In Good Company with Nicolai Tangen - Nandan Nilekani Co-founder and Chairman of Infosys

Episode Date: February 8, 2023

In this episode, Nicolai Tangen talks to Nandan Nilekani Co-founder and Chairman of Infosys, one of the world’s largest IT companies with more than 300 000 employees. Nandan has had an amazing career both at Infosys and for the Indian government where he led the biggest social project on the planet.The production team on this episode was PLAN-B’s Niklas Figenschaug Johansen and Martin Oftedal. Background research were done by Sigurd Brekke with additional input from Doug Shell.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everyone, and welcome to our podcast In Good Company. I'm Nikolaj Tangen, the CEO of the Norwegian Samoan Wealth Fund. In this podcast, I talk to the leaders of some of the largest companies we are invested in so that you can learn what we own and meet these impressive leaders. Today, I'm speaking to Nandan Nilekani, the co-founder and chairman of Infosys, one of the world's largest IT companies with more than 300,000 employees. We've been invested in Infosys since 2011 and we own more than 1% of the company. This translates to 10 billion Norwegian kroner or 1.2 billion US

dollars. Nandan has had an amazing career both at Infosys and also done some tremendous work for the Indian government where he for instance led the biggest social project on the planet. He's a super interesting guy. Tune in. So, Nandan, a huge pleasure to have you on. Thank you so much for taking the time. It's a real honor. Thank you, Nikolai.

It's really wonderful to be on your show. Why are there so many fantastic Indian-born CEOs in the tech industry in America? Well, I think that's a great question. And I feel that it's possibly because Indians have grown up forever dealing with ambiguity and being able to be agile and quick when things change.

And in a world which is becoming far more ambiguous, where there are so many choices, where there's no hard and fast, there's no black and white, I think Indian CEOs do very well in this world of ambiguity. Yeah, but I mean, you guys run Microsoft, Alphabet, IBM, and you know, your own company. It's quite amazing, no? It is. And what's interesting, Nikolai, is that many of the Indian CEOs in the West actually are from one school called Hyderabad Public School in Hyderabad. And people like Satya Nadella and Ajay Banga, who was the chairman and CEO of Mastercard,

Prem Vatsa, who's a big investor in Toronto, then Shantanu Narayan, who's the CEO of Adobe, are actually all from one school. So tell me about the school. Well, this seems to be a school for CEOs. It's a Hyderabad public school. Hyderabad is, as you know, the capital of Telangana. And clearly there's something special. But I think, you know, we have CEOs from many backgrounds.

But you see, I think there was a huge, I mean, there are a lot of Indians in the tech sector. And obviously some of them are sharp enough to rise to the top. Yeah, that's for sure. But why is India so good in tech and software? Well, you know, I believe that there are many reasons. One is, of course, India has a strong tradition in maths and STEM skills, the kind of skills you need for programming and so on. And essentially, the last 30, 40 years,

there's been a huge demand for software professionals. When Infosys began, for example, in 1981, we sensed this opportunity that there would be a huge demand for software skills. And I think then the whole education system has been geared towards that. It's become the first profession of choice for young

people. So it's created a virtual cycle which has led to, today in India alone, we have close to half a million people working in the software business. And then, of course, many others who have gone abroad. So it's really become the sort of

dominant choice of profession for many young people. I know that you are very, very optimistic about the outlook for India. And I think you're even coming to Arendal's Uka in August to talk about it, right? Oh, absolutely. I've been working. This is more in my philanthropic capacity.

I've been working with the Norwegian government and NORAD. And they have set up something called the Digital Public Goods Alliance. And basically, the idea is how do we use digital transformation to help nations around the world? So I'm working closely with Norway, and therefore they invited me to come there and speak. And they said, that is the best forum in Norway to come. And I said, I'll come and I believe you'll be there too.

So I'm really looking forward to that week. Yeah, I thought the two of us should eat some fresh shrimps at the harbour side there. Sounds good to me, and we can go on a boat. But why are you now more optimistic about the outlook for India than you have been in the past? I believe that India is at a cusp of momentous change. The first thing is that India has a very strong position in its reserves and foreign exchange basically because of its people. The software industry in India is currently at 227 billion dollars of annual revenue and it took

30 years to go from 0 to 100 billion. It took 10 years to go from 100 billion to 200 billion and it's going to go to 300 billion in three to four years so there's a scale change of growth happening and that generates a lot of dollars for the country so just like you know you get all money from oil in India we get money from software and then India is also a huge recipient of money sent back by immigrants from abroad. This year, the total inward remittance of India is about $100 billion, which is by far the biggest of any country in the world because lots of Indians are working all over the world and sending money back. So our foreign exchange condition is very, very strong.

And domestically also, reforms in taxation and all that, taxes are growing faster than the GDP growth. So both the domestic financial situation and the foreign exchange situation is very strong. We have this huge talent base. We have 90,000 startups in India today. And we, of course, have India's digital infrastructure, some of which I was involved with like Aadhaar. So all these things are coming together. And the geopolitics is also favoring India, because countries who are doing manufacturing

are looking at a China plus one strategy. So it's a combination of things happening, Nikolai, which is all putting India in the sweet spot. Now, talking about the sweet spot, Infosys, which you founded, has an important place there. Tell us about Infosys. Infosys is a company which was founded in 1981. That's almost 42 years back. It was founded under the leadership of Mr. Narayan Murthy, who was the first founder chairman. I was one of the co-founders. Today, I am the co-founder and

chairman. I've been in that role for the last five years. Infosys was built on the dream of creating a professionally run Indian company that was globally respected in the software space and essentially we have been able to ride the different waves of technology in the world. We have restarted the mainframes and many computers and PCs and the Internet and then you had all the smartphones. Today we have AI. So Infosys has been very agile at riding this. And today, its revenue is in excess of $17 billion, employing 330,000 people in 40 countries and a market cap of between $75 to $80 billion. So it's really become a flagship company from India

and well-recognized around the world. And our clients are essentially 1,700 of the world's largest companies for whom we do various kinds of digital transformation. It's an amazing story. What would you say has been the key to the success? I think Infosys was a company created with the intention to create an institution. So there's always long-term thinking, great values,

alignment of leadership, the ability to postpone gratification. So we're willing to work hard today for a better tomorrow, a very employee-focused approach, very strong standards of corporate governance so that we wanted to be a company that people from around the world will respect and invest in. So very strong corporate governance, a very strong focus on quality, and also a philosophy of continuous learning. We have massive investments in learning and we make sure that every one of our over 3,000, 30,000 employees have access to the best,

most current learning so they can keep on top of technology and business trends and deliver value to customers. So training continuously is a big part of what we have done. What's the key to getting that into the mindset of the people there? Well, I think the thing always has been we are in an industry which is changing rapidly and the new paradigms emerging every few years. And we realize that if we have to be relevant to our customers, we must be on top of what's happening because we have to guide and navigate our customers to their future. And I think everybody has internalized that.

We set up our education team more than 20 years back. So it's a long story, long history of investing in education. a long story, long history of investing in education. We also realized that the rapidly changing business we had, students coming out of the colleges would not have the latest background because universities move slower than companies. And therefore, we had to invest additionally in their basic education to make them ready for the complex challenges of the world. Well, we are soon kicking off what we call the MBIM Academy,

where we try to cross-teach the various skill sets that we have internally in the fund. But you have, I believe, the world's largest corporate university. That's right. We have a massive campus in the city of Mysore, which is not far, maybe two or three hours from Bangalore. And we have a huge campus where we can train 40,000 people at one time. It's probably the world's largest corporate university.

But increasingly, today's training, especially in the era of COVID, has gone virtual. So we have a very good hybrid blend of virtual training through the app on your phone, physical training, combination thereof, and that makes our learning systems very, very flexible. We also built a new education center in the city of Indianapolis in Indiana, US, and that's going to be our headquarters for the training of our employees in the US. We are a big recruiter in the US. We are hiring thousands of people there and we're investing in their training. So what are the skills you are prioritizing now?

Oh, we have literally hundreds of skills. Some of it, of course, are technical skills, whether it's coding, designing, project management, AI, big data analytics, all the cloud system and so on. A lot of them are technical skills which are required, but we're also training them on business knowledge. We have different groups that address different domains,

whether it's energy or banking or insurance or utilities or whatever. And we have deep domain knowledge because we work with the world's best companies. And therefore, we also train people in domain skills. And then we also train people in how to work in a consultative and collaborative manner. Because today's complex world needs everyone to come together to solve a problem. Now, if you were to acquire a new skill, what would that be? To me, my biggest thing is curiosity is a skill, in a sense. I believe that we have to keep learning and keep

I don't look at a specific skill, I make sure that I'm always curious and that enables me to remain on top of all the stuff that's happening around me and then if that leads to learning a particular skill for example if I need to learn something about chat GPD

and how to do prompt engineering then I will try that out to learn that skill. For example, if I need to learn something about chat GPT and how to do prompt engineering, then I will try that out to learn that skill. What do you think about that? Well, I think definitely chat GPT has brought in a new paradigm. I think a lot of the AI was already there, but I think their leapfrog was to put a very consumer, user-oriented UI on top of all the transformer technology that was already there. And we are seeing huge opportunities

because now anybody can use this tool to extend their and amplify their capabilities. So in fact, right now, one of the things we are looking at is how to make AI usage more pervasive in our company and in our clients' companies. Well, it's interesting. This morning, I got the chat GPT to write my LinkedIn post by itself.

Oh, wow. I hope it's not making investment decisions too. Not yet. Changing the tax a bit here and touching on sustainability, how can you as an information technology company help companies deliver on their sustainability goals? Oh, I believe that digital technology is very, very critical to sustainability goals.

Infosys actually has been a world leader on sustainability and we achieved carbon neutrality in 2020, 30 years ahead of the Paris goal. And we have over the last 15 years, we have built something like 57 million square feet of office space. We have extremely efficient buildings, very low use of energy, recycling of water, using of natural lightning, biodiversity in all our campuses. And we manage all this through our networks. We actually have a central network management for all our buildings where we get real-time sensors and data on what's happening. So I think sustainability will require huge amounts of data

to manage, monitor, transform. And all that requires technology. So there's, or if tomorrow, if you have a smart grid, a grid where thousands of, you know, car batteries are feeding in tires at night, or windmills are, you know, sometimes giving power, sometimes not. How do you manage such a complex grid,

which has both feed in and feed out tariffs, where production of energy is all, you know, very variable. All that requires very sophisticated networks and technology. So I do believe that digital transformation is also critical for the energy transition that the world is facing. So it's helping your own business, but you are also helping other companies to reach their goals. Philosophy that we should do it to ourselves before we talk to our clients. So our sustainability journey has given us enormous

credentials and credibility with our clients. We were talking from real world experience. Similarly, when we talk about digital transformation, we have done our own digital transformation over the last five years. So we can talk from real experience to our clients. So we use our own company as the place to try out all the things we talk about, because that's the learning that we can then take to our clients. Touching on governance, how do you see your role as a chairman? That's a very good question, Nicola, because in my previous avatar, from 1981 to 2009, I was an executive, I was a CEO, I was involved with

running the business and then as you know I took a break from Infosys and joined the government to do the Aadhaar ID project. We can talk about that later and then it so happened in 2017, eight years after I had left, there was a management crisis and I had to come back to set things right. And I realized that the role of governance is very different from the role of management. Management actually does the business, sells, delivers, collects. Governance is about enabling the right leadership, aligning everybody else, succession planning, ensuring that bad behavior is punished, making sure that governance standards are very high. So I found that governance is very different from operations.

And I've learned that the last five years because I'm really a non-executive chairman. And we have a fine management team under the leadership of Mr. Salil Parekh, who actually runs the business. So I think I learned what it means to be running the business and now I learned what it means to be stepping away from the business but allowing management to run at their optimal level. Do you think it's important that the chairperson and the CEO are two different people? Yes, I believe so. I believe the role of a CEO is very different from the role of a chairman. And I think it's important to separate that. I believe it's important to have a nominations and remuneration committee, which is a fully competent independent board members who reviews the compensation and

incentives for the management. Yeah, I think all these things, all these create checks and balances that are very required for a large global corporation. And why do you think they don't do it more often in the States? I don't know. I believe, I think the number now is there's still 35% of the big companies which have the chairperson and the CEO in one role. Yeah, I really don't know.

You as a huge investor should probably be asking that question. But I don't... We do. We do all the time and we really don't know. I know you as a huge investor should probably be asking that question. But I don't... We do. We do all the time and we really don't like it. Yeah. So, you know, I think maybe we are a bit, you know, more traditional in our thinking. And, you know, even when the role is the same person,

obviously, then you need a very strong lead independent director. In my case, technically, though I am non-executive chairman, I'm not an independent chairman because I'm a founder. But I'm non-executive and there's a clear delineation of

responsibility between the CEO and the chairman. I just believe that checks and balances are important in running a company. We talked about Chet GPT. Any other technological developments you are particularly concerned about for the moment or excited about? No, I think definitely AI is a very significant game changer.

We have been using AI, but I think recent developments in AI with the consumerization of AI in some sense, I think, is a very significant thing. Obviously, we do follow other new ideas like blockchain and metaverse and all that, but I don't personally find them as gripping and compelling as what AI can do. find them as gripping and compelling as what AI can do. In 2009, you left Infosys to work for the Prime Minister and you led a tremendously big project. Tell us. What happened in 2009 was, you know, in 2008, I had written a book called Imagining India,

where I talked about big ideas for the future. And one of those ideas was to have a digital ID for every Indian to streamline governance. And in 2009, the then Prime Minister, Dr. Manmohan Singh, invited me to actually implement this idea. So it sort of walked the talk, so to speak. And I joined the government of India in the rank of a cabinet minister with a specific mandate to give every Indian a digital ID and we did that project successfully. By the time I stepped down in 2014, we had 600 million people on the platform and subsequently the new government took it with even more fervor. And today, 1.3 billion Indians have a unique digital ID,

which they can authenticate online. And the system does about 80 million authentications a day. It provides an electronic know your customer. So you can open a bank account in two minutes using your digital ID called Aadhaar. You can digitally sign your documents on your phone using Aadhaar. You can store your documents on your phone using Aadhaar. You can store your documents on your phone using digital locker. So these are all digital public goods

at population scale, which have led to transformation of the way Indians live their lives. There's some unbelievable numbers. You may not know, but we are only 5 million Norwegians. So that would be a piece of cake for you to sort out some

of the IT systems here. But just give us a feel for the magnitude of the signing up and how you structured it. Well, you know, first of all, we had to build a very sophisticated backend because we had to deduplicate a billion people using biometrics. Nobody had done that

before. We were in uncharted territories and we had to basically push the envelope on biometric deduplication at scale. At the front end, we had to enroll one and a half million people a day. So we would cover Norway in three days in our model. And for that, we had 35,000 enrollment stations around the country and people would enroll about 50 people per day per station. And then all the data would be sent back. We would deduplicate it and assign unique numbers to people, making sure there are no

duplicates. And that deduplication would lead to maybe a billion, it was a very, very sophisticated system. But we were able to do this because we were able to do one and a half million and we did it using an interesting model. We didn't buy the CapEx. We encouraged private entrepreneurs to buy the CapEx and the government reimbursed them on an OpEx basis. So the government would give them half a euro or half a dollar per day per enrollment. And therefore, they had an incentive to enroll more and more people but we also because the deduplication we could make sure they didn't game the system and they enrolled only new people

into the system so a lot of you know incentive design incentive compatible design to make this work at scale and that was a big learning for me and of, I had to manage the environment. I had to deal with politicians, bureaucrats, judges, lawyers, activists, journalists, and take this idea through its logical conclusion. So that was actually more difficult than the technology, which was managing people and getting different people aligned behind one goal. Well, what's the key to leading and managing 300,000 people? I think there's two parts to it. There's one or maybe three parts. The one part is, of course, the systems to manage.

For example, Infosys, though it has 65 subsidiaries, we are able to close our books within 10, 12 days of the quarter ending across the world and get them audited, which is quite remarkable. And therefore, we have very strong systems on running the company and very strong checks and balances, audit and those kind of things. It's very strong. Our audit committee is very, very professional, independent board members and so on.

So, there's sort of the management through technology process audit. Then there is the whole propagation of our culture. At the same time, we can't be totally one style in culture. Culture has to have a set of cultural elements that are common but at the same time, the way our employees are in Norway may be different from the way they are in Australia. So we have to strike the right balance between local and global. And then, of course, I think the values, not only the practice of values, it's also the enforcement of values. So no matter how senior a person is or how important he or she is to the company, if there is a violation of values, then we would come down very strongly. So, the combination of systems which are harder, culture which is softer, and values which are reinforced, that's how you manage such a large

company and a huge investment in leadership development. We spend a lot of time and money and effort in making sure we are close to a thousand leaders in the company who are the investment we make in their values, in their training, in their global exposure, in their succession planning, in their career planning. All this is very important to create that engine of growth in a changing world. You mentioned that you would be hard on violations of values. What could that be? It could be anything. For example, if somebody is doing something financially inappropriate, then that person would not be in the company if it was established that he or she had done something wrong.

If there's a sexual harassment charge and if that is upheld, then that person also has no role in the company. So these are all, we take these kinds of transgressions very seriously and it does not matter whether the, you know, how high the person is in the system. So nobody is exempt from, you know, the enforcement of our values. That's very important because I think if employees feel that some senior people are getting a pass, then it all becomes, you know, just stop. And, you know. And we have a clear sense of purpose. Our purpose is to amplify human potential for the betterment of society,

for the betterment of people, businesses and communities. So that purpose is also pervasive in the company. So if this was a job interview and I had applied for a job with you, what kind of things would you ask me? Well, first of all, I would check on what you know. Second, I would try out a few scenarios and I would check on how you respond to those scenarios. I would look at your background and see how well you have coped with change, how well you have coped with diversity,

how well you have tackled new situations. And I think knowing what I know of you cope with diversity, how well you tackle new situations. And I think knowing what I know of you, Nicola, I think you would make the cut. Well, you may see my application at some stage. But what's the best leadership you personally have got? Well, I think the best leadership advice, I guess, amalgamation of what I've got from many people, but I think one clearly is, look at the future. You know, it's very easy to mild ourselves in the past

and get morose and depressed about what happened in the past. But when we are an action-oriented organization, there are bound to be some mistakes we make. So we need to stand up, dust our knees and move on.

I think thinking about the future is very important. I think, as I said earlier, curiosity is very important. I think in today's world, being on top of things requires you to be curious on a multidisciplinary way. It's not just about technologies,

about what's happening with people, with societies, with energy, whatever. So being curious across the board is very important. And it's also about leadership by example, because people get very disturbed if there's a gap between what you say and what you do. So maintaining the integrity of what you do and what you say being consistent is very important. And that's some of the things that, you know, at least I have tried to practice and also have a collegial and collaborative work style. Because today the best ideas may be the junior most person in the company working in some remote customer location.

And I need to make sure that that idea surfaces to the top. We have thousands of young people listening to this podcast. What kind of advice would you give to them? Well, I think they are actually in the world today at a very exciting time. I understand there are many challenges that we face today in the world be it inflation or rising interest rates or the Ukraine crisis or you know covid and so on but at the same time the world is on the brink of enormous positive change. I think we're going to see a huge energy transition in the next 20 years. We're going to see a huge digital transformation.

So there's ample opportunity for us in the world. And I think it's for them. They have to be, I think they have to always make sure they're relevant. If you're relevant, you'll do fine. And relevance may vary from context to context. But if you're relevant in what you do, and if you have made sure that you are able to deliver value. The other point I would say is that a lot of things that we do today may be made obsolete by technology.

You know, just like, you know, there was a time when we calculated by ourselves and now we use a calculator or a computer. Tomorrow's AI will make a lot of things happen through the computer. AI will make a lot of things happen through the computer. And therefore, you have to think, well, how do I remain relevant and useful and adding value in an era where everything is AI-driven? And finally, it boils down to human skills and human values, the value of empathy, the value of ideation and connecting the dots, the value of collaboration, the value of thinking about the future in a non-linear way. So I think we have to finally say what is it that we can do in a world

where many of the things we do today will become automated. And how do you relate to technology in your personal life? Actually, for me, technology is an instrument of bringing social change for enabling better equality, making it an open access society where people can use technology. All the work I've done, I've not only done the Aadhaar project, I'm also the advisor to India's payment system called UPI, built by the National Payment Corporation of India. And that's a very successful payment system, which has enabled more than 250 million

Indians to make digital payments on their phone very, very quickly, in real time. So you have recently written a book about how we cope with technology. It's called The Art of Bitfulness. What is that about? You know, this was a book which came out of the pandemic, Nikolai, because what I saw in the pandemic was that all of us, our digital intensity had gone up because we did our work on our devices, we did our entertainment on our devices, we ordered food on our devices,

we ordered goods on our devices, we had relationships on our devices, whatever. And also I saw that a lot of people were being affected by this excessive use of digital technology. They were doom-strolling about the pandemic and vaccines and whatnot. And I realized that while we have great value for technology, we run the risk of becoming sort of controlled by it also in some sense because the nature of these social media apps and all that is to encourage you to spend more time on the apps and the way they do that is by making you know appealing to your emotions and making you angry about something so the book is

about keeping calm in a digital world which is rather than let the technology lead you how do you master technology in a way that you get your benefits? How do you use social media products? How do you handle your email? How do you create a world where you can do serious work or you can do browsing work or you can do entertainment? Just a way of running your life, which a lot of people have found very useful.

Well, big thanks for taking the time to be with us today and I cannot wait to continue our conversation over shrimps in Arendal in August.

Sounds like a great plan. Not just shrimps, I want some Norwegian beer or whatever you guys drink. Absolutely. I'm on for everything. Very good.

Thank you so much. Thank you. Thank you, Nikolai. It'm on for everything. Very good. Thank you so much. Thank you. Thank you, Nikolai. It's a great interview. Thanks a lot.