Business Strategic Management of Infosys

Presented by: Deepika Aggarwal Priyanka Kant

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,

Integrity & Excellence.

Transparency,

Leadership by Example, Fairness and Pursuit of

The major objective of the company is to become Indias most respected company. Infosys deliberately defocused on revenue and profits. Their goal was to do everything by the book.

Introduction to Infosys
Infosys Technologies Ltd. was started in 1981. Today, it is a global leader in the "next generation" of IT and consulting. Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. Infosys serves the client globally and is one of the pioneers in strategic offshore outsourcing of software services Infosys pioneered Global Delivery Model (GDM)

Milestones
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.

Awards & Achievements

Infosys moved up to No. 14 on Fin Tech 100.

Awarded the Indias Best company to work

for in 2009.

Infosys was honored with the Sharpening Brand and Competitive Excellence Differentiation from the

Marketing

Award

Information Technology Services Marketing Association (ITSMA) A leader in SAP implementation services.

Today Infosys has more than 1,03,078 employees and has presence in more than 20 countries across the world.

Infosys - Business Lines

Retails, Consumer Goods and Logistics Banking and capital Markets Energy, utilities and Services Insurance Healthcare and Life Sciences India Business Unit

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)

New Markets and Services

Communication Media and Entertainment

Manufacturing

S.W.O.T. Analysis
Strengths
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

Weaknesses
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 low-wage 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. Rivalry among Firms: 1. Low Cost 2. Commoditized offering 3. High Industry growth Bargaining Power of Customers: 1. Large Number of IT Companies vying for projects High Competition 2. Huge Decline in IT Expenditure

Bargaining Power of Supplier: 1. Due to Slow Down, Job Cuts, layoff & bleak IT outlook 2. Demand Supply is not favorable to employees 3. Availability 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)

HIGH

Maintenance Software Products

Business Growth Rate LOW

Package Implementation

NONE

Consulting, BPO, KPO

HIGH

LOW

Market Share

McKinseys 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

McKinseys 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 .

McKinseys 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

McKinseys 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

Global Delivery Model Moving UP the value chain Corporate PSPD Model Level Low Cost Differentiation Focus Ansoffs Matrix Market Penetration Strategy Market development Strategy Product Development Strategy

Generic Strategy

Grand Strategy

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

Ansoffs matrix

Current Market Current Product New Product Market Penetration Strategy Product Development Strategy

New Market Market Development Strategy Diversification 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 High Dependence on Export Revenues (99% revenues from overseas business) Cost cutting and reducing IT expenditure by almost all companies Negative in short term

Infosys

Global Slowdown

Likely Impact

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