Sikka wants India's "bigger startups" to respect profit margins

Vishal Sikka, CEO and managing director of India’s second-largest IT company, Infosys, on Thursday backed the government’s initiative to boost the startup ecosystem, ahead of the announcement of the country’s first ever Start-up policy on January 16 in Delhi.

“The emphasis that has been placed in India on startups and entrepreneurs is a good move. It is true that a vast majority of startups fail, but entrepreneurs never fail. I think what the government is doing (with the Start-up policy) is a very encouraging move,” Sikka said at a press conference, while announcing the IT company's third-quarter earnings at its headquarters in Bengaluru.

Sikka though quipped that startups which have mature businesses should start looking at profit margins. Companies in the ecommerce sector, a poster child of the ongoing startup revolution in the country, are running only on foreign investor capital and haven't yet shown up with profits.  

“I wish that bigger startups in the country have more respect for profit margins. That would be a good thing,” Sikka said.

He also spoke of the need for large corporates to play a key role in boosting the startup culture in the country. “It has to be encouraged more at the government level and by companies like us,” he said.

Infosys is engaged with various ministries and government agencies for initiatives like Start-up India, Make in India and Digital India. Besides, the IT firm has also started to invest in startups and mentor them. “One area I’m excited about is to help rethink the idea of incubation,” said Sikka.  

Last year, Sikka increased the capital of the company’s Innovation Fund to $500 million from $100 million. The fund invested in a slew of startups that are involved in automation, machine learning, big data, and artificial intelligence. Of the $500 million Innovation Fund, Infosys set aside $250 million for an ‘Innovate in India Fund’ that will be dedicated to investments in Indian startups.

Infosys has also set aside $10 million from the global Innovation Fund for Ireland-based startups.

In April 2015, it invested $2 million in Airviz, a US-based clean-air technology company. Last year, Infosys also invested about $1.4 million in Bengaluru-based ANSR Consulting, a strategy consulting and implementation firm. So far, Infosys has made six investments in startups predominantly in the US and India.

“We are working on helping bring some scale to some of these startups that we have invested in and bring them to our clients for joint solutions,” said Sikka.