1) In the context of GDM, please explain how Infosys attempt to build a global cadre of management is consistent with its strategic need? What are the limitations of its staffing approach?
Global Delivery Model is the latest and most efficient outsourcing model in the world. GDM believes in the ideology that production should be done in that part of the world where it is the cheapest to produce and should be sold where you get the best price for the produce. It consists of onsite, near site and offshore models. The onsite and near site models are present near to the customer while the offshore model consist of different offshore centers of the company which are present all over the world. Infosys has adopted the GDM in a most competent way and has a huge market share in the global outsourcing market. With the emergence of MNCs and Chinese companies the global competition in the outsourcing market is enormous.
Apart from these huge international giants, other Indian companies who have the cost advantage can give Infosys huge competition. Due to these factors Infosys has to constantly update its GDM to maintain its competitive edge. For this purpose it is very important for Infosys to constantly upgrade its management. Not only upgrade its practices but also be innovative with them so that no one can replicate them. To have an edge over these competitors Infosys needs to constantly improve on its core competencies. At this point in time global management of this caliber will be the differentiating factor between Infosys and any other organization. This is what they are persistently doing and which is consistent with their strategic need
The staffing approach at Infosys is one of the best in the world. This approach equips it with many advantages but it also has its downsides. One problem that they can face is that of the employees switching jobs for better wages. In this scenario the whole investment done on the training of the employee goes down the drain. The employee doesn’t leave alone he leaves with a lot of experience under his belt. And the new person who is hired will have to learn to fill in those gaps. This is a huge limitation of the staffing policy at Infosys.
2) What are the key compensation challenges that Infosys has faced while managing GDM? How is Infosys addressing these challenges over time? How are these challenges different from the challenges faced by a developed country (such as USA) MNCs?
The key compensation challenges are of two types firstly these challenges are about the compensation of employees who are hired abroad for the onsite model. These employees are the locals of these countries so they are hired at much more price than the Indian employees. This is a major area of concern because this increases the cost of doing business many folds. The second compensation challenge is when employees are offered better salaries wages by other local and foreign competitors. Because Infosys cannot allow these employees to leave they have to offer them better salaries. This again increases the costs.
These challenges are different from abroad such that these MNCs pay huge sums to their employees in their home countries while in India they get cheap labor which is actually good for the company. But for Infosys it is the opposite. The costs go up when you move your operations abroad. Thus the situation for foreign companies coming to India is much more favorable.
3) Narayan Murthy, chairperson of Infosys, is a celebrated corporate leader in India. Many path breaking corporate HR initiatives in India such as employee stock options are credited to him. Conduct online/offline research on Mr. Murthy’s leadership style and critically analyze it in the context of the facts mentioned in the case.
Narayan Murthy is credited for many initiatives for the employees and their benefits such as the best reward systems. Apart from these initiatives he is also known for encouraging communication of employees with the higher management and for that purpose he used to send emails to all the employees fortnightly. It is widely known that Murthy wants his employees to take all decisions on merit and he believes that ego should not come in to play while making decisions. Murthy’s leadership style is more like that of a charismatic leader. A charismatic leader believes more in participation, decision making and empowerment of the employees. Although he aims to empower his employees but the pace he is doing it on is very slow. It seems he is doing this in reaction to different external factors. Such as the variable salary structure was employed after different firms started to make offers to the employees of Infosys. Although he is doing a great job keeping the employees happy but he should think ahead about the different obstacles he might face.