PROJECT REPORT On
(Infosys) Submitted in Partial Fulfillment of the Requirements of Bachelor of Business Administration Of Guru Govind Singh Indraprastha University
Submitted by: Name -Akshay Suresh Enrollment No.-12214201709 Semester-III-B(M) Jagannath International Management School Vasant Kunj, New Delhi – 70 _____________________________________________________________
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CERTIFICATE
This is to certify that Mr. Akshay Suresh student of BBA, “JIMS , New Delhi, has carried out project work on the topic of “INFOSYS” under my guidance . He has put in a lot of effort and hard work.
He has done good work with us I wish him all the best for bright future.
Project Guide
2
ACKNOWLEDGEMENT The completion of project report on “INFOSYS” has given me immense pleasure and knowledge. Obligations were heavy during my project work and it is a great pleasure to acknowledge deep sense of gratitude to my guide Ms. Neelam Dasgupta for her valuable guidance, advice, positive criticism, suggestion and constant encouragement throughout the project. I would also like to thank sincerely to my cousins and friends for their help and guidance during this task. Last but not least we are thankful to all of them who directly or indirectly helped us in computing this report successful
AKSHAY SURESH
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List of contents 1)
Introduction
2)
Company overview
3)
History
4)
Core Services
5)
Revenue Segments
6)
Key People
7)
Key competitors
8)
Key Clients
9)
Future Steps
10)
Financial Reports
11)
Latest Developments
12)
Analysis
13)
Goals
14)
References
4
Infosys Technologies Limited
TYPE
-
Public
BSE
-
500209
NASDAQ
-
Infy
FOUNDED
-
July 2, 1981
HEAD QUARTERS -
KEY PEOPLE
Bangalore, India
-
N.R.Narayana Murthy (chairman) Kris Gopalakrishna (CEO) & (Director)
INDUSTRY
-
Software services
PRODUCTS
-
IT service
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SERVICES
- Information Technology consulting services & solutions
REVENUE
-
US$3.16 billion (2009)
NET INCOME
-
US$1.16 billion (2009)
EMPLOYEES
-
1,03,905 (2009)
WEBSITE
-
Infosys.com
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Company Overview Infosys Technologies Limited (Infosys), incorporated on July 2, 1981, is a global technology services firm that defines, designs and delivers information technology (IT)-enabled business solutions to its clients. The Company provides end-to-end business solutions that leverage technology for its clients, including consulting, design, development, software re-engineering, maintenance, systems integration, package evaluation, and implementation and infrastructure management services. Infosys also provides software products to the banking industry. Infosys BPO (formerly Progeon Limited) is a majority owned subsidiary. Infosys Australia, Infosys China and Infosys Consulting are the Company's wholly owned subsidiaries. In June 2006, Infosys acquired the shares in Infosys BPO held by Citicorp International Finance Corporation (CIFC). As a result, Infosys effectively holds 99.98% of the equity share capital of Infosys BPO as of March 31, 2007. The Company complements its service offerings with specialist support for clients using its domain competency group that has expertise in areas, such as securities, insurance, telecommunication, banking and cash management, supply chain management, manufacturing, retail and distribution, energy and utilities, healthcare, and travel and tourism. It also uses its software engineering group and
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technology lab to create customized solutions for its clients. In addition, it continually evaluates and trains its professionals in new technologies and methodologies.
.
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HISTORY Established in 1981, Infosys is a NASDAQ listed global consulting and IT services company with more than 105,000 employees. From a capital of US$ 250, we have grown to become a US$ 4 billion company with a market capitalization of approximately US$ 27 billion. In our journey of over 28 years, we have catalyzed some of the major changes that have led to India's emergence as the global destination for software services talent. We pioneered the Global Delivery Model and became the first IT Company from India to be listed on NASDAQ. Our employee stock options program created some of India's first salaried millionaires. Infosys Technologies Limited is a leader in software development and was co founded by N.R. Narayana Murthy and a group of seven IT professionals in the year 1981 with an investment of $1000. He emerged as the company's chairman and CEO and is regarded as a great manager because of his numerical abilities and Western style of management. It has created several firsts in Indian industry like being the first Indian company to be listed on NASDAQ in 1999 and the first to provide employee stock options plan (ESOP).
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The company opened its first international office in USA in 1987. It became a public limited company in 1992 and offered its IPO in three of the nine Indian exchanges in 1993. It received its ISO 2001 certification in 1993 and opened other development centers in India in 1995.
By 1995 the firm was worth $200 million, had 900 employees and annual revenue of $20 million. It opened its first European office in United Kingdom in 1996. Infosys established its headquarters in Bangalore as there the workforces were not required to be unionized, benefits to the workforce were relatively a minor cost, and there was a huge potential for profit. The late 1990s was a time for exponential growth and the main reason for this was its offshore software development model. By 2000 its market capitalization was more than $20 billion. In 2003 it established subsidiaries in China and Australia. In 2004 it crossed $1 billion in revenue. In 2006 its revenue crossed $2 billion and it completed 25 years.
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Core Services Custom Application Development • The Company provides customized software solutions for its clients. Infosys creates new applications and enhances the functionality of its clients' existing software applications. The Company's projects vary in size and duration. • The Company's application development services span the entire range of mainframe, client server and Internet technologies. An increasing proportion of Infosys' applications development engagements are related to emerging platforms, such as Microsoft's .NET or open platforms, such as Java 2 Enterprise Edition (J2EE) and Linux
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Maintenance and Production Support Infosys provides maintenance services for its clients' large software systems that cover a range of technologies and businesses, and are typically critical to a client's business. The Company focuses on long-term functionality, stability and preventive maintenance to avoid problems that typically arise from incomplete or short-term solutions. While Infosys performs most of the maintenance work at its global development centers using secure and redundant communication links to its client's systems, it also maintain a team at the client's facility to coordinate certain key interface and support functions
Software Re-engineering The Company's software re-engineering services assist its clients in converting their existing IT systems to newer technologies and platforms developed by third-party vendors. Infosys' re-engineering services include Web-enabling its clients' existing legacy systems, database migration, implementing product upgrades, and platform migrations, such as mainframe to client-server and client-server to Internet platforms.
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Package Evaluation and Implementation • Infosys assists its clients in the evaluation and implementation of software packages developed by third-party vendors. It also provides training and support services in the course of their implementation.
• The Company specializes in enterprise resource planning packages developed by vendors, including Oracle, PeopleSoft, Retek and SAP; supply chain management packages developed by vendors, including i2, Manugistics and Oracle; customer relationship management packages developed by vendors, including PeopleSoft (Vantive) and Siebel; business intelligence packages developed by vendors, such as Business Objects and Cognos, and enterprise application integration packages developed by vendors, such as IBM and TIBCO.
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Information Technology Consulting • The Company's IT consulting professionals assist its clients by providing technical advice in developing and recommending appropriate IT architecture, hardware and software specifications to deliver IT solutions designed to meet specific business and computing objectives. • Infosys offers IT consulting in the areas of migration planning, institution-wide implementation and overall project management involving
multiple
vendors
under
a
common
architecture;
IT
infrastructure assessment, which includes assessing its clients' IT capabilities against existing and future business requirements and recommending appropriate technology infrastructure, and technology roadmap • development, which allows clients to evaluate emerging technologies and develop the standards and methodologies for applying those emerging technologies.
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Other Solutions • Infosys'
service
offerings
including
testing
services,
engineering services, business process management, systems integration, infrastructure management, and operational and business process consulting. The Company offers end-to-end validation solutions and services, including enterprise test management, performance benchmarking, test automation and product certification. • For each particular client, Infosys focuses on developing a framework for ongoing testing in order to seek continuous improvement in the predictability of its client's internal systems. The Company's service professionals are trained in test management
tools
from
developers,
such
as
Mercury
Interactive, IBM-Rational and Segue.
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Finacle •
Finacle®, the universal banking solution from Infosys, helps
banks by enabling them to shift their strategic and operational priorities. It maximizes their opportunities for growth ,while minimizing the risks that come with large-scale business transformation •
Finacle® currently powers 91 banks across 54 countries,
helping them serve over 100 million customers, 150 million accounts, 80,000users and supporting over 36 million peak banking transactions per day spread across multiple installations
Finacle from infosys
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Original author(s)
Infosys
Developer(s)
infosys
Initial release
1999
Stable release
3.06 / January 11, 2009; 19 months ago
Development status
Active
Written in
Java
Operating system
Cross-platform
Type
Banking and financial suite
License
Q Public License
Website
http://www.infosys.com/finacle/
Key industries
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Infosys serves various industries through its vertical business units, such as: •
Aerospace and Automobile (ANA)
•
Banking & Capital Markets (BCM)
•
Communication Service Providers (CSP)
•
Resources, Energy & Utilities (REU)
•
Hi Tech & Discrete Manufacturing (HTDM)
•
Insurance, Healthcare & Life Sciences (IHL)
•
Media and Entertainment
•
Product Lifecycle and Engineering Solutions (PLES)
•
Retail, Distribution & CPG (RETL)
•
Transportation & Services (TNS)
•
Independent Validation Solutions (IVS) - provides
software testing services. •
IT Infrastructure Management Services (IMS) -
manages core networks, data centers and servers of clients. •
Real Estate
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•
Life science
In addition to these, there are business units aligned to clients' geographies, such as EMEA (Europe, Middle East & Africa), APAC (Asia-Pacific) and CAND (Canada). There are also horizontal business units such as ES (Enterprise Solutions), which specializes in ERP and package implementation and works with clients across industries and geographies and SI (Systems Integration), which provides integration services to clients
Revenue Segments 19
Geography 2007
2006
2005
2004
2003
63.3
64.8
65.2
71.2
73.0
26.4
24.5
22.3
19.2
17.7
India
1.6
1.7
1.9
1.4
2.1
Rest of the World
8.7
9.0
10.6
8.2
7.2
100.0
100.0
100.0
100.0
100.0
North
America
Europe
Total
Industry Segmentation
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2007
2006
2005
2004
2003
Services 21.0 20.2 23.2 25.7 32.1 Development 29.3 30.2 29.9 30.1 28.2 Maintenance 17.5 16.2 15.2 14.5 11.0 Package implementation 6.9 5.9 5.8 5.3 3.4 2007 2.1 2006 4.7 2005 6.2 2004 6.0 20035.5 Testing Manufacturing 13.5 13.9 14.4 16.4 Re-engineering 3.6 3.5 3.6 3.714.8 4.3 Banking 37.4 36.0 34.6 37.6 Consulting financial service 4.7 4.0 2.7 1.636.6 0.5 Business process 1.6 1.8 2.0 2.2 2.6 and insurance Banking financial 30.2 28.5 25.2 23.7 23.3 managementand Engineering services service Other services Telecom Total services Retail Products Energy and utilities Total Transportation Others Total
9.4 96.1 7.2 3.9 19.3 100.0 10.0 5.3 2.4 12.1 100.0
9.7 96.2 7.5 3.8 16.5 100.0 10.1 4.7 5.1 13.7 100.0
8.4 97.0 9.4 3.0 18.5 100.0 9.8 3.2 7.6 11.9 100.0
8.1 97.2 12.9 2.8 16.6 100.0 11.6 3.0 7.1 10.3 100.0
7.8 95.4 14.3 4.6 15.2 100.0 11.4 2.9 6.8 9.7 100.0
Service Offering
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Key People Nilekani, Nandan M.
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1987 Co-Chairman of the Board
Trade
Murthy, N. R.
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1981 Non-Executive Chairman of the
Activity Trade
Narayana Gopalakrishnan, S.
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Board and Chief Mentor 1987 Chief Executive Officer and
Activity Trade
Bal Krishnan, Vibin
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Managing Director 1999 Chief Financial Officer
Activity Trade
Shibulal, S. D.
52
1997 Chief Operating Officer, Director
Activity Trade
2006 Secretary, Compliance Officer
Activity Trade
1994 Director and Head - Administration,
Activity Trade
Parvatheesam, K. Pai, T. V. Mohandas
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Education & Research and Human Krishnaswamy,
52
Resources, Director 1996 Head - Communication Design
Dinesh
Group, Information Systems, Quality
Batni, Srinath
52
& Productivity, Director 1996 Group Co Head - World-wide Customer Delivery, Director
Activity Trade Activity Trade Activity
Key Competitors
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• Offshore Technology services firms such as Cognizant Technologies, Satyam Computer Services, Tata Consultancy Services and Wipro • Consulting firms as Accenture , Cap Gemini • IT Outsourcing firms such as EDS ,CSC
Key Clients 23
ABN AMRO
AIRBUS
AETNA INC
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GOLDMAN SACHS During fiscal 2007, 95.3% of revenues came as repeat business and during 2006, 95.0% revenues came from repeat business from existing clients
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FUTURE STEPS 1. More keen on large deals. The margin dilution from large deals has been a point of concern in the past at Infosys. However, while the initial margin profile can be extremely wavy, it is possible to improve margins later in the life of the contract through reduced G&A overheads. Infosys, in its recent analyst meet, mentioned that a dedicated team was now working on large deals. We expect greater focus ahead in this area.
2. Increased focus on solution based offerings in both IT services and BPO. Infosys has developed ~50 solution based offerings in the IT services space and believes that some of these can help break the linearity between revenue and manpower growth in the business. In BPO as well, its first platform based BPO offering is likely to be launched soon.
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3. Willingness to explore new deal structures. The market was surprised when Infosys paid an upfront $28m for the $250m/7-year Phillips BPO deal. While TCS had made such a payment in the case of Pearl BPO earlier, Infosys’ willingness to do so was certainly a shift from the past.
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Company Strategy for future • Increase businesses from existing and new clients • Expand geographically • Continue to develop deep industry knowledge • Enhance brand visibility • Pursue alliance and strategic acquisitions • Continue to invest in infrastructure and employees
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Infosys's hiring plans for the year (2009): Most of the companies rapidly cutting their losses by employing massive retrenchment drive, firing thousands of employees or offering them early separation schemes. However, despite the massive economic turmoil across the globe, there are still some companies that are looking to hire skilled candidates. One of these companies is Infosys. The company intends to stick to its plan of hiring 25,000 people this fiscal year.
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Infosys plans acquisitions in Brazil and Mexico (JUNE 16, 2009) Infosys is trying to acquire a few companies in Mexico and Brazil to expand its delivery capabilities. The company's first centre will be operational in Brazil in next three to four months. Infosys has currently employed about 250 people in Mexico and hence feels the need to have local facility to attract local business. "We are looking for some very targeted acquisition with specific criteria," said Dheeshjith V G, Head, New Markets and services, INFOSYS Infosys had started focusing on Mexican market in last six to seven months. According to Dheeshjith there has been increase in the business from local clients and some companies are looking to outsource large deals. Around 20-25 percent of the total business in Infosys' Mexico subsidiary comes from
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multinational companies that have operations in Mexico while the rest of the business comes from clients in North America. That is the reason why Infosys is stressing on local deals to attract local customers.
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Financial Report Key Numbers
2007 Sales (mil.)
$3,090.0
1-Year Sales Growth
43.6%
2007 Net Income (mil.)
$850.0
1-Year Net Income Growth
53.2%
2007 Employees
72,200
1-Year Employee Growth
37.0%
Financials &Stock Performance
FINANCIAL HIGHLIGHTS Fiscal Year Fiscal Year Ends: Most Recent Quarter (mrq):
31-Mar 30-Jun-07
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Profitability Profit Margin (ttm): Operating Margin (ttm):
27.96% 27.13%
Management Effectiveness Return on Assets (ttm): Return on Equity (ttm):
21.37% 39.37%
Income Statement Revenue (ttm): Revenue Per Share (ttm): Qtrly Revenue Growth (yoy): Gross Profit (ttm): EBITDA (ttm): Net Income Avl to Common (ttm): Diluted EPS (ttm): Qtrly Earnings Growth (yoy):
3.36B 6.01 40.60% 1.31B 1.05B 939.00M 1.65 51.10%
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Balance Sheet Total Cash (mrq): Total Cash Per Share (mrq): Total Debt (mrq): Total Debt/Equity (mrq): Current Ratio (mrq): Book Value Per Share (mrq): Cash Flow Statement Operating Cash Flow (ttm): Levered Free Cash Flow (ttm):
1.59B 2.778 0 N/A 6.302 5.33 1.02B 240.50M
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Latest Developments •
NASDAQ-listed Infosys (INFY.O) will provide services like
application development, management and maintenance of railway operations of Canadian Pacific, which operates a 13,500-mile (21,700kilometre) transcontinental railway, a company statement said •
Infosys Technologies Ltd. (INFY.BO) signed a $250 million
outsourcing contract with Royal Philips Electronics (PHG.AS: Quote, Profile , Research) on Wednesday and bought three of the Dutch firm's back-office centres to extend its presence in Europe.
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Analysis Key challenges faced by Infosys are : •
Rise in Wage levels on Indian IT workers.
Infy can overcome this risk by growing up the value chain so that it can afford to increase its billing rates and still add value to its customers .Second thing it can do is to move their operations to second level cities in India that have low cost of living and where wage pressure is less. One of the good steps Infy has taken to this regard was by opening its Bhubaneswar center. Its cost of living is way less than that of Bangalore. Another good example is Gandhinagar where a Patni computer was one of the first big IT companies to open its office.
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•
Change in exchange rates.
Infy should grow its client base in India and China where the impact of foreign exchange is negligent. TCS is a good example with this regard. Its 2006 revenues had 12.5% revenues generated from India. This is around $300 mn. With the present Indian IT market valued at $5bn (obtained from TCS's 2006 annual report) and expected to grow at 11%, Infy has scope of getting a good market share.
• Rise in Infrastructure costs Infy's 2006 capital expenses was $246mn compared to that of $185mn in 2005. This is an increase of over 30%. In order to continue this pace the company needs to invest a large amount of capital in building new facilities. With recent surge in real estate prices in India, Infy would face challenges in controlling its capital expenditures towards expanding its facilities
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• Inability to acquire foreign companies The present Reserve Bank of India guidelines state that in ceratin cases Indian companies have to take the central bank's permission to acquire a foreign company. This increases the lead time required to acquire a company.
• Backlash towards outsourcing in foreign countries One way is to employ local talent.Another way can be employing virtual classroom techniques by which a person sitting in India can get US experience that he would otherwise get by being physically present in USA. Multinational companies like Accenture are doing a great job in this front and are not so much dependent on wok visas as the Indian companies like Infy.
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• Present Tax benefits are limited till 2009 Most Indian IT companies are enjoying a tax holiday which exempts them from taxes on exports performed from designated export promotion zones. This helps Indian IT companies to reduce their tax rate .But this benefit is only applicable till fiscal 2009. After that the Indian IT companies would be taxed the same way as other Indian companies
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SWOT ANALYSIS STRENGTHS Leadership in sophisticated solutions that enable clients to optimize the efficiency of their business: The company bring together expertise in consulting, IT services and business process outsourcing to create solutions that allow clients to increase their customer loyalty through faster innovation, restructure their cost base, and help them achieve greater success through shifting business cycles. Expertise helps our clients improve their own efficiencies, create better value for their end customers and become more competitive. They’re able to capture a greater share of our clients’ technology budgets.
Proven global delivery model: Highly evolved Global Delivery Model represents a key competitive advantage. Over the past decade, they have developed our onsite and 40
offshore execution capabilities to deliver high quality and scalable services. In doing so, Infosys have made substantial investments in processes, infrastructure and systems, and have refined our Global Delivery Model to effectively integrate onsite and offshore technology services. The Global Delivery Model provides clients with seamless, high quality solutions in reduced time frames enabling them to achieve operating efficiencies.
Commitment to superior quality and process execution: Infosys
have
developed
a
sophisticated
project
management
methodology to ensure timely, consistent and accurate delivery of superior quality solutions to maintain a high level of client satisfaction.
Strong Brand and Long-Standing Client Relationships: They have long-standing relationships with large multinational corporations built on successful prior engagements with them.
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Status as an employer of choice: Infosys has among the best talent in the Indian technology services industry and are committed to remaining among the industry’s leading employers. We have a presence in 13 cities in India, allowing us to recruit technology professionals with specific geographic preferences. We have a diverse workforce which includes employees from 70 nationalities.
Ability to scale: Infosys have successfully managed their growth by investing in infrastructure and by rapidly recruiting, training and deploying new professionals. We currently have 52 global development centers.
Innovation and leadership: A pioneer in the technology services industry. We are one of the first Indian companies to achieve a number of significant milestones, which has enhanced our reputation in the marketplace.
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WEAKNESSES
Revenues and expenses are difficult to predict and can vary significantly from period to period, which could cause share Price to decline 26 May not be able to sustain our previous profit margins or levels of profitability. The economic environment, pricing pressure and rising wages in India and overseas could negatively impact revenues and operating results. Revenues are highly dependent on clients primarily located in the United States and Europe, as well as on clients concentrated in certain industries. Economic slowdowns or factors that affect the economic health of the United States, Europe or these industries may affect our business. Any inability to manage growth could disrupt our business and reduce our profitability may face difficulties in providing end-to-end business solutions for our clients, which could lead to clients discontinuing their work. Revenues are highly dependent upon a small number of clients, and the loss of any one of our major clients could significantly impact the business 43
Failure to complete fixed-price, fixed-time frame contracts within budget and on time may negatively affect our profitability client contracts can typically be terminated without cause and with little or no notice or penalty, which could negatively impact our revenues and profitability The engagements with customers are singular in nature and do not necessarily provide for subsequent engagements
OPPORTUNITIES Huge untapped potential for in the global market as IT will become the need of almost every industry The IT industry can be the reason for India being a global leader of tomorrow
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THREATS Legislation in certain of the countries, in which Infosys operates, including the United States and the United Kingdom, may restrict companies in those countries from outsourcing work overseas Intense competition in the market for technology services could affect cost advantages, which could reduce the share of business from clients and decrease the company’s revenues Our client contracts are often conditioned upon our performance, which, if unsatisfactory, could result in less revenue than previously anticipated Some of our long-term client contracts contain benchmarking provisions which, if triggered, could result in lower future revenues and profitability under the contract.
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Goals INITIAL GOALS They started off with one client and right from the beginning understood the concept of an offshore delivery model. Conceptually, they tried to leverage globalization for customized software development - producing where it is most cost-effective, and selling where it is most profitable, all without being constrained by national boundaries. Infosys believed that the key to success is to ensure that it executes our engagements well every time. We have based our whole operation on a foundation of strong value systems. We were careful never to compromise on that despite many challenges.
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PRESENT GOALS OF INFOSYS AREA OF GOVERNANCE To define and implement a training module and create awareness about sustainability. Status-It was achieved by providing sustainability training for seniors
PRODUCT RESPONSIBILITY Sustain customer satisfaction in the annual customer survey Status- It was achieved; the overall customer satisfaction was at 81 %
ENERGY Monitor energy consumption to become energy efficient. Status- This was achieved by implementing new monitor mechanisms Reduce per capita energy consumption by 5 %.
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Status- This was partially achieved by reducing the per capita electricity consumption to 10%.
ENVIRONMENT Plant a tree for every new employee Status- Below the target – planted 16,000 trees in Mangalore.
HUMAN RIGHTS Create a framework for employees, suppliers and vendors to be educated on human rights. Status- Below target- developed a basic training module on human rights which will be implemented in 2010.
EMPLOYEE ENGAGEMENT Track impact of employee health related activities.
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Status- Target achieved by receiving feedbacks after health check ups.
SOCIETY Define and implement metrics for measurement. Status-
Achieved
target
by
developing
guidelines
and
dashboards.
FUTURE GOALS OF INFOSYS FOR THE YEAR 20092010
STRATEGIC LEVEL 49
1. We will develop processes to integrate business and sustainability goals. 2. Improve accountability in the business units through iSOP framework. 3. Strive to meet stringent short term goals.
OPERATIONAL LEVEL 1. 5% reduction in energy, water and carbon foot print. 2. To educate vendors on our green procurement policies. 3.
To create Large, global deals
4. Continued linear relationship between revenuemanpower
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To implement Enterprise scale Solution Design and Integration as key focus areas in the telecom sectors.
References
Websites: • Infosys.com • Google.com
51
• Scribd.com •
Bing.com
52
