Phaneesh Murthy’s uncanny ability to self-destruct just when glory is at an arm’s length must go down as one of the biggest ironies of corporate India.
Murthy was the quintessential middle-class guy who made it big in life through hard work and diligence. “I am just a hardworking guy. I probably outwork the others. It is just a simple equation: If you want to create unnatural results, you have to work unnaturally hard,” he told Business Line a few months ago.
Malleswaram in west Bangalore is home to the city’s middle-class and Murthy came from that milieu. Murthy studied in one of the best convent schools in Bangalore and actually wanted to study medicine until his father asked him to try IIT’s entrance exam. “My natural pride took over and I decided to study hard for it even though I didn’t want to get into IIT.” Murthy passed the entrance with ease, showing early signs of brilliance.
But that didn’t deter him from requesting his father again that he should let him study medicine even though getting into any of the medical colleges through the general category was difficult. His friends stepped in now and forced him to complete his IIT course and then IIM was a logical step forward. IIM, Ahmedabad was where he met his future wife and many others who went on to head prestigious institutes including India’s Chief Economic Advisor Raghuram Rajan, CEO and Managing Director of Tata Global Beverages Harish Bhat and Nachiket Mor, former Deputy Managing Director of ICICI Bank.
Stint with Sonata
Along with Rajan and Mor, Murthy passed out from IIM with top honours. Obviously, Murthy could do no wrong from there. But Murthy chose a little-known Sonata Software based out of Bangalore to start his innings because he felt that start ups give opportunities to experiment which an established one doesn’t. He was right. It taught him initial lessons in managing people as well as winning contracts coming from nowhere. “We beat Infosys every time in bagging contracts,” Murthy was to say about his stint with Sonata.
Murthy eventually applied to Infosys following an advertisement in India Today . Infosys was desperately looking for someone who could rescue the company. In a decade of its existence, it had notched up just a $2.5 million and was floundering. “We were all set to close down the company if we didn’t get the right man to head our US operations and we had just $40,000 in our bank account,” said a former boss at Infosys.
Murthy came along and as they say rest is history. Living out of eating salad in California, he earned his spurs there. Within a decade, Murthy had succeeded in taking Infosys from a $2.5-million company to a $700 million. It was heady success and Murthy was the toast of the Indian IT industry. He was all set to take over as the CEO once the legendary N.R. Narayana Murthy and then Nandan Nilekani stepped down.
But it was not to be. Reka Maximovitch, an American of Bulgarian descent, started working for Murthy around October 1999. But by December 2001, she had filed a case against the company for allegedly sexually harassing her. By July 2002, Murthy resigned from his job in Infosys where he had now become a board director. The episode shocked corporate India then as no CEO had been accused of sexual misconduct. Infosys later paid around $2 million to settle the case out of court with Maximovitch.
Narayana Murthy was pained to let him go. In an interview with Business Line , days before he retired from Infosys, he said it was one of the toughest decisions he ever made in his career in letting go Murthy. “I don’t have any role models. But the two people who come closest to, are Narayana Murthy and Steve Jobs,” Phaneesh Murthy told this paper recently.
Second innings
A few years later, Phaneesh Murthy was already beginning to start his second innings. In January 2003, he founded a business services provisioning company, Quintant, which received funding from the GMR Group of about $30 million. It just showed that the industry was more than willing to bet its money on Phaneesh Murthy’s talent.
After that there was no looking back for Murthy or so it seemed at that point of time. Murthy’s company was acquired by iGATE Global Solutions in August 2003 and he went to head the company by 2008.
Murthy had by then decided that he would grow iGATE through acquisitions. He zeroed in on the Pune-based Patni Computers, which in its early days had hired Narayana Murthy. By 2011, Patni had been acquired and Murthy was now setting his sights on taking the company towards the $3-billion mark by 2017.
“I seriously matured a lot from the Patni transaction,” Murthy said after acquiring the company. iGATE had by then gone from a (-) 25 per cent operating margin to a 25 per cent operating margin and from a 23 per cent gross margin to a 41 per cent gross margin. The turnaround specialist had worked his magic again.
But within a year of taking iGATE into the billion-dollar club, Murthy hit the self-destruct button again much to the horror of even his severest critic. Some say that he has a fatal flaw in his character, but it could be much more than that.
“In the end” (a phrase which Murthy uses often during his conversation), he will be best remembered for being a brilliant manager who just couldn’t get better of his weaknesses.