Giant Indian outsourcer targets New Zealand business
Worried that outsourcers want to tempt your company into exporting not just call centre jobs, but white collar roles further up the food chain? Your concern is well founded.
Infosys has launched an Australasian consulting arm, looking to lure higher-value business. The head of the new practice talks to NBR about the new business, and whether a recent accounting scandal in India has shaken confidence in all outsourcers based on the subcontinent.
Infosys has a well established presence in Australasia, with offices in Sydney, Melbourne, Brisbane and around staff on the ground in New Zealand at client locations.
Now the Indian-based company is looking for higher-value business with the creation of a new Australia-New Zealand consulting division.
Infosys Australia chief executive Jackie Korhonen (pictured) says: “Our new Consulting and Systems Integration practice will allow us to engage with clients earlier in the project lifecycle, by providing the technology and process strategy that supports transformational business goals.”
Robert Liong, who will lead the practice as managing partner, tells NBR the recession has pushed more companies to explore offshoring, where previously they had shied away. “They’re now looking at all options to remain competitive.
“Many are now evaluating it who haven’t before. But as to whether we can covert that interest into opportunities for Infosys, it’s still early days.”
Mr Liong says Infosys will add staff in New Zealand to match new business as it wins contracts. His consulting arm will sell its local knowledge and high-end expertise, backed by the company’s core outsourcing model. “That’s the beauty of the global delivery model. We can do high value work, backed up by a large delivery organisation sourced from lower cost countries.”
The outsourcing industry was recently rocked by an outsourcing scandal at Infosys’ rival Satyam, involving fraud, forgery and falsification of records as $US1 billion revenue was misspreported. The UN, and many others, pulled business from the outsourcer before charges were filed earlier this month.
The immediate aftermath of the scandal was positive for Infosys, says Mr Liong. The company took in a number of fleeing Satyam customers, helping it to a strong result for its quarter ending December 31. Infosys earned $US332 million, up from the year-ago quarter’s $US312 million as revenue climbed 8% to $US1.17 billion.
However, beyond that windfall, Mr Liong acknowledges the impact of the scandal.
“They [Satyam] are a large Indian company and that raises questions about other large Indian companies.
“But we have much stronger and more disciplined about our accounting and recruitment policies.”
Mr Liong also notes that Infosys is listed on the Nasdaq (NAS: INFY), which makes the company subject to the rigours of US securities laws.
Certainly, Infosys will need as many positives as possible over the rest of the year. Despite its strong December quarter worldwide, the company’s chief executive, Kris Gopalakrishnan, warned that the following 12 months would be tougher.
Locally, Infosys is already feeling the impact of the slowdown.
In the three months to December 31, Infosys Australia (which includes the company’s New Zealand operation) clocked $US2.89 million profit on revenue of $US28 million. In the year-ago quarter, it made $US8 million on $US37 million turnover.
Infosys’ Australasian staff has been reduced by 18 to 341 since the quarter closed.
Mr Liong, a newcomer to Infosys, but a 16-year veteran of BearingPoint, KPMG and Andersen Consulting, is now looking to win higher value, more strategic business that will add bodies.
A pilot project, with ING, seems to have been a success. Infosys recommended next steps in the application lifecycle for a number of core applications as part of that ING’s two-year technology transformation project.
“Infosys has brought process rigor, domain expertise and a great track record for ‘getting under the hood’ in the ING Australia portfolio analysis,” says ING Australia CIO Greg Booker.
Infosys is consciously launching the new practice at a time when the global economy is putting pressure on companies to rein in costs.
Ms Korhonen says, "When times are good, businesses want to focus on growth rather than on transforming underlying processes and strategies. But when the market starts to contract, you can't afford to ignore inefficiencies. You must transform.
“Clients impacted by the global financial crisis are looking to us to help them optimise their business. Our services and business model and very-well suited to helping them succeed in this environment. We call this ‘winning in the turns’ – it’s about positioning yourself for advantage during times of turbulence and change.”