Infosys May Look at Investing CSR Money in Startup Incubators

Information Technology major Infosys may look at investing a small portion of its profits which needs to be spent on corporate social responsibility on startup incubators, a top Infosys official told NextBigWhat.

Infosys Co-Chairman Kris Gopalakrishnan told NextBigWhat that spending on technology business incubators is “definitely” one of the ways in which the $7 bn company will look at spending its corporate social responsibility (CSR) budget.

“We were quite encouraged to see that as part of the budget and definitely as we look at how to spend this 2%, this is one of the areas we will look at,”  Gopalakrishnan told NextBigWhat. In the quarter ending December 2012, Infosys posted a net profit of  $434 mn.

The government in its 2013 budget said that spending on technology incubators can now be counted under corporate social responsibility expense. Also, the new companies bill mandates corporates to spend 2% of their net profit on corporate social responsibility activities. Corporates have asked the government for tax benefits for the CSR spend.

When asked what large corporations like Infosys can do to help startups, Gopalakrishnan said, “We can mentor companies, so we are starting to do that. It will also give our leaders an opportunity to our leaders to interact with startups outside,” he added.

(Watch the full interview with Kris Gopalakrishnan below)

Infosys can look at funding startups but it doesn’t do that at right now, said Gopalakrishan. “Today Infosys does not do that, we used to do that in the past and we may do that in the future,” he said. “We can also look at spin outs from Infosys,” he added.

Infosys has had two successful spin outs in the past. OnMobile, the Value Added Services company which clocked revenues of over Rs 500 cr in FY11, was an Infosys spinoff. Boston based Yantra Corp, another Infosys spin off was acquired by Sterling Commerce for $170mn in 2004.

Large corporates spending on technology business incubators will help startups big time. Not only will this increase cash flow into incubators, it will also make sure that large companies work closely with startups. Their involvement might help startups access larger markets, mentors and  technology experts.

Full Interview with Infosys Co-Chairman Kris Gopalakrishnan