sm2 project report-group6-revised ver

8/13/2019 SM2 Project Report-Group6-Revised Ver

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SM-II Project

Infosys 3.0Building tomorrows Enterprise

Participants

Abhinav Rastogi (WMP 08001) Kaustubh Sohoni (WMP 08019) Pankaj Bhardwaj (WMP 08025) Vaibhav Goel (WMP 08043) Vidit Kumar (WMP 08044)


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Contents1. Company Information ........................................................................................................................... 3

2. Strategy Evolution ................................................................................................................................. 3

3. Why Infosys 3.0 ..................................................................................................................................... 3

4. Infosys 3.0 Positioning for the future................................................................................................. 4

5. Infosys view for the transformation ..................................................................................................... 5

6. Outcomes .............................................................................................................................................. 5

7. Conclusion ............................................................................................................................................. 7

8. References ............................................................................................................................................ 7


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1. Company InformationPower by intellect, driven by values Infosys Limited, mantra of success for this Indianmultinational IT giant (head quartered at Bangalore) providing business consulting, information technology, software engineering and outsourcing services for clients variedon different geographies. One cannot resist the Eye of Infosys staring at you through

the shiny silver buildings gazing at you while you drive past on the 11km long flyovertowards Electronic City at Bangalore.

So called Dream Company of an IT professional was started by seven Ex-PatniComputers employees in 1981 with an investment of Rs10,000 ($250).

It has 7 other Indian. development centers in Hyderabad, Pune, Trivandrum,Bhubaneswar, Chandigarh, Mangalore and Chennai. It has a global presence in morethan thirty countries. Today with annual revenues of more than seven billion and a totalworkforce is more than 150,000+ employees; Infosys is the third largest softwareservices provider in India in terms of revenue.

Infosys has been a trusted IT services provider along with support and enhancementservices, enterprise services, technology outsourcing and business consulting, servicesand serves a host of Fortune 500 and Fortune 1000 companies in 20 domains.Its biggest clients include, Southern California Edison, DHL, Bank of America, CitibankBritish Telecom, British petroleum, ABN AMRO etc.

Commitment to new ideas is in its DNA. In other words, spirit of innovation has been aninseparable part of Infosys journey and it has powered their success for three decades.It will also continue to guide them in building tomorrows enterprise. However, ITservice industry is rapidly commoditizing which is seen as an opportunity by this IT giant

to transform their business and be more relevant to the clients i.e. Infosys 3.0. Thismeans an improved portfolio of business which will ensure high quality, industry leadinggrowth with enhanced revenues and margins.

2. Strategy EvolutionIT giant during its course has introduced threestrategies so far as represented by thediagram.

Infosys started as a retail business unit and

then they created various industrial units.When these units have gained critical mass, ithad virtualized them.

3. Why Infosys 3.0Today, IT industries are facing a twin challengeof scalability and commoditization. Client, today, look for those service providers who
http://en.wikipedia.org/wiki/Business_consultinghttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Software_engineeringhttp://en.wikipedia.org/wiki/Outsourcinghttp://en.wikipedia.org/wiki/Outsourcinghttp://en.wikipedia.org/wiki/Software_engineeringhttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/Business_consulting


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understand them in terms of both their business and challenges. Shift in demand is clearlyevident from traditional horizon offering to industry specific high value offering. Clients arelooking for increases ROI (return on investment) by converting their capex into opex. For thesame they are looking out for transformation partners. Market trend has left Infosys with twooptions viz.

Concentrate on the existing model or Transform to address the current demand and challenges in order to achieve superior

growth in medium to long term.

Hence, Infosys 3.0 was announced. With this Infosys continued to make focused investments intheir organization capabilities and trying to align their offerings or business portfolio moreclosely to the business priorities of the client.

4. Infosys 3.0 Positioning for the futureInfosys 3.0 New and improved version. With this type of strategy Infosys wants to transform

into a business solution provider i.e. working with the business sides of the client. With this, itwants to focus primarily on its existing customers. From the past it is evident that Infosys getsmajority of its business (around 95%) from its existing clients.

In general, there are two basic growth strategies viz.1. Same to more Selling same products and services to more clients, thereby, increasing their

market share and,2. More to same Selling higher value products and services to the existing/ same client.

More is same is what is Infosys focus. This is the differentiating factor that will help it to keep anedge over other s as well as to escape commoditization.

The key constituents of Infosys 3.0 are:1. First change was to restructure service lines or

offerings into three groups: Transformation Change of business initiatives Innovation Business Operation Run the business

Goal for next 5-7 years is to make each of theservices to contribute to 1/3 to the total revenue.More investment would be required towardsInnovation in order to achieve that.

2. Secondly, consolidating existing verticals into 4verticals and introduction of 1 new vertical

BFSI (Finance services and insurance) Manufacturing Energy, Utilities and Telecom Retail, CPG, Logistics and Life Sciences Public Services and Healthcare

25%

12%

63%

33% 33% 33%

Transformation Innovation BusinessOperation

Current Target


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These will be looked upon as separate Profit and Loss accounts giving more flexibility andability to scale up the within the units. New vertical focus will be on government contractswhere the competition is non-significant.

3. Last but not least, 7 new themes/ trends as key focus areas for tomorrows business model Digital Consumer New Commerce Healthcare Economy Sustainable Tomorrow Smarter Organizations Emerging Economies Pervasive Computing

Vertical heads will focus on trends which are most relevant to them. Some live examples asfollows:1. Flypp - a mobile applications platform for telecom service providers and handset vendors

(Digital Consumer)

2.

iTransform a comprehensive platform for the healthcare vertical to address HIPAA andCD-10 regulations (Healthcare Economy).

5. Infosys view for the transformation Infosys sees 3.0 as a strategically correct and necessary step towards the growth of the

company in current hostile and volatile environment. We have evident a change inleadership while adopting this strategy. Infosys is thinking of ripping benefits from thisstrategy as an early mover advantage. With this it indents to focus more on the externalenvironment than the internal environment of the company. They have a strong believe ontheir top management to help the company to stand again more strongly this time. Hence,Infosys 3.0 Accelerating growth can be seen as a mix of following strategies:

Growth through transformational partnerships Growth through differentiation Enhancing growth through innovation Nurturing tomorrow's talent

Infosys transformation of 3.0 strategies from older strategy was to transform into businessSolution Company from technology Solution Company.During such transition organization structure led to some changes in hierarchy whereindustrial units, service lines and industrial verticals were realigned into four key groups as:

Banking, Financial services and Insurance Manufacturing Energy, Utilities and Telecom Retail, CPG, Logistics and Life Sciences

6. OutcomesThe Infosys 3.0 strategy was to move Infosys higher up in the value chain of IT - into areas suchas innovation, products & platforms, consulting, and greater value addition in businessmanagement. However, the strategy came at a time when global economy was going through a


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downturn and clients were focused on cost-cutting rather than on developing new businessstrategies.The company has many problems, some easier to solve than others.Lack of morale and a cohesive direction Murthy can solve this issue father figure; greatvisionary3.0 was a transformation strategy which helps in measuring its in effect, the problem is notInfosys 3.0 as a strategy but the less-than-enthusiastic approach to implement it. Lack ofthought leadership from Infosys on its identified themes.

Infosys is in the midst of its Infosys 3.0 strategy. The firm has launched 7 new products and 7new platforms. Consulting and integration business now comprises 34% of overall revenue.The Business and IT Operations team closed $1B in revenue last year. Total contract valuebooked in products and platforms is $725M as of the last quarter.

In Innovation Infosys has been not able to outcast their competitor in innovating products,the only product & platforms which has been a successful story is of Financle platform onBanking.

Infosys compared with its other IT service providers such as Accenture, CapGemini , IBM has

been on low margin with the customized delivery only, but other providers have taken thevalue margin to a higher value.

Infosys is losing out on its traditional strengths, dealing with large clients. The number ofUSD 100-million clients went from 13 to 15 in the last two years. At the same time, for TCS,it went up from 8 to 16, and even for underperforming Wipro it went from 3 to 10.

With too many Delivery centers, Infosys was unable to manage its diversity and size due towhich re-doing the wheel proves to be the roadblock for the organization growth.

Large chunk of Revenue (around 97%) for Infosys have been from existing customer and avery small amount of revenue of 3% have been attributed by new customers.

In North America Infosys is losing its market share to TCS and Cognizant


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Revenue Exhibit of top 3 Service Providers North America

Infosys lack of aggression in implementing the strategy was clearly visible from its acquisitions,and market share revenue which has declined or has been stagnant and other players fromcompetitors have emerged as winners in the race the only big acquisition was of Lodestone

and later on no such deal has happened.

7. Conclusion

Vision and aspiration values of Infosys must drive the organization to high quality growth and tobelieve in the strategy to meet the organization goals. Low Operating Margin than competitor isone of major issue which is Infosys is facing in the competitive market. Prices are more than

Competitors (The onsite component contributes to at least 46% of Infosys' costs and contributesmore than 50% to revenues) Infosys should not lose focus on High Volume but low margincontracts.

8. References http://www.moneycontrol.com/news/business/what-is-infosys-30-

strategy_887924.html http://www.rediff.com/business/slide-show/slide-show-1-tech-what-is-infosys-version-

3-point-0-and-how-it-will-compete/20110603.htm http://www.globalservicesmedia.com/global-services/analysis/189680/is-narayana-

murthy-answer-faltering-infosys http://www.enterpriseirregulars.com/64837/event-report-infosys-global-analyst-

summit-awaiting-the-post-infosys-3-0-emergence/ http://www.hitbullseye.com/currentgk/1370589921.pdf http://smartinvestor.business-standard.com/BSCMS/PDF/info_050511_01.pdf http://www.keynoteindia.net/document-

hosting/research/065_Infosys_InitiatingCoverage.pdf http://www.slideshare.net/achalraghavan/infosys-case-analysis


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http://www.stevieawards.com/pubs/iba/awards/408_2659_22092.cfm http://www.financialexpress.com/news/3.0-strategy-is-about-winning-in-all-

portfolios/1016156 http://ronnie05.wordpress.com/2013/06/01/infosys-3-0murthy-2-0-9-reasons-why-it-

wouldnt-work/ http://www.kumaralok.com/infosys-3-0-the-future-version-of-infosys-with-no-release-

date http://forbesindia.com/article/boardroom/did-infosys-get-it-wrong-with-its-3.0-

strategy/35299/1 http://www.hindustantimes.com/StoryPage/Print/1069230.aspx

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