With 3 big joint ventures, Infosys searches for love in Tokyo
Infosys is planning to create a bigger footprint in Japan, a country that has been averse to outsourcing.
Ayan Pramanik
BENGALURU: Infosys plans to create a bigger footprint in Japan to tap the transformation across the manufacturing sector through its joint venture with Hitachi, Panasonic and Pasona, as it looks to expand in a country that has long been averse to outsourcing.
Infosys formed the alliance last month with two Japanese hi-tech electronics firms and one HR firm to build solutions that use digital technology platforms to improve indirect procurement.
For long, Indian IT services companies have struggled to expand their business in Japan, a developed market, which has traditionally been slow to embrace outsourcing. With companies such as Infosys, TCS, Wipro, HCL Technologies and others strengthening their platform-led services model, they have seen higher acceptance among the manufacturing and industrial companies in Japan.
"The large manufacturing hitech electronics producers are coming together for one common cause, which is indirect procurement. And we're going to actually apply technology on it and make it powerful enough to generate value," said Ravi Kumar, president and deputy COO, Infosys, during the analysts' call last week. "And thereafter, we're going to use this joint venture to go to other manufacturers in Japan. Their indirect procurement is a big category of spend."
He said Infosys would take over the subsidiary of Hitachi, which drives indirect procurement end-to-end and run it as a joint venture. "...the idea is directly expand this into —indirect procurement into the larger Hitachi organisation across the world, then to Panasonic, which is an equally big player… it's pretty historic," Kumar said.
Japan is increasingly tapping Indian talent and companies to build products and solutions at lower costs to compete against Chinese firms. In the IT services sector, NTT Data's acquisition of Dell Services helped the Japanese company gain a strong offshore presence in India and a large talent pool stationed here.
In 2017, Japanese consumer appliances major Panasonic set up an R&D centre jointly with Tata Elxsi to develop solutions in the field of artificial intelligence and robotics —both for the global market and India.
Industry body Nasscom believes Japanese organisations have higher acceptance of Indian IT firms with the emergence of platformled technology service delivery.
"Japan is among the largest technology markets in the world. This is the market Indian companies have for long been trying to penetrate, but I think the current digital technology shifts and the path Indian companies are creating would help them better relate to the Japanese industrial conglomerates that did not necessarily relate as much to the (earlier) services model," said Sangeeta Gupta, senior vice-president, Nasscom. The Japanese government is also tapping Indian talent, offering them training and deploying them on projects in several cities.
Infosys' local peers, such as TCS and Wipro, have taken new solutions to companies in the financial services and other sectors in Japan, which still contributes about 2% to India's $167-billion technology and services outsourcing revenue.
TCS was the first Indian IT services company to set up shop in Japan. The Mumbai-based IT services major only expanded its operations since then and in 2014 Tata Consultancy Services Japan was formed through a merger of three companies —Mitsubishi Corporation subsidiary IT Frontier Corporation, Tata Consultancy Services Japan and Nippon TCS Solution Center.
In 2017, TCS took its digital platform, ignio, to the Japanese market. The company received a significant deal from Japan's MUFG Bank for revamping payments.