IT services companies have to compete on value to customers, not pricing: Infosys founder Narayana Murthy

Our Bureau | | Updated on: Jun 17, 2022
NR Narayana Murthy, Founder, Infosys

NR Narayana Murthy, Founder, Infosys

‘This will enable companies move away from the tendency to commoditise market and compete only on cost’

The per capita revenue productivity of Indian software services companies in a global hard currency like the US dollar has remained almost the same over the last two decades, according to NR Narayana Murthy, Founder, Infosys.

“I hope I am wrong. It used to be so at least till 2014 when I was at Infosys,” he said.

The major challenge is to revamp the educational system to enhance curiosity; critical thinking and proactive problem solving among youngsters. This will perhaps help many services companies to enhance their per capita revenue productivity and enable some member companies to succeed as product companies in the global market. It will also help service companies to transform themselves from being reactive problem solvers to proactive problem definers and solvers for their customers.

Rupee depreciation

The depreciation of the Indian Rupee from ₹45 per $ in the year 2000 to ₹78 now has helped the Indian IT service companies to manage inflation, rising cost to some extent and protect the operating margin. Improving per capita revenue productivity in US dollars is clearly a company level issue,” he said in his address before a discussion, organised by MMA-KAS on Friday, on the theme of the book India’s IT Revolution - The Maverick Effect authored by Harish S Mehta.

The focus of Indian IT services companies has to shift from competing on price to competing on value to customers. Companies will have to bring in innovation to increase the business value leverage. The price can be higher if the business value to the customer is higher. This will also move companies away from the tendency to commoditise market and compete only on cost, he said.

New Education Policy

The New Education Policy has made many useful recommendations. Nasscom has a seminal role in exhorting the higher educational institutions to implement these recommendations with alacrity.

Nasscom can also prepare a recommendatory methodology for private companies to prepare talent for successfully executing government projects in India on time, within budget and with the requisite quality. It can produce a manual to help government in India to plan a digitisation project, to prepare a proper bid; to select the right vendor, to detail the requirement definition and to manage time, cost, productivity, quality, security, privacy and disaster recovery in developing,maintaining and operating large application projects of digitisation.

Nasscom can create a group to share innovative ideas in this effort. Infosys always believed that sharing ideas will only make the ideas better. The success of an idea is determined primarily by how well and how quickly one can execute the idea so individual companies need not worry about competitors, he said.

Published on June 17, 2022
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