Infosys is one of India’s hallowed institutions, a titan of the corporate landscape that is not to be trifled with.
And yet, one senses that their recent Rs 18,000 crore share buyback is a case of a runaway train so set on its course that it cannot course correct, even if an AI-sized bomb lingers large on the road ahead. Perhaps it is prudent to execute this buyback and return excess cash to investors. But an argument could be made that it is even more prudent to invest in the future, especially when it can obliterate even the most well-set of business models.
But Infosys was not always so conservative.
Ghost in the Machine
The year 2015 was a turning point, though few recognized it at the time. While much of the tech world was still grappling with the nuances of “machine learning,” a visionary CEO at an Indian IT giant made a bold, prescient move: he committed his company, Infosys, to back a fledgling non-profit called OpenAI.
That CEO was Vishal Sikka, and his story at Infosys is a corporate “what-if” that speaks volumes about leadership, cultural inertia, and the brutal cost of strategic missteps in an era of rapid technological disruption.
Sikka, the first non-founder CEO of Infosys, was no ordinary corporate leader. With a PhD in AI from Stanford and tutelage under AI pioneers like John McCarthy and Marvin Minsky, he arrived at Infosys not to merely manage an IT services behemoth, but to fundamentally transform it.
His fundamental principle was stark yet simple: AI was poised to reshape industries, and a significant portion of Infosys’s 150,000-strong workforce, engaged in repetitive tasks, would eventually be automated. He envisioned a shift from labor arbitrage to knowledge automation, from projects to platforms, and from cost-centric delivery to value creation. He sought to position Infosys, and by extension Indian IT, to own the AI economy rather than merely rent its services.
Infosys saw the potential to do so in a fledgling startup called OpenAI, and became one of its earliest investors. Initial engagement, however, was framed as a charitable donation. At the time, OpenAI was structured as a non-profit research lab dedicated to ensuring artificial general intelligence benefited all of humanity. This noble mission seemed a fitting recipient for Infosys’s philanthropic arm, not an equity investment that might yield strategic dividends. This decision, seemingly innocuous at the time, would prove to be one of the most consequential in the company’s history.
The unfolding drama within Infosys itself created the perfect storm that prevented Sikka’s vision from taking root. A deep cultural schism emerged between Sikka’s aggressive AI investment and transformation agenda and the conservative financial ethos of co-founder N.R. Narayana Murthy. Murthy, championing the values that built Infosys—modest compensation, proven business models, and prudent financial management—found himself at odds with Sikka’s Silicon Valley-esque approach to talent acquisition and fundamental business model overhaul.
By 2017, this public warfare reached a crescendo, forcing a choice. Murthy prevailed, and Sikka, the visionary who had charted a course for Infosys to lead the AI revolution, resigned.
This internal conflict had devastating external consequences. The critical inflection point for OpenAI, and indeed the broader AI landscape, arrived in 2019. OpenAI restructured from a non-profit to a “capped-profit” model, opening the door for strategic partnerships and equity investments.
This was Infosys’s last, clear chance to convert its early donor relationship into a robust strategic alliance. But consumed by the aftermath of the Sikka-Murthy saga and under new leadership with seemingly little interest in AI partnerships, Infosys let the opportunity pass.
The $45 Billion Missed Opportunity
Meanwhile, Microsoft, under Satya Nadella, saw the potential. They turned Sikka’s original thesis into action, securing what can only be described as the partnership of the century. Microsoft invested an initial $1 billion in 2019 (now reportedly totaling ~$13 billion) and negotiated an exclusive partnership that included being OpenAI’s sole compute provider, a 49% profit share, IP rights for use in Microsoft products, and first access to new models.
The result? Microsoft emerged as the undisputed enterprise AI leader, boasting an AI annual revenue run-rate of ~$13 billion and a rumored ~30% stake in OpenAI, valued at an astonishing $150 billion based on a $500 billion OpenAI valuation.
The numbers are stark, bordering on painful. OpenAI’s current valuation of $500 billion dwarfs Infosys’s market cap of roughly $70 billion. Had Infosys doubled down in 2019 with a “mere” $1 billion investment, that stake could today be worth upwards of $45 billion.
To put it another way, the non-profit Infosys donated to in 2015 is now worth more than four times Infosys’s entire company.
This is not merely a missed opportunity; it is a profound failure of strategic foresight and leadership, exacerbated by internal squabbles.
Today, India’s tech landscape faces mass layoffs, significant skills gaps, and a creeping commoditization of IT services. These are precisely the shocks Sikka’s AI strategy was designed to absorb. While Infosys is now attempting to course-correct, as evidenced by its recent focus on balancing buybacks with AI investments, the question remains; is it too little, too late? The company is now playing catch-up in a race where its former CEO had handed it a significant head start.
The Infosys story is a cautionary tale for all established enterprises. It underscores that even pioneers can be undone by a failure to embrace disruptive change. It highlights the critical importance of visionary leadership that can navigate cultural resistance, and the immense cost when such leadership is either sidelined or ignored. In the end, Sikka drew the blueprint, Microsoft built it, and Infosys, despite its early glimpse of the future, is now left with the prospect of paying the rent in an AI-driven economy it could have owned.
