Infosys Consulting Inc.

Parent and child

Created in 2004, Infosys Consulting is an off-shoot of Indian tech outsourcing and business consulting giant Infosys Technologies.  Based on the premise of consistently finding ways to increase value for its clients (rather than, say, focusing on its own profits), IC is committed to making its clients more competitive.  To do that, the firm is prepared to leverage any and all of the contacts its parent has, even if that means arranging outsourcing deals for clients through it.  And the parent, it would seem, is prepared to be indulgent as its offspring finds it feet: IC has yet to turn a profit since its inception.  It was, however, widely tipped to do so in 2009, although those predictions were mostly made prior to the first major events that marked the beginning of the economic downturn and accompanying financial crisis.

A guiding principle of IC's strategy is to offer its consulting services on a global scale, using a similar methodology as Infosys did when helping to pioneer the concept of global outsourcing.  If that means that consultants in India take over a project to complete tasks while consultants in the U.S. sleep, so be it.  Strategizing and technical analysis can take place anywhere, as long as the results eventually make it back to the client.  IC's services, meanwhile, are available across a wide range of industries, spanning everything from aerospace to consumer packaged goods, and focusing on two main areas: strategic and competitive analysis, and complex operational change.

From there to here

Infosys Consulting came into being when Infosys, currently a $4 billion a year enterprise, decided to reach beyond the realms of its successful outsourcing concern, and offer its clients consulting services as well.  The theory behind the move seems simple enough in retrospect: If a consulting firm can conduct an operational review that identifies a need for a client to use Infosys' business process outsourcing services, why couldn't Infosys do the consulting as well?  A tech services firm building a consulting presence, after all, is considerably less labor intensive than a consulting firm building a tech services and outsourcing capability.

It took Infosys a little over two decades to get to the point where it could branch out into the consulting world.  Begun in 1981, the firm initially offered IT services to the domestic Indian market, but soon began scoring some lucrative international clients.  The first major client was GE, although the likes of American Express, Apple, Boeing and J.C. Penney soon followed.  That success drove Infosys beyond the $100 billion revenue barrier in 1999, the same year the firm became the first Indian company listed on the Nasdaq stock exchange.  Within five years, that figure had multiplied to $1 billion, as the bursting of the tech bubble in the early 21st century drove more and more companies to outsourcing as a way to reduce costs.  

As mentioned above, 2004 saw the firm branch out into consulting.  To date, Infosys has spent more than $40 million on the unit, according to an article in India's Business Standard in April 2008. And while the offshoot has yet to see it turn a profit, the parent is not overly concerned, since the organization as a whole posted an overall profit of $1.1 billion in 2008.

If you can't beat 'em, hire 'em

Infosys Consulting's stated specialization is in "making companies more competitive," a mantra that definitely begins at home.  To increase its own competitiveness, the firm has developed a reputation for luring top talent from competitors.  CEO Stephen Pratt, for example, was a 20-year veteran of the consulting industry when Infosys persuaded him to leave Deloitte, where he had served as senior partner for 12 years, to head up their nascent consulting arm.  

Certainly, the ability to attract top talent depends greatly on a firm's ability to match what the top competitors are paying, a factor IC has taken into account.  Its compensation policy has enabled the firm to consistently pursue the top-10 percent of employees from the leading consulting firms around the world.  For proof of that strategy, look no further than the company's own website.  In addition to stressing IC's commitment to such matters as diversity and paying top salaries, a page headed, "Our Culture," gives a sampling of backgrounds of current employees at the firm.  The list of previous firms reads, well, more or less like a Vault list of top consulting firms: Everyone from Accenture to Capgemini, IBM to McKinsey is listed.  The graduate institutions attended by that same group, meanwhile, is a similar who's who list of top schools, most major institutions, from Wharton and Stanford to the likes of MIT's Sloan school and Harvard, are represented, with even Oxford making an appearance.

A formula for success

While competitiveness is IC's watchword for both itself and its clients, there's apparently a lot more to it than just hiring the best and letting them get on with it.  IC's formula is a two-part equation.  The first part involves creating "strategic differentiation" for its clients, a process that showcases both to clients and their potential customers exactly how they differ from the competition.  The other portion of the competitiveness equation is in figuring out how to do everything better than those same competitors, something IC calls "operational superiority."  Add those two halves together, the company says, and you've got a formula that equals increased competitiveness.

Speculation, no accumulation

At present, the majority of the work contracted by IC is in the U.S., hardly surprising, given that the firm only has one office elsewhere: London.  That lack of global presence, plus Infosys' sizable bankroll, means that the company is regularly linked to potential acquisition targets.  In 2007, for example, speculation was rife that the firm would be acquiring European giant Capgemini.  That, however, was short-lived: Infosys never so much as made a bid for the company, while Capgemini went on to acquire its own Indian outsourcing firm, Kanbay International, shortly thereafter.

IC did end up making a bid for a large consulting outfit the following year, however, when it tendered an offer of $753 million for the U.K.'s Axon Corp., a specialist in SAP services.  The bid was initially accepted by Axon's board in August 2008, but rival HCL Technologies had other plans, and stepped in with a significantly higher offer.  Choosing not to become embroiled in a bidding war (probably a prescient move, given the collapsing financial markets at the time), Infosys opted to walk away from what would have been the largest ever acquisition by an Indian IT services firm.  In a bizarre twist, India-based HCL wound up winning the prize for less than Infosys' bid.  Closing the deal in November 2008, the downturn had taken a substantial toll on Axon's share price; the company ended up fetching just $662 million, some $90 million less than Infosys had been prepared to pay.

Regardless of the outcome of the deal, though, one thing is clear from Infosys' bid (not to mention the constant speculation): The firm remains focused on building out its consulting arm, with Europe an extremely likely candidate for an acquisition to occur.  In February 2009, for example, reports began circulating in the media that the firm had narrowed down a search to two potential firms.  The first of these is Polish outfit BCC, an SAP specialist with a significant footprint in Germany.  The other is another SAP specialist, CIBER Novasoft, a German unit of U.S. consultancy CIBER.  Whether or not the firm can push through a deal in the current economic climate, however, is another matter entirely.

One to chew on

Due to the overlapping nature of its work, it can sometimes be difficult to identify which projects linked to Infosys are likely to include IC's capabilities, and which are not.  That situation is made more difficult by the fact that IC doesn't publish its own results, or even its own press releases.  Still, the more complex the contract announced by Infosys, the more likely it is to include input from IC's specialists (especially if it involves a company in the U.S., IC's main hub).  An example of such a contract was highlighted in November 2008, when the firm revealed details of its project with chewing gum giant Wm. Wrigley Jr. to reduce its carbon footprint by transforming its logistics operations.  In a pilot program that first determined how much carbon Wrigley's emits in transport, IC then sought to reduce that amount across the firm's truck-shipping operations in Western Europe.  Infosys provided both solutions and services on the project, and will continue to monitor Wrigley's European distribution network across six countries in future.

Well en-Dow'd

Also in November 2008, Infosys Technologies was afforded a rare honor, inclusion in a new worldwide stock index of 150 leading blue-chip companies.  Known as "The Global Dow," the index was selected by journalists and the editor in chief at Dow Jones, and took issues such as size, reputation and future promise into consideration, while essentially factoring out distribution of wealth by country.

That's not the only reason the firm has to be cheerful as it surveys the future: Analysts have widely predicted that Indian consulting firms will see benefits from the recession.  Indeed, IC CEO Stephen Pratt was quoted in several media outlets in November 2008 as saying, "We believe our consulting unit will take market share during the downturn as clients demand more business value for each consulting dollar."

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Infosys Consulting Inc.


6607 Kaiser Drive
Fremont, CA 94555
Phone: (510) 742-3000
Fax: (510) 742-3090
www.infosysconsulting.com

STATS


  • Employer Type: Public
  • Stock Symbol: INFY
  • Stock Exchange: NASDAQ
  • CEO (Infosys Consulting Inc.): Stephen R Pratt
  • 2010 Employees: 131,000

Major Office Locations

  • Fremont, CA

Key Financials

  • 2010 Revenue: $6,000 million

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