Infosys’s Next Frontiers

Business 2.0 writes:

[Infosys CEO Nandan] Nilekani’s consulting gambit exhibits both in abundance. It’s based on a premise that Infosys’s outsourcing model is not only a cheaper mousetrap but also a better one. “Like Dell, like Wal-Mart, we’ve created a genuine business-model innovation,” he says. “We’ve created a new way of organizing workers without regard to distance.” Having firmly established Infosys’s back-end credibility in code writing and system integration, Nilekani sees the front end — consulting and services — as its next frontier. “It’s like Wal-Mart getting into groceries or Dell getting into printers,” he says. “On top of our global delivery model, we’re adding these new capabilities at the point of customer contact.”

It would be easy enough to conclude that Nilekani is suffering from delusions of grandeur. IT consulting and services are people businesses, in which perception and reputation matter greatly. They are businesses dominated by the likes of Accenture, BearingPoint, and IBM — large, powerful, deep-pocketed outfits with armies of experienced professionals and sprawling networks of relationships in boardrooms around the world. A number of Infosys’s Indian rivals, such as Wipro and Tata, have already attempted to seize a chunk of this lucrative territory. And what they’ve learned so far is that gaining ground is much simpler said than done.

Yet while grandeur may be one of Nilekani’s goals, deluded he is not. He knows just how crucial the human factor is. That’s why, in launching Infosys Consulting, the first thing he did was hire an all-star team to run it, full of consultants from Deloitte, EDS, and IBM. He’s also aware that, nevertheless, Infosys faces what he calls “a difficult road ahead.” But he can and does take comfort from the fact that the incumbent IT services giants face a rocky road themselves. “They have the relationships and domain knowledge,” he says, “but their delivery models are obsolete. For them the challenge is to retool, to adapt to our model, to take costs out of their supply chains. And we think that transition will be more painful for them than ours will be for us.”

Nilekani may be right about that, but Infosys has more than one transition on its hands. In India, where the company has long had the pick of the litter when it comes to hiring engineers — every year Infosys receives an astonishing 1 million job applications — competition for talent is intensifying and wages are rising. At the same time, countries such as Russia and China are likely to emerge as players in the worldwide tech economy, undercutting India as a provider of low-cost engineering. Finally, there’s the possibility that this year’s outsourcing controversy in the United States was only a mild preview of a full-scale backlash to come — one that could include protectionist measures designed to kneecap Infosys and its compatriots.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.