simple infosys restructuring analysis

The case of

Infosys Restructuring

Raghunath Ganti

3/17/2010 ODC Grp 9: Infosys Restructuring 1

Sec A Group 9

The Questions Posed

• Use McKinsey’s 7S framework to analyze Infosys

• Identify Weakness of Infosys and analyze the changes made in the given context and comment on its effectiveness in leveraging the strengths and addressing the weakness.

3/17/2010 Grp 9 ODC: Infosys Restructuring 2

About Infosys - Essentials

• 2nd largest Indian IT firm with over 1 Lakh employees

• Global footprint, offices in multiple countries

• Pioneered the Global Delivery Model (GDM)

– GDM principle of taking work to the location with

• best talent,

• best economic sense,

• least amount of acceptable risk.


Core Strategies

• GDM

• Moving up the Value Chain

• PSPD Model

– Predictability of Revenues,

– Sustainability of Revenues,

– Profitability,

– De-risking.


Organization Structure:

Concept of IBU and its Success

• Primarily a s/w dev & maintenance company• Programmers leverage past experience most

effectively when concentrated on one industry.

• Industry Business Unit concept

– Structure featured a large no. of small business units,

– IBU was effectively a separate company in itself


Q1: The 7S: Strategies


• Client-focused strategy to achieve growth

– Focuses on limited number of large organizations

– Rather than focusing on numerous small organizations

– Commands premium margins

• Some time prefers to walk-out rather than compromise

• Increase business from existing and new clients

• Expand geographically

• Develop deep industry knowledge

Q1: The 7S: Staff (HR)


• Knowledge-based industry, so Human capital

important

• Emphasis on selecting right candidates

• Spends about 2.65 per cent of its revenues on up

gradation of employees’ skills,

Q1: The 7S: Style (Leadership)


• Leadership is based on high business vision and predominantly supportive styles.

• Emphasis on developing leadership qualities: ILI

• Open door policy, continuous sharing of information

Q1: The 7S: Skills


• Focus on continuous skills improvements

• Mandatory certifications for domain and technology

• Projects at CMMi level

• Knowledge Management given special focus

Q1: The 7S: Other S

• Structure

– IBU

– Free form organization

• Shared Values

– C-LIFE

• Systems


Q2: Weaknesses


• Excessive dependence on US for revenues

• Excessive dependence on BFSI sector for revenues

• Weak player in domestic markets

• Low R&D spending compared to global IT firms

• Low expertise in high end services like Consultancy

Adobe Acrobat Document

Drivers for Change


• Growth opportunities in non-US.

– India, Europe, Asia and other parts of the world

• The need to move into in the high value add segment like Design, Consulting

Adobe Acrobat Document

Current Structure: Problems


• Lack of expertise in dealing with the European

markets

• Unable to capture the domestic Indian market.

• Lack of large IP ownership necessary to be able to

capture the markets in the Southeast Asia

HIGHLIGHTS OF THE CHANGES MADE


• Banking and Capital Markets (BCM)• Communications Media and Entertainment (CME)• Energy, Utilities and Services (EUS)• Insurance, Healthcare and Life Sciences (IHL)• Manufacturing (MFG)• Retail, Consumer Product Goods and Logistics (RETL)• New Growth Engines (NGE)• India Business Unit (IND)

Industry Business Units (IBUs)

• Consulting Solutions (CS)• Enterprise Solutions (ES)• Infrastructure Management Services (IMS)• Product Engineering and Testing Services (PETS) - PED, PLES, IVS• Systems Integration (SI)

Horizontal Business Units (HBUs)

Q2: Judging the effectiveness


• Too premature to judge

• Actual Views

– Clear focus on US and non US markets helpful

– Consulting being given more importance with middle level

managers being made part of it

– Specialized training for Europe market – Language, Culture

Thankyou.

Questions…

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