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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Plans for the Future

In a span of five years, till 2010, Infosys planned to invest US$ 65 million in new centers at Shanghai and Hangzhou. These centers were to accommodate 6,000 employees eventually.

The 25,000 sq. m. Shanghai Center required an initial investment of US$ 10 million. The Hangzhou center was to be constructed in an area of 100,000 sq. m. Infosys has chosen these locations as they have the required infrastructure and availability of talented people. The new centers were to undertake projects related to software development, IT-enabled services and IT services. Infosys planned to include training and research centers in these facilities apart from recreational facilities for employees. The investment of Infosys was one of the largest foreign direct investments from India into China. The revenues of ITSCo for financial year 2007-08 were projected at US$ 50 million. Infosys hoped its Chinese operations would contribute 10% of its total revenues by 2015...

Looking Ahead

Industry analysts point out various benefits and drawbacks of operating in the IT industry in China as compared to India. The software development skills in China were good enough and the entry level salaries were competitive.

While in 2004 the salaries for IT professionals in India were up by 15-25% on the previous year owing to the 30% growth in the demand for IT services, in China, the salaries in this sector grew only by 4% in the same year. According to an analyst, "India's advantage has always been the large pool of inexpensive, English-speaking talent. But now salaries in India are jumping at 25 percent or more annually.

So India's cost advantage may not endure. We don't see that in China yet. BearingPoint Inc. opened its office in Shanghai, as it found that manpower costs in Shanghai were 40% lower than in Bangalore...


Exhibit I: Infosys - Five Year Financial Highlights (US Gaap)

Exhibit II: Infosys - Milestones

Exhibit III: Global Delivery Model of Infosys

Exhibit IV: A Note on the Chinese IT Industry

Exhibit V: Problems Foreign Companies Could Face in China

Exhibit VI: Infosys China - Vision and Mission

Exhibit VII: India vs. China - Economic Parameters

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