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Infonet in France

Infonet in France. Best in France Case Study 15 December 2003 . Infonet France. Established in France since 1980 Subsidiary of Infonet Services Corp (“ISC”), based El Segundo, California Business of Global Managed Corporate Data Networks 10% Global market share, 15% in France

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Infonet in France

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  1. Infonet in France Best in France Case Study 15 December 2003

  2. Infonet France • Established in France since 1980 • Subsidiary of Infonet Services Corp (“ISC”), based El Segundo, California • Business of Global Managed Corporate Data Networks • 10% Global market share, 15% in France • Competitors in France, as worldwide: MCI Worldcom, AT&T and Equant (each 15% globally) Best in France - Infonet France

  3. 2003 Figures • Global Total Revenues (2003): $654,196,000 • Net Loss (2003): $219,936,000 • but $428,979,000 in cash and short term investments and no debt • France: 4% of 2003 Global Revenue (viz approx $26 million) Best in France - Infonet France

  4. Infonet’s Business Model 1/2 • 80% of ISC equity held by handful of national telecoms operators • Telstra, Telia, Swisscom, KPN, Telefonica, KDD • Historically, and still in a large number of markets, World Network managed by national operator-managed JVs in which ISC only a minority shareholder Best in France - Infonet France

  5. Infonet’s Business Model 2/2 • Distinction between “A-end” business and “B-end” business • ISC continues to act largely as an arms-length “middleman” • selling access to the World network to local affiliates • taking a percentage on provision of international services intra-group even where 100% owner of the affiliates themselves Best in France - Infonet France

  6. Why Infonet came to France • International growth is key business driver • World Network coverage of 180 countries, physical presence in 80 • Multinational clients demand continual increases in geographical extent and quality of coverage • No question of not having a presence in France: major business centre • EMEA now represents 60% of ISC revenues (then Asia, US in third place) • Key question rather one of how best to develop the French A-end business Best in France - Infonet France

  7. Corporate values 1/2 • Results, results, results • Uncompromising use of metrics • Infonet Affiliate rule: maximum 1 employee per $1m gross revenue • Country managers held accountable for revenue targets • Monthly performance of each manager ranked against 80 international peers: rankings circulated worldwide Best in France - Infonet France

  8. Corporate Values 2/2 • Corporate values instilled • Need for results the real core value? • Codes of ethics and “reactivity” value applied worldwide • However, tacit acceptance that local company knows the local market best: autonomy inherent in the “franchisee” system • Affiliate is often majority owned by a national operator, making Infonet “value inculcation” somewhat problematic • Relationship between ISC and affiliates more contractually driven than by values • Also, perhaps, the importance of open communication • all employees (whatever their function) must speak more or less perfect English Best in France - Infonet France

  9. Company Products & Services • Operational necessity for standardized Global Offering (linkages, routers): technology is therefore specified and “enforced” centrally by ISC • Issues arise from centralized approach: US infrastructure differences, different client demands – subject of lobbying from affiliates • E.g. DSL pilot in France Best in France - Infonet France

  10. Infonet France’s Clients • “A-end” clients and “B-end clients” • A-end: 5% of total, 40% of revenues • Major multinationals • In France, “A-end” examples: Axa, Total, . Necessarily large multinationals given nature of service • High expectations: price, but primarily reliability and quality of support • Leased service: if clients are unhappy, they will go elsewhere Best in France - Infonet France

  11. Constraints in France Primary constraint (but also key opportunity) is France Telecom’s dominant position through its ownership of Equant Best in France - Infonet France

  12. Adaptation to France (1/2) • Small size and corporate autonomy of local workforce means largely ad hoc systems can work effectively • Recruitment/Selection and Workforce planning all local and in the hands of the relevant A-end/B-end head • Compensation set locally in line with local market rates (other than the country manager) • Annual Performance Appraisal document to be completed by the A and B-end heads on all staff (although no follow-up and no consequences for advancement/ salary, which are local issues) • Job Design, Job Assignment determined, again, by A and B-end Heads Best in France - Infonet France

  13. Adaptation to France (2/2) • Communication Policies are exclusively within ISC’s remit and dealt with out of El Segundo • International Transfers are possible, but there is no centralized system to actively promote this: more a question of Infonet affiliates hiring colleagues from other affiliates • Training is both local and “ISC”: mandatory continuing intranet-delivered training, but training also sourced locally Best in France - Infonet France

  14. Constraint Costs • HR-type costs are such a small part of the cost structure (witness the revenue to headcount figure), that they generate little or no ISC interest • Pragmatic attitude to the level of all local costs from local managers: they are what they are • B-end business (specifically the support element) could theoretically be offshored, but no ISC pressure to do so • No real costs associated with “integrating” French managers. They are to an extent appointed on the basis of their pre-existing Infonet compatibility Best in France - Infonet France

  15. Key Benefits • Europe generally, and France in particular, very much at the forefront in technical development due to its highly skilled labour force, local client demands and the need for competitive edge to break into markets. Of benefit to Infonet worldwide: upgrading of the standardized product offer. • Revenue per French employee the same as from all Infonet Affiliates worldwide: headcount is directly linked to revenue (one employee per $1m revenue) – neither a benefit nor a constraint • France an attractive market in terms of the margins it will support. One of the four major European markets (together with the UK, Germany and Switzerland) • Targeted Revenue growth in Franceof 20 to 25% per year Best in France - Infonet France

  16. We Thank • Manager 1: David Trouillard: Operations Director, Infonet France SA david.trouillard@infonetfr.com • Manager 2: Pascal Borios: Sales Director, Infonet France SA pascal.borios@infonetfr.com Best in France - Infonet France

  17. Bibliography • References • Infonet Annual Report 2003 • Infonet Corporate Profile • Infonet Factbook 2003 • Infonet Facts & Figures at a Glance Best in France - Infonet France

  18. Our Team Rob Webb Patty Ho Bart Bicke Jean-Marc Devaux Best in France - Infonet France

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