INFOSYS

IT Service Industry Overview

PEST ANALYSIS

Political • Political stability

• Government owned companies and PSUs have decided to give more IT projects to Indian IT companies.

• Terrorist attack or war.

Economic • Global IT spending

(demand) • Domestic IT Spending

(Demand)• Currency Fluctuation • Real Estate Prices• Attrition

PEST Analysis

Social • Language spoken: English

• Education: A number of technical institutes and universities over the country offer IT education.

• Working age population

Technological • Telephony

• Internet Backbone

• New IT technologies Technologies like SOA, Web 2.0, High-definition content, grid computing, etc

Porter’s Five Forces Model

• Threat of Substitutes: Medium1. Other offshore locations such as Eastern Europe, the

Philippines and China2. Price

• Bargaining power of supplier: High to Low1. Due to slowdown, the job-cuts, the layoffs and bleak IT

outlook. 2. No longer Demand and supply of IT professionals 3. Vast talent pool – fresher's and experienced.

Porter’s Five Forces Model• Barriers to Entry : Low1. Low capital requirements. 2. Large value chain, space for small enterprises.

• Bargaining Power of Customers: Very High1. Large number of IT companies 2. Huge decline in IT expenditure

• Rivalry Among Firms: High 1. 'low-cost, little-differentiation' positioning.2. Strong competitors – few numbers of large companies.

Infosys Profile

• Founded on 2nd July 1981 with a capital of Rs.10,000• Went Public in 1993• 1st Indian Company to be listed on Nasdaq on 11th March

1999• Global footprint : Over 50 offices and development centers• Employees: 103,905 (As on 30th June 2009)• Certified at SEI- CMM Level 5.• Major Clients: British Telecom, BanAmerica, Citigroup,

Walmart

Infosys Resources

• Tangible People Capital Global Reach

• Intangible Brand Equity Trust & Goodwill Corporate Culture

Infosys Capabilities• Global Delivery Model

• Training Capabilities

• Operational Efficiency

• Management/Leadership

• High Quality Standards

VIRU Analysis

• IBM - Brand Equity - Global Reach - R & D focus - Bouquet of Services• Infosys - Brand Image, Culture - Operational Efficiency - Marketing Strategy

• Mastek - No growth strategies - High operational costs, Limited

reach - Expertise in Insurance Sector• L & T Infotech - Weak Brand Image - No cost efficiency, No reach - No special service or industry

capability

Sustainable Competitive Advantage

Valuable Inimitable Rare Unsubstituable Competitive Consequences

Performance Implication

IBM Yes Yes Yes Yes Sust. comp adv

Above avg

Infosys Yes Yes Yes No Temp comp adv.

Avg to Above avg

Mastek No No Yes No Comp parity Avg

L & T Infotech

No No No No Comp disadv.

Below avg

VALUE CHAIN ANALYSIS

• Primary Activities• Inbound Logistic• Operation• Outbound Logistic• Marketing And Sales• Post Sales Service

CONTD……

• Secondary Activities

• Human Resource Management

• Technology Management

• Infrastructure

McKINSEY’S 7 S MODEL

Leadership Style:

•Essential for organizational success.

•Based on high business vision and

supportive styles.

•Emphasis on developing leadership

qualities among employees.

•“Infosys Leadership Institute”

•Open door policy

•Continuous sharing of information

•Employee input for decision making

•Building personal rapport with

employees

Leadership Style:

•Essential for organizational success.

•Based on high business vision and

supportive styles.

•Emphasis on developing leadership

qualities among employees.

•“Infosys Leadership Institute”

•Open door policy

•Continuous sharing of information

•Employee input for decision making

•Building personal rapport with

employees

Staff (Human Resources):Knowledge-based industry - Focuses on the quality

of the human resources

90% Engineers

At the entry level

Find the company’s meritocratic culture

satisfying

Superior academic records

Technical skills

High level of learn ability.

Emphasizes on T&D on continuous basis

Spends about 2.65 % of revenue on up gradation of

employees’ skills

High training standard

High matured processes capabilities

Investment in infrastructure.

Staff (Human Resources):Knowledge-based industry - Focuses on the quality

of the human resources

90% Engineers

At the entry level

Find the company’s meritocratic culture

satisfying

Superior academic records

Technical skills

High level of learn ability.

Emphasizes on T&D on continuous basis

Spends about 2.65 % of revenue on up gradation of

employees’ skills

High training standard

High matured processes capabilities

Investment in infrastructure.

Strategy:

Client-focused strategy to achieve growth

Focuses on limited number of large organizations throughout

world

Caters clients through custom-built softwares

Commands premium margins

Does not compromise on quality for low-cost contracts

Quality driven model rather than cost-differentiating model.

Increase business from existing and new clients

Expand geographically

Enhance solution set

Develop deep industry knowledge

Enhance brand visibility

Pursue alliances and strategic acquisitions

Strategy:

Client-focused strategy to achieve growth

Focuses on limited number of large organizations throughout

world

Caters clients through custom-built softwares

Commands premium margins

Does not compromise on quality for low-cost contracts

Quality driven model rather than cost-differentiating model.

Increase business from existing and new clients

Expand geographically

Enhance solution set

Develop deep industry knowledge

Enhance brand visibility

Pursue alliances and strategic acquisitions

Shared Values:

Customer Delight-A commitment to surpassing customer

expectations.

Leadership by Example-A commitment to set standards in

business and transactions and be an exemplar for the industry

and teams.

Integrity and Transparency-A commitment to be ethical,

sincere and open in our dealings.

Fairness- A commitment to be objective and transaction-

oriented, thereby earning trust and respect.

Pursuit of Excellence-A commitment to strive relentlessly, to

constantly improve ourselves, our teams, our services and

products so as to become the best

Shared Values:

Customer Delight-A commitment to surpassing customer

expectations.

Leadership by Example-A commitment to set standards in

business and transactions and be an exemplar for the industry

and teams.

Integrity and Transparency-A commitment to be ethical,

sincere and open in our dealings.

Fairness- A commitment to be objective and transaction-

oriented, thereby earning trust and respect.

Pursuit of Excellence-A commitment to strive relentlessly, to

constantly improve ourselves, our teams, our services and

products so as to become the best

Organizational Structure:

•Free form organization devoid of hierarchies

•Everyone is known as associates irrespective of his position

in the company Software development is undertaken

through teams

•Constitution of teams is based on the principle of flexibility

Organizational Structure:

•Free form organization devoid of hierarchies

•Everyone is known as associates irrespective of his position

in the company Software development is undertaken

through teams

•Constitution of teams is based on the principle of flexibility

Skills:

•Mandatory for every employee to clear 7 predefined

certifications (domain as well as technical) in order to be

eligible for appraisal.

•This is just one of the initiatives taken by Infosys which

signifies the efforts taken for building competencies. Apart

from internal initiatives like

•Knowledge management

•Infosys has been CMM-Level 5 certified for its process

capabilities

Skills:

•Mandatory for every employee to clear 7 predefined

certifications (domain as well as technical) in order to be

eligible for appraisal.

•This is just one of the initiatives taken by Infosys which

signifies the efforts taken for building competencies. Apart

from internal initiatives like

•Knowledge management

•Infosys has been CMM-Level 5 certified for its process

capabilities

INFOSYS BCG MATRIX - USA

INFOSYS BCG MATRIX - INDIA

CORPORATE LEVEL STRATEGIES

Core Strategies:

Global Delivery Model – Producing where it is most cost effective to produce & selling where it is most profitable to sell.

Moving up the Value Chain – Getting involved in a software development project at the earliest stage of its life cycle.

PSPD Model – “Predictability of Revenues, Sustainability of Revenues, Profitability, De-risking” for risk management.

Global Delivery Model – Producing where it is most cost effective to produce & selling where it is most profitable to sell.

Moving up the Value Chain – Getting involved in a software development project at the earliest stage of its life cycle.

PSPD Model – “Predictability of Revenues, Sustainability of Revenues, Profitability, De-risking” for risk management.

Firm believer in “Organic

growth” and acquire only

those companies in line with

strategic goals

Firm believer in “Organic

growth” and acquire only

those companies in line with

strategic goals

Actions Taken: 1. To maintain low-cost advantage they have opened offices in

Czech Republic, Mauritius, Poland, Philippines, Thailand and Mexico

2. Invested in developing training centers

3. Improved quality capabilities – CMM level 5i company

4. Infosys Consultancy established to provide high end services

in value chain

5. Has hedged currency for more predictability of revenues (risk

management)

CORPORATE LEVEL STRATEGIES

GENERIC STRATEGIES

• Low cost Global delivery 24/7 Model

• Little differentiation in low-end services of value chain

• High differentiation in high end services of value chain like

software products and package solutions

• Focus on quality, customer relationship management, timely-

delivery

SWOT AnalysisSTRENGTHS

• Trusted Brand & Client Relations

• Proven GDM

• Wide spectrum of Services

• Leadership & Management

• Quality Standards

WEAKNESSES• Dependence on BFSI Segment

for revenues

• Dependence on North America for revenues

• Weak Player in domestic Mkt

• Rising Operating Expenditure

• Low R & D focus

SWOT AnalysisOPPORTUNITIES

• Untapped Domestic Market

• New Geographies

• Acquisitions

• High End Consulting

• Intense Competition

• High dependency on small no. of clients

• Currency Fluctuations

THREATS

Recommendations• Reduce Dependency on BFSI, North America, Explore new markets

• R & D Focus

• Hunt for Acquisitions

• Focus on cost reduction

• Tap Domestic Market