2005 book The Earth is Flat: The Globalised World in the Twenty-First Century. Friedman, a Pulitzer Prize-winning journalist, got the inspiration for the book’s title following a conversation with one of Shibulal’s predecessors, Nandan Nilekani.
Nilekani insisted that the world had been "flattened" by technology, and the more Friedman heard the more he was convinced.
"Clearly Nandan was right," he wrote. "It is now possible for more people than ever to collaborate and compete in real time with more other people on more different kinds of work from more different corners of the planet and on a more equal footing than at any previous time in the history of the world – using computers, email, fibre-optic networks, teleconferencing, and dynamic new software."
IT business process outsourcing (BPO) now accounts for a quarter of all Indian exports while outsourcing as a whole accounts for 7% of the nation’s gross domestic product (GDP).
But now Shibulal is keen to effect a change: being a services company alone will no longer do. According to reports in the Indian press, two-thirds of the company’s revenues today come from outsourcing software and business processes. Senior management is understood to want to cap it at 30%.
SD Shibulal, Infosys
"Six years back our consulting revenue was very, very small," he says. "Now consulting and systems integration account for about 20-22% [of our business]. The number of consultants we have today is between 2,500 and 3,000 – 10,000 would be a good number. So that’s one part of the journey."
Move into the cloud
As with others in the sector, the opportunities of cloud computing excites Infosys, and industry forecasts suggest that 60% of enterprise workload will move into the cloud, private or public, in five to seven years. Software as services is not a new concept, nor is centralised storage, but the ubiquity of high-speed network access from anywhere to anywhere has given both a new lease of life. Because the cloud can be scaled, you can do things faster and, as a consequence, do things differently. That, at least, is the theory.
"When we talk about the cloud, that’s a symbolic thing. The real space is the business innovation space," Shibulal says.
"So if you look at this 10 years back we were mostly in business operations – we used to do application development and maintenance. Now we are trying to become an enterprise player because if you look at our clients they do all of these things – they do business operations, business transformation and products and platforms."
Is this move in part a result of a fear that the benefits of globalisation will soon pass from India to other, cheaper parts of the world?
Paradoxically, as many Indians become richer and earn higher salaries on the back of the success of the services sector, there’s a likelihood that its workforce becomes too expensive. At that point, highly educated labour in Africa, South America or the Middle East – perhaps even in Pakistan and Bangladesh – will become the places to go.
Shibulal remains unfazed and insists that three things play to India’s advantage: the size of the talent pool, the pervasiveness of spoken English and the management depth. "India produces 500,000 engineers, Pakistan probably produces 5,000. If you go into Pakistan you will probably have to appoint every single engineer to set up one centre."
He also has a response regarding the threat posed by China, India’s Asian neighbour with an economy growing at an even faster rate. "Our global delivery model is not India-centric," he says. "Yes, it originated in India but today we have 3,000 people in China – we are spending $130m building a campus in Shanghai; we have 1,000-people capacity in the Philippines; we have 1,000-people capacity in the Czech Republic; and we have 500 people in Mexico."
Shibulal is a rich man – a billionaire and 71st on Forbes’ India rich list – in a country where 300 million people live in poverty. Is the success of India’s IT sector being felt by those lower down the social order or is it, as some research suggests, merely entrenching class and caste inequity? Shibulal firmly believes it is the former.
"It’s true that below the poverty line the numbers have not come down to a healthy level. So it is a challenge," he says. "But as long as the GDP growth is happening the benefits of that growth is slowly starting to trickle down."
Does he believe it is trickling down? "That’s the only way you can have middle class that’s increasing," he replies. Even though some people will always be excluded? "That’s a universal problem."
So what comes next for Infosys, or rather, who comes next for a company that invariably appoints from within? The company’s Leadership Institute has recently been subject to a complete overhaul, suggesting that the succession planning has already begun.
Those in senior roles, 550 in total, are split into three management tiers. "The tier-one leaders we have are running $2bn businesses," notes Shibulal. "Any one of them is capable of doing any kind of job."
Having spent time outside the company, at Sun, I wonder if he agrees that the 30 year-old Infosys would benefit from fresh blood at the top. He counters by reeling off a list of senior executives who have been brought in from the outside. As for the idea of recruiting a CEO externally, he simply replies: "Anything is possible. Anything is possible."
Jon Bernstein is the deputy editor of the New Statesman.