Infosys in China case study Contents Infosys in China case study 1 Contents 2 Abstract 3 Background 3 Issue Statement 4 Factors that led to enter the Chinese Market 4 Global Delivery Model 5 Analysis of the Problems 6 Alternative analysis and selection criteria 7 Recommendation 8 Action and Implementation Plan 8 Reference 9 Abstract Infosys technology Ltd is the second largest outsourcing company…
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These centers would look after new projects on software, IT and ITES (ICMR, 2006, p.9). The report deals with some of the issues faced by Infosys in China on its way to expansion and also the role of Global Delivery Model. It suggests measures for a better development in China and also other emerging countries. Background Infosys was started by a group of seven members in the year 1981. It incorporated with the name Infosys Consultant Private Ltd. From the very beginning Infosys was depended on the overseas business. The founder of Infosys, Narayana Murthy operated its business in India while the other seven went to US and started working for their corporate clients. Reebok was Infosys first US based client. The company earned revenue of Rs 1.2 million in 1981. 1981 was a period when India did not experience the growth of computers, so licensing of computers would take a longer period. Infosys did not have the space needed to install a computer, thus it hired a premise of a customer where the new employees would be provided training. It also concentrated in the fields like retailing, distribution, finance and telecommunications. Infosys has entered into a joint venture with Kurt Salmon Associate (ICMR, 2006, p.2). Infosys being the first company to get listed on NASDAQ stock exchange. It accounted a net profit of $US 152.1 million at the end of the quarterly result. USA is its main source of revenue; it is planning to expand in Europe and Asia. Infosys in china is merely focusing on its local clients. It has been recognized as one of the fastest growing company (IBEF, n.d., p.1). In the year 2000, 78% of revenue came from North America, 14.8% from Europe and only 1.4% from India. By 2005, Infosys mode of operation was proximity development, which consisted of 9 and off shore software development about 17, mainly operating in India. Infosys is also facing a tough competition from other It giants because of the liberalization that has effected India and its economy (ICMR, 2006, p.3). An important achievement for the company came its way when it pioneered the Global Delivery Model. With the help of this model work can be done at places where it suited the most, its economical and least risk of acceptance. The company is using level 5 of CMM and PCMM. It has been awarded Asia’s Most Admirable Knowledge Enterprise in the year 2002. Infosys operates mostly in Bangalore, being the head quarter in India (Kochikar & Suresh, 2004, p.3). Issue Statement Factors that led to enter the Chinese Market In the year 2006, Infosys reported that it has achieved a milestone of US $ 2billion. Thus its revenue increased at a high rate by 33.5% in the financial year 2005-2006. But the subsidiary in China had suffered a loss of 83.9 million. The projected employee rate in China was in between 800-1000 but the China office had only 500 employees. Thus Infosys decided to enter the china market. In the year 2004, Infosys entered China as a part of its global extension plan. The reason behind Infosys entering China was the high demand of the employees due to globalization. Since the demand is rising there prevails a shortage of manpower. NASSCOM estimated that there would be a shortage of 250000 employees in the IT sector. Thus china was the option for Infosys as it’s comparable with India in terms of salary and quality of
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