The business process outsourcing (BPO) division of Infosys, India’s second-largest IT services exporter, is engaged in serious discussions with domestic Chinese companies to help them expand their operations globally even as the Indian IT major looks at making a serious inroads in the China market.
“We are taking our value proposition to Chinese companies to make them look better in terms of driving efficiency and also help them expand into other countries and continents,” Swami Swaminathan, CEO & MD, Infosys BPO, said in an exclusive interview. At the end of the third quarter of FY13, Infosys China reported a revenue of $25.56 million with a meagre net profit of $0.69 million compared with a year earlier when revenue was $31 million with a net of $4.9 million.
The profile of services provided by Infosys BPO like finance and accounting (F&A), human resources outsourcing, legal process outsourcing, and sourcing and procurement, and its global reach means that the company can tell Chinese companies that it can provide the entire back-office operations as they expand globally. Swaminathan said they are currently holding discussions with some Chinese companies from diverse segments like FMCG, manufacturing and services to assist them in globalising their operations.
Already, Infosys BPO’s China operation is serving as a delivery centre for multinationals to expand in the Chinese market. It currently has 850 people with a centre in Hangzhou and will soon open a second unit in Dalian.
This development should come as an uplift for Infosys’ overall business in China as the IT services major has found it tough to penetrate the Chinese market despite being there for a considerable period of time.
Talking to FE, Infosys CEO SD Shibulal said: “It (the China market) has started to do well for us but very slowly as it is a small base. We are seeing some traction but it will not be substantial and it would take us couple of more years.”
Infosys in China provides both outsourcing services and local domestic operations. However, it encounters significant challenges when it holds discussions with Chinese public corporations. According to Shibulal, just like in India the traditional global delivery model does not find much relevance in China and it requires a new solution to find traction in the Chinese market. “The number one challenge we find is in terms of local talent, so we need to understand their culture and carry them along with our vision,” he said.