“AI Hype Must Cool Down!” — N. R. Narayana Murthy & Aditya Puri In Rare Joint Interview

Hello and welcome to this very special conversation on Moneycontrol. We're in conversation with Mr. N. R. Narayana Murthy, the founder of Infosys and Catamaran, and Aditya Puri, the former MD and CEO of HDFC Bank who's currently a senior adviser for Carlyle Asia. It's very unusual to get two titans of India Inc. together and we're very excited for this conversation. Thank you both very much. We are talking at the Indian Institute of Management Bengaluru which will hopefully breed many more corporate leaders and entrepreneurs. But I just want you know in my opening remarks there was so much to unpack from your fireside in terms of the qualities that entrepreneurs should have, qualities that a company's board must have. It's been a very exciting year for new age startups. In the last year we saw a lot of IPOs. Is IPO sort of the end game? What would your advice to entrepreneurs be?

See, the opportunity is phenomenal and it's only going to increase as AI comes in and as we need to do things to develop. And I think both Mr. Murthy and me said very clearly that you have to be clear on the basics. If you're going to set up something, set it up for the long run. Which means you have to understand what your purpose is, what your culture is, what your product fit is. Focus on profitability. You can't just say top line. Those days are gone. If you don't have bottom line, it doesn't work. And so if you keep these basic values and make sure you respect all stakeholders, I don't think you will have a problem and there's tremendous... No adjusted EBITDA and EBITA. That doesn't help. Who are you fooling? You either have profit, unit profit, and I think both Murthy and me concentrated on unit profit. If you have unit profit, you know how many units you need to sell when you will be profitable. So don't play around with that. Unit profitability leading you to break even and profit. If you say adjusted EBITDA, you're fooling yourself. At the end, the purpose of business is to have profit, create employment, grow, and be fair.

This actually plays into what you said. You said leaders should eat last in the food chain. But Mr. Puri, do you think that is pragmatic in this day and age? Because you hear about founder secondaries, you know, in the second stage of funding where they want liquidity. Companies are listing faster than ever before. And you know, there is also an argument that unless you really pay top dollar you won't attract good talent. So how does this, I mean, do you think it's pragmatic to have that point of view today?

No, I think it's totally pragmatic. See, when you listen to Murthy, sir, look at the broader thing. He's not saying everybody has to be paid the same. What he's saying is you will be paid along with your qualification and market value. He's just saying whatever you do, do it fairly. If you have to pay more because that's what the market is demanding, that's fine. But don't gratify yourself and leave the rest swimming. Be fair so that they be with you and you can't take all the benefits because you are not creating all of it.

Right. I also noticed you mentioning AI a fair bit on stage. And you know, someone asked you how do you identify bubbles and you said it doesn't take a lot of brilliance to figure out if there is a bubble or there's not. How do you see the impact of AI? Because there's a lot of concern on whether this will wipe out white collar jobs in India, especially in the services industry. It's been a huge source of employment and wealth creation for engineers.

I think, and partly based on our discussions we had last night, I think there is too much hype on AI and what it can do and how quickly it can do it. And correspondingly there's too much negativity in terms of how many jobs will be lost, etc. Will some jobs be lost? Yes. Will new jobs be created? Yes. So if you look at AI, it will have growth. It will probably need some reskilling. But it doesn't mean if you say 60% of the jobs will be replaced by AI there'll be 60% job losses. Nothing like that happens. So when you look at AI it has to come down from the hype what it is today. How it can make a return on investment for the people down below. If you see, I mean when you look at it today the biggest hiring by people is for prompters. What's the difference between a prompter and a fellow who helped you implement your software system? Then they have these context guys. What's the difference between those who brought in new version? Then you have the data scientist. So there will be some change. But I think this negativism on loss of jobs is way too far. Total replacement is not going to happen. So you will have what do you call, you can call it robotic in terms of machine learning which is rule-based. You will have agentic AI but the human is not going anywhere. It'll be a combination that will be delivered and even this whole thing about AI is as if it's going to happen tomorrow. It's going to take a decade or two. So keep that in mind but Mr. Murthy will be more equipped to answer that.

That's a hopeful and optimistic thing to say, sir. But Mr. Puri, do you see AI reshaping financial services as we've known it? I think Bajaj Finserv recently spoke about how AI is handling a majority of their customer queries. There is a lot of buzz around, you know, whether this will make lending more efficient or whether it will reach more people. Again, do you think it's too early or is there an opportunity here to build an AI-first bank or an AI-first fintech?