Computer Jobs Enrich India
Infosys Technologies Global Outsourcing Profits Expand
India's second-largest software exporter, Infosys Technologies grew its operating profit by almost 19% in the latest quarter ending September 2007.
Key to Infosys’ success in outsourcing computer jobs to India and around the world is its Global Delivery Model. GDM provides a comprehensive menu of Information Technology (IT) project services to a growing cohort of clients. Customers include Fortune 500 companies like Microsoft and Wachovia.
Infosys Technologies trades under the symbol INFY on Nasdaq. The multinational company is second only to Tata Consultancy Services in the battle to become India's biggest provider of inexpensive outsourced labour.
IT Project Examples
Royal Philips Electronics recently paid Infosys US$250 million to automate the company's financial and administrative back-office operations. Another Infosys iniative requires software controls that ensure gift cards used at a retailer are debited from and credited to the correct accounts via pertinent finanicial and administrative systems.
Infosys is also well-known for customizing Oracle and SAP business software applications.
Competive Advantages: Size, Youth, Experience
For the latest quarter, Infosys garnered revenues in excess of 1 billion. At the end of last fiscal year, the company had some $1.5 billion in cash topping off a strong balance sheet. Unlike smaller competitors, the IT outsourcer enjoys steady cashflows and longer-term client contracts.
Infosys is well-positioned to:
- Offer more diversified project service offerings
- Acquire smaller competitors
- Build on its young and skilled global labour force.
The company had 80,501 employees worldwide as of September 2007, a gain of 6% from the prior 3 months. Of these, 94% were skilled software professionals.
Outsourcing Trends
Like other Indian IT outsourcers, Infosys continues to profit from advances in technology and communications that facilitate the outsourcing of work to areas around the world with lower labour costs.
Indian labour costs have gone up recently, due in part to:
- A strengthening Indian currency (rupee)
- Heightened competition for Infosys’ global labour force from competitive outsourcing firms
- Multinational corporations that launch their own operations in countries with lower labour costs.
Infosys Outsources to Lower-Cost Labour Around the Globe
To maintain its competitive advantages and profit margins, Infosys now recruits and trains skilled workers in developing nations including Mexico, the Czech Republic, Thailand and China.
The computer services provider wants to clone its Indian back offices in lower cost regions, through training that makes native workers more effective than would be the case through local outsourcing companies.
In the past, on-site work in the U.S. has been billed at an average rate of about $200 per hour. Work done in India has cost around $35 an hour. Given the appreciation of India’s rupee, Infosys now even outsources project components to low-cost regions in the United States.
Boasting deep outsourcing experience in the India business environment, Infosys is able to analyze a project into basic components and then delegate building-block tasks to teams of skilled workers. Company development centers, principally in India, test deliverables for quality before shipping final, re-assembled deliverables to clients.
Geographic revenues for the most recent quarter show that North America and Europe are home to 90% of Infosys clients.
- North America … 62.6% of overall company revenues
- Europe … 27.4%
- India … 1%)
- Rest of world (including Australia and fast-growing China) … 9%.
Infosys’ Global Delivery Model continues its winning ways. IT projects performed offshore away from client sites represented 51.2% of overall company contracts in the latest quarter, up 3.1% from the same quarter last year.
Sources for this Article
This article presents independent calculations and insights based on data drawn from Investor Relations on infosys.com and Anand Giridharadas New York Times article ‘India Outsources Outsourcing’ (published in the Toronto Star on September 27, 2007).
