Infosys looks to tap more Japanese manufacturing cos with JV

Infosys plans to create a bigger footprint in Japan to tap the transformation across manufacturing sector through its joint venture with Hitachi, Panasonic and Pasona, as it looks to grow business in the country that has long been averse to outsourcing.

In December 2018, Infosys formed the JV with the three Japanese hi-tech electronics firms, to build solutions that use digital technology platforms to improve indirect procurement.

For long, Indian IT services companies have have struggled to grow 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 hi-tech 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 its 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 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 organization across the world, then to Panasonic which is equally big player, it’s pretty historic.”

Japanese companies are 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 India a large chunk of talent 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, 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 platform-led 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 is helping them better relate to the Japanese industrial conglomerates who did not necessarily relate as much to the (earlier) services model,” Sangeeta Gupta, senior vice president, Nasscom, told ET.

Japanese government is also tapping Indian talent, offering them training and deploy on projects in several cities.

Infosys’ peers such as TCS, Wipro have taken new solutions to companies in financial services and other sectors in Japan, which has remained stagnant at nearly 2% contribution to the $167 billion Indian IT-BPM sector.

TCS was the first Indian IT services company to set up shop in Japan. The Mumbai-headquartered IT services major only expanded its operations since then and in 2014 Tata Consultancy Services Japan, Ltd. was formed through a merger of three companies - Mitsubishi Corporation subsidiary IT Frontier Corporation, Tata Consultancy Services Japan Ltd and Nippon TCS Solution Center Ltd. 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.