Reverse outsourcing: Case study Infosys Technologies

Offshore outsourcing has paid back. That has been shown by many Indian companies which have originally been established as local business organizations and now expand internationally, being global giants and creating jobs in these countries where they traditionally have been outsourced from. Infosys, Tata Consultancy Services, Wipro, and many more. They make their profits on both: national and international deals.

Infosys Technologies having about USD 2.8 billion in form of cash and cash equivalents in its assets as of 30 September 2009 is now searching for acquisitions opportunities in Europe (France and Germany). "We are looking at companies typically in the revenue range of USD 100 million to USD 300 million a year", B.G. Srinivas, Infosys’s executive council member overseeing European operations says.

This case not only shows the win-win situation offshore outsourcing offers for vendor and buyer countries in a long-term period but also the use of crisis as an opportunity. Why Europe? Because India’s IT companies try to expand their operations outside the USA to reduce dependence on that market. Europe is experiencing the slowdown due to global financial crisis and offers now a huge potential for low-cost services. "We have been depending too much on the US, and now we are looking at steadily increasing our market share in Europe to mitigate business risks", Srinivas further says, adding that one more office would be opened in Munich or in Düsseldorf soon and one in Paris.

The cost factor is a subject here: Infosys competing with European giants such as Capgemini, Atos Origin, T-Systems for outsourcing deals expects the price differences amounting to 25%-30% would attract potential buyers.

Infosys is interested in employees of the competition as it is crucial in IT outsourcing industry to have local people with essential market and contacts to expand. At the moment the corporation employs 75,000 headcount world-wide and is going to offer jobs to further 26,000 people this year.

The market has very positively reacted on the acquisition plans of Infosys. Many analysts as ASK Securities or ABN Amro have recommended to buy Infosys shares.

According to some industry experts, Infosys would have an interest in acquisition of Capgemini and T-Systems. However, the corporation itself has not given any official statements about that.

Posted by Magdalena Szarafin on October 24, 2009
Website: http://www.szarafin.info/ | Email: mszarafin@web.de