Phaneesh Murthy, iGate Chief: Patni buyout a transformative thing in my life

After eight years of scrambling to compete better with the big boys of Indian IT, Murthy is now set to face the toughest assignment he's ever had: integrating iGate with a company double its size.

By Shruti Sabharwal & Pankaj Mishra, ET Bureau & Agencies | Jan 11, 2011, 01.20 PM IST

BANGALORE: For Phaneesh Murthy, who helped Infosys Technologies grow from $2 million in 1992 to nearly $700 million over 10 years, coming back to the forefront of Indian IT has been a long, slow burn.

After eight years of scrambling to compete better with the big boys of Indian IT, Murthy is now set to face the toughest assignment he’s ever had: integrating iGate with a company double its size. That too in an environment where mid-tier firms are facing increased heat from bigger rivals and customers who are more demanding than ever.

"Clearly this is one of the two or three most transformative things I have done in my life, but the real test lies ahead," he says. "As a leader, I have an obligation to create a platform that is the best in the world. Now, we have that platform we can compete with any of the big guys, like IBM. Now, we have see to see how hungry our employees will get as we grow from teenagers to adults after this deal," says Murthy.

The decision to accept a $40,000-a-year job and move to the US with a wife and kid was transformative in 1992, Murthy says. After leaving Infosys in 2002, he founded Quintant, which posted revenues of $30 million, and later got acquired by iGate.

Over the past four months, after General Atlantic approached him to sell its 16% Patni stake and explore a bigger transaction with iGate, Murthy held hectic parleys with the three Patni brothers, apart from the top management and customers , not to mention his own board, which was sceptical of the deal.

"The reaction from the board was intriguing. They said it is big, complex. And also asked me to show it could be pulled off in terms of integration, financing and other issues," he recalls. The next obvious question the iGate board asked him was whether the Patni brothers were unanimous about selling their stake this time.

"I had just two meetings with the promoters separately . And while each of them is a fine gentlemen, when they come together it creates a certain dysfunctionality that I do not understand," Murthy says. "Fairly, public spats have taken its toll on all of them."

Murthy, 47, an engineering graduate from IIT Madras and an IIM Ahmedabad alumni to boot, spent months attempting to seal the deal—a transaction that eluded some of the most aggressive bidders including Japanese IT giant NTT and private equity firms Advent and Carlyle over the last three years.

"Naren Patni’s emotional attachment is extremely high and it was difficult for him but I understand that. As a larger company they could have turned around and said we will buy you but I think the past has taken a toll on them. They had by then mentally prepared to say take it (Patni) off our hands, so in that way our timing was good," he says.
In many ways, Murthy had made it clear to the iGate board that for him to achieve the 2012 goal of becoming a billion-dollar company, an acquisition was critical.

"The seeds were sown when we were attempting to acquire Satyam. But at the time there were concerns including lack of capability, proper team apart from too much uncertainty of revenue flow in Satyam," he says. While iGate officials are set to meet the Patni management and lay out plans for the new organisational structure, Murthy says he will drive the joint entity. "Regardless of what my title is, fundamentally I will still be driving both the companies forward. We are operating companies, and not passive financial investors," says Murthy who returned from Hawaii last month after a quick vacation with family amid the Patni pursuit.

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