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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EXCERPTS

Need for Entering China

Meanwhile, many of Infosys' US-based clients were setting up operations in China and Infosys wanted to replicate its software development model in China to cater to those clients.

Unlike in some of the American and European countries where Infosys operated without a local presence, Infosys realized that catering to clients in China demanded a local presence. Knowledge of Chinese and an in-depth understanding of the complicated rules and regulations in China were a prerequisite to address the needs of these clients. Chinese programmers were better equipped to understand and analyze material written in Chinese and to customize programs for the Chinese market. Analysts believed that Indian IT companies like Infosys were simply following their multinational clients to China. If the Indian IT companies did not establish a presence in China, they would surely lose their clients to local players...

Entering China

Infosys had planned to establish a branch office but was not able to obtain the required permission from the Chinese government and faced several bureaucratic hurdles. Infosys was given permission to set up a joint venture with the government, but the company was against the idea.

It felt that both the parties would have conflicting agendas, with the government looking at reducing costs, while Infosys would be aiming at maximizing profits. According to a spokesperson of Infosys, "We are working with them to create a basic framework, but its execution requires a lot more time than anticipated." Infosys then established a representative office and started working towards obtaining permission to establish a development center. The issues that delayed Infosys' Chinese venture concerned the ownership structure, repatriation of profits and the shareholding pattern. At a time when several foreign multinationals were praising China for minimum bureaucratic hurdles, Infosys had to face several problems...

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