Business Strategic Management of Infosys
“Group F”:-
Vision And Mission » Vision:- “To be a globally respected corporation that provides best-ofbreed business solutions, leveraging technology, delivered by best-inclass 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 ØInfosys Technologies Ltd. was started in 1981. ØToday, it is a global leader in the "next generation" of IT and consulting. ØInfosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. ØInfosys serves the client globally and is one of the pioneers in strategic offshore outsourcing of software services Ø ØInfosys pioneered Global Delivery Model (GDM)
Milestones
Awards & Achievements
» 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.
» 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)
» Today Infosys has more than 1,03,078 employees and has presence in more than 20 countries across the world.
»
» A leader in SAP implementation services.
Infosys - Business Lines Insurance Banking Communicati Energy, Healthcareand on Media and utilities and Life capital Entertainmentand Sciences Markets Services
Retails, ManuNew India Business Consumer factu Markets Unit Goods and ring and Logistics Services
Consulting Solutions (CS) Enterprise Solutions (ES) Product Engineering and Validation Services (PEVS) – PED, PLES, IVS Infrastructure Management Services (IMS) Software Engineering and Technology Labs (SETLabs) System Integration Services (SI) Corporate Sales and Marketing (CSM)
Financial Growth
Revenue Break up as per Services offered in 2009
Industry Segmentation Performance
Source: Annual Report Infosys, 2009
S.W.O.T. Analysis Strengths
Weaknesses
» 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
» 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
Threats
» 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 lowwage countries like China, Indonesia etc. »
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: Rivalry among Firms: g Power of Supplier: 1.Large Number of IT Companies vying for projects – High Co 1.Low Cost low Down, Job Cuts, layoff & bleak IT outlook2.Commoditized2.Huge offeringDecline in IT Expenditure Supply is not favorable to employees 3.High Industry growth lity of vast pool of talent.
Barriers to Entry: 1.Low Capital Requirements 2.Large value chain for small enterprises 3.MNCs are ramping up capacity and employee strength
BCG Matrix – Infosys (India) HI G H Business Growth Rate
Software Products
L O W NONE
Maintenance Package Implementation
Consulting, BPO, KPO HIGH
LOW Market Share
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
McKinsey’s 7 S Model 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).
Strategy Analysis - Infosys
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 Product New Product
Current Market New Market Market Penetration Market Strategy Development Strategy Product Diversification Development Strategy 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
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
