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September 24, 1998

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Asia Pacific Software Showcase
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The future is inorganic: M&A, not organic growth, will catalyse the software industry. Infosys CEO Narayana Murthy does analysis. Mergers and acquisitions in the Indian software sector could become a reality in the coming months, feels Infosys Technologies Chairman and CEO N R Narayana Murthy.

Though Murthy declined to name the "corporate probables" that could kick off the process in India, he said the appeal of the "non-organic" mode of growth is rapidly catching on with the country's top software entrepreneurs.

Email this story to a friend. "Worldwide, IT companies embarking on the non-organic growth mode have understood the wisdom of mergers and acquisitions on the threshold of the Digital Age," Murthy has been reported as saying.

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Describing Microsoft's acquisition of PowerPoint and Internet Explorer as perfect instances of corporate leveraging, Murthy said, "Such acquisitions can lead to new degrees of freedom for existing corporates."

"There is near unanimity about a company acquiring multiple dimensions through the M&A route... once executed with the right mindset, it is bound to create a win-win situation in the Indian IT corporate spectrum," he observed.

More importantly, only those corporations that step up the pace of innovation will survive, he said. "Organisations with decision-making speed and imagination will thrive as nobody can claim to have a monopoly over creativity," felt Murthy.

He said knowledge and imagination would prove more valuable than physical capital. "Physical assets or strong balance sheets will no longer be the primary requirements of today's marketplace," said Murthy.

Murthy felt that impending M&A in the software arena would complement the skills of innovative entrepreneurs.

But the Infosys chief, also a key member of the high-powered National IT Task Force, said "What India now needs is a robust domestic market in order to become a successful long-term exporter."

Significantly, the domestic software sector is targeting annual growth levels of 30-40 per cent. Murthy believes both industry and government should jointly work to create a situation wherein key government departments, ministries, public sector undertakings and private sector organisations set aside a substantial chunk of their expenditure budgets for IT-related investments.

"That is bound to happen in this age of cut-throat competition, given the profusion of MNCs, the increasing pace of decision-making both in the corporate world and in government," said an optimistic Murthy.

- Compiled from the Indian media

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