'GST is unlikely to help improve the IT export market' says Narayana Murthy

N R Narayana Murthy’s spoke to BW People’s Himani Chandna at the first floor of his Jayanagar-based office Catamaran Ventures. Catamaran is a proprietary, sector-agnostic, family office that invests in inspirational early stage and growing companies in India and overseas. He spoke on range of issues apart from sharing his personal life experiences including the failed entrepreneurial venture.If your entrepreneurial dream has crashed, get up quickly, dust your knees and start working again, he advises. Edited excerpts:

Do you think over the years the culture of acquiring and retaining talent has changed from what it was when you incepted Infosys? 

First of all, we must remember that university education is all about learning to learn. Therefore, we decided not to expect any knowledge of computer science from the young engineering graduates that we recruited. Their competence and willingness to learn new things was sufficient for us. That is the reason we recruited civil engineers, mechanical engineers, physicists, mathematicians to become analysts and programmers. That is also the reason why we created the world’s largest corporate training facility in Mysore where, on a given day, we could train about 15 thousand engineers. Secondly, we must remember that we operate in an industry where the only constant is change.

Being an entrepreneur is relatively easy today than it was in your time. Do you agree? 

When I founded Softronics in 1976 I focused on the domestic market. I soon realized that there was hardly any domestic market for IT in India at that time. I closed Softronics, took up a job to learn about export market, and eventually I started Infosys. When I founded Infosys in 1981, we had certain types of challenges. Getting a license to import a computer was a big challenge; friction to business was huge; there was no current account convertibility; and getting a telephone connection required 7 years. Obtaining hard currency from RBI to travel abroad was very a tortuous process. Opening offices was difficult since there was no current account convertibility. Today, the challenges are different. These challenges are related to the market. Today’s challenges are about the quality of innovation that you can demonstrate in your products or services. Attracting the right quality of talent in today’s highly competitive talent market is a big challenge. So, it is difficult to say that our challenges are any tougher than the challenges faced by today’s entrepreneurs or vice-versa.

When you shut down your first entrepreneurial venture Softronics, did you feel discouraged? No, there was no sadness because I realized that there was no market for software in India of the middle seventies, and that my idea was going to fail. Therefore, I decided to move on.

What are your opinions on the latest economic reforms such as the move of demonetization and introduction of goods and services tax?

GST is a good move. But, the biggest economic reform that happened in the history of post-independent India is clearly the economic reforms of 1991 because they removed lots of friction to business. The successive governments after 1991 have been bringing about incremental improvements to reduce friction to business. However, even today, there are several areas that need reforms. For example, in the area of education, we have not reduced friction to business. Somehow, we have not learnt that economic reforms enhanced the velocity of business and that bringing reforms in the education sector will yield even richer dividends. Second, we have not yet introduced reforms to improve our agricultural productivity. Third, we have not yet attempted labour reforms that are required in factories and small businesses. When you have such tough regulations regarding retrenching labour, entrepreneurs are very hesitant to recruit labour in large numbers. A flexible hire-and-let-go policy with a good safety net is necessary if you want to create a large number of jobs. If we bring in all these reforms, the country will start accelerating its GDP growth rates.

Will GST be of any help to the IT market since the recruitment has come to a standstill? 

The IT market is mainly export-oriented where GST has no role. So, it is unlikely to help improve the IT export market.

You have often mentioned the term , ‘Compassionate Capitalism’. What it is all about?  

Since 1974 I have been convinced that the only way a society can solve the problem of poverty is through creation of jobs. That is possible only through entrepreneurship. The free enterprise system is the best environment for unhindered entrepreneurship. Capitalism is the best system to encourage free enterprise. However, in a country like India where majority of our people live in utter poverty, it is necessary that the leaders of capitalism shun vulgar display of wealth, think about the lowest level employees in instituting compensation and benefit policies, and ensure that there is fairness in allocation of benefits of a corporation amongst various levels of employees. In other words, “compassionate capitalism” is capitalism in the mind and socialism in the heart.