On June 21, 2024, Infosys marked a significant milestone by celebrating 25 years of being listed on the Nasdaq, becoming the first Indian company to achieve this feat. Since its listing, Infosys has had a remarkable journey, filled with achievements and challenges.
A Historic First
Infosys, founded in 1981 by seven engineers in Pune, including N.R. Narayana Murthy and Nandan M. Nilekani, aimed to transform a homegrown company into a global giant. By 1993, the company had gone public in India, introducing an employee stock option program (ESOP) that enriched many of its employees. Six years later, in March 1999, Infosys became the first Indian company to list on the Nasdaq, selling 2,070,000 shares at $34 each.
The Strategic Move
The decision to list in the US was strategic, as 60% of Infosys’ business came from America. T.V. Mohandas Pai, former CFO, emphasized that the listing was to instill confidence in Western clients. This strategy paid off, making Infosys a household name in the IT industry.
The Formula for Success
Infosys distinguished itself by adopting pioneering practices in corporate governance and disclosure norms. The company reported its financials in US GAAP accounting standards, released a sustainability report, and provided a yearly revenue growth outlook. These practices set a new benchmark for Indian companies.
The company also fostered a culture of equality, eliminating distinctions between senior and junior employees in facilities like canteens and restrooms. This inclusive approach, combined with consistent growth, made Infosys a favorite among investors.
Major Milestones
From its humble beginnings, Infosys grew to generate a revenue of $18.6 billion last year, making it India’s second-largest IT services company. The company’s market cap surpassed $100 billion, a testament to its sustained performance and strategic vision.
Challenges Along the Way
Infosys faced significant challenges, particularly with its leadership transitions. The practice of rotating CEOs among co-founders created instability. After Nandan Nilekani’s tenure, Kris Gopalakrishnan took over in 2007, followed by S.D. Shibulal in 2011. During this period, Infosys lost market share to competitors like Cognizant and TCS.
The appointment of external leaders, such as Vishal Sikka as CEO in 2014, also led to internal conflicts. Displeasure among co-founders over strategic decisions and compensation practices resulted in Sikka’s early exit.
The Return of Nandan Nilekani
In 2017, Nandan Nilekani returned as non-executive chairman to stabilize the company. His mandates were clear: find a new CEO, reconstitute the board, and stabilize the business. Under his leadership, Infosys appointed Salil Parekh as CEO, who has been instrumental in driving large deals and improving execution.
Current Standing and Future Prospects
As of June 20, 2024, a single Infosys share bought on June 1, 1999, would have yielded a return of 2,239 times in dollars. In rupee terms, the returns would have been 433 times more. With 317,240 employees, Infosys is now navigating the generative artificial intelligence (Gen AI) revolution, poised for future growth.
Summing Up
Infosys’ 25-year journey on the Nasdaq is a story of strategic foresight, pioneering governance, and resilience in the face of challenges. As the company continues to innovate and adapt, it remains a beacon of success in the global IT landscape.