Infosys Business Case | MGT 551-12 | Authors:UID # 864597543 UID # 811655441September 3, 2008 |

Leveraging its vast, low-cost human capital base to deliver its services globally, Infosys has experienced remarkable growth since its inception to become a leader in the offshoring IT services industry. However, rising salary costs in India and increasing employee attrition rates at Infosys not only threaten near-term profit margins but also the sustainability of Infosys’ current business model. Since the early 1990’s, Infosys and other large IT service providers in India have relied on two key competitive advantages to create their multi-billion dollar businesses of today. First, the initial impetus behind IT offshore demand was simple: cost savings. And with the average IT professional in India costing 29 percent of comparable U.S.-based staff in 1995, Infosys was able to offer its services to global clients at fraction of the prices charged by Western companies.
Exhibit 1 demonstrates the direct relationship between Infosys’ human capital growth and its sustained revenue generation over a 9 year period. This graph not only highlights the success a low cost, large work force strategy, it also identifies the second critical component in Infosys’ success: HR design and execution. Delivering those cost-saving services required a highly skilled employee base, whose development entailed large investments of time and money. Accordingly, Infosys established world-class human resources systems to selectively recruit and integrate large volumes of Indian engineer graduates. These systems enabled Infosys to process over 1 million job applicants in FY2007 and hire nearly 25,000 of them, which translated to a hiring rate of only 2 percent. To further guarantee that its talent growth was qualitative, the company invested an industry-leading US $170 million in its