NRN was unsure of growth in China: Wiki

True, Infosys is on Wednesday gearing up to start its first overseas campus in China, but only four years ago the Indian IT major’s co-founder and ex-chairman, N R Narayana Murthy, was apprehensive about its expansion in the East Asian nation, according to WikiLeaks.

According to a cable released by the non-profit organisation, Murthy reportedly told US diplomats that the concerns of his 1981-founded company’s clients about China’s poor intellectual right protection was checking its expansion in that country. “Murthy said his clients, particularly European and American ones, are reluctant to have their work done in China due to their concerns about China’s poor intellectual property protections,” the cable stated.

According to the Wikileaks cable titled ‘Infosys founder on IPR in China, hiring in the US’, Murthy told US diplomats that clients were initially reluctant to include China in the Master Agreements by which the company had to spell out name of delivery locations.

The cable said Murthy, now 65, discussed the state of Infosys with particular emphasis on its expansion plans outside of India. He, however, had said it would take four to five years to overcome clients’ reluctance to be served from China.

This seems to have what has happened exactly after four years, when Infosys announced setting up its campus in China this year, the first one outside of India. While announcing the opening of their campus in China in May this year, Murthy had said, “As the second largest economy in the world, China will lead the world in economic growth in the future and we see exciting times ahead. This large investment is a testimony to Infosys’ commitment to China.” According to the Wikileaks cable, Murthy also went on to give his own interesting experience in China to depict the how rampant was piracy in the country.

Taking a stroll on a Beijing road with Peter Bonfield, then CEO of British Telecom, Murthy said the two encountered a sidewalk vendor selling pirated Microsoft and Windows products. Murthy said Bonfield jokingly asked the vendor if he had Finacle (an Infosys banking software product) and the vendor replied “I can get it for you tomorrow”, said the cable.

In the cables, sectioned under — unclassified/for official use only — Murthy said that at that time, the Chinese leadership were not able to understand the impact of their weak intellectual property rights protections.

Murthy also described challenges on the human resources front in China. He said qualified graduates were available, but those who had sufficient English skills commanded a high premium. He also said retention was more difficult in China than in India, as Chinese professionals were more willing to leave for a higher salary where Indian ones valued institutions a bit more.

Incorporated in 2004, Infosys China on Wednesday employs over 3,300 people with about 95 of them being local recruits. In the fiscal 2011, Infosys China recorded revenues of $78 million. At present, Infosys services most of its global customers out of its three delivery locations in China.