Building a Global Outsourcing Powerhouse
Nagavara Ramarao Narayana Murthy (also known as “NR”) and six co-founders of Bangalore-based Infosys Technologies had to borrow US $250 to start their IT outsourcing and software company in 1981. Back then, the idea of Infosys competing with world giants such as IBM in global markets was just wishful thinking. In 2010, Infosys had nearly 114,000 employees in 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the United Kingdom, Canada, and Japan. Although the company is still relatively small (about US $4.8 billion in annual sales) compared to IBM (US $95.8 billion annual sales), Infosys has become a global powerhouse. NR and his co-founders created Infosys on what are considered the principles of globalization. He found capital where it was the cheapest, produced in a location that was cost effective, and sold services and products where they were most profitable. The sprawling Infosys campus in Bangalore, India, reflects the firm’s global perspective with its high-end restaurant and clocks displaying different time zones. In the past 10 years, repeat business, high-quality software developed in India at a fraction of the cost of European or American development, and investment in research and development have made Infosys a global success story. For example, Belgian mobile communication operator Belgacom Mobile wanted to develop a customer loyalty program that would handle data storage in different languages and provide flexibility for clients. Infosys delivered the program ahead of schedule, providing Belgacom with a high-quality, first-mover product.
Building on their early success in software development, over the years Infosys has expanded its list of services and products to include:
• Business and technology consulting,
• Business process outsourcing,
• Systems integration,
• Application services,
• Product engineering, and
• Testing and validation services.
Infosys has attracted business from Europe, Latin America, Canada, and the United States. NR gained the confidence of customers, some of whom were anxious about using foreign software outsourcing, by meeting quality standards and schedules. Today, Infosys has the reputation of being one of the best software firms in the world. NR stresses quality in every phase of producing software. His quality initiative is a part of the Infosys company culture. He matches or benchmarks his quality against the world’s most recognized multinational firms. Foreign and institutional investors who in the late 1980s were wary of investing in India are no longer reluctant to invest in Infosys. NR is proudest of Infosys’s ability to compete with any firm, anywhere. He wanted to make a difference in India and throughout the world. Obviously, he has done so through a management system that requires employees to focus on quality production as the top priority. It’s no wonder why NR is considered the “father of the country’s information technology outsourcing industry.”
· Read the above case study. Using the material you have acquired from the chapters, answer the questions at the end of the case study in at least 500 words.
- Which principles of globalization did NR and his colleagues follow when they were growing Infosys into a global powerhouse?
- According to Hofstede’s research, India has a high score on the power distance dimension. To what degree could this high score help to explain Infosys Technology’s success in the global marketplace?
- Refer to Table 3.1 in the chapter. Which phase of corporate and cross-cultural evolution do you think Infosys is currently finding itself? Phase I Domestic, Phase II International, Phase III Multinational, or Phase IV Global?