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Infosys-KSA parnership


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Internationalization …

Infosys-KSA parnership
Infosys-KSA collapse

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  • 1. INFOSYS – KSAINFOSYS – KSA Internationalization AMITY BUSINESS SCHOOL 4th March 2009
  • 2. GROUP MEMBERS • V.Karthik • Himanshu • Paritosh • Kshitij • Vivek
  • 3. INFOSYS Targets USA Narayan Murthy along with 6 professionals founded Infosys in 1981 He focused on the world's most challenging market - the US. 2 reasons for this 1. First, there was no market for software in India at the time. He believed that Indian software companies should export products in which they had a competitive advantage 2. The second feature of the strategy was "moving up the value chain" – which meant getting involved in a software development project at the earliest stage of its life cycle
  • 4. INFOSYS – KSA Partnership • 1987: Infosys entered into a joint venture with Kurt Salmon Associates (KSA), a leading global management consultancy firm KSA-Infosys was the first Indo- American joint venture in the US. • In 1988-89, Infosys set up its first office in the US • But Infosys increased its share from 40% to 50% stake in 1993. The name of the new company was changed to Software Sourcing Corporation • KSA was responsible for sourcing projects for the joint venture and Infosys provided the software expertise and technical knowledge
  • 5. Between 1987 and 1994 he headed the technical operations of KSA/Infosys ( joint venture between Infosys and KSA as Vice President (Technical) Was responsible for managing the relationship with KSA “At that time, this joint venture allowed us to build credibility in a market where we were relative newcomers and gave us access to a number of opportunities we would not have otherwise had” S. Gopalakrishnan
  • 6. INFOSYS projects • Reebok of France was looking for a software system to handle its distribution management at the same time • The project involved designing and building an automated ordering and distribution system that would track and maintain Reebok orders worldwide. The project team overcame many hurdles, including the language barrier (many of the project specifications were provided in French) and completed the project ahead of time, which won it accolades and a new customer for life. • In 1989, Infosys bagged another major contract from Digital Equipment. • By 1993, it worked on projects for GE, Nestle, Holiday Inn, and many other firms
  • 7. 1991 Economic reforms • In 1991, the Government of India announced a number of measures to address the economic and financial difficulties the country had been facing. • The package contained policies that were aimed at stimulating investment in many industries and included favorable incentives designed to foster the growing Indian software industry • Manmohan Singh facilitated Infosys’ IPO in early 1990s • In the early 1990s, with the opening up of the Indian economy, many export-oriented software companies were set up in India that created the momentum • By mid-1990s, Infosys was competing not only with Indian software majors like TCS & Wipro, but also with overseas players like Cambridge Technology Partners and Sapinet, which offered software solutions
  • 8. PARTNERSHIP DISSOLVED • In 1989 the JV with KSA almost collapsed • Infosys planned to wind up in 1989 • In early 1990s Manmohan Singh facilitated Infosys’ IPO to issue its shares at a premium • In 1994, the joint venture with KSA was dissolved with Infosys keen to have direct access to clients and branch out into other sectors • In 1995 set up it’s own subsidiary -> the entry mode that affords highest level of control & also presents highest level of risk • Infosys got support from both domestic & US govt to set up wholly owned subsidiary in US • Infosys started a marketing office in the States and marketed its products based on its own brand name • Infosys transferred managerial expertise & technological skills to their subsidiaries operating in USA
  • 9. Contd……. x 19871987 19941994
  • 10. The collapse of the KSA joint venture led Infosys to its first crisis. The company was on the verge of collapse. But Murthy had the courage of conviction. 'If you all want to leave, you can. But I am going to stick (with it) and make it,' Murthy told them. The other partners decided to stay. And thus began to germinate the seeds of Infosys' enormous growth. Collapse
  • 11. Before & After
  • 12. A successful joint venture can offer: • Access to new markets and distribution networks • Increased capacity • Sharing of risks and costs with a partner • Access to greater resources, including specialised staff, technology and finance
  • 13. The risks of joint ventures • Partnering with another business can be complex • It takes time and effort to build the right relationship • Who has effective control? • Whether operations should conform to foreign firm’s standards or domestic • the objectives of the venture are not 100 per cent clear and communicated to everyone involved • the partners have different objectives for the joint venture • different cultures and management styles result in poor integration and co-operation