Infosys in China

            
 
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Case Details:

Case Code : BSTR221
Case Length : 18 Pages
Pages Period : 2001-2006
Organization : Infosys China
Pub Date : 2006
Teaching Note :Not Available
Countries : China
Industry : Software

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Introduction Contd...

Another reason that encouraged Infosys to move into China was the rapid growth in the Chinese economy, which had drawn in several multinationals. The foreign companies entering China were looking at established players in the software industry, who could understand systems, procedures and standards in China, and Infosys did not want to miss this high potential business opportunity. The market for software and IT services in China was expected to grow exponentially. According to Gartner,10 the Chinese IT services market, including call centers and back office operations, was expected to grow to US$ 27 billion by 2007. Indian IT companies were expected to account for 40% of this market.

Background Note

Infosys was incorporated as Infosys Consultants Private Limited on July 02, 1981 by a group of seven professionals.11 From the beginning, Infosys relied heavily on overseas business. One of the founders, Narayana Murthy (Murthy) stayed in India, while the others went to the US to carry out onsite programming for corporate clients. One of Infosys'first clients was the US-based sports shoe manufacturer Reebok. Infosys hired its first set of employees in 1982 from the Indian Institute of Technology, Chennai. These employees were provided training and were sent abroad for onsite projects.

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After its revenues started increasing, Infosys started spending more on training and product development. The company's revenues in 1982 were at Rs 1.2 million.

At this time, computers were not manufactured in India. A task like importing a computer required a license and the process would take several months. Infosys did not have the required space to install many computers, so the computers it purchased were installed in the premises of one of its customers, where the new employees were trained and products like proprietary banking software were developed. At the same time, Infosys focused on acquiring domain knowledge in segments like retailing, finance, distribution, and telecommunications. In 1987, Infosys formed a 40:60 joint venture with Kurt Salmon Associates (KSA),12 a management consulting firm, to expand its marketing efforts in the US...

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10] Gartner Inc. is a leading provider of research and analysis on the global information technology industry. It serves more than 10,000 clients.

11] The group comprised Narayana Murthy, Nandan Nilekani, S.Gopalakrishnan, K. Dinesh, SB Shibulal, NS Raghavan and Ashok Arora. Ashok Arora left Infosys in 1983 to join a US based software company.

12] Kurt Salmon Associates is a management consulting firm that offers strategy, process and technology deployment solutions.

 

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