“Mega corporation’s No.1 enemy exposed. It’s the business model called Time & Material,” large ads from iGATE Corp in the US screamed last year.
The multi-million-dollar campaign was a thumb-in-the-nose gesture from its CEO Phaneesh Murthy to much of India’s software services industry, including his former employer, Infosys, where he had served as global head of sales.
“The old model of IT vendors getting paid on a flawed metric of effort without any risk being shared, is dying in today's times,” the goateed, and now greying Murthy said in an affirmation of his short-selling the cheap-wage model on which India built up its $76 billion (Rs. 418,000 crore) software and business process outsourcing (BPO) export business that employs three million people.
Under Murthy, iGATE shifted to a pricing model in which its returns will depend on outcomes delivered. The spunk was typical of Murthy, who broke some rules to scale new heights in the competitive business. Now, iGATE says he broke some more.
The 48-year-old’s exit on grounds of sexual harassment from the company, the same ground on which he quit Infosys in 2002, has a ring of déjà vu.
On both occasions, Murthy has denied any wrongdoing.
Infosys paid $3 mn to his personal assistant in the US and saw him off to settle his case, while iGATE, which last year paid him $1.5 million in annual pay, simply asked him to quit because he did not disclose a relationship with a subordinate.
Three R's — risks, relationships and returns — have been key factors driving his growth.
Joining little-known Infosys in 1992 as marketing manager for someone with an IIT,Chennai and IIM, Ahmedabad pedigree was a big risk.
Infosys co-founder NR Narayana Murthy, no relative of Phaneesh, nurtured him because he had two traits unusual in an army of soft-spoken, introverted engineers in southern India: an outgoing nature and an aggressive streak that helped put the Bangalore company on the world map.
“He was an alpha male-high achiever, high energy, high performance,” said Mohandas Pai, former Infosys board member who is now chairman of Manipal Global Education.
“And alpha males have ego. I don't know what got him.”
Soon after Infosys became the first Indian company to list on the tech-heavy Nasdaq in 1999, Murthy would boldly speak of how Infosys must rank along side global consulting firms.
When Infosys ran into a crisis in 2001 after an Internet “dotcom” meltdown, Phaneesh Murthy helped Infosys found BPO unit Progeon Solutions, in which lie the roots of his later model of making clients outsource complex work that involves business analysis and not simple work like coding or clerical accounting.
One industry insider said he was a “lone ranger who wanted things done his way, and could not pull along people.”
He had a way with high-flyer clients in the global financial services industry, offering a mix of happy golfing and pally talk.
“He is extremely friendly, smart and a raconteur who could hold his own against anybody,” Pai said.
Phaneesh’s unseemly exit from Infosys put him in the wilderness, but only for briefly. Murthy bounced back in under two years by first founding a consulting firm called Primentor, which he later merged into BPO firm Quintant, which was later folded into iGATE, which then went on to acquire Patni Computer Services - the firm from which the key founders of Infosys had come.
“At iGATE they have tried to do completely new things. I don’t know if it has worked,” said Ganesh Natrajan, CEO of Zensar Technologies.
Being now a relatively smaller player in a big industry he took iGATE to being named among the best employers, and then backed it up with his analytics and risk-based pricing model that seemed to be changing the game. But then, the game changed for him — again.