N.R. NARAYANA MURTHY says once you benchmark with the best in the world, you realise how small you are

A company that adds an organisation equivalent to half its size every year poses a very stiff challenge to those reclusive strategists - the board of directors. When such scorching growth (40 per cent and above) comes on annual revenues of $1-billion plus, the responsibility grows manifold.

For the board of directors, even one that includes the likes of N.R. Narayana Murthy, Nandan Nilekani, Omkar Goswami, Larry Pressler and Claude Smadja, piloting such an organisation can be treacherous. A simple error of judgement could spell disaster. So, how do they do justice to the onerous responsibility of defining future strategies without jeopardising the current rate of growth?

The Infosys Technologies board believes it has found the answer in the 1:1:3 formula. In its offerings to the world, consulting was conspicuous by its absence. The board believes that the $20-million investment in starting the consulting practice, Infosys Consulting Inc., last year will be pivotal to how Infosys will grow. This is what the formula means: For every single consulting specialist on the job, Infosys Technologies would like to place at least one person on site and another three offshore. The attempt is to create a potent force in the IT industry by marrying consulting with global delivery. The Infosys board thinks that if the 1:1:3 strategy can be implemented, it would be possible to piggyback more on the consulting business - that consulting will generate enough downstream work to keep the organisation on a high growth path. Infosys's revenues from consulting are at 3.4 per cent today. The company claims it hasn't set a revenue target for Infosys Consulting yet.

Infosys Consulting is being led by CEO Stephen Pratt, former global leader of Deloitte Consulting's customer relationship management (CRM) practice. Its managing directors include Romil Bahl, ex-vice president, consulting services, EDS; Raj Joshi, former CEO of Deloitte Consulting Offshore Technology Group; and Paul Cole, ex-head, global operations, Cap Gemini. Infosys Consulting will hire 75 people by March 2005 and 500 consultants by March 2007.

To provide the support structure to 1:1:3, the board took a strategic decision. In November 2003, Infosys restructured itself from geographical business units to fully integrated vertical industry groups called Independent Business Units (IBUs). Its IBUs are Banking & Capital Markets; Insurance & Healthcare; Automotive & Aerospace; and Retail, Distribution & CPG. The board believes such a structure - most international IT firms are structured this way -will create multiple growth engines within the organisation. Especially since each IBU head has been fully empowered, like a CEO, to design and implement his strategy.

The 1:1:3 plan will also draw support from the BPO business. While Infosys's BPO subsidiary Progeon lags behind its peers, its board has decided to keep off the call centre business. Instead, the company will focus on areas like business transaction, sales order and financial reconciliation. "Call centres has become a commodity business. We would like to keep away from it," says Nandan Nilekani, CEO and MD. Despite that, Infosys's ITES revenues will double to $34 million this year, from $17 million last year.

Next, to monitor targets and for mid-course corrections, Infosys has a triple-horizon strategic planning. In the first horizon, progress will be tracked from a quarter to a year. In the second horizon, the board will approve a three-year plan comprising business plans for all IBUs. The third horizon is scenario planning. It is a five-year crystal ball gazing to find answers to questions like Infosys's response if China becomes hugely competitive in IT or if there is a shortage of labour in India. Or the possibility of a radical technological change and the company's readiness for such a scenario.

Infosys also has a Risk Mitigation group to look at a variety of risks, ranging from micro- and macro-economic risks to technological and geographical risks as well as risks in application areas.

Strategies like these have kept any other Indian corporate from unseating Infosys Technologies from the top slot in the BW Most Respected Companies (Infosys has held the numero uno position since 2001). After all, dynamic industries require dynamic planning. And Infosys has more than proved that it's a veteran at that.