Management Toolkit

Battle of business models rages in India

Staff, CNETAsia CNETAsia

Published: 21 Oct 2003 11:00 BST

Indian IT companies are geared towards a global, outsourcing model of doing business and, as a result, will always have an edge over multinationals in India, according to a senior executive with one of the country's largest IT firms.

Nandan Nilekani, the chief executive of Infosys Technologies said in a Times of India interview that there is now a "battle of business models".

"We have our global delivery model, rooted in the offshore model, which allows us to deliver very high quality and very high reliability at an affordable price. The MNCs' model is local, and local people do local things in different parts of the world," he was quoted as saying.

"That model does not have the degree of freedom that our model delivers."

However he warned that as multinationals adopt the traits of Indian firms, the domestic industry could undergo upheavals.

Infosys, which already has an annual revenue going past the US$1bn (£0.6bn) mark, needs some reorganisation in order to rake in the next billion, said Nikelani. This realignment would take the shape of creating smaller, specialised business units to look after more specific industries, he said.

In July, in a sign that demand for offshore IT services is strong, Infosys' quarterly revenue jumped 49.3 percent year-over-year to $233.3m; its earnings per diluted share rose 37.5 percent year-over-year to 44 cents.

"There is an increased interest in offshore outsourcing as global corporations realise its benefits. Business opportunities continue to grow. However, the pricing environment remains challenging," said Nilekani.

The emergence of Infosys and other Indian-based IT services companies such as Wipro Technologies has put pressure on US based IT services companies to expand their operations abroad.

News.com's Ed Frauenheim contributed to this report.