Infosys® Technologies Ltd.: Growing Share of a Customer’s Business
James A. Narus
James A. Narus is Professor of Business Marketing, Babcock Graduate School of Management, Wake Forest University in the U.S.A. D.V.R. Seshadri is Visiting Professor at Indian Institute of Management Bangalore, India. We gratefully acknowledge the significant contributions of Infosys executives and managers in providing case information.
CASE QUESTIONS TO ADDRESS 1. Looking beyond the immediate Ariba e-Procurement System project, what challenging issues related to global marketing does this case pose for Infosys? 2. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS
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During the 1980‟s several factors converged to make Infosys wildly successful. The Indian Government decided to target IT as the source of significant economic development. To spur such development, the government eliminated significant “red tape” associated with new business formation, offered free or low-cost access to infrastructure (e.g., buildings and data transmission lines), and granted frequent “tax holidays.” Simultaneously, General Electric (GE) made global outsourcing respectable and allayed fears about potential risks by moving significant business to Indian subcontractors. Other major international corporations quickly followed suit. To tap the large pool of competent and IT-savvy professionals in India, Infosys issued lucrative stock option plans for all employees. Soon, the most talented programmers and managers from across India were queuing up for a chance to work for Infosys. The firm has experienced four phases in its development, each entailing a distinct market offering and value proposition. In its first decade, Infosys relied on an offshore outsourcing model. Playing the “global labor arbitrage” game, Infosys benefited from the availability of low-cost and worldclass IT professionals in India. As a rule of thumb, the salary for a software engineer in India could be 40% to 50% lower than a comparable individual in the U.S.