A U.S. tech downturn offers India ‘a bigger opportunity,’ says Infosys founder

Infosys founder Narayana Murthy sees tech layoffs in the U.S. as an opportunity for India.

“I look at these things [such as tech layoffs] as part of a business cycle. The curve goes up and down, up and down. So I would not be that much worried,” Murthy told The CNBC Conversation.

While India’s domestic IT companies worry that a slowdown in the U.S. economy could lead to American firm cutting back on tech spending and projects in India, Murthy said Indian IT firms stand to gain instead.

“Whenever there is a downturn in the U.S. or in the developed world, there is a bigger opportunity for countries like India, particularly in my sector, which provide better value for money,” Murthy told CNBC’s Tanvir Gill.

“In a downturn, the market shrinks a little bit and our charter is very clear. We work even harder and then we take a slightly larger market share and you will not have any issue of job losses,” said Murthy.

Sometimes described as the father of India’s IT sector, Murthy — with his six friends — founded Infosys in 1981. He served as CEO from 1981 to 2002.

Funded with an initial investment of $250 from Murthy’s wife, Infosys has grown into a multibillion dollar company valued at over $60 billion.

India’s second-largest IT company hires more than 346,000 workers across the world from Asia-Pacific to North America to Europe and the Middle East.

Many companies opt to outsource software development to India for quality at lower costs, said Krina Mehta, co-founder of U.S.-based offshore software development company Fortune Infosys, in a LinkedIn post.

“By working with [Indian developers], you will have the access to high-quality IT professionals for quite reasonable cost compared to the prices you will have to pay in the West,” said Mehta.

There are other American and European companies coming. So I suppose our opportunity will come in the coming years.
Narayana Murthy
Founder, Infosys

Mehta said India has a talent pool filled with skilled software developers who developed a wide range of tech specializations from relevant and core technologies like Python programing to newer enterprise technologies like .NET Core.

According to custom software development company Peerbits, companies can save 20% to 30% in tech spending by offshoring their custom software development needs to India.

“The lesson for the U.S. corporations is to ensure that they improve their productivity, reduce their cost automatically even without depending on countries like India, China, etc. I think that is the way to move forward,” said Murthy.

Opportunities ahead

Murthy noted that iPhone maker Apple will be shifting some of its production to India.

Apple started assembling its flagship iPhone 14 in India last year after production was disrupted at the world’s largest iPhone factory in Zhengzhou, China due to a Covid outbreak and workers’ protests.

Apple currently manufactures 5% to 7% of its iPhones in India, a jump from just 1% in 2021. India’s commerce minister has said Apple wants to eventually manufacture 25% of its iPhones in the country. 

Murthy said many American companies like General Electric and Microsoft have set up research and development centers in India.

“There are other American and European companies coming. So I suppose our opportunity will come in the coming years,” said Murthy.

“The Indian leadership under the prime minister Shri Narendra Modi has put in a lot of initiatives like ‘Startup India’ to make sure that the country becomes a source of innovation,” said Murthy.