Strategic Analysis of Infosys

8/4/2019 Strategic Analysis of Infosys

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STRATEGIC ANALYSIS OF INFOSYS

PRESENTED BYMARUTIOMKARPARASHURAM

NAVEEN GOUDERNITIN MANIYALNIRANJANNETRAVATHI

NAGABHUSHAN


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INTRODUCTION Infosys Technologies Ltd. was started in 1981.

Its initial investment was $ 250 US.

Today, it is a global leader in the "nextgeneration" of IT and consulting.

Infosys serves the client globally and is one ofthe pioneers in strategic off shore outsourcing ofsoftware services


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MILESTONES

In 1987 Infosys got its first foreign client.

In 1993, Infosys became a public limitedcompany.

In 1999, Infosys crossed $100 Million and waslisted on NASDAQ.

In 2006, Infosys completed 25 years of itsexistence and its revenues crossed $ 2 billion.

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


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AWARDS AND ACHIEVEMENTS

Infosys moved up to No. 14 on FinTech 100

Infosys was awarded the Indias best company

to work for in 2009.

A leader in SAP implementation services.


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VISIONTo be a globally respected corporation that provides best-of-

breed business solutions, leveraging technology, delivered bybest-in-class people."


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To achieve our objectives in an environment offairness, honesty, and courtesy towards ourclients, employees, vendors and society at large."


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OBJECTIVES

Infosys technologies ltd. Defined, designs anddelivers IT- enabled business solutions whichaims at providing strategic differentiation and

operational security to clients. With Infosys,clients are assured of world class processes andthe power to stretch their IT budget by leveraging the global delivery model that Infosyspioneered.


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FINANCIAL:

Improve market share of niche products

Achieve Profitable Growth to beOne of Top 5Global Companies

Attain World Class Cost Competitiveness

CUSTOMER :

Acquire Customers Through New Offerings &

Reach Acquire Customers Through Existing Offerings

Retain Profitable Customers

Improve Customers Satisfaction


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BUSINESS PROCESS:

Product Rationalization, Product Development

Acquire / Enhance Capacity

Increase Loyalty Through CustomerRelationship Mgmt

Improve Order Management Process

Improve Process Capability

Improve Supplier Management


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LEARNING AND GROWTH

Enhance Strategic Skills

Create a culture of high performance and team

based working

Knowledge Management

Enhance Employee Satisfaction

Leadership Development


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STRATEGIC PLAN


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CORPORATE LEVEL STRSTEGIES: CORE

STRATEGIES:

Global Delivery Model Producing where it is most cost

effective to produce & selling where it is most profitableto sell.

Moving up the Value Chain Getting involved in asoftware development project at the earliest stage of itslife cycle.

PSPD Model Predictability of Revenues,Sustainability of Revenues, Profitability, De-risking forrisk management.


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ACTION TAKEN:

To maintain low-cost advantage they haveopened offices in Czech Republic, Mauritius,

Poland, Philippines, Thailand and Mexico. Invested in developing training centers

Improved quality capabilities CMM level 5icompany.

Infosys Consultancy established to provide highend services in value chain.

Has hedged currency for more predictability ofrevenues (risk management).


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GENERIC STRATEGIES:

Low cost Global delivery 24/7 Model.

Little differentiation in low-end services ofvalue chain; high differentiation in high endservices of value chain like software productsand package solutions.

Focus on quality, customer relationshipmanagement, timely-delivery.


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POLITICAL

Political stability: Indian political structure isconsidered stable enough expect the fact thatthere is a fear of hung parliament (no clearmajority). It is positive

U.S. government has declared that U.S

companies that outsource IT work to otherlocations other than U.S. will not get tax benefit.It is deep negetive


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Government owned companies and PSUs havedecided to give more IT projects to Indian ITcompanies. It is positive.

Terrorist attack or war. It is negative.


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ECONOMIC

Domestic IT Spending (Demand):Doemestic market

to grow by 20% and reach approx USD 20 billion in2008-09. It is positive

Currency Fluctuation. It is negetive

Attrition: Due to recession, the layoffs and job-cuts

have resulted in low attrition rate. It is mildly

positive


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SOCIAL

Language spoken: English is widely spokenlanguage in India, English medium being the mostaccepted medium of education. Thus, India boasts of

large English speaking population. It is highly positive

Education: A number of technical institutes anduniversities over the country offer IT education. It ishighly positive

Working age population. It is positive


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TECHNOLOGICAL

Telephony:

India has the worlds lowest call rates.

Expected to have total subscriber base of about500 million by 2010.

India has the second largest telephone networkafter china.

Tele density 19.86 %

Enterprise telephone services, 3G, Wi-max andVPN are poised to grow. It is highly positive


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Internet Backbone: Due to IT revolution of 90s,Indian cities and India is well connected withcable. It is positive

New IT technologies: Technologies like SOA,Web 2.0, High-definition content, gridcomputing, etc and innovation in low cost

technologies is presenting new challenges andopportunities for Indian IT industry. It ispositive.


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POSITIVE NEGETIVE

TOTAL 11 POINTS TOTAL 3 POINTS


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PORTERS 5 FORCE MODEL


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THREATS OF SUBSTITUTES

Other offshore locations such as EasternEurope, the Philippines and China, are emerging

and are posing threat to Indian IT industrybecause of their cost-advantage. However, thisshould have an impact only in the medium tolong term.

Price quoted for projects is a majordifferentiator, the quality of products beingsame. It is mediun


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BARGAINING POWER OF SUPPLIER

Due to slowdown, the job-cuts, the layoffs and

bleak IT outlook. Demand and supply of IT professionals is nolonger that favorable to employees.

Availability of vast talent pool freshers and

experienced. Shift from high to low


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BARGAINING POWER OF CUSTOMERS

Large number of IT companies vying for ITprojects resulting in high competition forprojects.

Huge decline in IT expenditure: Indian ITsector is dependent on USA and BFSI inparticular for majority of its revenues, and withthe recent financial crisis, the new spending

from these has reduced tremendously. However, for the existing products and services,

the clients continue the old companies. It is veryhigh.


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BARRIERS TO ENTRY

Low capital requirements.

Large value chain, space for small enterprises.

MNCs are ramping up capacity and employee

strength. It is low


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RIVALARY AMONG FIRMS:HIGH

Commoditized offerings.

'low-cost, little-differentiation

'positioning.

high industry growth.

Strong competitors few numbers of largecompanies.


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KEY SUCCESS FACTORS Sound Management Skills

Nurturing Working Atmosphere

Commitment To Values, Speed ,Imagination and

Excellence

Personnel Management

Infrastructure


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OTHER FACTORS

Invest in well understood, proven product & not

just R&D.

While dealing with investors, always underpromise and over deliver.

Have a healthy sense of paranoia and respect for

the competition.

Leaders in the making.


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FUNCTIONAL AREA PROFILE


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HUMAN RESOURCE

Since Infosys is in knowledge-based industry, itfocuses on the quality of the human resources.

Out of total personnel, about 90 per cent areengineers.

At the entry level, it emphasizes on selecting

candidates who find the company

s meritocraticculture satisfying, superior academic records,technical skills, and high level of learn ability.


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The company emphasizes on training anddevelopment of its employees on continuous

basis and spends about 2.65 per cent of itsrevenues on up gradation of employees skills,

and around 50% as employee costs.

In spite of thousands of people joining everymonth, Infosys has been able to maintain its

training standard mostly due to its highlymatured processes capabilities and investmentin infrastructure


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MARKETING

Current Markets: USA and Europe

Current Products: BPO, KPO, consultancyservices (in BFSI, manufacturing and retail) andsoftware products (financial products).

Recommendation: As most large clients in US

and Europe are cutting costs, Infosys needs to bemore aggressive on cost and quality front.

Result of strategy: Unlikely to yield good results


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FINANCE(2009)

Revenues Rs 20766 Crores

PAT Rs 5819 Crores

EPS 101.58

Total Assets Rs 17809 Crores

Cash and Cash Equivalent Rs 10289 Crores


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SWOT ANALYSIS


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STRENGTHS

Cost advantage

Breadth of service offering Ease of scalability

Quality and maturity of process

Global and 24/7 delivery capability


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WEAKNESS

Excessive dependence on USA for revenues

Excessive dependence on BFSI sector forrevenues

High rates of attrition

Decreasing competitive advantage


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OPPORTUNITY

Greater scope for product innovation

Increased focus on high end work Domestic demand for IT services

Greater scope to service domain

It has a huge capital


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THREATS

Global economic slowdown

US govt against outsourcing Intense competition

High dependency

Currency fluctuations

Termination of client contracts


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THANK YOU

Strategic Analysis of Infosys

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