India needs to be stable in troubled economic climate: Murthy
India needs to find a balance between remaining competitive and being financially secure and stable in a troubled economic climate, Infosys' Chief Mentor, N R Narayana Murthy said here today.
The Indian corporate sector has been extremely fortunate in escaping the worst of the global financial crisis. While America and other western countries posted sluggish growth rates and witnessed spiraling unemployment, India's economy grew 6.8 per cent during the financial quarter in June, up from 5.8 percent in the previous quarter, Murthy told reporters on the sidelines of an industry conference.
"Despite the relative health of the Indian economy, we should be mindful of the fact that the danger of an economic downturn in India has not yet passed and situation could change rapidly," Murthy said.
"We must be alert and careful to temper our optimism with realism," the Infosys Founder said.
Indian companies function in a highly competitive environment which demands keeping operational costs down.
"Our ability to deliver high-quality products at a fraction of the prevailing cost has become an integral part of our success in recent years, and anything that jeopardises that objective places our future growth at risk," Murthy said.
In current economic scenario, Indian firms are also operating in an environment that is resource-scarce.
"While India has a reasonable level of resource availability, there is a limit to how long we can tap these resources before exhausting them. What is more, we cannot stake our productivity on continued investment in new resources," Murthy said.
'A poor economy not an excuse for lay-offs'
Layoffs are an inevitable aspect of the corporate world, especially in recession. But a poor economy should not be an excuse to cut jobs, a top industry official said.
"In today's economic downturn, the challenge lies in having the courage to set an example that responsible profitability is a realistic achievement, and by using data to demonstrate that it is possible to preserve jobs in an economic downturn while innovating to increase profits, productivity and efficiency," Murthy, told reporters on the sidelines of an industry meet here today.
It is simply too risky to pour money into projects or assets that may or may not yield the desired results. Therefore, from the perspective of resource management, there is a compelling case to be made for creative thinking and innovation to create new productivity and efficiency solutions from existing resources, Murthy said.
"The other imperative of Indian companies is to improve the lives of the largest number of Indians because that is how you can make this a better society," he said.
"Indian companies must embrace fairness, transparency and accountability to their stakeholders-customers, employees, investors, vendor-partners, the Government of the land and society," Murthy said.
Rather than relying on the standard solution of cutting jobs which is at best a stop-gap measure to temporarily improve numbers, "we should encourage employees at every level to contribute their ideas to generate sustainable, genuine improvements in productivity efficiency and profits," the Infosys Founder said.
