Infosys recently won a financial services systems integration deal from the Department of Post in the Ministry of Communications and IT of India worth INR 700 crore (US$126 million). In 2010, India’s Cabinet Committee on Economic Affairs approved India Post’s “IT modernization” project, which was divided into eight separate contracts worth a total of $337 million. With this deal, Infosys has won one of these eight contracts.
According to the terms of the contract, Infosys will commission both hardware and software – Intellectual Property (Finacle Core Banking and McCamish Insurance products) over India Post’s approximately 25,000 departmental offices over a period of 24 months. The contract, which is valid for seven years, includes managed services, application support, and infrastructure operations. More details about the deal can be found here.
Let’s look at what this deal means to Infosys and to India Post:
I’m in Las Vegas attending Infosys’s Connect 2011 client event, and one of the recurring themes in sessions and side conversations has been the nature of Strategic Partnership. The phrase risks becoming a meaningless cliché, so I was interested to research what it actually means to Infosys execs and clients. I got some interesting, varied perspectives.
A large CPG company’s central IT group described its interpretation in a couple of sessions. It demands, among other things, a strong cultural fit, a commitment to win:win solutions to problems, and regular meetings with partners’ CEOs. This group has 12 “strategic partners” who get a lead role in a specific area, but may not even be considered in other areas, even though they have good solutions in their portfolio. I might argue the semantic point about whether this means they are merely ‘important, at the moment’ rather than ‘strategic’. However, the key point is that the two parties’ commitment to making the partnership work creates a better, stronger commercial framework than any legal agreement could deliver.
Raj Joshi, MD of Infosys Consulting, described his group’s Value Realization Method (VRM) that formally tracks each project’s expected business benefits from the initial project business case through design and implementation and onto ongoing value delivery. Joshi stressed the importance of shared incentives, such as risk/ reward sharing commercial models, in ensuring projects’ success.
Last week, as part of the debate on the 600B border security bill, Senator Charles E. Schumer from New York reportedly called the Indian offshore IT firms in general and Infosys in particular “chop shops” — a reference to the locations where criminals dismantle stolen cars for spare parts. As always, the Indian press has immediately reacted. But let’s not take the comment out of context; US Senator Charles Schumer calls Infosys 'chop shop' - India Business - Business - The Times of India. Senator Schumer is showing that in an election year, he is “standing up” for American jobs.
But that said, as we head into the midterm elections with 9.5% unemployment and very little job growth, there will be more comments like this unfortunately, and the Indian firms and NASSCOM need to be prepared with their own PR counterattack and story. Offshore customers would also be advised to take the same advice and have a clear PR plan ready to go at a moment’s notice in case they get raked over the coals as part of the rhetoric.