Narayana Murthy Starts Infosys

Seed Money for Infosys

NARAYANA MURTHY: When we started Infosys in 1981, we were seven people, and we put together about USD250 at current exchange rates. We were short of money, but we were very long on hope. - on PBS

This down-to-earth man had to mortgage his wife Sudha's jewelry for Rs. 10,000 to put some funds in the company. - ZDNet India

Established in 1981 by seven professionals who pooled in their savings of Rs 10,000 (borrowed from their wives),... india-seminar.com

IN 1981 MURTY WANTED TO START INFOSYS. HE HAD A VISION AND ZERO CAPITAL. . ....Typical of Murty, he just had a dream and no money. So I gave him Rs 10,000 which I had saved for a rainy day, without his knowledge and told him, This is all I have. Take it. - (unofficial) Sudha Murthy


Did the Murthys contribute the entire 10,000 rupees (USD250 at 'current exchange rates') or a share of it, at roughly 1,500 rupees assuming equal share among the seven co-founders? And how difficult was it for them to contribute even the higher of these two numbers?

2010 Update

February 2010. To put things in perspective, in 1981 I bought plane ticket to the USA and converted some rupees to dollars from over INR 10,000 I had saved over the prior one year (from 1980 to 1981) working as a first year regular employee earning much less than seasoned professional like Narayana Murthy or Sudha Murthy. No, my mom didn't have to pawn anything unlike poor Sudha Murthy who in 1981 had to raise INR 10,000 under severe hardship.

Narayana and Sudha Murthy : Highly paid Professionals

Estimate of their earnings

Narayana Murthy finished his undergraduate in electrical engineering from Mysore University in 1967 and then went on to obtain a master's degree in electrical engineering from IIT Kanpur. After that he worked at IIM Ahmedabad and then worked for a few years in France. In 1978 he was hired as the general manager at Patni Computers. My conservative estimate of his monthly earning at Patni Computers in 1981, just prior to founding of Infosys, is 6,000 to 8,000 rupees. His wife, Sudha Murthy did her graduate work at the prestigious IISc Bangalore and since 1974 worked for Telco , a Tata company. My conservative estimate of her 1981 earnings at Telco is 5,000 to 6,000 rupees a month.

Estimate of their monthly savings

Assuming gross combined income of Rs 11,000 per month, various deductions at about 3,000 rupees and their combined expenses of 3,000 rupees a month, the net savings comes to about 5,000 rupees a month. This is based on very conservative estimates.

Narayana and Sudha Murthy in the top Tier of Income

In 1981, India's per capita income was around 1,000 rupees a year. Murthys' combined annual income of over 100,000 rupees, placed them solidly in upper-upper-middle class - most likely very comfortably in the top one percentile of income brackets.

Summary

They seems to have been financially very well-off prior to the founding of Infosys, with the 'claimed' seed money of 10,000 rupees just small change for them. All these tales of hardships don't seem to be true, in my judgement.


Note: A few other hints about how well-off they were. a) After telling us how they spent USD17 on their marriage, and that too with costs split between her and her husband (can't you see how poor we were? impression creation attempt) in the very next sentence Sudha Murthy casually mentions going to the USA shortly after the marriage where she spent a few months. She forgot to mention the cost for that trip. Just plane fare for a single person would have been a few hundred dollars (about USD1000+?) How many poor Indians can afford to go to USA for personal visit like that. b) Just after start of Infosys they bought a house 'on loan.' How many people buy houses after starting up a company which might sqeeze their cashflows and do banks loan them money under such circumstances? c) Mr. Murthy mentioned that how just by chance on a flight that he happened to be sitting next to K.S.N. Murthy of the Karnataka State Industrial Investment and Development Corporation,who expedited his loan approval. I didn't hear of any poor businessmen starting out a company and flying for their business trips. I have seen them travelling by second class trains, though.


A few internal links

Charity - Narayan Murthy Style

Cornell loves Narayana Murthy (Infosys)

Narayan Murthy was too poor to attend IIT after clearing IIT-JEE with fairly high rank

Nandan Nilekani - co-founder of Infosys

CBS 60 minutes on IIT


A few external links

Commanding Heights: Narayana Murthy Interview on PBS

Interview with N.R. Narayana Murthy - India Seminar

Mrs.Murthy saying 'bout Mr.Murthy...(reprinted from Savvy August 2000)

IIT >
People >
Narayana Murthy >
Infosys Seed Money

"IN 1981 MURTY WANTED TO START INFOSYS. HE HAD A VISION AND ZERO CAPITAL. . ....Typical of Murty, he just had a dream and no money. So I gave him Rs 10,000 which I had saved for a rainy day, without his knowledge and told him, This is all I have. Take it." - Sudha Murthy in some unofficial article


(Last Updated: March 27, 2005)

Reform IIT