In my post yesterday, "Biggest Story of 2012: Implosion of H-1B Business Model," I promised to provide some additional examples that demonstrate how Infosys watchers, especially those in India, are so captivated by Infosys' power and influence that they're being blinded to the one development that will have a more dramatic impact on the future of Infosys and the Indian IT services sector than any other: the U.S. government's determination to bring Infosys to justice for rampant visa and tax fraud.
Let's begin with a Dec. 19 interview conducted by India's Business Standard with Kris Gopalakrishnan, the co-founder and executive co-chairman of Infosys who was CEO of the company when Infosys employee and whistleblower Jay Palmer filed his civil suit alleging visa and tax fraud, and the U.S. government began its criminal investigation of the company. Almost incomprehensibly, the interviewer asked absolutely nothing about the unprecedented legal challenge that Infosys is facing in the United States, which arose under Gopalakrishnan's watch as CEO. Instead, the interviewer lobbed softball questions about IT budgets and capacity expansion, enabling Gopalakrishnan to maintain the charade that the outlook for Infosys is rosy.
Then there's the equally incomprehensible and strikingly oblivious continuation of the myth that Infosys is a model of ethical corporate behavior. On Dec. 16, Beech Tree Associates, an ethics training outfit in the UK, posted an article titled, "Ethics and Competitiveness - The Double Business Case," in which the author cited Infosys to make his case about the value of business ethics:
What you do not hear so much about are the businesses that are doing well from a long term strategy and respect for business ethics. These companies are not so much "playing by the rules" rather they are "writing the new rules" and living by them daily in an uncompromising way. Infosys is one such exemplar company that I have written about before. An Indian IT services company founded on ethical principles, it has flourished for over 40 years; and no one can argue with its impressive business results. This is an excellent example of the positive business case for ethics (+PBC).
The irony is that the author was largely accurate: It is very much the case that instead of "playing by the rules," Infosys is "writing the new rules and living by them daily in an uncompromising way." The author apparently has no clue that the new rules Infosys is writing and living by constitute the absolute antithesis of ethical behavior, with visa and tax fraud a core element of its corporate culture. It's mind-boggling that an outfit whose reason for existence is to provide training in business ethics could have allowed itself to guzzle the Infosys Kool-Aid with such relish.
And then we have a Dec. 29 story posted on the website of NDTV Profit, a media outlet in India, headlined, "Corporate Succession: Inside Two Biggest Stories of 2011." According to these folks, the two top stories of 2011 were the leadership changes at Tata Sons and Infosys. The story recounted how former Infosys board member Mohandas Pai criticized the CEO selection process of the company, as if that somehow helped to substantiate the selection of the leadership change at Infosys as one of the two biggest stories of the year. There was, of course, no mention whatsoever of the visa and tax fraud scandal in the United States that these leaders were quietly dealing with as they passed the baton.
Perhaps most inexcusably oblivious of all was an analysis of Infosys' business outlook conducted by Sudin Apte, principal analyst and CEO of Offshore Insights Research and Solutions in Pune, India, who has reportedly been tracking Infosys and the Indian IT industry for 15 years. Apte's analysis, which appeared on the website of Forbes India on Dec. 19, was pessimistic about what lies ahead for Infosys. It cited faded strength over other companies in account management, client relationships and account mining. It referred to slow decision-making and a paucity of clients that have bought Infosys' stories on new technology initiatives. It mentioned unhappy Infosys customers who are dissatisfied with the low number of employees it assigns to their projects. It noted that Infosys' net margins are 50 percent of what they were 10 years ago. But it said absolutely zero about anything that relates in any way to what Infosys and the Indian IT services sector stand to lose as a result of the U.S. government's sweeping criminal investigation of the company. This guy's entire professional life is wrapped around Infosys and the Indian IT services sector, and yet he's clueless about what's happening behind the scenes in the market where Infosys gets two-thirds of its revenue.
Perhaps it's the case that Infosys is seen as too big and too powerful to be hurt in any meaningful way by whatever actions the U.S. government takes as a result of the criminal investigation. Perhaps visa fraud is seen as a standard business practice that doesn't warrant any substantive attention. I have a feeling that a lot of that is about to change, and that this case is going to get a whole lot more attention than it's getting now. There are people within Infosys who know what I'm talking about. Stay tuned.