Globalization’s Poster Child Is Facing Political Headwinds

(Bloomberg Opinion) -- The Infosys campus in Bengaluru looks as if it is made from bits of from the developed world that have been flat-packed to India and then lovingly reassembled. The predominant theme is Silicon Valley bland: low-slung office buildings, well-maintained gardens, gyms, yoga studios and putting greens, even a resort-size swimming pool. But there are also echoes of iconic buildings such as the Sydney Opera House, the Louvre pyramid and St. Peter’s Basilica. Anybody who wanted to write the history of capitalism through the medium of corporate headquarters— and it’s as good a way of doing the job as any — might be advised to open the chapter on the recent age of globalization with this campus. 

Infosys Ltd. was founded in 1981 by seven Indian entrepreneurs with 10,000 rupees (about $1,000 at the time) between them. It rapidly became a symbol of the rise of a new India — high-tech and globally-connected — as the first Indian company to list on the NASDAQ and, in August 2021, the fourth to cross $100 billion in market capitalization. It was during a visit to the Bengaluru HQ in 2000 that the New York Times’ Thomas Friedman came up with his famous formulation that “the world is flat” — that every country’s now on a level playing field. And it was to this campus that a succession of foreign dignitaries — Vladimir Putin in 2004 and David Cameron in 2010 — came when they wanted to discover the new India. 

Infosys continues to be a poster child of globalization, with operations in more than 50 countries and a good proportion of the world’s companies (including Bloomberg) among its clients. Its consolidated net profits rose by 12% in the most recent March quarter. The company is still, in many ways, in the same business as it was when Friedman made his flat world observation — bringing Indian tech prowess to the global market at competitive prices. The majority of its approximately 260,000 employees are based in India. The company’s core competence is arguably its ability to turn the products of Indian higher education into polished professionals at a fearsome clip. 

Yet Infosys and its disciples are increasingly being battered by forces that refuse to follow the logic of the global market: forces that have to do with elemental things such as political passions, communal identities and group loyalties. The world may be flat when it comes to sending pulses of electricity down communication wires. But it is decidedly spiky when it comes to anything to do with politics. 

The most recent example of this is the British brouhaha over Akshata Murthy, the daughter of N. R. Narayana Murthy, the company’s chief executive officer from 1981-2002, and an owner of 0.91% of the company’s shares, worth an estimated £690 million ($906 million). Her marriage to Britain’s chancellor of the exchequer, Rishi Sunak, has recently turned her into a symbol of the unacceptable face of globalization. The revelation that she holds non-dom status (which means that her overseas earnings are shielded from U.K. taxes) caused a furor about one rule for the rich and another for the rest of us.

At the same time, Infosys’s refusal to close its Moscow offices, as companies like Oracle Corp. and Microsoft Corp. did to protest against Russia’s invasion of Ukraine, led to accusations that she was living off “blood money.” In both cases, the logic of politics trumped the logic of money. Murthy agreed to pay taxes like a regular British citizen and Infosys decided to “urgently” close its Moscow office and move the office’s 100 or so employees elsewhere. 

Akshata’s brother, Rohan, who holds 1.43% of the company’s shares, is also caught up in a long-running row that demonstrates the growing spikiness of the world. Murty (who spells his surname differently from his father) looked as if he was following the path of a typical member of the global elite: he studied computer science at two elite American universities, Cornell and Harvard, and founded a tech company, Soroco, which specializes in AI and automation. But while pursuing his Ph.D at Harvard, he also took some courses on ancient philosophy and literature from the Sanskrit department, and decided to fund, together with his father, a Murty classical library of India, consisting of some 500 volumes, comparable with the Loeb classical library of Greek and Roman texts. 

Producing a library of Indian classics was always going to be a controversial venture given the tendency of today’s Hindu nationalists to marginalize the country’s other traditions. But Murty made it more controversial by putting the series in the hands of Sheldon Pollock, a post-modernist scholar who treats Sanskrit as “the principal discursive instrument of domination in premodern India” and emphasizes the way that writers justify the abuse of Dalits, women and Muslims. Some 130 Indian scholars and public figures signed a petition calling for the removal of Pollock from the general editor’s chair, and, though Murty refused to bend, Hindu activists continue to agitate against the project. 

Hindu nationalists have also begun to focus on Infosys itself. Gone are the days when the company could claim protection from populist fury as a symbol of national regeneration. Now members of Prime Minister Narendra Modi’s ruling Bharatiya Janata Party are increasingly treating it as just another multinational tech giant like Amazon.com Inc. or IBM. The most recent sign of the change of heart is the way the ruling party has reacted to problems being generated by Infosys’s upgrade of the country’s income tax portal. 

The teething troubles are certainly serious, forcing the tax department to extend this year’s filing deadline from July 31 to Dec. 31, but they are arguably par for the course for big tech projects everywhere. The BJP has treated them as an opportunity to take Big Indian Tech down a peg or two: Finance Minister Nirmala Sitharaman twice summoned Infosys CEO Salil Parekh to her office for a dressing down. More ominously, a Hindi-language magazine run by members of the Rashtriya Swayamsevak Sangh movement — the militant parent organization of the BJP — published a four-page tirade in September 2021 lambasting Infosys for conspiring to undermine not only the Modi government but India itself. “There are allegations,” the magazine mused, “that the Infosys management is trying to deliberately destabilize the economy. Could it be that anti-India forces are trying to harm India’s economic interests through Infosys?”

The incident shows just how quickly, technical problems with lines of code can degenerate into culture wars about belonging and betrayal. For a growing number of Hindu nationalists, home-grown tech companies are not national champions but enemies within: the agents of a global culture bent on dissolving traditional values by allowing women to work instead of staying home to have children (Infosys boasts that 39% of its employees are female); where people are promoted on merit rather than confined to their caste identity; and in which cities expand at the expense of villages.

Even as it struggles with Hindu nationalism at home, Infosys is also being forced to put down deeper roots abroad. The company’s business model of marketing Indian brain power is being challenged by the combination of growing resistance to immigration everywhere (the company has been repeatedly accused of bending the rules about U.S. visas) and growing demand for in-person service. Infosys is now treating “localization” as one of its priorities, expanding local workforces in both the developed world and China, deepening its relationships with foreign universities and technical colleges, and creating “innovation hubs, near-shore centers and digital design studios.” 

Yet localization not only complicates a business model that was based on labor arbitrage. It also exacerbates the company’s cultural problems at home. How does a company that prides itself on its “One Infosys” policy recruit knowledge workers in the U.S. — where LGBTQ employees get family leave and trans people are addressed by their pronouns of choice — without infuriating Hindu nationalists at home who think that people should be defined not just by their biology but also by their caste? 

The original founders of Infosys are now not only billionaires in their own right but godfathers of the next generation of Indian tech, taking young entrepreneurs under their wings and investing in dynamic new companies. But for all that, both they and their families are no longer exempt from the anti-globalization forces that are raging across the world. And the general business atmosphere in India is getting colder, with private investment falling and the economy slowing even before Covid struck. It is too early to conclude that it would be impossible to repeat the extraordinary successes of the 1980s in the 2020s. But, alas, you can no longer treat the world as if it were flat and imagine that the only problems in your path have to do with tech and logistics.

More From This Writer and Others at Bloomberg Opinion:

• How to Break Out From the Great Stagnation: Adrian Wooldridge

• Why I’m Losing Hope in India: Andy Mukherjee

• Under Pressure From All, India Gives Diplomacy a Chance: Ruth Pollard

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Adrian Wooldridge is the global business columnist for Bloomberg Opinion. He was previously a writer at the Economist. His latest book is "The Aristocracy of Talent: How Meritocracy Made the Modern World."

©2022 Bloomberg L.P.