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October 14, 1997


Infosys adds three directors to board

Infosys Technologies Limited has inducted three additional directors to its board in its pursuit to create global brand equity and enhance its per capita revenue productivity.

Former chairman of Hindustan Lever, S M Datta; Seagram (Asia-Pacific) President Ramesh Vangal and Housing Development and Finance Corporation Managing Director Deepak Satwalekar joined the six-man strong board of directors of Infosys Technologies on October 10, 1997.

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Infosys Technologies' move to induct additional professional directors to the board comes at a time when the Indian software industry is facing many bottlenecks.

The lack of trained manpower and the galloping salary levels at the rate of 20 to 30 per cent in the country have resulted in the erosion of industry margins.

According to the Boston Computer Institute, 120,000 software professionals are required every year for the Indian IT industry and though a number of computer training institutes have mushroomed, they still do not fulfil the need.

However, Infosys Technologies Chairman and Managing Director N R Narayana Murthy said the company hopes to improve its per capita revenue productivity which, compared to some companies in the United States, works out to a paltry 40 to 50 per cent and in some cases even lower.

"Hence we have to move towards creating a brand equity as we move on to the next orbit to compete as equals with locals in the markets where we sell our products," said Murthy.

This would require financial inputs and one of the means to fund this requirement would be through accessing foreign capital markets, he said. This would call for satisfying investors overseas in terms of transparency and accounting standards.

Currently, the company is starting the construction of the second phase of the electronic city development centre in Bangalore. This Rs 1-billion project, to be set up in stages, would house 2,300 people in 360,000 square feet.

The entire project is expected to be completed by December 1999. Infosys will be financing the project through internal accruals and short-term borrowings though the company has not closed the option to go in for an equity offer, said Murthy.

Infosys Technologies has been able to consistently maintain its net profit in excess of 20 per cent and its operating margins at 30 per cent plus.

This, according to Murthy, is possible considering the company's focused attitude in selling just banking products in the Indian market, its increasing productivity and its control over costs.

Earlier, announcing the appointment of the three independent directors, Murthy said "We need the wisdom and experience of people who have dealt with a lot more multinational operations and have created tremendous brand equity and have managed larger institutions."

Murthy said that these three eminent personages would be independent directors at the strategic level. They would be part of the audit committee, nomination committee and compensation committee.

"They would decide and look at how well the company is audited, take decision as to whether there is a need to add on more directors and decide on the compensation for the directors," said Murthy.

Collectively, their respective individual talents would "add tremendous value to the company," said Murthy.

- Compiled from the Indian media

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