Business Strategic Management of Infosys

Presented by: Deepika Aggarwal Priyanka Kant

Vision And Mission

» Vision:- “To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people."

» Mission:- "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."

Values

» Infosys’ value system is best articulated by the acronym

C-Life – Customer Delight, Leadership by Example,

Integrity & Transparency, Fairness and Pursuit of

Excellence.

» The major objective of the company is to become India’s most respected company.

» Infosys deliberately defocused on revenue and profits. Their goal was to do everything by the book.

Introduction to Infosys

Infosys Technologies Ltd. was started in 1981.

Today, it is a global leader in the "next generation" of IT and consulting.

Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World.

Infosys serves the client globally and is one of the pioneers in strategic offshore outsourcing of software services

Infosys pioneered Global Delivery Model (GDM)

Milestones

» In 1987 Infosys got its first foreign client.

» In 1993, Infosys became a public limited company and received ISO 9001/Tick IT certification.

» In 1999, Infosys crossed $100 Million and was listed on NASDAQ.

» In 2006, Infosys completed 25 years of its existence and its revenues crossed $ 2 billion.

» Today Infosys has more than 1,03,078

employees and has presence in more than 20 countries across the world.

Awards & Achievements

» Infosys moved up to No. 14 on Fin Tech 100.

» Awarded the ‘India’s Best company to work

for’ in 2009.

» Infosys was honored with the Sharpening

Brand and Competitive Differentiation

Marketing Excellence Award from the

Information Technology Services Marketing

Association (ITSMA)

» A leader in SAP implementation services.

Infosys - Business Lines Insurance Healthcare and Life Sciences

Banking and capital Markets

Communication Media and Entertainment

Energy, utilities and Services

Retails, Consumer Goods and Logistics

Manufacturing

New Markets and Services

India Business Unit

Consulting Solutions (CS)Enterprise Solutions (ES)Product Engineering and Validation Services (PEVS) – PED, PLES, IVSInfrastructure Management Services (IMS)Software Engineering and Technology Labs (SETLabs)System Integration Services (SI)Corporate Sales and Marketing (CSM)

S.W.O.T. Analysis

Strengths

» Cost advantage – Presence of Infosys in India is key to its success

» Breadth of service offering – end to end solutions including high end services like IT consultancy and KPO

» Quality and maturity of process – Infosys has quality standards such as CMM Level 5i to differentiate from other competitors

» Global and 24/7 delivery capability – excellent internet backbone and telecommunications facilities enabling companies to develop 24/7 delivery capabilities from India itself

Weaknesses

» Excessive dependence on USA for revenues – US Companies are cutting down IT budget hence revenues to be hit hard for Infosys

» Excessive dependence on BFSI sector for revenues – Banking sector is facing a crisis globally and is going to spend less on IT

» High rates of attrition – Although slowdown in global economy has lowered attrition rate but the industry still faces high attrition rates as compared to other sectors

» Decreasing competitive advantage – rising salary expenses is taking away the cost advantage enjoyed by Indian companies (including Infosys).

S.W.O.T. Analysis

Opportunities» Greater scope for product innovation

» Increased focus on high end work like

consulting and KPO

» Domestic demand for IT services is to

grow at 20 %

» Greater scope to service domains other

than BFSI such as Transportation,

Infrastructure, etc.

» Satyam fiasco – Likely to have positive

impact on business considering

corporate governance, possibility of

shifting of business, getting higher

incremental business from overlapped

clients, and winning new business from

new clients

» Global economic slowdown may continue for several years – hence low IT spending globally

» US Govt. against outsourcing » Shrinking margins due to rising wage

inflation » Rupee-dollar movement affects revenue

and hence margins » Increased competition from foreign

firms like Accenture, IBM etc.

» Increased competition from low-wage countries like China, Indonesia etc.

Threats

Porters Five Forces Model

Threat of Substitutes:1. Other offshore locations – Low Cost

Locations like Eastern Europe, Philippines and China.

2. Price quoted is the biggest Differentiator.

Bargaining Power of Customers:1. Large Number of IT Companies

vying for projects – High Competition

2. Huge Decline in IT Expenditure

Barriers to Entry:1. Low Capital Requirements2. Large value chain for small

enterprises3. MNCs are ramping up capacity

and employee strength

Bargaining Power of Supplier:1. Due to Slow Down, Job Cuts,

layoff & bleak IT outlook2. Demand Supply is not

favorable to employees3. Availability of vast pool of

talent.

Rivalry among Firms:1. Low Cost2. Commoditized

offering3. High Industry

growth

BCG Matrix – Infosys (India)

Software ProductsMaintenance

Package Implementation

NONE Consulting, BPO,KPO

HIGH LOW

Market Share

HIG

HL

O W

Business Growth

Rate

McKinsey’s 7 S Model

Style - LEADERSHIP

“Infosys Leadership Institute”• Open door policy.• Continuous sharing of information.• Takes inputs from employees in decision making. • Builds personal rapport with employees.

Staff – HUMAN RESOURCES

“Knowledge Based Industry” (90% are engineers)• Emphasis on academic records• Technical skills• Ability to learn• 2.65 per cent of its revenues on up gradation of

employees‟ skills • High training standards

Strategy» Client focused strategy (custom built soft wares)» Quality driven model.» Strong Engagements with existing clients.» Value added services to new clients.» Geographical Expansion.» Enhanced Solution Set.» Consulting.» Business Process Management.» Systems Integration.» Infrastructure Management.» Deep Industry Knowledge.» Brand Visibility.» Pursue alliances and strategic acquisitions .

McKinsey’s 7 S Model

Shared Values» Customer Delight» Leadership by Example» Integrity and Transparency» Fairness» Pursuit of Excellence

Organizational Structure» Free Form» Flexible Team Structure

e.g. A member, who might have been team leader in one project, may be replaced by another member of the same team for another project.

» Equality among employees

McKinsey’s 7 S Model

Skills

» Domain specific Certifications» Competency Building

Infosys has been CMM-Level 5 certified for its process capabilities.

It has entered the Balanced Scorecard Hall of Fame for Executing

Strategy for achieving breakthrough performance results using the

Balanced Scorecard (BSC).

McKinsey’s 7 S Model

Strategy Analysis - Infosys

Corporat

e Leve

l

• Global Delivery Model• Moving UP the value chain• PSPD Model

Generic Strategy

• Low Cost• Differentiation• Focus

Grand

Strategy

• Ansoff’s Matrix• Market Penetration Strategy• Market development Strategy• Product Development Strategy

Infosys- Corporate Level Strategy

» Global Delivery Model: Producing where it is most cost effective and selling where it is most profitable.

» Moving UP the value chain: Getting involved in a software development project at the earliest stage of the life cycle.

» PSPD Model: “Predictability of Revenues, sustainability of revenues, Profitability, De-Risking” for Risk Management.

» Actions Taken» Expansion into low cost countries like Mauritius, Philippines, Thailand, Mexico

etc.» Improved Quality capabilities -> CMM Level 5i» Emphasis on delivering high value services» Currency hedging for predictability of revenues.» Investing heavily in training centers.

Infosys – Generic Strategy

» Low cost Global delivery 24/7 Model

» Little differentiation in low-end services of value chain; high differentiation in high end services in value chain like software products and package solutions.

» Focus on Quality, Customer relationship management, timely delivery.

Infosys – Grand Strategies

» Ansoff’s matrix

Current Market New Market

Current Product Market Penetration Strategy

Market Development Strategy

New Product Product Development Strategy

Diversification Strategy

Market Penetration Strategy

» Current Markets: USA and Europe » Current Products: BPO, KPO, consultancy services (in BFSI,

manufacturing and retail) and software products (financial products).

» Recommendation: As most large clients in US and Europe are cutting costs, Infosys needs to be more aggressive on cost and quality front.

» Result of strategy: Unlikely to yield good results.

Market Development Strategy

» New Market: India, Middle-east and Australia » Current Product: ADM, BPO, KPO, consultancy services

(in BFSI, manufacturing and retail) and software products (financial products).

» Recommendation: Since these are fast developing IT market, Infosys needs a paradigm shift in focus from US and EU markets to new markets.

» Result of strategy: Likely to yield good result.

Product Development Strategy

» Current Market: USA and Europe » New Product: Consultancy and package implementation services

in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services.

» Recommendation: Concentrate on building expertise in these domains by strategic acquisitions.

» Result of Strategy: Likely to have good result. (better the company acquired, the better the result).

Diversification Strategy

» New Market: India, Middle-east and Australia » New product: Consultancy and package implementation services

in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services.

» Recommendation: Changing Brand image from low value service provider to high value service provider.

» Result of Strategy: Difficult to achieve overnight (possible in long term)

Other Strategies

» CONCENTRATION: 90% of Infosys revenues from American and European nations.

» VERTICAL INTEGRATION: Infosys recently made a bid to acquire a European major – Axon consultancy to improve its business in European markets, but finally called off the deal due to high valuation. Otherwise, Infosys has always believed in organic growth.

» INNOVATION: The Software Engineering and Technology Labs (SETLabs) at Infosys is the centre for applied technology research in software engineering and enterprise technology.

SETLabs conducted 24 Innovation Workshops with customers from the US and Australia, to identify research collaboration possibilities. Infosys promotes a favourable work environment that encourages innovation and meritocracy.

Future Strategies

Infosys

• High Dependence on Export Revenues (99% revenues from overseas business)

Global

Slowdown

• Cost cutting and reducing IT expenditure by almost all companies

Likely

Impact

• Negative in short term

Future Strategies Contd..

» Global sourcing strategy is aligned with business strategy» Enhancing operational efficiency and delivering value added

services.» Structuring processes and services into modules thus leading to

enhanced flexibility and productivity.» Aggressive focus on ERP solutions like Oracle and SAP.» Expand into high end consulting.

Lessons to Draw

» Do not put all eggs in one basket.» Provide more high end services in value chain (3rd wave IT)» Shift in focus from low cost advantage to high quality services.» Consolidation and Strategic acquisitions are essential for future

growth of revenues.» Quick adoption to high growth markets is necessary.

Thank you