Infosys Consulting CEO Decrees an Era of "Big Change"

CM: How would you characterize this period of time for Infosys Consulting? Pratt: It's a dangerous time and potentially an exciting time. It's a time when we have (an opportunity) to gain credibility with clients about really being business advisers. It's not unlike a time in the '80s when management consulting firms missed the technology wave and created an opening for the accounting firms to get into consulting. We're seeing another opening right now, where most of the consulting firms have either been very late or altogether missed the wave around accessing global talent. And this means bringing together super-efficient models around global talent. Efficient models sort of exist around manufacturing, and now we see them around services. Companies are saying that we need people to help us with this huge shift: "The whole competitive dynamics of business are changing, and we need consulting firms that can help us." So I think that the credibility is at stake and that's one thing. The other thing is the promise that we are going to develop our consultants into great business leaders. CM: What qualifies Infosys for such a role?

Pratt: Our point of view is that if you're really going to train the CEO of tomorrow you need four things: You need a strategic perspective on competition to be able to understand the competitive dynamics of the industry. You need to understand what it takes to implement big changes, so you need to know how to roll up your sleeves and duke it out in the politics of change and what it actually takes to get things done. Third, you need to understand the underlying processes and how a company runs — you really can't be a good leader and not understand those things. Finally, you have to understand the major economic forces in the world. That is, you have understand how North America is interacting with the EU, and how the EU is interacting with India and China. There is a fundamental shift in dynamics, and if you don't understand the impact India and China are having on your business, you are going lose. So I think that the different consulting groups need to expose their people to all of these things, or they are going to miss out.

CM: Are different types of firms better suited to give their people experience in these things?

Pratt: I would say that most consulting firms aren't. I think that management or strategy consultants are sort of stuck with the strategic perspective and maybe some international experience, but certainly their firms don't give them a deep enough understanding of the processes that help a company run and what it takes to make big changes. Meanwhile, I think that a lot of the accounting houses also don't get the strategic perspective enough and are only now beginning to work on the big changes. Two years ago, Infosys committed to building a world-class consultancy and working on site with clients, and the timing turned out to be very good. We want to get to this future model a lot faster than competitors can transition to it.

CM: What can you tell us about the future model?

Pratt: It's no secret that the future model is very good on-site consultants combined with a super-lean, super-efficient global delivery model. It's just better for clients in almost all aspects. Our approach now is to say, "Let us help you make big changes to your business." There's a lot more to it than managing talent. It's how to use information to make better decisions, how to monetize information.

CM: What are some of the milestones which suggest that the new Infosys model has arrived?

Pratt: It started hitting home about two years ago, when Infosys hit $1 billion and had 25,000 people. Now it's two years later, and we're at $2 billion in revenue and have 50,000 people. So we have added 25, 000 people in two years. The other indicator is how we were able to get a bunch of high-profile consultants from different firms to join Infosys. It's a breakthrough structure. Infosys Consulting is a U.S. company incorporated in Texas. We have a lot of autonomy to design the business. We are being innovative with our design, not only from an Infosys perspective, but also from a perspective of the consulting profession.

CM: In what sense have you been innovative from the perspective of the profession?

Pratt: When you look at how we are linking people's bonuses to the shareholder value we create for clients. And how we are linking consultant bonuses to a client mutual fund, which is where we created a performance measure by adding up all the fees our client companies pay us, and by buying the stocks of those companies, and then comparing the performance of that portfolio to the S&P 500.

CM: Doesn't Bain & Company do something similar?

Pratt: Well, Bain tracks their client company stock values and puts them on their Web site, but they don't pay their consultants based on it. Here, when people wake up in the morning they know that it's about how much business value they deliver. Part of what we do is survey clients and ask them how much business value we delivered versus what they expected, and that becomes a percentage that has a direct impact on people's bonuses. So if they say 110 percent, you get 10 percent more. If they say 90 percent, you get 10 percent less.

CM: How is Infosys Consulting innovative from a talent perspective?

Pratt: We're trying to set free a lot of the sacred cows, and we believe that the idea that good strategic thinking and good implementation have to be in separate firms is a ridiculous notion. So what we're trying to do is create a set of consultants who have good strategic perspectives and good implementation skills. I began consulting at Booz Allen and went to Deloitte, and there are people like Ming Tsai, one of our managing directors, who was at BCG for eight years and then went to IBM. So again, we have talent that comes from both sides. A lot of the consulting firms that did do implementation in the '90s let their strategy skills atrophy.

CM: What can you tell us about the leadership of your parent company?

Pratt: The leaders of Infosys are the same people who founded the company. They care deeply about the company and have a reputation for being leaders. And they understood from the start that Infosys Consulting had to be a separate entity, one that had the freedom to operate as consulting firm and not as a technology company. We have our own HR policies and our own culture. However, the focus on the client is the same, so we all come together at the client.

CM: Having spent most of your career in private partnerships, did you worry whether a publicly held firm could put its clients first?

Pratt: At first, I was concerned as to whether it would create undue financial pressure on the consultants. I wondered how we could avoid a situation where consultants would have pressure put on them at the end of the quarter to close business. But the accounting actually works differently. Revenue is accrued only when the work is delivered, so because of that it does not put financial pressure on the consultants. Now, we will have to see whether a problem is created as we experience greater pressure to grow. We'll have to see.

CM: Speaking of growth, should we be surprised to see Infosys Consulting do an acquisition in 2006?

Pratt: No, I think its something we're very actively looking at. I believe you have to get into consulting organically at first. You have to get the culture right, the processes right, the operating model right and then once you get to sufficient scale then you can grow through acquisition. This is going to be a core part of what we'll be doing going forward. We're going to be very picky. Again, there will need to be a good cultural fit and they will need to have the right level of client facing of consultants.