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