36785333 it industry analysis

8/8/2019 36785333 IT Industry Analysis

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INDUSTRY ANALYSIS 2010

SWOT ANALYSIS FOR AN IT INDUSTRY:

Every industry or a company has to perform swot analysis before going to start its

operations to analyze the performance of a company or that particular industry. Every industry

will have its own strengths, weaknesses, opportunities and threats with related parameters. now

we will see the swot analysis for IT sector.

STRENGTHS:

Highly skilled human resource Low wage structure Quality of work Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-

governance projects)

Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc. Following Quality Standards such as ISO 9000, SEI CMM etc. English-speaking professionals Cost competitiveness Quality telecommunications infrastructure Indian time zone (24 x 7 services to the global customers). Time difference between India

and America is approximately 12 hours, which is beneficial for outsourcing of work.

Flexibility, adaptability and reliability in operations Experience in working on large projects

OPPORTUNITIES

High quality IT education market

Increasing number of working age people India 's well developed software infrastructure Upcoming International Players in the market Rapid proliferation of the Internet in the domestic and global markets Shift in the global markets from legacy systems to more of web-based systems


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Indian governments thrust towards increased computerization of offices, banksetc

IT enabled services in the country and across the globe is forecasted to explode Instant development of world software industry

WEAKNESSES

Inadequate marketing skills Absence of practical knowledge Dearth of suitable candidates Less Research and Development Contribution of IT sector to India 's GDP is still rather small. Employee salaries in IT sector are increasing tremendously. Low wages benefit will soon

come to an end.

Depending on software outsourcing and less domestic demand Weakness of hardware industry

THREATS

Instability of political environments Lack of data security systems Countries like China and Philippines with qualified workforce making efforts to

overcome the English language barrier

IT development concentrated in a few cities only


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MATRIX REPRESENTATION BASED ON PARAMETERS OF AN INDUSTRY:

Threats (T)

External

Environment

Opportunities (O)

(more for IT indust)

Strengths (S) Weaknesses (W)

Internal Environments

The Indian IT Industry has more strengths rather than weakness in the Internal

Environment. In an External Environment Software Industry have opportunities and Threats

almost equally. But due to of Internal Strengths and External Opportunities the Software Industry

is in Exploration. For any industry to sustain in market or to earn the profits it needs to analyze

all these parameters. when the strengths are more than weaknesses n opportunities are more than

threats then the industry can get better position in that particular segment.

Confront Avoid

Exploit SearchExploration


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QUALITATIVE AND QUANTITATIVE PARAMETERS:

y Quantitative Factorso Investment Appraisal

Payback period NPV ARR

o Break-Even Analysiso Market Researcho Sales Forecastingo Critical Path Analysiso Decision Trees

y Growthy Quality certification

How Quality Certification will affect Productivity and Growth

Reducing overall cost

Increasing revenuesThrough higher rates or higher value projects

Bidding for new clients

Learning to bid accurately

y PerformanceWe therefore use revenue per employee (productivity) as a measure of

Performance for Indian companies. Since organizations recruit their employees from the

same labor market, we assume that the average wage rate is approximately the same

across all organizations3. Software companies are located in big cities where the cost of

living is approximately the same.

QUALITY STANDARDS:

y ISOy CMM.


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y Qualitative Factorso SWOT

Strengths Weaknesses Opportunities Threats

o HRM Motivation Morale Recruitment and Retention

o PEST Political Economic Social Technological

y Publicity and Public Imagey Long term survival/development issuesy IT services to customersy Stakeholder Analysis

o Employeeso Shareholderso Managerso Environmento Local Community


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o Supplierso Governmento Consumers


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PORTERS FIVE FORCES COMPETITIVEMODEL:

Intensity of Rivalry and

Competition - HIGH

Exit Barriers Industry

Concentration

Fixedcosts/Valueadded

Industry Growth Intermittent

Overcapacity

Product Differences Switchingcosts

Barriers to Entry HIGH

Absolute cost advantages

proprietary learning curve access to inputs government policy Economies of scale capital requirements Brand identity switchingcosts Access to distribution

Bargaining power of

Suppliers LOW

Supplierconcentration

Importance ofvolume to supplier

Differentiation ofinputs

Impact of inputs oncost or differentiation

Switchingcosts offirms in the industry

presence of substituteinputs

threat of forward

Bargaining power of

Buyers HIGH

Bargaining Leverag Buyer Volume Buyer Information Brand Identity Price Sensitivity Threat of backward

integration

ProductDifferentiation

Buyer concentrationVs Industry

Substitutes Availabl Buyers Incentives

Threat of Substitutes

LOW

Switching Costs Buyer Inclination to

substitute

Price-Performancetrade-off of substitutes

36785333 it industry analysis

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