Vibin Balakrishnan

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What is the mapping of Intangible Assets (I.A.) at INFOSYS? Which ones do you consider as crucial for your strategy, for your competitiveness ?
We are a people-oriented company. Our financial statement is 4 billion dollars. We use valuation tools to measure our human resources and our brand, in order to try to explain the difference between the market cap and the book value. Therefore, I would say the two most important I.A. at INFOSYS are the brand and the people.

Is there a risk-management unit dedicated to the specific risks linked to I.A.? (E.g. reputation, image, human capital…)
We don’t have a dedicated group working on this issue however we have a board committee. The board is responsible for the governance of the company. We have identified the biggest risk as reputational.

It’s fairly clear, just by looking at the way we work, how important human resources are to our company.  We have to make sure we have the reputation and the brand to attract the best and the brightest. We need to remain the employer of choice on our market. So the brand is covered by the board. In terms of reputation, we have to be transparent, we have to communicate, and we have to make sure our financial statements are transparent. All in all, every single risk the company faces is covered by the board.

By which means do you communicate on I.A.?
We communicate on different levels.  In India, we are members of various committees of different regulators. We give a lot of information out to make sure that stakeholders are comfortable. We participate in forums about risk management and the like. We are a highly reputed brand in India, covered by a lot of media sources.

Basically, we have to practice what we preach. What’s also important is leadership in the company – we have to maintain and constantly improve the corporate governance structure. We follow the highest standards, and go beyond legislation. In India, we are a very strong brand, highly reputed across the country.

 Could you please tell us about INFOSYS 5+1 approach ?
The 5 are the stakeholders of the company: customers, suppliers, staff, shareholders, society, while the +1 refers to the leadership that aligns them to a common purpose. We believe that the company belongs to the stakeholders, and that the management is just a trustee of shareholders’ money. We also believe in going further and giving all the necessary information to all the stakeholders. Corporate governance is a mindset issue.

So your strategy, then, is to deliver shared value ?  Do you think that stakeholders have a good understanding of this strategy ?
Companies that are more transparent give more comfort to stakeholders. There is an IT company in India which got in trouble for fraud – the whole market went down with it, except for INFOSYS. We give stakeholders more comfort, and this is clearly shown in our higher price/earnings multiple. As we have seen time and time again, companies which are much more transparent have higher multiples for a longer period of time.

We try to explain and communicate to stakeholders. I think stakeholders appreciate this. When stakeholders see value, that brings confidence and comfort. As long as we communicate, confidence will be good.

Have you ever been swayed by short-term objectives, or have you managed to keep a balance between short-term and long-term assets ?
We have always managed to keep that balance. We understand that it is difficult to manage both the short and the long term.  But we always think in terms of long-term investments. We are able to convey and articulate our long-term strategy, even if it means short-term losses. The stakeholders appreciate this.

The customers take comfort in the fact that we have a better management and a more sustainable strategy. They are highly comfortable working with a trusted partner like us.  Because of this, we are able to obtain premium rates.

The vendors give us better rates and are more willing to work with us. They think we are very transparent.

Is there an Indian way of measuring intangible assets ? 
Not really. We follow global methods. There are various governmental and semi-governmental committees on intangible assets in India, and we participate in these. But I hope that we’re not heading towards more government involvement. I think that it’s the job of individual managements to communicate. There should be some mandatory requirements, but, in the end, it’s up to companies to do what they can. What’s more, I don’t know how much the regulators can mandate in terms of reporting intangibles.

If you are asking me if it would be useful for the IT players to come together and self-regulate the sector, I would say it should be left to individual companies. As for Indian management, it attaches value to intangible assets. Just to give an example, more than 50% of the Indian economy is service-based. But, we’ve taken a lead in India in terms of financial reporting and transparency. Some of it is legislated, but not all.  The IT industry is seen as much more transparent, and much more willing to share information.

How would you build on what you are doing now?  Which media would you use? What about competitors /other companies?
First, annual reports are extremely important. Also, by participating in various forums, because we have to make sure that people understand what we are doing. But even now, in India, we are extremely visible. We just have to keep articulating what we are doing. Some of our competitors have tried to reduce the gap by improving their communications strategy. Most companies are indeed trying to catch us. But we have to make sure that we are always one step ahead of them.

We work with other companies to make sure that they communicate more information. I know all the players very well, and we make sure that we always try to share information. But companies are different, and we can’t change how other companies think. We welcome progress. At the end of the day, everyone should benefit. We work with companies very closely – companies who are willing to change.

What do you think about the disappearing frontier between internal and external communication?  Could you tell us if this is a driving factor for the future ?
Well, there are some things that should never be shared with those outside the company - sharing customer data, just to give you an example.  However, companies should move towards a situation where internal and external communication is more or less the same. We are aiming at reducing the asymmetry of information. The difference should not really be there, except for vital internal information on customers and so on.

Has the Indian government identified intellectual capital and other intangible assets as vital to growth ?  Do you feel that there is a coordinated strategy in this field ?
Definitely, India is a young country. We are reaping the demographic dividend of a young workforce. The government really understands that intellectual capital is really important. What China is doing in manufacturing, India is trying to do with services.

Interview réalisée par les étudiants de la Tribune Sciences de l’Immatériel
Sous la direction de Marie-Ange Andrieux – Deloitte – Directeur de la Tribune Sciences Po de l’Immatériel