Infosys Announces Results for Second Quarter 2005

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Posted by Donald A. DePalma on July 12, 2005 in the following blogs: Translation and Localization, Web Globalization, Business Globalization, Technology, Interpreting, Market Data, Global Marketing, Best Practices, Supplier Business Issues
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Infosys is one of the large services and solutions companies that we often cite (along with Wipro and Tata) as potential providers of globalization services to rival the larger LSPs hoping to become business process outsourcers (BPO).

Last week we touched base with Infosys to talk about globalization. First off, to give credit where credit is due, Infosys CEO Nandan Nilekani inspired New York Times columnist Thomas Friedman with his statement that, "Tom, the playing field is being leveled." This sports metaphor led to the pre-Copernican title of Friedman's latest book, "The World Is Flat: A Brief History of the Twenty-First Century."

However, despite Nilekani's view, Infosys doesn't see globalization in the same way we do. The company hasn't noted any increase in business around multilingual or multinational software or website development. Instead, what's big for Infosys now is global, standardized ERP rollouts with multi-country deployments. Anti-globalization zealots often view such deployments at the retail level (McDonald's, Starbucks) as the harbinger of homogenization (H12N), but in enterprise software, global standardization is a best and necessary practice. Localized interfaces should follow, but that's always not a given. The company will, of course, localize software if the customer needs it and has tailored ERP solutions for individual markets.

Infosys does see potential in globalizing its testing and infrastructure management service lines, but those are not big businesses yet. For now, custom application development for ERP packages, financial services, and telecommunications drives the company's revenue. One big growth area for Infosys is high-level consulting; that group has been in business for a year, but has already scored against the Accentures and IBMs of that high-octane sector. This level of outsourcing comes with its own alphabet soup of terminology, including the Capability Maturity Model (CMM). CMM assesses process maturity for documentation and discipline; Level 1 means there is no formal process, while Level 5 assures a "continuous, rigorous, and self-improving process." A given among large integrators and outsourcers, few LSPs hold such certification. Lionbridge is one, holding CMM Level 5 certification in Mumbai through its 2003 acquisition of Mentorix.

Should the language services providers that have staked out business process outsourcing -- Lionbridge, SDL, Transware, and others waiting in the wings -- worry about Infosys? With the largest of the LSPs only one-third the size of Infosys and a fraction the size of IBM Global, it's only a matter of time before these larger non-language companies begin to see some benefit in getting more localization savvy. With stock to trade and good cash flow, an acquisition could be the quickest way to enter the language services market.

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