Narayan Murthy’s Speech at NYU (Part 4)
Check other articles in the series...A final story: On a hot summer morning in 1995, a Fortune-10 corporation had sequestered all their Indian software vendors, including Infosys, in different rooms at the Taj Residency hotel in Bangalore so that the vendors could not communicate with one another. This customer’s propensity for tough negotiations was well-known. Our team was very nervous.
First of all, with revenues of only around $5 million, we were minnows compared to the customer.
Second, this customer contributed fully 25% of our revenues. The loss of this business would potentially devastate our recently-listed company.
Third, the customer’s negotiation style was very aggressive. The customer team would go from room to room, get the best terms out of each vendor and then pit one vendor against the other. This went on for several rounds. Our various arguments why a fair price — one that allowed us to invest in good people, R&D, infrastructure, technology and training — was actually in their interest failed to cut any ice with the customer.
By 5 p.m. on the last day, we had to make a decision right on the spot whether to accept the customer’s terms or to walk out.
All eyes were on me as I mulled over the decision. I closed my eyes, and reflected upon our journey until then. Through many a tough call, we had always thought about the long-term interests of Infosys. I communicated clearly to the customer team that we could not accept their terms, since it could well lead us to letting them down later. But I promised a smooth, professional transition to a vendor of customer’s choice.
This was a turning point for Infosys.
Subsequently, we created a Risk Mitigation Council which ensured that we would never again depend too much on any one client, technology, country, application area or key employee. The crisis was a blessing in disguise. Today, Infosys has a sound de-risking strategy that has stabilized its revenues and profits.
(to be continued)
This segment is part 4 in a 6 part series Segment 5 →
Jump to part: 1, 2, 3, 4, 5, 6
