INFOSYS

IT Service Industry Overview

PEST ANALYSIS Political Economic Political stability Government owned companies and PSUs have decided to give more IT projects to Indian IT companies. Terrorist attack or war. Global IT spending (demand) Domestic IT Spending (Demand) Currency Fluctuation Real Estate Prices Attrition

PEST Analysis Social Technological Language spoken: English Education: A number of technical institutes and universities over the country offer IT education. Working age population Telephony 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 Other offshore locations such as Eastern Europe, the Philippines and China Price Bargaining power of supplier: High to Low Due to slowdown, the job-cuts, the layoffs and bleak IT outlook. No longer Demand and supply of IT professionals Vast talent pool – fresher's and experienced.

Porter’s Five Forces Model Barriers to Entry : Low Low capital requirements. 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 'low-cost, little-differentiation' positioning. 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 Intangible Brand Equity 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 Sust. comp adv Above avg Infosys No Temp comp adv. Avg to Above avg Mastek Comp parity Avg L & T Infotech 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 Staff (Human Resources): Leadership Style: Strategy: Client-focused strategy to achieve growth Focuses on limited number of large organizations throughout world Caters clients through custom-built softwares Commands premium margins Does not compromise on quality for low-cost contracts Quality driven model rather than cost-differentiating model. Increase business from existing and new clients Expand geographically Enhance solution set Develop deep industry knowledge Enhance brand visibility Pursue alliances and strategic acquisitions Staff (Human Resources): Knowledge-based industry - Focuses on the quality of the human resources 90% Engineers At the entry level Find the company’s meritocratic culture satisfying Superior academic records Technical skills High level of learn ability. Emphasizes on T&D on continuous basis Spends about 2.65 % of revenue on up gradation of employees’ skills High training standard High matured processes capabilities Investment in infrastructure. Shared Values: Customer Delight-A commitment to surpassing customer expectations. Leadership by Example-A commitment to set standards in business and transactions and be an exemplar for the industry and teams. Integrity and Transparency-A commitment to be ethical, sincere and open in our dealings. Fairness- A commitment to be objective and transaction-oriented, thereby earning trust and respect. Pursuit of Excellence-A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best Leadership Style: Essential for organizational success. Based on high business vision and supportive styles. Emphasis on developing leadership qualities among employees. “Infosys Leadership Institute” Open door policy Continuous sharing of information Employee input for decision making Building personal rapport with employees Skills: Mandatory for every employee to clear 7 predefined certifications (domain as well as technical) in order to be eligible for appraisal. This is just one of the initiatives taken by Infosys which signifies the efforts taken for building competencies. Apart from internal initiatives like Knowledge management Infosys has been CMM-Level 5 certified for its process capabilities Organizational Structure: Free form organization devoid of hierarchies Everyone is known as associates irrespective of his position in the company Software development is undertaken through teams Constitution of teams is based on the principle of flexibility

INFOSYS BCG MATRIX - USA

INFOSYS BCG MATRIX - INDIA

CORPORATE LEVEL STRATEGIES Core Strategies: Firm believer in “Organic growth” and acquire only those companies in line with strategic goals 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, De-risking” for risk management.

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, timely-delivery

SWOT Analysis STRENGTHS WEAKNESSES Trusted Brand & Client Relations Proven GDM Wide spectrum of Services Leadership & Management Quality Standards WEAKNESSES Dependence on BFSI Segment for revenues Dependence on North America for revenues Weak Player in domestic Mkt Rising Operating Expenditure Low R & D focus

SWOT Analysis THREATS OPPORTUNITIES Intense Competition Untapped Domestic Market New Geographies Acquisitions High End Consulting Intense Competition High dependency on small no. of clients Currency Fluctuations

Recommendations Reduce Dependency on BFSI, North America, Explore new markets R & D Focus Hunt for Acquisitions Focus on cost reduction Tap Domestic Market