INFOSYS

INFOSYS
IT Service Industry Overview
PEST ANALYSIS
Political
• Political stability
• Government owned
companies and PSUs have
decided to give more IT
projects to Indian IT
companies.
• Terrorist attack or war.
•
•
•
•
•
Economic
Global IT spending
(demand)
Domestic IT Spending
(Demand)
Currency Fluctuation
Real Estate Prices
Attrition
PEST Analysis
Social
• Language spoken: English
Technological
• Telephony
• Education: A number of
technical institutes and
universities over the
country offer IT education.
•
•
Working age population
Internet Backbone
• New IT technologies
Technologies like SOA, Web
2.0, High-definition content,
grid computing, etc
Porter’s Five Forces Model
• Threat of Substitutes: Medium
1. Other offshore locations such as Eastern Europe, the
Philippines and China
2. Price
• Bargaining power of supplier: High to Low
1. Due to slowdown, the job-cuts, the layoffs and bleak IT
outlook.
2. No longer Demand and supply of IT professionals
3. Vast talent pool – fresher's and experienced.
Porter’s Five Forces Model
• Barriers to Entry : Low
1. Low capital requirements.
2. Large value chain, space for small enterprises.
• Bargaining Power of Customers: Very High
1. Large number of IT companies
2. Huge decline in IT expenditure
• Rivalry Among Firms: High
1. 'low-cost, little-differentiation' positioning.
2. Strong competitors – few numbers of large companies.
Infosys Profile
• Founded on 2nd July 1981 with a capital of Rs.10,000
• Went Public in 1993
• 1st Indian Company to be listed on Nasdaq on 11th March
1999
• Global footprint : Over 50 offices and development centers
• Employees: 103,905 (As on 30th June 2009)
• Certified at SEI- CMM Level 5.
• Major Clients: British Telecom, BanAmerica, Citigroup,
Walmart
Infosys Resources
• Tangible
People
Capital
Global Reach
• Intangible
Brand Equity
Trust & Goodwill
Corporate Culture
Infosys Capabilities
• Global Delivery Model
• Training Capabilities
• Operational Efficiency
• Management/Leadership
• High Quality Standards
VIRU Analysis
• IBM
- Brand Equity
- Global Reach
- R & D focus
- Bouquet of Services
• Infosys
- Brand Image, Culture
- Operational Efficiency
- Marketing Strategy
• Mastek
- No growth strategies
- High operational costs,
Limited reach
- Expertise in Insurance Sector
• L & T Infotech
- Weak Brand Image
- No cost efficiency, No reach
- No special service or
industry capability
Sustainable Competitive Advantage
Valuable
Inimitable
Rare
Unsubstituable
Competitive
Consequences
Performance
Implication
IBM
Yes
Yes
Yes
Yes
Sust. comp
adv
Above avg
Infosys
Yes
Yes
Yes
No
Temp comp
adv.
Avg to Above
avg
Mastek
No
No
Yes
No
Comp parity Avg
L&T
Infotech
No
No
No
No
Comp
disadv.
Below avg
VALUE CHAIN ANALYSIS
•
•
•
•
•
•
Primary Activities
Inbound Logistic
Operation
Outbound Logistic
Marketing And Sales
Post Sales Service
CONTD……
• Secondary Activities
• Human Resource Management
• Technology Management
• Infrastructure
McKINSEY’S 7 S MODEL
Strategy: Staff (Human Resources):
Knowledge-based
Focuses on the quality
Shared Values:
Leadership
Style: - growth
Client-focused
strategy toindustry
achieve
ofDelight-A
the
humancommitment
resources
•Essential
for organizational
success.
Customer
to organizations
surpassing
customer
Focuses
on
limited
number
of
large
throughout
Skills:
90% Engineers
expectations.•Based on high business vision and
world
•Mandatory
employee to clear 7 predefined
At for
the every
entry level
styles.
Leadership
bysupportive
Example-A
commitment
to set standards in
Caters
clients
through
softwares
certifications
(domain
ascustom-built
well
as technical)
in order
to be
Organizational
Structure:
Find
the
company’s
meritocratic
culture
•Emphasis
onand
developing
leadership
business andpremium
transactions
be an exemplar
for the industry
Commands
margins
satisfying
eligible
appraisal.
•Free for
form
organization
devoid of hierarchies
qualities
among
employees.
and teams.
Does
onassociates
quality
for
low-cost
contracts
Superior
academic
records
•This
isnot
justcompromise
one
of theas
initiatives
taken
by Infosys
•Everyone
is known
irrespective
ofwhich
his position
Leadership
Institute” to be ethical,
Integritydriven
and•“Infosys
Transparency-A
commitment
Technical
skills
Quality
model
rather
than
cost-differentiating
model.
signifies
the efforts
taken
fordevelopment
building
competencies.
Apart
in the company
Software
is undertaken
•Open
policy
High
level
learn
ability.existing and new clients
sincere
and
open
inofdoor
our
dealings.
Increase
business
from
from
internal
initiatives
like
through teams
Emphasizes
on T&D
on
basis
•Continuous
sharing
of information
FairnessA commitment
to
becontinuous
objective
and transaction
Expand
geographically
•Knowledge
management
•Constitution
of teams is based on the principle of flexibility
Spends
about 2.65
% offor
revenue
on upmaking
gradation of
•Employee
input
decision
oriented,
thereby
earning
trust
and
respect.
Enhance
set 5 certified for its process
•Infosys
has
beensolution
CMM-Level
employees’
skills
•Building
personal
rapport
Pursuit
of Excellence-A
commitment
towith
strive relentlessly, to
Develop
deep industry
knowledge
capabilities
High training standard
employees
constantly
improve
ourselves,
our teams, our services and
Enhance
brand
visibility
High
matured
processes capabilities
products
so as alliances
to
become
the
best acquisitions
Pursue
and
Investment
instrategic
infrastructure.
INFOSYS BCG MATRIX - USA
INFOSYS BCG MATRIX - INDIA
CORPORATE LEVEL STRATEGIES
Core Strategies:
Global Delivery Model – Producing where it is
most cost effective to produce & selling where
it is most profitable to sell.
Moving up the Value Chain – Getting involved
in a software development project at the
earliest stage of its life cycle.
PSPD Model – “Predictability of Revenues,
Sustainability of Revenues, Profitability, Derisking” for risk management.
Firm believer in
“Organic
growth” and
acquire only
those companies
in line with
strategic goals
CORPORATE LEVEL STRATEGIES
Actions Taken:
1. To maintain low-cost advantage they have opened offices in
Czech Republic, Mauritius, Poland, Philippines, Thailand and
Mexico
2. Invested in developing training centers
3. Improved quality capabilities – CMM level 5i company
4. Infosys Consultancy established to provide high end services
in value chain
5. Has hedged currency for more predictability of revenues (risk
management)
GENERIC STRATEGIES
• Low cost Global delivery 24/7 Model
•
Little differentiation in low-end services of value chain
• High differentiation in high end services of value chain like
software products and package solutions
•
Focus on quality, customer relationship management, timelydelivery
SWOT Analysis
STRENGTHS
WEAKNESSES
• Trusted Brand & Client
Relations
• Dependence on BFSI Segment
for revenues
• Proven GDM
• Dependence on North
America for revenues
• Wide spectrum of Services
• Weak Player in domestic Mkt
• Leadership & Management
• Rising Operating Expenditure
• Quality Standards
• Low R & D focus
SWOT Analysis
OPPORTUNITIES
• Untapped Domestic
THREATS
• Intense Competition
Market
• New Geographies
• High dependency on small
no. of clients
• Acquisitions
• Currency Fluctuations
• High End Consulting
Recommendations
• Reduce Dependency on BFSI, North America, Explore new markets
• R & D Focus
• Hunt for Acquisitions
• Focus on cost reduction
• Tap Domestic Market