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Infosys' Global Delivery Model

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Case Code :OPER059 For delivery in electronicformat: Rs. 400;For delivery through courier (within India): Rs. 400 + Rs.25 for Shipping & Handling

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Case Length :14 PagesPeriod :1995-2006Organization:Infosys

Technologies

Pub Date :2006TeachingNote

:Available

Countries :India/GlobalIndustry :Software

Abstract:

The case examines the globaldelivery model (GDM) of theleading India based softwarecompany - Infosys

Technologies. Infosys usedGDM as a strategic outsourcingtool; using it, the companycould take the work to the placewhere it could be bestperformed at lowest cost withminimum risk.

By using GDM, Infosysdelivered the highest processand quality standards, whileleveraging differences in cost,

quality and skill sets of manpower in different globallocations. The case presents anin-depth information on theoperational aspects of GDMand its benefits to Infosys.

It also discusses the challenges faced by the company from

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foreign and Indian software companies like Accenture, IBMGlobal Services, EDS, TCS and Wipro who had alreadyadopted or were in the process of adopting a similar modellike Infosys' GDM.

Issues:

» Study and analyze the operational aspects of the GlobalDelivery Model of Infosys

» Analyze how GDM emerged as a source of competitiveadvantage to Infosys

» Understand the factors that contributed to the success of GDM

» Examine the challenges faced by Infosys from foreign andIndian software companies

Contents:

 PageNo.

The 'Leader' 1Background Note 2The Global Delivery Model 3GDM - Making the Model Work  6Expanding GDM 7The Benefits 7The Road Ahead 8

Exhibits 10Keywords:

Infosys Technologies, Global Delivery Model, SoftwareDevelopment, Business Innovation, Global ProjectManagement, Outsourcing, Offshoring, Systems Integration,Capability Maturity Model, Global Development Centers,Proximity Development Centers, Offshore DevelopmentCenters, Knowledge Management

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Please note:

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.

"The Global Delivery Model that has been at the heart of our execution is more than

just a way of getting work done offshore. It is a genuine business innovation that 

delivers a superior value proposition at higher quality and lower cost. By leveraging

global resources and global strengths, it creates a new degree of freedom."1

- Nandan Nilekani, President, CEO and Managing Director, Infosys, in 2006.

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"Infosys can obtain skilled labour at better rates than its customers can in their own

region and the focus of the GDM is maximizing skill while minimizing cost."2

- ZapThink, Massachusetts-based IT Market Intelligence Firm, in 2005.

The 'Leader'

In February 2006, Gartner 3, a research firmfocused on technology industries, published its'Magic Quadrant for Offshore ApplicationServices, 2006'.

This report assessed 30 leading offshoreapplication service providers. For its magicquadrant, Gartner evaluated service providers onthe basis of parameters such as completeness of vision and their ability to execute4.

India-based Infosys Technologies (Infosys) wasplaced in the 'leaders' quadrant, signifying clear vision of the market direction and buildingcompetencies to sustain its leadership position inthe market

(Refer Exhibit I for the criteria used in the Magic Quadrant, and Exhibit II for traits of the companies placed in the 'Leaders' quadrant).

Gartner's magic quadrant analyzed thecompetencies of the service providers based ontheir Global Delivery Model (GDM). Gartner said

that Infosys' 'strong management capabilityrelative to the other pure-play offshore providers'was one of the key demonstrated capabilities of the company.

S. Gopalakrishnan (Gopalakrishnan), Chief Operating Officer and Deputy Managing Director of Infosys, said, "I am happy to see Infosys beingrecognized as a leader in this OffshoreApplication Services Magic Quadrant, the firsttime that Gartner has published one to focus onthis area. This is an important indicator for the

mainstream acceptance of GDM by clients."5

GDM provided a superior value proposition at higher quality and lower cost. Thecompanies adopting this model leveraged their own global resources and strengthsto achieve higher profitability.

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Infosys' Global Delivery Model• Case Details 

• Case Intro 1 

• Case Intro 2 

• Excerpts 

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Case Details:

Case Code : OPER059

Case Length : 14 Pages

Period : 1995-2006

Organization : Infosys Technologies

Pub Date : 2006

Teaching Note : Available

Countries : India/Global

Industry : Software

To download Infosys' Global Delivery

Model case study (Case Code:

OPER059) click on the button below,

and select the case from the list of 

available cases:

Price:

For delivery in electronic format: Rs.

400;

For delivery through courier (within

India): Rs. 400 + Rs. 25 for Shipping &

Handling Charges

<< Previous

The 'Leader' Contd..

The company had decided to enhance its GDM capabilities byapplying it to new services and adding in new global deliverylocations. Commenting on the GDM, Manjari Raman, aBoston based management writer said, "What made Infosys'GDM disruptive was its framework for distributed projectmanagement - the ability to deploy multi-location, multi-time-zone teams to execute projects efficiently and at low cost."6

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Infosys' Global Delivery Model

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• Excerpts 

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Excerpts

The Global Delivery Model

In the GDM, large scale

software development projectswere divided into differentcategories. Falling under thefirst category were the tasks thatwere to be carried out at thelocation of the client. Under thesecond category were the tasks,which needed to be carried outcloser to the client. The thirdcategory consisted of tasks thatcould be done in remotelocations, where process-driven

technology centers with highlyskilled manpower were easilyavailable (Refer Exhibit IV for details of the tasks carried outonsite, near-site and at offshorelocations). The work on projectswas carried out 24 hours a day,with teams located at differentlocations across the world,working round-the-clock on theproject.

Nandan Nilekani, President, CEO and Managing Director of Infosys, commented, "The work can be moved anywhere.This allows for a degree of freedom in the way a business isconducted. The work can be moved depending on where itwould be cheaper to do so, or to a place that has unutilizedcapacity, or special skills. This is the kind of innovation(GDM) for which we are taking credit for."...

GDM - Making the ModelWork

For an offshore development

project, a team from Infosysvisited the client in order todetermine the requirements of the project. After obtaining therequired specifications, some of the team members stayed back with the client to coordinate anddetermine any changes that the

Case Code : OPER059

Case Length : 14 Pages

Period : 1995-2006

Organization : Infosys Technologies

Pub Date : 2006

Teaching Note : Available

Countries : India/Global

Industry : Software

To download Infosys' Global Delivery

Model case study (Case Code:

OPER059) click on the button below,

and select the case from the list of 

available cases:

Price:

For delivery in electronic format: Rs.

400;

For delivery through courier (within

India): Rs. 400 + Rs. 25 for Shipping &

Handling Charges

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s

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client demanded in the project,while the project managersreturned to the GDCs.

At the clients' location, there

was an on-site coordinator whocommunicated with the PDCsand ODCs regularly...

Expanding GDM

In 2003, Infosys launched GDM Plus, an enhanced servicedelivery model, a combination of more services andexcellence in execution. Infosys defined GDM Plus as anintegrated delivery model that encompassed vertical solutions,expanded vertical footprint and execution excellence.According to Infosys, GDM Plus was its strategic response to

changing market conditions and the competitive landscape todeliver high volumes to customers. Execution excellence wasto be achieved through business solutions, technology,domain expertise, quality, operational efficiency and peopledevelopment...

 

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Please note:

This case study was compiled from

published sources, and is intended to be

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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.

Excerpts Contd...

The Benefits

According to analysts, GDM was cited as one of the key factors behind the rapid growth of Infosys'revenues. In a span of 25 years, the company grewto generate revenues of US$ 2 billion in 2005-06.Infosys' revenues grew almost four-fold in thepast four years (Refer Exhibit VII for five year revenues of Infosys). The company continuedattracting a talented workforce in India and other 

countries. The number of employees of Infosysgrew to 52,700 as of March 2006 against 10,700in 2002. In the fiscal year 2005-06, Infosysderived more than 40% of its revenues throughnew GDM based services like packageimplementation, independent validation, businessprocess management, infrastructure managementand systems integration...

The Road Ahead

Realizing the potential of GDM, several other Indian IT companies also began

providing offshore services. Indian companies could charge a premium of 10-20%for their offshore services. But with these services becoming mainstream, there wascompetition among major players and customers became less willing to pay apremium. It was not long before multinationals also entered the fray. Several MNCslike Accenture , IBM Global Services , Electronic Data Systems , have startedoperating from India and began offering the same offshore rates as Indiancompanies.

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But Infosys remained confident that consultants and companies abroad could notmatch their GDM capabilities. They would need to build the model from scratch, byretrenching the manpower in their countries and hire equally talented employees inother locations with cost advantages. The multinationals would need to redesigntheir operations in order to replicate Infosys' GDM, which would be a very difficult

task...