Case 2.1. System Modification for Japan

by Junichi Yoshida

(Reprinted by permission of Junichi Yoshida and Infosys)

Note: This section was adapted and used by permission of the author and of Infosys.

This case study was developed by Junichi Yoshida, a Japanese Infosys engineer, for use in internal Infosys training to illustrate cultural differences in the way business is conducted in Japan and India. The events in the case are compiled and simplified from several different experiences the case writer observed while working for Infosys. The case itself therefore is a fictitious event.

Background

As the broadband penetration rate in Japan increased, Nippon Tele Communication (NTC) thought that there was a business opportunity for VoIP (Voice over Internet Protocol) service to Japanese consumers. NTC selected the system used by ATC (a U.S. company) for its information technology (IT) system for this application, although it realized that significant modifications and enhancements would be required for the Japanese context. Infosys had worked with ATC to develop this application.

Infosys Japan thought that Infosys had a good chance of getting the opportunity to do the system modifications and enhancements for the NTC project. Tanaka-san, a Japanese Infosys sales manager, visited NTC in early November 2003 about bidding on the work, but was told by NTCs head of IT that NTC was in the process of choosing Nippon Information System Processing (NISP) to do the system modifications. Tanaka-san asked why Infosys Japan had not received an RFP (request for proposal) for this Japanese localization work and was told there had not been an RFP. Not ready to give up on this opportunity, Infosys asked ATC to recommend Infosys to NTC. This tactic worked well. ATC recommended Infosys to NTC. NTC then asked Infosys to form a team to make a proposal for the work, offering to pay Infosys for the expenses associated with submitting a proposal.

Tanaka-san then requested that Infosys Corporate headquarters (which is located in India) send a consultant to help Infosys Japan develop a proposal for NTC. Infosys Corporate was reluctant to allocate resources for this project because no contract had been signed with NTC. After a long teleconference between Tanaka-san and Infosys Corporate, Infosys Corporate decided to send a relatively junior engineer named Sachin.

Sachin held an undergraduate degree in electrical engineering from Bangalore University. He was an expert in Java programming, and, during the five years he had been at Infosys since his graduation, he had been involved in several projects. Most recently, Sachin had been technical architect on the ATC project.

The First Meeting at NTC

Sachin was not quite ready when Yoneyama-san, an Infosys Japan project manager and engineer, arrived at Sachins hotel to take him to the first meeting with NTC. They took the train, meeting Tanaka-san, the Infosys Japan sales manager, in the NTC lobby five minutes before the meeting was to start.

Most of the meeting was conducted in Japanese. Sachin was bored, uncomfortable because the room was too hot (he took off his jacket), and tired from the long trip. He was asked only one question, about how many orders the ATC system processed daily. Sachin wasnt sure but said ten thousand.

The Second Meeting

After the first meeting, Infosys and NTC engineers met several more times, working to develop enough information so that Infosys could estimate the costs of the desired system specifications. Communications at these meetings were challenging. For example, at the second meeting, Sachin had questions to which he needed answers, but he hadnt written them down. Some discussion was held in English, but for the most part (especially regarding technical issues) Sachin asked each question in English, and Yoneyama-san translated the question into Japanese for the NTC engineer. Then the NTC engineer would make a call, get the answer, and pass it on to Yoneyama-san for translation back into English for Sachin.

During this second meeting, Sachin believed that the NTC engineer was saying yes, agreeing to most of Sachins qualifications and conditions, even when Sachin explained that the ATC system only processed five thousand orders, not ten thousand as he had mistakenly said previously. When Sachin modified his estimate he also explained that NTC could use faster equipment and be able to process ten thousand orders. At the end of the second meeting Sachin orally summarized what had been discussed, and politely refused to go out for a drink with Yoneyama-san and the NTC engineer, since he did not drink alcohol.

More Meetings and Cost Estimate Negotiations

After several more meetings and more preparation, Infosys submitted a cost estimate of $220,000. NTC requested a price reduction, since the total cost was almost 50 percent more than NISPs competing proposal. Infosys objected but ultimately reduced the price by 20 percent. NTC also requested that the time be cut from sixteen weeks to fourteen weeks. Although doing so would require overlapping the design and coding phases of the project, Infosys agreed to the time reduction.

Problems Executing the Project

In the course of development, NTC invited end users to test the system and entered the issues these users raised into the tracking system. Sachin thought most of the end-user issues were cosmetic, since they did not block users from using the system. However, there were far more issues than Sachin had anticipated. Fixing them all would adversely affect the cost of the project or the schedule or both. Sachin told this to his NTC counterpart, trying to make the point that NTC should have frozen the requirements when the contract was agreed to. NTCs response was that Infosys had been doing what it wanted to do without really knowing what NTC wanted. NTC also said that no delay in delivery was acceptable because NTC was already advertising the new VoIP service. NTC refused to pay extra for the new work associated with solving the end-user issues.

Discussion Questions

1. What did you notice about the way the opportunity for this project came about that was an unusual business practice for Infosys?

2. Describe the contract negotiations. In what way were these negotiations a departure from the way you would have expected negotiations to be conducted?

3. Why do you suppose NTC accepted Infosyss 20 percent reduction, which still made their proposal more expensive than that of the other vendor?

4. Shouldnt Infosys have asked for something in return for reducing its price? What might Infosys have asked for?

5. Once NTC got a price reduction they then asked for a two-week time reduction. Infosys agreed to that, too. Who was Infosys negotiating with? What should Infosys have done at this stage of the negotiation?

6. Communications during the meetings to develop specifications were difficult. Is there anything that Infosys might have done to facilitate communications, reduce the transaction costs associated with developing the bid, and minimize conflict once the project was launched? Keep in mind that translation in Japan is very expensive.

7. When Sachin tried to make the point that NTC should have frozen the requirements when the contract was agreed to, NTC responded that Infosys did what it wanted to do without really knowing what NTC wanted. What might have led to this response?

8. Should Sachin have gone out for drinks with Yoneyama-san and their counterpart at NTC? Did Sachin need to drink alcohol?