Why Infosys Chose NASDAQ Over Just BSE? - Infosys Co-Founder

We are all fierce competitors, he said. But we work together.

The Infosys co-founder was describing how the Indian IT industry responded to the Satyam scandal in 2009 - the moment when one of India’s four largest IT services companies collapsed under an accounting fraud that had been running for years. The natural competitive move would have been for Infosys, Wipro, HCL and the others to circle. Poach the clients. Poach the employees. Absorb the market share that had suddenly become available.

They chose not to.

The NASDAQ Rationale

The story starts with a related decision. The NASDAQ listing.

The interviewer asked why Infosys had listed on NASDAQ in 1999 when it was already listed on the Bombay Stock Exchange.

Trust, credibility, brand, Kris said. In the US where the actual clients were.

The NASDAQ listing was not about raising capital. Infosys had capital. The NASDAQ listing was about signaling to the US clients that Indian corporate governance was world-class.

The point was to show that Infosys’s standard of disclosure and financial reporting was the best in the world.

This is a specific insight worth pausing over. Public market listings are usually thought of as capital-raising events. Kris is telling us the NASDAQ listing was a signaling event. The point of listing on the world’s most demanding exchange was to demonstrate that Infosys could meet the world’s most demanding disclosure and reporting standards.

The clients would see the listing. The listing would signal the standards. The standards would build the trust. The trust would build the brand.

The Competitive Reality

The context around Infosys was intensely competitive.

Wipro, HCL, Satyam - they all fought tooth and nail, Kris said.

The interviewer asked how Kris perceived the competition. Competition always was there, is there also, Kris said. But what you need to understand is that the demand is more than what any one of us can handle.

That is the sentence worth writing down. In an industry where demand exceeds any single player’s capacity, competition takes on a different character. It is not zero-sum. Everyone can grow at the same time.

Kris gave the current numbers to make the point. The Indian IT industry today is a $200 billion market growing at 8-10% annually. That is $16-20 billion of net new demand every year. No single company can absorb that alone. The high-growth tier consists of a handful of companies. There is room for all of them.

The zero-sum thinking that drives most competitive strategies does not apply.

The Satyam Fiasco

Then came the Satyam scandal.

In January 2009, Ramalinga Raju, the founder and chairman of Satyam Computer Services, admitted to an accounting fraud of approximately Rs 7,000 crore. The company had inflated revenues, profits, and cash positions for years. Satyam was one of the four largest Indian IT companies. Its collapse threatened the entire India brand for IT services.

What we did when Satyam fiasco happened was that we said Satyam’s clients and Satyam’s employees should not suffer, Kris said. Because that will be a black mark for the industry.

This is the sentence that reveals the philosophy.

The Indian IT competitors did not see the collapse of Satyam as an opportunity. They saw it as a threat to the entire sector’s brand. If Satyam’s clients suffered, they would blame India as a destination. If Satyam’s employees were treated badly, the labor market signal would damage every other Indian IT company’s hiring.

And we all agreed that we will not poach employees and we will not poach customers, Kris said.

The collective decision was to not compete for Satyam’s assets.

This is genuinely rare business behavior. In most industries, a competitor’s collapse is treated as an opportunity to take share. Aggressive recruiting from the failing company. Aggressive sales calls to their clients. Talking down the competitor to customers who might be worried. Every one of these moves would have been available to Infosys, Wipro, and HCL when Satyam collapsed.

They did not take any of them.

The Government Response

The government did its part in parallel.

Government replaced the board and brought in new people, Kris said. Sold the company to Tech Mahindra. Satyam was absorbed into Tech Mahindra.

The government intervention was decisive. New board. New leadership. Managed sale to Tech Mahindra. The company was preserved through absorption rather than allowed to collapse into pieces that competitors could pick over.

The combination of private-sector restraint and government coordination produced the outcome.

The Payoff

That was actually probably the best thing that could have happened because the clients’ belief in India brand and India as the destination for software services got reinforced, Kris said.

This is the payoff sentence.

The Satyam collapse could have been the moment that ended Indian IT’s global reputation. Instead, it became the moment that reinforced it. Clients saw the government and the industry working together to preserve the sector. They saw employees not being thrown to the wolves. They saw the systemic response that suggested India as a destination was mature enough to handle its own crises without collateral damage.

Even the government and the industry working together, Kris said, making sure that no customer suffered and not one employee also got hurt.

That is the mature-market signal. The industry can police itself. The government can coordinate rather than punish. The clients can trust that even a scandal will be managed responsibly.

The NASSCOM Infrastructure

The coordination did not happen by accident. It happened through NASSCOM.

NASSCOM was created as the industry body together by the Indian services companies, Kris said.

NASSCOM - the National Association of Software and Service Companies - had been created by the Indian IT competitors to serve as the industry body. It was the venue where competitors coordinated on industry-wide issues. Government relations. Skills development. International representation. Standards setting.

When Satyam collapsed, NASSCOM was the venue where the collective response could be organised. The decision not to poach was made in that venue. The coordination with the government was done through that venue.

This is the specific insight worth carrying forward. Industry-wide coordination requires industry-wide institutions. Without NASSCOM, the Indian IT companies would have had no venue in which to coordinate their response to Satyam. Each would have made its own decision. Some would have chosen restraint. Some would have chosen predation. The collective outcome would not have been possible.

The Non-Answer

The interviewer asked whether Infosys had considered bidding to acquire Satyam.

No, Kris said. I can’t talk about that.

That is the exact response. He does not elaborate. The non-answer is itself informative. There is a version of this story where individual companies did consider individual actions that the collective agreement ruled out. Kris does not want to talk about it. We do not need to speculate.

What matters is the collective outcome that was chosen and executed.

The Universal Insight

The Kris insight has application beyond IT services.

Every industry has a moment when a major competitor collapses. Financial services had Lehman Brothers. Aviation had various carriers. Telecom has had operators go bankrupt. Retail has had massive chains close. In each case, the surviving competitors face the choice Kris describes.

The default is to circle. Poach. Take share. Grow at the expense of the failing rival.

The alternative is to protect the industry brand. Coordinate with the government. Absorb the failing competitor into a healthy one. Preserve the trust of clients who might otherwise question the entire sector.

The alternative is harder. It requires industry-wide coordination institutions that most sectors do not have. It requires individual companies to accept short-term opportunity costs for long-term collective benefits. It requires the kind of maturity that most industries do not develop until they have been through several cycles.

Indian IT was mature enough to make the alternative choice. Not because the individual companies were more ethical than anyone else. But because they understood the demand principle. There was more demand than any single company could handle. Poaching Satyam’s assets would have gained less than the damage to the India brand would have cost.

The competitive philosophy that flows from that understanding is what Kris is describing.

What This Reveals

Three things from this segment will stay with me.

The NASDAQ-as-signaling insight. Public market listings can serve as trust events rather than capital events. The listing signals the standards. The standards build the brand. This applies to any company selling into a market where trust matters more than capital.

The demand principle. In an industry where demand exceeds any single player’s capacity, zero-sum competitive thinking is wrong. Everyone can grow at once. The competitive strategy that matters is not taking share from rivals but capturing the demand together with them.

The Satyam restraint. The Indian IT industry chose to protect the sector over exploit a competitor’s collapse. This required an industry body that existed as a coordination venue. It required government partnership. It required individual companies to accept that the collective interest was worth more than the individual gain.

The Real Question For Founders

The uncomfortable question the segment raises is whether your industry has the coordination infrastructure to respond the way Indian IT responded.

Most industries do not. Most industries have industry associations that exist for lobbying but not for coordination. Most industries have competitive dynamics that treat rival collapses as opportunities. Most industries would poach if given the chance.

The founders who understand the demand principle build differently. They invest in industry bodies. They participate in standards-setting. They coordinate with government. They accept that some short-term gains are not worth the long-term damage to the sector.

That is the mature-market posture. Indian IT built it in the 2000s. The Satyam response was the moment when it paid off.

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