draft infosys final

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A Report on Infosys

Submitted to

Mr. Mohit Bansal

Submitted By Group 3

Azhar Ali

Chiranjeev Brahma

Deepak Rawat

Dhara Trivedi

Dinesh Garg

Foziya Siddiquee

Gaurav Pandey

Himanshu Kanojia

Honey Parnami

11-Apr-11


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CONTENTS

ContentsCONTENTS ................................ ................................ ................................ ................................ ......... 2

IT Industry in India ................................ ................................ ................................ ............................. 3

PEST Analysis ................................ ................................ ................................ ................................ ..... 4

Political ................................ ................................ ................................ ................................ .......... 4

Economic ................................ ................................ ................................ ................................ ....... 5

Social ................................ ................................ ................................ ................................ ............. 5

Technological ................................ ................................ ................................ ................................ . 5

Infosys ................................ ................................ ................................ ................................ ............... 6

Performance of Infosys ................................ ................................ ................................ ...................... 6

Financial Performance ................................ ................................ ................................ ................... 6

Focus on Expansion ................................ ................................ ................................ ........................... 9

Key success factors for Infosys ................................ ................................ ................................ ......... 10

Critical Success Factors ................................ ................................ ................................ .................... 11

Porters Five Force Model on Infosys ................................ ................................ ............................... 11

Competency of Infosys ................................ ................................ ................................ .................... 13

Strategic moves of Infosys ................................ ................................ ................................ ............... 13

Functional Level of Infosys ................................ ................................ ................................ ............... 14

Recently posted jobs at Infosys ................................ ..................... Error! Bookmark not defined.

Recruitment ................................ ................................ ...................... Error! Bookmark not defined.

Training ................................ ................................ ................................ ................................ ....... 16

Infosys leadership institute ................................ ................................ ................................ .......... 16

Performance appraisal ................................ ................................ ................................ ................. 16

Conclusion ................................ ................................ ................................ ................................ ....... 16


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IT Industry in India

The information technology (IT) industry has become of the most robust industries in the world. IT,

more than any other industry or economic face, has an increased productivity, particularly in the

developed world, and therefore is a keydriver of global economic growth. Both software

development and the hardware involved in the IT industry include everything from computer

systems, to the design, implementation, study and development of IT and management systems.Owing to its easy accessibility and the wide range of IT products available, the demand for IT services

has increased substantially over the years. The IT sector has emerged as a major global source of

both growth and employment.

Information technology is one of the most important industries in the Indian economy. IT industry of

India has seen huge growth in recent years. This industry grew from $150 million in 1990-1991 to

$50 billion in years 2006-2007. In last decade the information technology industry in India has grown

at an average annual rate of 30%. During the ten year 1992-2002, the Indian software industry grew

at double the rate as the US software industry. Some of the major reasons for the significant growth

of IT industry of India are

y Availability of skilled manpower

y Reduced import duties on software and hardware products

y Cost advantages

y Reduced telecommunication and internet costs

Some of the major companies of IT industry of India are

y Tata Consultancy Services (TCS)

y

Infosys

y Wipro

y IBM

y HP

y HCL

y Cognizant Technology Solutions (CTS)

y Patni

y

Satyam

y NIIT

Indias IT industry caters to both domestic and export markets. Exports contribute around 75% of the

total revenue of IT industry in India. The IT industry can be broadly into four segments-


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y IT services

y Software (includes both engineering and Research & Development)

y ITES-BPO

y Hardware

PEST Analysis

Political

y Us government has said that US firms which are outsourcing it work to other

location other than us will not get any tax benefit. It is expected to have deep

negative impact as us is a major market for Indian It sector.

y In India, IT companies are battling hard against taxes & continuous STPI soaping.

This would have negative impact on the industry.y Government owned companies and PSUs in India have decided to give IT projects

to Indian IT companies only. This would have positive impact on Indian it industries

y Indian government is trying to reduce international cost and is providing

infrastructure support to organizations. This again is a positive factor.

revenue

usa

europe

apac

ro


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Economic

Indian It sector is one of the flourishing sectors in Indian financial sector and is expected to grow

over the years. As per Nasscom, Indian IT exports are anticipated to attain 175$ billion by 2020 out

of which domestic earnings would be around 50$ billion.

India continues to be a leader in terms of global financial attractiveness.

The economic downturn has put IT spending on hold. It has resulted in projects cancellation, low

confidence of customers, bankruptcies.

Social

y English is widely spoken in India. English is most accepted means of education in India. This

gives us an edge over other non English speaking nations.

y India generates a pool of IT professionals each year to meet the increasing industry

requirements. Indians represent nearly 30 percent of the global annual supply of graduate

engineers.

y As per NASSCOM Strategic Review report, India is one of the few countries to have an

increasing share of working population. India is expected to be the youngest nation in the

aging world.

Technologicaly Innovation in low cost technologies is presenting new challenges and opportunities for IT

industry.

y Internet base is increasing in India. it has positive impact on Indian IT industry.

y India has 2ndlargest telephone network.

0

0.5

1

1.5

2

2.5

3

3.5

global

attractiveness

index(1-4)


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Infosys

Infosys wases

ablis

e

in 1981 by a group of IT professionals in Pune India with initial capital of US$

250 and signed up its first client Data Basics Corporation, in New York. It opened its first

international office in Boston, US in year 1987. In 1990

s it brought it IPO and introduced EmployeeStock Options Programs and also ac uired ISO 9001certification. Its revenue increased upto US$100

million in the late90

s, it was listed on NASDAQ. Over theyears Infosys hase panded its business in

manycountries like US, China, Japan, ermany, Australia etc. It also launched Infosys Consulting Inc.

In theyear 2004 and established subsidiaries in china and Australia.

Perfor

nce of Infosys

e have decided to analyse the performance of Infosys to better understand how well itsstrategies

have worked out for the company. Since thecompany doesnt operate in isolation and has many

competitors, we must understand the performance of the other companies as well.

e have relied

on data readily available on the internet such as the annual report of the companies on their

websites or other financial websites. Lets understand the performance of the company in the

following sub heads.

1. Financial performance

2. Focus on e pansion

FinancialPerfor

ance

Here are some interesting facts that were found from the financial data available for some

companies.

To begin with thechart below tells us that TCS achieved the highest amount ofsales during the2010

followed by Infosys and then

ipro. But this doesnt provide the whole picture.

e must look at the

profits that thesecompaniesearned and that tells us a different story.

Infosys operates at the

highest operating

margins of30

followed by TCS at

28 and them ipro


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Infosys, TCS and!

ipro are three major IT firms in the domestic market. Recently they have faced

somecompetition bycompaniessuch as Cognizant.

From the graphs above it isclear that Infosys is far ahead of TCS and other in terms of operating

profits as well as reported profits despite it lower operating income asshown in the first graph. The

reason is pretty much apparent and can be understood if we look at thecost ofsales as a percentage

of operating income. Itsstrategy has primarily been to keep its overheads lower than the industry

standards.

St" #

t$

% &

:- Infosys hasstrived to achieve the lowest manufacturing cost for software ascompared to

TSC whose manufacturing cost for March10 was7.27cr against 6630cr for Infosys.


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St) 0

t1

2 3

: - Another striking feature we noticed is that Infosysspends a healthy sum of money on

selling e4 penses. TCS tends to have a very low share of e4 penses on selling as compared to its

revenues. On the other hand5

ipro seems to have a high selling e4 pense. In the graph below wecan

see that

5

ipro tends to spend a remarkably large amount of money on selling practices whereasInfosys maintains a good ratio.

Also we noticed that Infosys the tax saving for Infosys due to amortization of its intellectual property

(software 6 is far higher than any of thecompanies.

St) 0

t1

2 3

: -5

e noticed that Infosys has been sitting on a hugecash pile for a very long time and has

been increasing itscash reservessince2006.5

ipro on the other hand also has had a similar strategy

but there is a striking difference.5

ipro has, for a long time followed a strategy theycall Sting of

pearls, where it has been ac7

uiring smaller companies. Recently it has ac7

uired another company

called SAIC. Infosys has not been in the news for ac 7 uisitions. It prefers to sit on hugecash reserves.

Also the amount ofearnings retained by Infosys is the highest in the industry.


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St @ A t BC D

: - Retaining operating profit to a great extent is a strategy followed not only by Infosys but

most of thecompetitors. Among all the players in the IT sector Infosysseems to retain the maximum

share of its operating profits both in absolute terms and also as a percentage of the operating profit.

However this trend may beshifting with more and more IT companies working towards a strategy

where they increase their critical mass. Somesmaller companies like HCL and Cognizant have

focused more on increasing their top line than their bottom. They tend to have higher investment inactivities that directly affect theclient such assales, marketing and higher wages to attract talent.

This has helped thesecompanies to increase their market share over theyears.

Focus on Expansion

UnlikeE

ipro, Infosys has predominantly relied on organic growth over the years and its

aggressiveness towards retained earningssupports this argument. Infosys primarily relies on the US

(North America) and Europe for its revenues. Almost 65F

of the total revenueearned by Infosys is

from US. Domestic business adds up to only20F

of revenue of Infosys.

Thecompanycould use as

much as10

F

of its revenuefor ac G uisitions, or around

$300 million to $500

million


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But that doesnt mean that thecompany doesnt focus on emerging markets. It hasset up operation

in emerging marketssuch asBrazil with 180employees and caters to the local businesses. Over 90P

of the firms business in Brazil comes from local businesses. Recession was the time when perhapsmost of the IT firms had to relook their strategy and Infosys did the same. In 2009, the CEO S.

Qopalakrishnan, clearlyexpressed their intent to bring down their dependence on US from 60

P

to

40P

. At thesame time they would increase the presence in Asia Pacific from 10P

to 20P

and they

would increase theshare from Europe to 30P

. One of the primary reasons for such a shift in strategy

was due to a bill that was passed in the US bysenators Dick Durbin and ChuckQ

rassley that denied

access to low cost worker in the US to Infosys. Also the New visa reforms in the US make it further

difficult for Infosys to send its employees to the US. This has made the company to look for

acR

uisitions in the non-English speaking developed countries as well.

Key success facS

ors for Infosys

y

Sound management skillsy Personnel management

y Infrastructure

y Commitment to values, speed, imagination and excellence

y Invest in well understood, proven product and research & development

y While dealing with investors, always under-promise and over deliver.

y Have a healthysense thecompetition.

In 2010, the CEO

announced that local hiring

in US would increase to

mitigate the uncertainties

due to policychanges in the

US.

Were also investing into emerging

markets, like China, Brazil, Mexico, theMiddle East, India, so were diversifying

our portfolios to includeemerging

markets,

CEO T opalakrishnan said the

appreciating rupee was the

biggest short-term challenge as a

1U

gain or loss in the local

currency has a 40 basis point

impact on its margins


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Critical Success Factors

Infosys depends on Sound management skills and Personnel management for its success. In

Infosys the leadership qualities among employees is developed continuously and role vacuum

does not exists. Top management emphasizes on open door policy, continuous sharing of

information, taking inputs from employees in decision-making, and builds personal rapport with

employees. This is critical for success.

Infosys is in knowledge based industry and about 90 per cent of the employees are computer

professionals who are expertise in work. The company provides training and development to

its employees on continuous basis and spends a considerable amount of its revenues on up

gradation of employees skills which increases the performance levels and thus leads to success

of whole organization. The company offers stock options to every employee to motivate them

and reduce employee turnover.

The company emphasizes on high ethical values in work, equality among all personnel

irrespective of their organizational positions, encouragement of high performance standardsand

sharing of outcomes of performance by all. Teamwork is also a critical factor for success inInfosys.

The company always invests in well understood, proven products for profitable business and it

also carries out research and development on continuous basis to compete in dynamic market.

The company is committed to its values, imagination and excellence and has a healthy sense of

competition which helps it achieve excellence in performance and unmatchable results.

Porters Five Force Model on Infosys

An organizations competitive standing is determined by 4 important factors apart from industry

rivals: customers, suppliers, potential entrants, and substitute products. The Porters 5-force model

can enable a company to clearly determine its industry structure and develop its strategy

accordingly. The 5-force analysis provides a complete picture of where the company stands versus

buyers, suppliers, entrants, rivals, and substitutes.

The Porter's 5-force model of infosys is explained following:

1. Rivalry among Firms: The company has many competitors. In IT Industry, Infosys, TCS, Wiproand HCL Technologies are the major players in the domestic market. So TCS, Wipro and HCL

Technologies are the major competitors of Infosys. Now the company is facing strong competition

from these firms. As competitors are providing commoditized offerings, low cost products, new

product introductions and service improvements, so the company with a clear understanding of the

structural underpinnings of rivalry can take steps to shift the nature of competition in a more

positive direction and can make strategies accordingly in order to compete among rivalry firms.


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2. Bargaining power of customers: there are other players like HCL,TCS, Wipro, Cognizantwhich are taking a hit on their profits but driving hard to get projects resulting in high competition

for getting projects. With the presence of such competition the buyers have options like HCL and

Tech Mahindra which charge less. Also competitors like Wipro and TCS are as technically sound as

Infosys and hence again the buyers have such options.

3. Bargaining Power of Suppliers: Powerful suppliers capture more of the value forthemselves by charging higher prices or limiting quality or services. In case of Infosys, the HR

consultancy agencies which due to the lack of engineers in the company could charge high

premium. The expertise that some supplier in some domains that leads them to charge higher for

smaller sub contracted work. So the company made strategies accordingly by taking these things

into consideration.

4. Threat of New Entrants: The threat of entry in an industry depends on the entry barriers inthe industry. In case of IT Industry, there are low barriers to entry in this Industry. There is low

capital required to be invested in order to start a new venture. There are also few government

restrictions such as licensing in case of IT Industry.

5. Threat of Substitutes: The threat from substitutes depends on the factors like price-performance trade-off offered by the substitute, buyers switching cost, similarity to functions

performed by original product. Infosys face more threat of substitutes. Also Countries like Eastern

Europe, China etc are emerging and posing threat to Indian IT Industry because of their cost

advantage.


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Competency ofInfosys

1. Aerospace and defence

Infosys' Aerospace & Defence industry solutions and services help commercial and defence clients

increase productivity, reduce costs and compete effectively. Our services cover Product Design &

Development, Embedded Systems, Product Life Cycle Management and IT Solutions

2 . Airlines

Infosys enables Airlines and Air Transport service providers to become more competitive and

responsive to the shifts of the Flat World. Our offerings span strategic consulting, business

process re-engineering and industry-specific solutions.

3. Banking and capital markets

Infosys partners with banks and capital markets firms to build new products and services andimplement business and technology strategies. Our business, domain, technology and change

management expertise helps you win in the Flat World

4. Consumer Packaged Goods

Infosys' end-to-end IT services and business solutions help Consumer Packaged Goods (CPG)

companies optimize business processes and systems across Product Development, Supply

Chain Planning & Execution, Sales & Marketing Management and Customer Management.

5. Education

Infosys partners with leading educational institutions to develop customized solutions that span IT

Security, Identity Management, ERP, e-Learning and Disaster Recovery/Business Continuity.

6 . High technology

Infosys' industry solutions, IT services and business process management enable High-Tech

companies to optimize customer experience, enhance supply chain effectiveness, and leverage

IT investments for business advantage. Our engineering services help companies accelerate

product innovation in a highly competitive environment with short product life cycles.

Strategic moves ofInfosys

Over the time Infosys has followed a systematic strategy to move ahead and achieve its goals. It

diversified itself in to consulting services, business process outsourcing services in order to maximize

its market share. It opened office in various countries, with a major focus on US and other European

countries. The main strategic moves are

y Infosys strived to achieve the lowest manufacturing cost for software as compared to its

competitor TCS


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y It spends a healthy amount of money on selling expenses

y Succession planning of Infosys is that each of the member from the board will lead the

company, Mr. Narayan Murthi announced that his son will not take over Infosys after him,

they give each of the board member to be the CEO of the company

y It also tries to keep its overheads lower than the industry standard

y

It assists the clients through constant communication with the managementy Although Infosys has not acquired any company but it is on top in revenue generation unlike

its competitor who are acquiring other companies.

Functional Level ofInfosys

Infosys has various recruitment strategy. Also it practices employee engagement and promotion of

benefits that employee brings to their organization. It follows a complete cycle of hire to retire of its

employees. Infosys has total 1,09,882 number of employees mentioned in their Q3 of year 2010.

Besides hiring graduates and post graduate from India, they also hiring students from American

universities and UK colleges.

The following graphs show the number of students hired by Infosys and its competitors. The hired

Employees are mostly graduates followed by post graduate.

Recruitment Strategy

The company is well known for its employee friendly HR practices. Infosys attract the best talent

from across the world, and recruit the candidates by conducting toughest selection process. Nilekani

said, "We focus on recruiting candidates who display a high degree of 'learnability.'

The largest IT Company in India has 127,779 employees (including subsidiaries) as of 2010.

These are fairly large numbers, and these numbers have come up because the industry is growing at

a very rapid pace and globalizing. The strategy is to keep up the growth with pace needed to

globalize and therefore they need to have a more global work force. Infosys has a global footprint

with over 50 offices and development centre in India, China, Australia, the Czech Republic, Poland,

the UK, Canada and Japan.

550,000 engineering graduates passing out every year, anywhere between 10% and 25%

cannot be readily employed by any technology firm in the country. Nasscom says only 25% of

graduates working in IT are employable, while 15% are for back-office jobs. They are spending

almost $1 billion a year on readying these graduates. So they are trained properly.


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The above graph shows that Infosys is running far better than industry standards. They have

bachelors more than the other companies.

The recession in 2008 has left the job market and hiring capability even more challenging.

The IT players were going through worst phase of there time. Recruitment was stop vehemently. The

mostly hit were the freshers. There was no scope of jobs whether in America, India, China, Taiwan,

Germany etc. At that time Infosys has stopped hiring moreover offer letters given to individuals as

final placement offers were asked to join later, they didn't mention any date or particular time of

joining. So they were looking for the low cost labour.

The increase in US visa fees and other factors, have led to a lower demand for the coveted

H-1B visa. H1B1 visa charges against Infosys as they looking to hire more people in us form India.

Allegations have come up with stating the visa misuse and age discrimination for the recruitment

which has given a negative image. So they come with the strategy that they will recruit the people

from the local market. Hiring from the local is the strategic need of the company to go up the value

chain. Hiring people from local will help the company to engage the customer and gain their faith in

the delivery system. They believe that customers are willing to pay more for high engagement.

They are also more focusing on hiring because of the visa rules. They are not able to hire people

from UK as there is not proper supply. France and Germany are different countries so it is difficult to

talk about those countries. Also the attrition rate is too high in Infosys so they keep looking into thehiring process. They have a target of hiring 1000 people in America for their local needs. They overall

strategy of having much more diverse workforce is that they are betting and investing on as they see

related work in this area.


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Training

Infosys leadership institute

The Infosys Leadership Institute (ILI) was set up in 2001 to nurture future leaders in the company so

that they can manage effectively the exceptional growth. All the employees were required to

undergo training every year, and some of the chosen employees were trained at the Infosys

Leadership Institute to take on higher responsibilities in the company. The executives trained to

handle the changes in the external and internal environment.

Performance appraisal

The evaluation of personal skills for the tasks assigned to an employee is the main criteria for the

performance appraisal. To evaluate the performance different criteria were considered : -

y Timeliness

y quality of work carried out by the employee

y customer satisfaction

y peer satisfaction

y business potential

y learning and analytical ability

y communication skills

y decision making

y change management

y planning and organizing skills

Conclusion

The success of a company depends upon its strategy. The evaluation of strategy can be done by the

performance of the company. Infosys is a huge brand name and yes its one of the major success

factor is its strategyV

. If we are talking about the operating profit and reported profit Infosys is far

ahead of other players. The idea is to keep their overheads lower. They have the lowest

manufacturing cost. Infosys expands a huge amount on selling expenses. Infosys primarily relies on

US(North America) and Europe for its revenues, also it has setup its operations in emerging markets.

Infosys entered balanced scorecard for executing strategy of its innovative planning and execution

capabilities. Leadership is based on the leadership skill training and action learning. Quality is the

main focus of human resource at Infosys. They put stress on building and maintaining relationship.Being a knowledge based industry the professionals are expertise in the work. It does carries out

research and development on continuous basis to compete in the dynamic market. It has diversified

itself into various domain such as aerospace, defence, airlines, banking and capital markets,

education etc. It focus on hiring graduates and post graduates from India as well as from colleges of

UK and US. It has one of the best HR practices and it attracts best from the world.

draft infosys final

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