PORTER FIVE FORCE ANALYSIS ANALYSIS – INF INFOSY OSYS S LTD.
RIVALRY AMONG FIRMS :
The IT Indust Industry ry landsca landscape pe is charact characteris erised ed by intense intense comple completio tion n for conven conventio tional nal IT services: Application Development & Maintenance, IT Infrastructure Management Services, Netor! Management Services, Data"center Services etc# leading therefore to commoditization# There are several firms in the mar!et offering similar services and it is difcult to dierentiate based on these service offerings# The e$isting competition comes from both domestic players and international ones#
Infosys e$perience intense competition in traditional services and see a rapidly"changing mar!etplace ith ne competitors arising in ne technologies ho are focused on agility, fle$ibility and innovation#
In future, Infosys e$pect intensified competition# They e$pect increased competition from firms that strengthen their offshore presence in India or other lo"cost locations and firms that offer technology"based solutions to business problems and from firms incumbent in mar!et segments that they have recently entered#
BARGAINING POWER OF CUSTOMERS :
%or conventional IT services, bargaining poer of the buyer is large and the possibility of pressure on rates e$ists# The buyer, having or!ed ith both ith international IT providers as ell as Indian ones is largely the price setter and has negated to a large e$tent' the offshore advantages through mature procurement and global delivery# The international IT firms firms too have negated negated the advant advantage age en(oye en(oyed d by Indian Indian IT compan companies ies throug through h captiv captivee centres in India and globally# In this industry, in case of conventional IT services, the buyer is !ing)
In case of non"conventional services, i#e# those that cater to emergent technologies and technology trends in Data Analytics or *nterprise Mobility for instance' there is potential for differentiat differentiation ion and higher margins# margins# Also, this is the case for non"conven non"conventional tional,, partnership partnership"" style engagements here both ris! and reards are higher#
Mohamed Rizwan – 2015JULB02020 (PGDM Batch 2015 – 2017)
PORTER FIVE FORCE ANALYSIS – INFOSYS LTD.
BARGAINING POWER OF SUPPLIERS :
The bargaining poer for suppliers is very lo and since high"standardi+ation e$ists, there is little scope of suppliers having any clout#
Softare and computing technology are transforming business in every industry around the orld in a very profound and fundamental ay# The continuous reduction in the unit cost of hardare, the e$plosion of netor! bandidth, advance softare technologies and technology"enabled services are fuelling the rapid digiti+ation of business process and information# Traditional business models are being disrupted in every industry ith digital and softare"based business models#
The suppliers consist of IT Infrastructure providers Servers, computers etc#', ecruitment firms, -ffice Space Suppliers etc#
THREAT OF NEW ENTRANTS:
In conte$t of the highly commoditi+ed IT services, there is little threat of ne entrants# That said, the Industry is also characterised by high people dependence and therefore can see veterans detach from e$isting companies to invest in ne ventures#
The neer technologies allo the possibility of ne niche players that are not dependant on si+e or e$perience constraints#
MN.s are ramping up capacity and employee strength#
AVAILABILITY OF SUBSTITUTES :
Mohamed Rizwan – 2015JULB02020 (PGDM Batch 2015 – 2017)
PORTER FIVE FORCE ANALYSIS – INFOSYS LTD.
There are no substantial substitutes to IT services apart from Internal IT departments, hich have lost clout over the years and are ever thinner in numbers and significance# -ne argument for internal IT is retaining control over pertinent aspects of business but the argument against ould be since the main business of the company is not IT services, it should outsource as much as possible and focus on future groth in core areas# -ver time there has been a steady decrease in in"house IT development and maintenance ith more and more being outsourced and the internal IT staff has settled into a supervisory program management' role#
This has been a mi$ed bag for neer services as ell since internal speciali+ation is very lo, most of the or! is outsourced# %or critical areas, governance has been retained in"house and this trend seems to have found favour ith most large enterprises orldide#
/roadly spea!ing the mar!et for conventional services is highly commoditised ith potential for differentiation concentrated around niche e$pertise in ne technologies and trends SMA. 0 Internet of Things' and around non"conventional engagements revenue1profit share, ris!"reard models'# It is unli!ely that the mar!et for conventional services ill vanish overnight but the future promises to hold a highly modified vie# Application development is fast morphing into app"development and a large part of revenues continue to be dran from conventional services as the need to adapt and incorporate ne technologies and engagement models looms over an IT industry that needs to reform and re"invent itself rapidly#
Mohamed Rizwan – 2015JULB02020 (PGDM Batch 2015 – 2017)
