Taking Cue from Kris Gopalakrishnan – How Should Startups Face Difficult Times Keep the fixed cost as low as possible; keep the variable cost directly proportional to the revenue

By Sneha Banerjee

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Axilor Ventures

The Indian startup environment is witnessing some of its biggest behemoths being hit with markdowns and conduct layoffs. Times are tough and it's situations like these wherein the true mettle of entrepreneurs can be tested! Kris Gopalakrishnan, co-founder of Indian IT giant Infosys, has seen both tough and glory days. But both these scenarios hadn't perturbed growth at the company.

Speaking at an event conducted by startup co-working space Bhive Workspace, Kris said that the preparation for any challenge or downturn by a company happens early on. "It starts by having a philosophy – you have to think about building an institution, building a company that will last beyond its founders. Always think about building a sustainable business," he said.

Talking about how one should go about building a sustainable company, Kris noted that one should look at sustainable leadership, checking profitability and funding requirement, one must have a clear roadmap for the next two years as to how the company should be funded and have an excellent idea about the business model.

Kris further added, "If something bad happens what are the costs that you can cut. One must have that flexibility. Keep the fixed cost as low as possible. Keep the variable cost directly proportional to the revenue. So that when the revenue goes down, the variable costs go down."

Withstanding 2008 financial crisis at Infosys

Talking about dealing with the financial crisis in 2008, Kris said that since Infosys had to plan recruitment plans 18 months ahead. "We had made 25,000 offers between October 2007 to January 2008 at campuses. When the meltdown happened we knew our growth rate would plummet. From 35 percent growth rate we went to 3 percent growth rate," Kris said, who now is the Chairman at Axilor Ventures is now.

Infosys, which back then had already promised jobs to thousands of employees, honoured those offers as it had the ability to absorb those costs. The company had decided to extend the training period from three months to six months.

Kris said that one should have a very clear risk mitigation plan. "The resilience has to be built through the financial model, the risk mitigation model, the business model, the leadership has to understand how the business has to function," he added.

Sneha Banerjee

Entrepreneur Staff

Former Staff, Entrepreneur India

She used to write for Entrepreneur India from Bangalore and other cities in South India. 

Marketing

Why Business Growth Today Demands More Than Just Traditional Marketing

Today's CMOs are growth architects focused on creating coherence and driving business success from within.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

News and Trends

Recur Club Announces Credit Offerings for Startups Beyond Series A and SMEs

In FY 24–25, the platform also plans to deploy an additional INR 2000 crores through its Recur Swift program for startups.

Business News

IBM Replaced Hundreds of HR Workers With AI, According to Its CEO

IBM CEO Arvind Krishna said the move led to more hiring in other areas.

News and Trends

Videotex Aims Turnover of INR 1,000 Cr in 4 Years, to Enter New Categories

It aims to onboard over 10 new brands in the LED space by FY2028–29, further strengthening its position as a leading ODM in the industry.

News and Trends

India-UK FTA Unlocks $1.2 Billion Export Opportunity for Indian Garments: Report

The new terms give Indian apparel exporters a 12 per cent advantage over China, the largest supplier to the UK, which has seen its share erode in recent years due to rising labor costs and global brands shifting to a "China Plus One" sourcing model.