CNN's Andrew Stevens meets with Nandan Nilekani

As part of its live business programming initiative, ‘India Means Business’, CNN’s Andrew Stevens meets with Nandan Nilekani on a special edition of Talk Asia today. The co-founder of Infosys Technologies, the first Indian IT company to list on the NASDAQ, Nilekani is now ready to launch his debut book ‘Imagining India--Ideas for the new Century’. Nilekani speaks to Talk Asia about the impact of the global economic crisis on India and where the country is heading.


**Please credit ‘CNN Talk Asia’ when using any quotes from this interview.**


Below is the interview transcript:

Andrew Stevens, the host – AS

Nandan Nilekani, the guest - NN


AS: Hello, I’m Andrew Stevens in New Delhi. As part of CNN’s India Means Business week, I’m with the man who’s at the forefront of India’s IT Revolution. He’s known as the Bill Gates of India, the software entrepreneur, Nandan Nilekani. This is Talk Asia.


AS: This is the nerve center of India’s most high profile companies. Infosys is an IT and outsourcing giant with venues of $4 billion and workforce of almost 100, 000 people. It works in diverse sectors, from hospitality to banking to aerospace and its meteoric growth tracks the rise of India as an economic tiger. By 2010 IT and outsourcing is to account for 8% of GDP and employ 10 million people, that’s according to an industry consortium. In turn the industry itself has spawned a new generation of young Indians with disposable income and independence. The average age of an Infosys employee if 26. It’s all a long way from the humble beginnings of Infosys back in 1981 when seven partners launched the company from this office with just $250. These days the firm is lead by this man, co-founder Nandan Nilekani. He helped lead Infosys to its listing on the NASDAQ, the first by an Indian IT company. And his prevailing ethos on leveling the playing field inspired Thomas Freidman’s bestseller The World is Flat.


AS: Nandan Nilekani, thanks so much for joining us here at Talk Asia. Now we just heard the world is flat, the Tom Friedman book and I guess if you take an economic perspective on this, the world is getting rapidly downhill. What do you think the impact is going to be of this impending global recession on India?


NN: Well, I think India is certainly going to be impacted. I think we had several years of fantastic economic growth, growing at 8, 9 per cent and I think that will definitely slow down. I think our companies and our consumers are facing a liquidity crunch which is related to this global issue. So I think we are going to be impacted. At the same time I think the fundamentals of India, our young population, our entrepreneurs, our high savings rate. I think those are very much in place, so I think as soon as things stabilize, I think India will get back onto the growth curve.


AS: Well the India Finance Minister says all India needs is a little bit of confidence and it can have 9 per cent growth in 2009. Do you buy that?


NN: Well I don’t know in which year it will happen (AS: Well, he’s saying next year.) Ok, that, I’m not a soothsayer on that, but fundamentally, as I said, the combination of demographics, savings, the entrepreneurs and our global advantages has absolutely got the potential for India to grow at 9 per cent in the long term.


AS: Are you hopeful that from the fall-out of this crisis there will be a truly adequate, and that’s the best term I can use at this stage, regulatory framework for the global financial system? Or do you think we’re going to go back to that piecemeal, various countries doing various solutions?


NN: No I think you know. I don’t think countries will secede their right to regulate themselves to an international body so I don’t think we’ll have a super-regulator in the world. But definitely, the level of co-ordination among countries to have common regulation and collaborative regulation is going to go up. And more importantly, I think this also, I think for the first time with the G20 meeting which happened in Washington. I think the recognition of countries like India that they should be at the head table of conversation on redesigning the global architecture, I think that now is very apparent. So in some sense this is a seminal moment. Apart from the crisis, is the recognition of countries like India should be at the top table of discussions.


AS: Do you think India is prepared enough to be at the top table?


NN: I think so. I think there is a clear strategy. I think the Indian leadership recognizes we are at a seminal point in the balancing of globalization and the force of globalization and I think they have a view across all our engagements to make sure that India puts its best foot forward in the new architecture.


AS: In the Indian experience, what do you think India can bring to bear on an International scale that would need to be listened to?


NN: First of all, I think international bodies must give India the weight equal to its economic size because many of these bodies like the G8 or all the other institutions. G8 was set up later but if you go back to Brecken Woods, they are 60 years old. And they don’t reflect today’s economic strengths of countries like India and, of course of China.


AS: But what does India bring to the table? In forms of solution, in forms of…


NN: No I think India has it’s, it’s representing a very large country, one of the world’s largest populations, a county that has been able to marry democracy with development, 8 per cent growth with democracy. It’s an open society. It has been able to manage diversity. It has done an excellent job of sequencing its own financial reforms. I think we have an excellent regulatory structure. For example, in India, there is only one regulator for the insurance industry. For the entire country. For the U.S there is one in each state. There are 50 regulators! So I think a regulator environment for stock markets, for insurance, for pension, is actually very sophisticated. And we have shown how to sequence markets into a society.


Barack Obama speech on 16th October 2008: Instead of giving tax credits to, and tax breaks, to companies that shift jobs overseas, what we’re going to do is say to American companies for each new employee you hire, in the United States over the next two years, you are going to get a tax break. That makes sense.


AS: Is this a form of protectionism?


NN: No I don’t think so. I think that’s a very fair policy. I think that if a country, a company in any given country wants to create jobs and you want to create some kind of an economic incentive I think that’s a very fair thing. I think…


AS: Doesn’t that chance the playing field?


NN: I don’t think so, I think what people have to realize it that a value proposition combines availability of people with intellectual property with value for money so we just make a value proposition compelling enough for people to want to buy our services.


AS: Four or five years ago there was a level of animosity towards the Indian outsourcing industry. Do you think there is still some level of ill-feeling towards the outsourcing industry?


NN: I don’t think so I think, I think people realize the value that we bring. People realize that it’s a win-win. You know, the same, the job created her also consume Western products, we buy our planes from Boeing and Airbus, we buy our hamburgers at McDonald’s so it’s a two-way street so I think if India grows rapidly, I think it’s going to create markets for global companies. So people realize it’s a win-win on both sides.

00:08:27


AS: I want to bring the impact of outsourcing closer to home, to India now. It is a young person’s industry. Infosys, for example, has 100,000 employees and the average age is 26 years old. They have a much higher disposable income which leads to a higher economic independence, social independence then perhaps their parents did. (NN: Absolutely) Do you think the outsourcing industry is changing Indian culture?


NN: Well, I think certainly it is having an impact. Of course, the number of people in the industry may be a couple of million which in the population of a billion is not much but they are younger, they are much more globalised, they are more free spending. They buy things, they go to malls. At the same time, you will be amazed but I am finding a lot of these youngsters are very socially conscious and want to do something for their society.


AS: You’re watching Talk Asia, our special guest this day is Nandan Nilekani, the co-chairman, indeed the co-founder of probably the best known name in global outsourcing Infosys. We’ll be back right after this break.


AS: It’s 9:30am in New Delhi, Nandan Nilekani arrives without fanfare at a summit organized by the World Economic Forum.


AS: The 53 year old, was named as one of the world’s most influential people by Time Magazine. He advises the Indian government on the environment. He also serves on London’s Olympic Committee but today it’s the economy. (Speaker: I can see the appeal of Nandan Nilekani that we have a full hall at 9:30 on Sunday morning. NN: For those that have not been empowered with the right education, the right health, the right environment, the right job, the right markets, they’ve actually been further left behind.)

Growing up in Bangalore, the soft-ware engineer joined a computer firm in 1978 where he met Narayan Murthy. Three years later, they launched Infosys, with Murthy serving as CEO.


AS: Back in 1981 did you have any idea, any inkling you were onto something which would become this big?


NN: We had no idea. I don’t think we realised. Certainly I didn’t. I was just 25 at that time and I didn’t realise the import of what we were doing. But one thing was that all of us had such total faith in Narayan Murthy that we would follow him if he said jump off this cliff here, I would probably have done that too! So we had complete faith in his leadership. And we said this is a great person and a great leader.


AS: What were you going to, what did you think you were going to though with Infosys?


NN: It was very clear; we knew there was going to be a global approach in software. We knew that India was going to be a huge talent pool and we felt the need to create a world-class professional company which could really marry these two things. That was very clear from day one.


AS: A world company which would be doing back office operations for American banks?


NN: No it would be using Indian human capital for doing software transformation for the world’s large company’s yes.


AS: Right so you saw this as truly international…


NN: Sure absolutely, right from day one.


AS: The management guru Tom Peters wrote, this was in the mid-1990’s that “Infosys may be the coolest company in the world.” Were you aware that you were creating that sort of environment, were you consciously trying to do that?


NN: No I think, you know, we had some very fundamental motivations. We wanted to create a great company for employees. We want to create an ethical company that had very fine values in the business operations. We wanted to create a company that practised fairness. We wanted to create a company that was based on merit that was a young people’s company. So it’s not that we set out to saying we want to be cool. But what we realised was that all these things are like a breath of fresh air in an environment where you are only family owned companies or government owned companies or global companies. And this notion of young people forming a new kind of company I think came like a breath of fresh air and created a lot of the buzz.


AS: According to a quote your brother, Infosys started with I think $250 in Bangalore, there were seven of you, no influential contacts and with this pledge to do things ethically. Why was that pledge of ethics so important to you then because it’s a tough world out there and you’re saying that we’re not going to bend?


NN: Because for us the only kind of business that made sense was ethical, legal and law-abiding business. Otherwise it didn’t make sense. We didn’t want to make money through short-cuts.


AS: Can you say hand on heart, twenty-seven years later that Infosys has never had to bend its scruples to get some business done?


NN: Absolutely, I think we have walked away from many opportunities or many situations because of the fact that it violated our standards.


AS: How unusual do you think that is in India to do that?


NN: No, I think there are other companies too which have done that and I think now that is becoming the norm. I think Indian corporate governance has improved dramatically. I thin companies have realised that if you run a company in a trustworthy manner, customers reward you, employees stay with you, investors value you. So there is a business foundation to this too.


AS: What is it about India and the entrepreneurial spirit? It seems to flourish in India. Why is that?


NN: Well I think that. I personally feel that, after the United States, India is the biggest hotbed entrepreneurship. There are a number of reasons for that. One is classically there have been many entrepreneurs in business backgrounds, with business families; people like us actually started a new trend. We are first generation entrepreneurs. Our parents were not entrepreneurs and we therefore, showed other people who were not from a business background that they too can be entrepreneurs. So we have seen that happening and we have had farming communities becoming entrepreneurs, we have had office communities becoming entrepreneurs, we have had shop-keeping communities becoming entrepreneurs, so entrepreneurship is coming from all sides. So I think this is a fantastic hotbed of entrepreneurship in the world today after the U.S.


AS: And why is it particularly that India has churned out so many successful software developers, IT engineers, scientists?


NN: Well, first of all I think there was a huge investment in higher education in early independent India, thanks to people like Pundit Jalal Ahiru, who built the higher IIT and other top schools, so becoming an engineer and being of that brand was a big social thing and also I think the aptitude that Indian’s have for software, for numbers, for Maths is definitely there…


AS: Yeah, it’s interesting. Is that just something in the genes?


NN: I don’t know, genes or maybe in the hair. I don’t know what it is but definitely, I think the important thing is the software engineer in India has always been, in the last twenty years anyway, has been a very prized occupation so it’s attracted a lot of talent too. It’s not that people want to become, in some society they want to become lawyers and bankers but here they want to become software engineers.


AS: I just want to ask you as a man who wears many hats. Apart from Infosys, as I said you’re a board member of the World Economic Forum, you’re on the Peterson Institute for International Economics, you’re on the Bombay Heritage Fund, you’re an urban regeneration committee with the Indian government. What gives you the most inspiration? What are you most passionate about now out of all those things that you do?


NN: I think I’m most passionate about, I think I have got a certain unique and privileged position by virtue of where I am and I would like to use that position to make an impact on India make sure India achieves its goals of eliminating poverty and making sure people have access, so all these things that I work on for example, urban renewal or when I work on how to use IT for improving governance are all related to this one thing. How do I take advantage of my unique position to make an impact on society?


AS: You’re watching Talk Asia. Our special guest today is Nandan Nilekani. Stay with us. We’re going to be discussing his new book Imagining India: Ideas for the new century. After this short break we’re going to be looking at where he thinks India needs to be in the 21st Century.


AS: Welcome back, you’re watching Talk Asia. Our special guest today is Nandan Nilekani. A new book, just hitting the bookshelves this week actually, it’s a big weighty tone Imagining India: Ideas for the new century. And you’ve got some big issues you’re looking at. You’re looking at reforming India as a global power, as a sustainable global power for the 21st Century, you’re talking about a generally inclusive democracy, public health, sustainable energy, harnessing what you describe as India’s greatest asset, its youth, and also, talking about avoiding the mistakes of early development models. So what do you think the most pressing, the most critical issue, facing India right now is then?


NN: I think we have to ensure that we do all the right things to equip our young people who are the so-called demographic dividend with the right aposity and tools to flourish in this world because going to have this huge young people. If we don’t educate them, if we don’t create jobs, if we don’t create healthcare for them, if we don’t give them access to infrastructure then the same demographic dividend is going to go the other way.


AS: Why do you think India is not doing this then? Is because they are not aware, the government of today is not aware of it?


NN: No it’s aware of it, and I’ve tried to explain in the book, but a lot of it has to do with implementation, a lot of it has to do with translating intent into creating real ground things. It’s not enough to put money into schools, you have to schools that work, teachers come to work, curriculum has to be up to date. You know, there are so many nitty-gritty things.


AS: The Tom Friedman book, The World is Flat, uses you and Infosys as a way of demystifying globalization if you like. Should India be embracing this unfettered globalization as part of your idea?


NN: I think clearly I’m not recommending unfettered globalization, especially financial globalization where there is billions of dollars going in and out of a country that can be very very destructive. But I believe globalization in terms of putting young Indians to work for the global market, to be able to trade products and to really revamp our agriculture that kind of globalization is something I would recommend.


AS: When you’re talking about a country where the majority is still rural based, where the government has been looking inwardly since independence really, is there any sort of willingness at government level to embrace globalization do you think?


NN: Oh I think so. I think our Prime Minister understands the value of globalization, he understands that we are an interdependent world, and he also understands that when you have a young population, you must go global because that’s the only way that you’ll be able to create jobs for these millions of people so I think we, people very much understand the fact that India has to globalize from a strategic point of view.


AS: What can India learn from China?


NN: I think China’s execution ability, I think you know the fact that when they put their mind to something they do it, in fact they do it in quicker time than what is said. The fact that they think scale. I think we have a lot to learn from China in execution and scale.


AS: But China also has an authoritarian government so it makes it very easy for them to do it.


NN: Sure, so we need to figure out how, in a democracy you figure out how you achieve scale and execution excellence. And in some sense, I’ve called my book a safety net of ideas, because in a totalitarian state you can issue a dictate and get things done, in a democracy you can only do it by influencing and cajoling with your ideas and I hope to do that with my book.


AS: What can China learn from India?


NN: I think clearly, I gave a couple of examples of how India’s democracy has helped in its journey so clearly I think giving some kind of representational thing is something that China will have to deal (AS: Opening up politically) Yeah sure, and also I think the fact that we have been able to use our English language capabilities, the fact that we have built a strong, global service industry, those things I think we have some things which are different.


AS: The environment has been a big issue with you personally and if you look at a casual observer in India. It looks like India is losing the battle against pollution.


NN: Well, I think pollution is one part of it. It has to do with our cities and you know it certainly has to be dealt with, but I think the larger issue, I mean if India is to grow at 8 per cent a year for the next thirty, forty years, we’ll end up going up sixteen times in per capita income from today, but if you look at the challenges from global warming India can at best go up twice in terms of carbon emission so we have to be the first country which builds a post carbon growth model, that doesn’t depend on carbon and has some other form of energy so we have those kind of challenges,. I think that pollution is really a subset of larger set of issues to do with the environment (AS: Changing a whole model) Changing the model of our growth.


AS: Should India sacrifice growth for sustainable energy development?


NN: I don’t think the two are incompatible. I think you can build a model of growth which also has sustainability of energy and the world in general built into it and that’s the key thing, how do we. It’s not growth or sustainability, its growth and sustainability. (AS: You can have both) Absolutely. If you think it through, yes.


AS: Do you have any one or two rule you think have made a huge difference to you and your business success?


NN: Well, of course, you know we talked about the value system, but I have a couple of rules. One is that I believe in being less busy and more effective. I believe in being generous with my money and stingy with my time. Simple principles and I believe that I should have a portfolio of ideas I work with, each of them with great people and some of them will win, some of them won’t but to push on all fronts.


AS: Nandan, thank you so much for your time. You’ve been watching Nandan Nilekani, the co-founder and co-chairman of Infosys on this week’s Talk Asia. Make sure you stay with us Talk Asia will be back next week.


**Please credit ‘CNN Talk Asia’ when using any quotes from this interview.**


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