Infosys Case

ASIAN CASE RESEARCH JOURNAL, VOL. 12, ISSUE 2, 249–273 (2008)

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This case was prepared by Professors Ram Subrama-nian, Ram Misra, and C. Jay-achandran of Montclair State University and Professor Tripti Singh of the Indian In-stitute of Management, Ban-galore, India, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation.

Please address all correspon- dence to Prof. Ram Subra-manian, School of Business, Montclair State University, Montclair, NJ 07043, USA. E-mail: [email protected].

© 2008 by World Scientific Publishing Co.

Infosys Technologies Limited: The Global Talent Program

T.V. Mohandas Pai, Director and Member of the Board for Infosys Technologies Limited (Infosys), the Bangalore, India-based information technology company, eased his six-foot three-inch frame into his office chair and pulled up the latest US recruitment report. It was Monday, October 15, 2007. He had just returned from a meeting with Kris Gopalakrishnan, the company’s CEO, where the two had discussed at length the company’s overseas recruitment efforts. For a company that obtained 98% of its revenues from abroad and operated 17 development centers in five countries, a mere 3% of its nearly 70,000 strong workforce was non-Indian. Gopalakrishnan had challenged Pai to increase the number of non-Indian staff by 30% each year or around 1,000 annually.

To increase its foreign workforce, Infosys had started an ambitious overseas recruitment effort called the Global Talent Program (GTP). In 2006, a batch of 126 recruits from US universities had been trained at the company’s training center in Mysore, India prior to being deployed in various US offices. Similar batches from the US had joined in February and July of 2007, while the first batch from the UK joined in September 2007.

As Pai perused the recruitment report, he recalled his words from the interview he had given to an Indian business magazine:

“For a company to be called truly global, what are the metrics? Do we get the bulk of our revenues from the international market; do we have a footprint in various

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countries across the world; does our board reflect a transnational character; does the workforce also mirror this? The answer, obviously, is ‘yes’ for the first three, but ‘no’ for the last one.”1

Gopalakrishnan had reiterated to Pai the need to step up global recruiting, with future employees coming not only from the US and the UK, but also from countries such as China, Malaysia, Australia, and the rest of Europe. To accommodate the increasing inflow of trainees, Infosys had constructed a massive center in Mysore that had lodging facilities for 10,000, 250 classrooms, and multiple conference halls.

Pai’s concern about Gopalakrishnan’s mandate centered on the Mysore facility’s ability to impart training to a culturally diverse mix of recruits. While Infosys had handled effectively a number of issues that arose with the initial batches from abroad, the training staff had to learn to handle multiple learning styles, diverse modes of interaction, and varied classroom expectations on the fly that had caused considerable tension. “As we step up the pace of overseas recruitment with recruits coming from many foreign countries and diverse cultures, can our training function keep up with these changes?” reflected Pai to himself.

Pai picked up the telephone and asked his assistant to set up a meeting of all the functional heads within the HR department for the following day. He told his assistant that the agenda for the meeting would consist of one item: issues related to GTP training. To prepare for the meeting, Pai asked his assistant to cancel all his morning appointments and settled down to read and reflect on the company’s initial experience in training overseas candidates.

THE INFORMATION TECHNOLOGY INDUSTRY2

There were two major categories in the global information technology (IT) industry. The first, business services, included business consulting and business process outsourcing. This segment reported worldwide revenues of $178 billion in

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2005 and was projected to grow at a 9.6% compound annual rate till 2010. IT services, the second category, included application management, system infrastructure, network and desktop outsourcing, and related services. This segment accounted for $443 billion in revenues in 2005 and was expected to grow at an average annual compound rate of 5.6% through 2010. The US accounted for approximately 43% of the worldwide market in this industry. Players in this industry included independent providers (EDS, Computer Services Corporation, Infosys), hardware and software vendors who offered computer services (IBM, Oracle Corporation), and hybrid firms (Accenture, BearingPoint) which offered general consulting in addition to IT services.

Starting in the 1990s, India emerged as a major player in this industry, with its three largest service providers, Tata Consultancy Services Ltd (fiscal 2006 revenues of $4.3 billion, over 100,000 employees worldwide), Infosys Technologies Ltd., and Wipro Limited (fiscal 2006 revenues of $2.385 billion, over 78,000 employees worldwide), challenging their global rivals such as IBM and Accenture. Standard and Poors expected the growth rates of the Indian IT companies to be higher than the industry average due to these companies aggressively taking away market share from their larger competitors. To take advantage of the low cost and technically qualified workforce that was available in India, most industry players had a significant presence in that country. For example, Accenture had slightly less than half its global workforce of 53,000 in India, and of EDS’s 32,000 employees worldwide, 18,000 were located in India. Competition for the Indian workforce had increased the wage rates by 17.9% in 2006. Companies resorted to stock-based compensation as a way to boosting both productivity and retention. However, this resulted in an increase in the overall cost of operations that put significant competitive pressure on companies. IT companies were shifting to a global sourcing model and recruiting employees from countries such as Brazil, China, the Philippines, Vietnam, and Eastern Europe.

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BACKGROUND ON INFOSYS3

Incorporated in 1981, Infosys was a $3.090 billion (in fiscal 2007) in revenues company with net income of $850 million (Exhibit 1 contains the company’s financials in summary form) that provided consulting and information technology (IT) services to clients globally. The company was listed in the NASDAQ stock market. Infosys was headquartered in Bangalore, India and had offices in 57 major cities in 23 countries, with its US headquarters in Fremont, California. In September 2007, Infosys employed over 80,000 people worldwide.

In 1981, seven software engineers working for Patni Computers Limited resigned from their jobs to start Infosys. The partners pooled their savings (that amounted to $250) to fund the company. Led by the company’s first CEO and current Chief Mentor, N.R. Narayana Murthy, Infosys sought to leverage the difference in low wage rates for technical staff between India and the western world (principally the USA and Europe) to build a competitive advantage in the IT industry. Initially, Infosys acted as an on-site developer of software for US customers through a partnership with a company called Data Basics Corp. The company’s first employees (other than the partners) were three engineers who were hired in 1982 and immediately sent to work in client sites in the US. The company’s headquarters was a converted bedroom in Murthy’s Bangalore apartment. In 1987, the company formed a joint venture (since terminated) with Kurt Salmon Associates to market its services in the US.

Infosys found itself at a critical juncture in 1989 when the severe restrictions on foreign exchange imposed by the Indian government constrained the company’s growth. Company legend has it that all the partners except Murthy voted to dissolve the company. Frustrated by a business model that was restricted by government laws, the partners wanted to go their separate ways. Murthy offered to buy out all the partners, but proposed that if they chose to stay together he would ensure that the company went public within five years. The liberalization of the Indian economy

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in 1991 allowed Infosys to raise capital in the IPO market in 1993. It parlayed the capital raised to become a high growth business that averaged annual sales increases of approximately 64% between 1994 and 1998 and around 30% per year since then.

Upon reaching the age of 60, Murthy stepped down as CEO in 2002 and was succeeded by Nandan Nilekani, one of the co-founders. Nilekani ended his CEO tenure in March 2007, at which time Kris Gopalakrishnan (another founding partner) took over the leadership role. Infosys won the first of its several “India’s Most Admired Company” awards in 1999 in the Economic Times survey. Since then it had also won several “India’s Best Companies to Work For” awards in surveys conducted by Business Today, the most recent award being in 2006.

Infosys pioneered the global delivery model (see Exhibit 2) as a way to obtain a competitive advantage in the global IT industry. In 2007, Infosys obtained 63.6% of its revenues from North America, 26.4% from Europe, 1.6% from India, and 8.4% from the rest of the world.

GLOBAL RECRUITMENT

In early 2003, Infosys developed the vision of becoming a global company. Pai reflected on how this mandated a change in the recruitment policy:

“Our business is all around the globe, we happened to be headquartered in India for historic reasons. We source the great majority of people from India because India has the largest pool of young, technically qualified people. But as we get only about 2% of our revenue from India, it is very essential that in local markets we have local nationals interfacing with our customers. They can speak in the manner that the customer understands. It makes great business sense to hire globally. In addition, our explosive rate of growth made us realize that we cannot just rely on the Indian talent pool, but that we have to reach out elsewhere.”

Since the majority of the company’s customers were in the US, the US became the first choice for overseas

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recruitment. Infosys created a recruitment team for the US (Exhibit 3A has the organization chart for Infosys and 3B has the organization chart for the recruitment function). The six-person team spent the Fall of 2005 and Spring of 2006 making presentations at various US universities. Recruitment team member, Jharna Thammaiah, spoke about the differences in campus hiring in India and the US:

“One major difference is the day status. In India there is the concept of limiting oneself to 1–2 job offers and not more. It is imperative, therefore, for recruiters to get the privileged first day status at campuses so that their offer is the first or the second one for the candidate, as otherwise they might lose good candidates. It took us a while to realize that such a concept did not exist in the US. Also, unlike in India, the placement office in the US does not have any control over the career choices of the candidates. They provide the infrastructure and the rest is up to the candidate. If an engineering major wants to end up as a musician, there is nothing the placement office can do. Not so in Indian campuses.”

Since Infosys was an unknown name in the US job market, the company had to take a two-step approach to recruitment. They first had to make themselves visible to candidates by sponsoring career fairs where the company distributed information leaflets about the opportunity. They also distributed marketing collaterals such as pens and writing pads to stimulate interest as well as recall. Jharna reflected on this:

“Our recruitment costs were significantly higher in the US. The first thing that happens when we contact a US school is the placement office wanting to know if we are participating in the career fair. For a career fair we have to rent a stall, hire staff to manage the stall, and pay for marketing giveaways. Aggressive promotion at career fairs will get us 20–30 attendees at a formal presentation about Infosys. This was a big change from one of earlier efforts when a recruiter went for a campus presentation and nobody showed up! This is in contrast to standing room crowds of 300–400 at presentations in India without the time and expense of career fairs. We have two hiring sessions in the US (Fall and Spring) as compared to just

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one in India. We also have our recruitment managers building relationships with campus placement offices throughout the year by sponsoring career workshops and supplying information brochures.”

To overcome the unfamiliarity of interviewing American candidates as well as ensuring compliance with local laws, Infosys hired a US firm that specialized in training recruiters to train and certify Infosys recruiters. Infosys used the recruiting message of “Go East, Young Man” and emphasized the cultural diversity in India as well as the chance to be involved in the growing outsourcing industry in its sales pitch. In addition, in subsequent batches, recruiters were accompanied by US recruits who had completed the training program and were employed in Infosys offices in the US. Recruiters looked for three attributes in candidates: open mindedness, learning ability, and the spirit of adventure. A written test of analytical skills and a face-to-face interview identified recruitable candidates. For the first US batch, Infosys’s conversion rate (the number of acceptance to the number of offers made) was low, typically 1 in 4. It improved to 1 in 3 in subsequent batches. Somnath, a recruitment team member described a key reason for the low conversion rate:

“In the global delivery model, Infosys has offices in various US cities. Take Chicago for example. We work with clients not just in Chicago but in various mid-west cities. This means that a Chicago office staff member has to be able to work in Chicago and when the project is over, relocate to a different city and work on a project there. We found that not all people are comfortable with this model, they want to be rooted to a city. They also have to be prepared to stay on the bench (an industry term for employees not currently working on a project) because their skills don’t meet the client’s requirements or there is not enough work. When you are uncomfortable with this approach, you tend to seek employment in a more traditional company.”

Jharna spoke about the type of candidates recruited in the US:

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“Our entry level position is that of a software engineer. In India we hire students with engineering backgrounds, though they may come from the electrical or the mechanical side. In the global recruitment program, we have extended the hiring to include not just engineers but also liberal arts majors. This was an experiment for us, because we don’t hire liberal arts students in India.”

Infosys hired 126 candidates in the first US batch. Of these, 17 were liberal arts graduates. Their training called for 16 weeks of classroom instruction at the Infosys training center in Mysore, India, followed by eight weeks of on-the-job training at Infosys offices in India. Candidates were posted in offices in various US cities after the completion of the 24-week training.

TRAINING

Training foreign candidates was not entirely a new area for Infosys. In 2002, the company got a request from the government of Mauritius to train 25 of their government employees in project management. The following year, the company got similar requests from governments in Japan, Australia, and Thailand. At first, there was skepticism within the company about the importance of this venture, but this was quickly overcome when top managers reiterated the need to globalize Infosys. Dr. M.P. Ravindra, the then head of Education and Research (E&R), reiterated the importance of these early training initiatives:

“The training for various foreign governments was all done to foster goodwill. But the important outcome was that it gave us the confidence to take people from different environments and education systems and train them successfully. It enabled us to take on the much bigger challenge involved with the GTP.”

GTP training involved pre-training orientation, much of which was done via newsletters and emails, and the training itself, which was a 16-week training in technical and non-technical skills at the company’s Mysore training facility.

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Pre-Training Orientation

Infosys ensured that the new hires were in constant touch with the recruiters prior to their departure for training in Mysore. The company’s HR staff talked to the new hires via video conferencing. These video conferences were used to answer questions about the nature of training, living accommodations in Mysore, and about the company’s culture. The Campus Recruitment Team (CRT) provided the point of contact for the new recruit prior to departure for training. New hires received periodic electronic newsletters that informed them of Indian visa procedures and documents necessary for international travel. Infosys block booked airline tickets for the trainees. US trainees reported at a hotel in Washington D.C., one day prior to their departure for India. Infosys organized a “kick off” party in the city to enable the trainees to get to know each other. The trainees departed for India the following day and training started two days after arrival. The Employee Relations team, a unit of the company’s HR function, coordinated the recruits’ arrival in Bangalore, India. A fleet of buses transported the trainees to the company’s Mysore training center, about 80 miles away.

Facilities

Infosys’s Mysore training facility, called the Global Education Center, occupied 315 acres of land. Dubbed the “Taj Mahal of training centers” by Fortune magazine, it had two helipads, a professional grade cricket stadium, an employee center with a laundromat, medical center, supermarket, bank, book store, salon, movie theatres, basketball, tennis, shuttle badminton and squash courts, an 8-lane Brunswick bowling alley, snooker tables, yoga classrooms, meditation rooms, a steam bath, and a swimming pool. The training facility had 10,000 rooms, 250 classrooms, 650 faculty cabins, and several large and small conference halls.

A food court featured Indian, European, and American food kiosks. A Domino’s Pizza kiosk served pizzas with

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American toppings as well as with Indian variations, such as the keema do pyaaza pizza — onions, minced meat, and jalapenos. Infosys encouraged its employees to take time out and eat at the food court rather than take food back to their desks. When the first batch of US hires were trained at the Mysore facility, the American food kiosks were exclusively for the US hires. The company’s training staff was of the opinion that new US hires preferred American food, at least during the initial part of their Indian stay. This exclusivity was removed after the first US batch and subsequently all food kiosks were open to all trainees. Facilities Manager, Jairam Madhav Rao spoke about the living arrangements:

“We had people from HR who coordinated with the US recruits to find out their eating preferences and we made sure that the supermarket carried the items that they were familiar with. We already had a French chef working for us who came up with an array of menu items that was both nutritious and tasty. We were proactive in training the housekeeping staff. Because the training facility until recently had a limited number of rooms, we gave single accommodation to the US hires and shared accommodation to the Indian trainees. From now on, though, we have ample rooms to offer single accommodation to all trainees. All trainees are given cleaning and maintenance schedules so that they are aware of when the housekeeping staff would be in their room. We made it mandatory that no laundry or any kind of delivery service would be offered to trainees.”

Infosys had a policy of prohibiting trainees from bringing their personal computers while at the training facility. This created a problem when the first US batch arrived at the facility. Security officers prevented the trainees from taking their computers into the facility. The trainees argued that they needed their computers to keep in touch with their families in the US. A potential stand off was prevented when senior Infosys managers quickly decided on an exception to the policy. The result was that the US trainees were allowed to use their computers only in their rooms and not carry it around to their classes or to the food court.

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A two-day induction program covered all aspects of the training facility for the trainees. Facilities Manager, Rao, described this program:

“The program, which is mandatory for all trainees, covers everything about their stay. We talk about the maintenance and cleaning schedule, the security system, the logistics of getting around the city, and what they can do and cannot do during their stay. As examples of what they cannot do, they cannot smoke or drink on campus, they need to register their vehicles with security, and they cannot walk on lawns. We also have strict curfews — 11:00 p.m. on weekdays and 1:00 a.m. on weekends and trainees have to check out and check in with security when they leave campus. For foreign trainees, overnight stay outside of campus requires prior written permission from HR because of security reasons. We find American trainees generally following rules in contrast to Indian trainees. My feeling is that once you explain the rules clearly to the American trainees, they follow them diligently.”

Training Objectives

Prior to the recruitment of the first US batch, Mohandas Pai identified the operational challenges relating to training foreign hires:

“Our challenges were multifold. We had to develop a training program that catered to the different learning styles of foreign recruits. We had to introduce the trainees to the global delivery model. For most hires, this was either their first job, or their first job in a big organization, and their first job in a foreign country. In addition, most were not exposed to the IT industry’s model of working in place A with the client in place B, where the interaction with the client was almost exclusively through telecommunication channels. We also had to instill in them the notion of globally distributed work, where work was parceled out to teams in different geographic locations, which called for not only the ability to work independently but also the ability to integrate work done elsewhere.”

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The 16-week on-campus training was divided into technical and non-technical (soft-skills) parts. Technical training centered on imparting in-depth knowledge in various computer programming languages (Java, C++, etc.) as well as in systems analysis and design. Rigorous homework assignments and examinations were used to assess learning. The E&R unit was responsible for this part of the training program. Infosys used in-house trainers to do the technical training.

Soft-Skills Training

Infosys created the E&R unit in 1991. The unit was charged with the task of providing technical training to the employees of the fast-growing company. Dr. Ravindra spoke about the need for soft-skills training and the creation of the Infosys Leadership Institute:

“Till 1999, all the training that we did was technical. The market dictated our investment in training. Customers decided what had to be done and we had to do the job and deliver it to them. After 1999, and in particular after the dotcom bust, the whole scenario changed and customers were pushing us to take on more respon-sibilities for various reasons. We wanted to move to a “trusted partner” status, where we would develop long-term relationships with clients and do multiple and varied jobs for them. The company’s leaders realized the importance of training employees in leadership, diversity management, communication, and team working skills. Toward this, the Infosys Leadership Institute (ILI) was created in 2001.”

Infosys identified a pool of internal trainers to conduct the training program (both technical and non-technical) for foreign recruits. Diversity Officer, Srimathi provided the rationale for using in-house trainers:

“We typically go with Infosys facilitators because we have competent people working for us in the ILI. We believe that for such training, we need people who understand the organizational perspective, have an exposure to how

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teams work, and have experience dealing with non-Indians.”

Exhibit 4 provides brief profiles of three facilitators employed in the program. Dr. Ravindra recalled the initial training given to the trainers in preparation for the technical skills part for the first batch of GTP recruits:

“We selected nine members of the training staff and they were given a quick tutorial of 20–25 minutes on cross-cultural issues. We then asked them to simulate teaching a class. We recorded their teaching and played it back on high resolution T.V. ILI staff critiqued their teaching and developed parameters that all educators used. Selected educators were then given a whole day of cultural sensitivity training prior to deployment in the classroom. M.R. Narayana Murthy (one of the founders of Infosys and its current Chief Mentor) was involved in this initial assessment because he was aware of the magnitude of what we were trying to do. Indian students went to the US for higher studies or training. It was never the other way around. Americans never came to India for studies or training. Murthy wanted us to gain the confidence of American trainees so that it would be easier for us to recruit globally.”

Managing Cultural Differences

Since the 2006 US batch of 126 hires was the first group in the GTP, both E&R and ILI spent more than six months preparing the training program. A number of Infosys personnel who had worked in the company’s US offices or with US clients were debriefed to understand cultural and learning style differences between the US and Indian cultures. The entire set of training materials was sent to a leading university in the US where professors vetted the documents to suggest changes for words or phrases that would be more suitable to the Americans. Harvard Business School cases were selected to make training sessions more interactive than they currently were. In addition, trainers culled business situations specific to Infosys from operating personnel and created a bank of “live” cases. Trainers were

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given a repository of words that were not to be used during training because of culture-specific meaning attached to them. One example was the use of the word “marks.” The word was commonly used in India to indicate how a person did on an assignment or test. Since this was not used by Americans the same way, trainers were told to use the word “score” or “grade” instead of “marks” when assessing the American group.

Separate batches

Infosys deliberately chose to train the first US batch separately. Since the Mysore training facility typically was the training home to 12,000 to 15,000 Indian employees, a number of batches of Indian recruits were trained separately at the same time as the 2006 US batch. The trainees met at the food court and socialized after classes, though they attended classes separately.

When the first US batch was deployed at various Infosys offices in the US after training, the feedback from field operatives reiterated the need for increased cultural assimilation. Therefore, from the second US batch onwards, the US and all GTP trainees were mixed together with Indian trainees in training classrooms.

While the soft-skill content taught in training classes for the Indian and non-Indian batches was the same, covering areas such as managing diversity, interpersonal communication, leadership, and team building, the method of delivery varied occasionally. An ILI facilitator reflected on how she taught interpersonal communication to the two different groups:

“For foreign trainees, behavioral concepts have to be made very clear. If I am teaching communication, I won’t talk about transactional analysis (TA)* for the Indian batch because I believe that it will be really heavy for

*Developed by Eric Berne, transactional analysis (TA) is a psychoanalytic theory of psychology that emphasizes the importance of interactions rather than internal psychological dynamics. Wikipedia, extracted on October 31, 2007.

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them to digest. I would talk about TA at length to the US batch because I think it provides important background for them to understand communication.”

The training day was also broken up differently for the US and Indian batches. Lecture sessions averaged three hours for the Indian batch, while they were limited to one-hour sessions for the US batch. An educator described the motivation for the dissimilar length of sessions:

“We noticed marked differences in learning styles between Indian and US trainees. US students ask a lot of questions during the lecture and tend to get restless after about an hour. They have very good probing skills but they also require a lot of clarity to be comfortable with the subject matter. They are very honest in giving feedback. They wanted more hands-on work to apply the lecture concepts and so after an hour of lecture, we stop and give them problem solving and other interactive exercises. The Indians, on the other hand, can sit through a three-hour lecture and not feel restless. We found that for Americans, silence means they have grasped the material, because if they haven’t they are not bashful to ask us to repeat the lecture. Whereas in the Indian case, the silence may mean things are not very clear, but they are uneasy to ask for clarification lest they appear dumb in front of their peers. We didn’t know this at first, and so when the Americans were silent in class, I tended to repeat the lecture over and over till they got frustrated and talked to me about it.”

Mixed batches

For the second US batch that started its training in February 2007, Infosys decided to mix up the trainees so that there were both Indian and American trainees in each classroom. The class was divided equally between Indians and Americans. E&R staff member, Rashmi Balakrishnan, reflected on the mixed batches:

“When answering in class, Indians have the tendency to answer in groups. The Americans were unhappy about this as they typically answered independently. The Americans spoke out about this tendency of Indians and

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our trainers had to tell the Indian trainees not to speak in groups but individually. Also, when the trainer posed a question to the class, the Indians tended to get the question very quickly and were always the first ones to reply. This is because they are used to the trainer’s accent. When the Americans complained about this unfairness, we had to tell the trainers to hand pick the person to respond to a question. We also had issues with specific phrases. An example is the phrase “you should not do it.” The Americans felt that it was a very strong statement and also aggressive. So we had to change it to “You need not do it.” Also, we changed the emphasis from 60% theory and 40% application to 30% theory and 70% hands-on work at the behest of the Americans.”

E&R staff member, Sundar, made the following observation with regard to assessment of group work in mixed batches:

“Our trainers assessed group projects with a single grade for the entire group. The Indians were comfortable with this type of assessment. But the American students told us that it was quite possible in a group to have members contribute unequally. They wanted individual assessment of each person’s contribution to the group project. We felt that there was some merit in their criticism and so now we divide the grade for group projects into a group grade and an individual grade.”

Exit surveys of the mixed batches indicated that while the Americans were satisfied with the 50:50 make up of trainees in a classroom, the Indians wanted a 30% Americans and 70% Indians split, because in their opinion Americans tended to dominate classroom discussions and an equal split made it difficult for the Indians to be heard in the classroom.

Post-Training Assessment

All trainees were asked to assess the training via formal surveys. In addition, ILI periodically sought informal feedback from the trainees. One American trainee made the following observation in his developmental assignment:

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“My culture is monochronic. I am used to strict sequences in everything from my to-do list to driving to everyday conversation. The biggest difference I found in the two cultures (American and Indian) was that while we are monochronic, Indians are polychronic. My first experience with this polychronic idea was my trip to the Indian Consulate in Chicago to pick up my visa. The man I dealt with interrupted me to allow another man in to speak with him, and interrupted that man in the middle of a sentence by answering his phone. Although some people told me this was part of Indian culture, I thought this was just a peculiar habit of this man. When I got to India, I dis- covered how very commonplace that type of behavior is.”

A female American trainee had this to say:

“The Indian men don’t normally greet any of us when they pass, but if I smile or say “hello” first they always respond the same. The women on the other hand are different. It’s rare to find one walking alone. They travel in groups. If you smile or say “hi” to them, they either don’t respond, or they just giggle to each other. Someone told me that the reason is because it’s not normal for them to be greeted so they just don’t know how to respond. I don’t know if that’s true or not, but it sounds reasonable.”

Exhibit 5 provides a summary of the recurring observations that came out in the exit surveys and group discussions.

THE DECISION

As Mohandas Pai read and reflected on Infosys’s experience with the GTP, he realized that he and his training staff faced immense challenges. The GTP had brought foreign batches from the US (three batches) and from the UK (one batch). Trainees in these batches were predominantly Americans and Britons, but there was also a smattering of Chinese, Japanese, Latinos, and Australians. In all, these batches accounted for roughly 500 foreign trainees over a two-year period. Upon completion of their training program, Infosys classified the trainees into three categories: high

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performers, average performers, and poor performers. High performers were able to hit the ground running once they were deployed in the field. The average performers had to go through additional field training (often 1–2 months) prior to being deployed in the field. Poor performers needed considerable additional field training (an average of six months) before being allowed to interact with clients. GTP candidates fell predominantly in the high and average category. Dr. Ravindra of E&R assessed the performance of GTP candidates:

“We pick candidates from a number of universities in India because of the large numbers needed. Some of them come from good institutions while others are from average ones. Not so with our foreign recruits. In the case of our GTP trainees, we have picked from the top universities in each country. It is no surprise then that our GTP candidates are rated “high” or “average” when they complete training. Will that continue when we expand our training groups and have to go to second tier institutions in each country?”

Given the need to increase foreign intake to around 1,000 a year, Pai wondered if a dilution in quality of candidates would need to be addressed by the training staff. More importantly, given the mixed results of the separate and blended batches in the training program, what would be the better option? Should the company conduct parallel training sessions for Indian and GTP candidates or should they offer blended batches? In either case, trainers had to contend with varying learning styles and cultural values of candidates from many foreign countries.

“Are we prepared for this,” asked Pai aloud to himself. He quickly corrected himself, “No, that’s not a question that we should wrestle with. We don’t have that luxury! For Infosys to succeed with the GDM, we need GTP candidates along with Indian trainees. Our business is growing so we are poised to take in more candidates now than in the past. Given the necessity of the GTP, what changes should the ILI and E&R do to the training program?”

Pai wanted to use the next day’s meeting to address these issues in detail. But he realized that, as the leader of

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INFOSYS TECHNOLOGIES LIMITED 267

the Human Resources function, the others would look up to him to provide the direction. He wondered what that should be.

ENDNOTES

1. Venkatesh Babu, “Incredible Infy,” Business Today, November 1, 2006, p. 90.

2. This section is based on Standard & Poor’s Industry Surveys, “Computers: Commercial services,” May 3, 2007 and websites of Tata Consultancy Services (www.tcs.com) and Wipro Limited (www.wipro.com).

3. Information for this section was obtained from www.infosys.com and “Infosys Technologies Limited,” Wharton School case study, 1999.

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268 ACRJ

Exhibit 1

Infosys Technologies LimitedCompany Financials

Summary Income Statement (US$ million)

2007 2006 2005Revenue 3,090 2,152 1,592Operating Income 970 698 522Depreciation 118 99.0 66.0Pretax Income 936 630 491Net Income 850 555 419

Summary Balance Sheet (US$ million)

2007 2006 2005Cash 1,403 889 410Current Assets 2,098 1,509 1,060Total Assets 3,073 2,066 1,454Current Liabilities 355 209 175Common Equity 2,717 1,837 1,253

Total Capital 2,717 1,852 1,253Infosys sold ADRs (American Depository Receipts) in the US in 1999.Source: Standard & Poor’s Stock Report.

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Exhibit 2

The Global Delivery Model

Even though today in the USA outsourcing is synonymous with off-shore sourcing, it started as on-shore sourcing in 1984 when American companies started giving out their IT work to other American companies. This mode of outsourcing is known as onshore sourcing model. A few years later, another model evolved — an offshore model — in which companies gave their IT work to companies located offshore — mostly Indian companies. The limitation of the offshore model was that only a subset of the work that did not require direct interaction with clients could be outsourced. Realizing this, Infosys, in its efforts to grow and become a global company, developed a third model that was a combination of the onshore sourcing and offshore sourcing. This model now is popularly known as the Global Delivery Model (GDM).

The basic premise of the GDM is to break pieces of work into logical components, and distribute these components geo-locationally, to perform them where it creates the maximum value. Under the GDM, a service provider such as Infosys will have work centers all over the globe, some onshore and some offshore. As more and more developed nations started using outsourcing, it made sense to service providers such as Infosys to have onshore or near-shore centers in various countries and to connect them so that the work can be distributed to one or more centers that are most logical in terms of matching the resources needed. Another variation of the GDM that is evolving uses the work centers of the service company’s partners in addition to its own centers. This allows a service company a truly global access and flexibility to get the work done in many places.

One of the best ways to understand the distinction between the work done by the onshore centers and the offshore centers is to think of the work that requires interacting with clients and customers (end user). This could be the initial planning of the project that involves understanding the problem, developing possible solutions and selecting the best solution that the client can afford, field testing of the system/solution, and providing support in the initial installation. The work done at the offshore development centers may include the detailed design specifications, software development, and system testing. The Hispanic computer interface project for the American bank portrayed in the figure below illustrates this.

The global delivery model is particularly suited for fast turnaround projects or large projects. Fast turnaround projects typically require a lot of people doing different parts of the project at the same time, which can be easily achieved by pooling together the complementary resources available in various work centers around the globe. Large projects often require a lot of skilled resources typically not available in a single work location. It can also result in reducing the risk of project completion since even if some offshore centers face a disaster, the work can be distributed to other centers without much discontinuity in work.

Infosys has client site locations, near-site locations and offshore centers. As can be seen in the table below, the near-shore centers have duplicate service capabilities some that are common to the onsite centers and some common to the offshore centers. This redundancy in the service providing capabilities in the near-shore centers makes the entire global delivery concept so powerful. The near-shore centers serve as interface points for the onsite and offshore centers.

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270 ACRJ

Client-Site Location

USA

Near-Site Location

Monterrey, Mexico

Offshore Location

Bangalore, India

Bank

Client

Infosys Office Infosys OfficeInfosys Office

•Client interface

•Project review

•Project leadership

•Analysis and

synthesis•Design and

prototype building

•Detailed design•Background

research

•Code

development

• Analysis and synthesis• Design and prototype building

• Detailed design• Background research• Code development

Project: To develop a computer system for an American bank that would handle a loan program for Hispanic customers. The system should have Spanish interface and be attuned to the cultural nuances of Mexican customers.

Source: Casewriters’ visualization based on Anand Giridhardas, “Outsourcing Works, So India is Exporting Jobs,” The New York Times, September 25, 2007, nytimes.com.

Services Client-Site Locations Near-Site Locations Offshore Locations

Strategy and roadmap definition

Client interaction, interviews, reviews, program leadership, and goal setting

Analysis and synthesis

Background research, thought leadership, and information support

Development and integration

Architecture, requirements, change management, and implementation

Requirements analysis, high level design and prototype building, and implementation support

Detailed design, code development, testing and integration

Systems integration and package implementation

Client interaction, process mapping, solution definition, architecture, change and program management

Prototype building, high level design, and implementation support

Custom components, integration interfaces, and report building

Information Technology Outsourcing; Business Process Outsourcing; Application Maintenance Outsourcing

First-level support, facilities support, and program management

Near-site support centers, service redundancy

Large offshore centers, core service delivery

Source: www.infosys.com/gdm/.

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Exhibit 3B

Infosys Technologies LimitedOrganization Chart for the Recruitment Function

Exhibit 3A

Infosys Organization Chart (Adapted)

Co-ChairmanNandan M. Nilekani

CEO & Managing DirectorS. “Kris” Gopalakrishnan

Head

Worldwide Sales & Customer Delivery

Director & Head

CDG,IS, Quality and Productivity

Director & Head

E & R & HRDMohandas Pai

CFO

Administration,Infrastructure, and

security

Commercial &Facilities

Education & Research

IBU- Finacle

Human ResourcesDevelopment

Infosys LeadershipInstitute (ILI)

AdministrationInfrastructure, and

security

IBU - Finacle

Source: Infosys.

Head – Global Entry Level Hiring & Campus Relations

Head – India Hiring Manager – UK HiringManager – US Hiring

Global Entry Level Hiring & Campus Relations

Regional Recruiter – West

Manager – Geo Hiring

Regional Recruiter – South

Regional

Recruiter – Mid

West

Regional Recruiter – East

Recruitment Coordinator

Global Entry Level Hiring & Campus Relations

Source: Infosys.

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272 ACRJ

Exhibit 4

ILI Facilitator Profiles

Facilitator #1

• Began his managerial training career with Dale Carnegie Associates (DCA) and worked with them for over eight years, both as an apprentice and employee. Conducted both public programs and corporate consulting for DCA in the US, Singapore, and Hong Kong.

• Has worked with a number of clients of Infosys across geographies in order to build more collaborative teams across multiple cultures.

• Is certified in a number of psychometric tools like the MBTI.• Published two papers in an international conference related to the field of cross-cultural

competence. • Overall, about 10 years experience in this field.

Facilitator #2

• A gold medalist and rank holder during graduation, also holds a Management degree, a Post Graduate Diploma in Training & Development, and a Master Facilitator certification.

• Designed interventions and trained Infosys employees and clients on a continuum of skills ranging from effective communication to managing diversity.

• Has facilitated over 500 programs. • At Infosys, has also anchored a number of roles and initiatives — learning management in

business units, continuing executive education, training in non-India locations, etc. • Is certified in a number of psychometric tools like Belbin.• Has also facilitated workshops with client teams to get the best out of multicultural teams. • Overall, about 10 years experience in this field.

Facilitator #3

• Has developed people in both technical and behavioral areas.• Published two papers in an international conference related to the field of cross-cultural

competence. • Has been an invited panelist speaker at an international conference on diversity. • Is certified in a number of psychometric tools like the MBTI.• Specializes in the field of cultural differences and has run a number of surveys to assess

cultural orientations in people, some of them in workshops with clients.• Overall, about 11 years experience in this field. Source: Infosys.

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Exhibit 5

Pre-Training Due Diligence and Post-Training Feedback

US Batch 1

Pre-Training Due Diligence• Did some form of needs analysis before they joined.• Allotted trainers who had previous cross-cultural experience.• Got the training material upgraded with higher order skills.• Ensured material review by senior American colleagues and faculty from Duke University in

the US.

Post-Training Feedback• Some of the material was too simple.• The batch was quick to say what was not OK, but did not have any constructive suggestions

on what could help.• Cross-cultural comfort came across as the primary need.• The discomfort about not knowing their exact roles spilled over into the sessions.

US Batch 2

Pre-Training Due Diligence• Eliminated some of the elementary training modules on listening, etc., and strengthened the

cross-cultural piece.• Did a number of focus group discussions and one-on-ones with the previous batches, ran

surveys, etc., to further flesh out areas of comfort/discomfort.• Reworked the “Working in Teams” and “Client Orientation” pieces to bring in more business

and real-life focus.• Mixed Indian and US trainees in the same session (50–50) to bring about higher cultural

immersion.

Post-Training Feedback• Duration of the programs tends to become a dissatisfier.• People do not mix despite being in the same room. Silos continued.• More productive learning vehicle needed.

US Batch 3 and UK Batch 1

Pre-Training Due Diligence• Turned the design of the curriculum upside down — just the bare minimum in the class and

most of it as an assignment.• Spoke to some of the managers of the previous US batches.• Did a more comprehensive needs analysis and identified operations in daily life as a need.• Brought in the real-life assignment that enhanced cultural understanding as well as forced

interaction with other cultures.• Introduced the shadowing project for four days to get a sense of a real-life project.

Post-Training Feedback — None, sessions still in progress.Source: Infosys.

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