Indian Institute of Management - Kozikhode

Infosys - Growing share of Customers Business

Case Analysis Note









By
S.N. Name Roll No. Designation Organization
1. Mr. Umesh R. Sonawane EPGCMM-06-024

Manager Corporate
Communications
Sahara India
Pariwar
2. Mr. Raj Kumar

EPGCMM-06-015 Key Account
Manager
Nestle India Ltd
3. Mr. Roshan Joseph Pauly

EPGCMM-06-016 Sales Manager Dell India Pvt.
Ltd.
4. Mr. Marripudi Jaya Rao EPGCMM-06-010 Area Business
Manager
Biogen Idec India

Private and Confidential
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1. Looking beyond the immediate Ariba e-Procurement System project, what challenging issues
related to global marketing does this case pose for Infosys?
Ans: The key issue for Infosys here to make a compelling solution to win this contract without harming
their cost-plus targets, following are some of the challenges Infosys have to overcome:
a. The fact that Infosys does not have any prior experience in installation of Ariba or any other
insurance solution for that matter.
b. As this will be an onshore project (at least at the initial stage) Infosys pricing may come near
or the same as that of its competitor
c. For all these years, Infosys was providing maintenance, they also have gained reputation in the
industry as the best offshore maintenance for IT and ITES companies. In order to earn this
project Infosys have to put up a convincible argument that they can manage end-to-end
implementation project. This is where the competition will have an edge over Infosyss
proposal.
d. The perception of Indian companies could be an issue for Infosys because Indian companies
are perceived as labor intensive outsourcing agencies for its capacity of doing mechanically
routine jobs but when it comes to high end consulting or management of large scale projects
Indian companies are never taken seriously
Stages of Infosys Evolution:













2. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS
during the past five years?
Ans: Following are the areas Infosys has proved quantified cost savings for PFS:
a. Project re-engineering-
i. PFS designated 5 projects to Infosys under its offshore policy to save cost
ii. Infosys not only performed its off shore partner responsibility, but also saved cost using
mix of off and on shore resources
iii. Over the time Infosys optimized its resources and made the entire process more efficient
both in terms of performance and cost to the company
iv. Cost saving illustration:
Year On-site
Resource
On site
Cost
Off-site
Resource
Off-site
Cost
Total Cost Savings
compare to
previous years
1 250 2,40,00,000 0 2,40,00,000
2 250 2,40,00,000 0 2,40,00,000
3 75 72,00,000 250 96,00,000 1,68,00,000 72,00,000
4 75 72,00,000 100 38,40,000 1,10,40,000 57,60,000
5 75 72,00,000 100 38,40,000 1,10,40,000
Total Savings 1,29,60,000

Labour Intensive
Outsourcing
IT Maintenance
Services
End-to-End
Solutions
Domain Specefic
Solutions
Current position of the
Infosys in the Industry
Required position to
earn the Ariba Contract
Private and Confidential
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b. Data Corruption Subroutine-
i. Previous to Infosys PFS batch system running after 5am used to cause loss of time and
resource for the company
ii. Infosys diagnosed the issue and came up with an innovative program that enabled PFS
to run its batch processes during night from 11pm to 5am avoiding any glitch during
working hours
iii. This has saved cost for PFS as below illustrated-
Details Time Cost ($)
Corruption events 24 5,04,000
Idled hours at PFS (125*4*24) 12,000
Repair hours (3*4*24) 288 12,960
Technical assistance hours (1*1*24) 24 960
CPU seconds (15*24) 360 140.40
Total Savings 5,18,060

c. Record Comparison Algorithm-
i. Team Infosys proactively wrote an algorithm to improve the record comparison
efficiency by 56%
ii. It resulted in optimized usage of CPU, especially during month end heavy workload to
avoid regulatory submission penalty
iii. Approximately cost savings of $3,60,000 (penalty for late submission)

d. Reduce disability claims-
i. Infosys automated some of the manual processes like claim submission and payments
which has resulted in a reduced number of reserved jobs
ii. Cost saving approximately - cost of capital at 10% reduction of $14,00,000 will give
savings of $1,40,000

3. What knowledge transfer time cost savings can PFS expect from sole sourcing the Ariba e-
Procurement System project?
Ans: Given the situation where PFS does employ Infosys to implement the Ariba e-procurement,
it will avoid the time taken for knowledge transfer of the Infosys maintenance team to understand
the implemented solution from another vendor.

Since, Infosys team is involved from the inception they can directly get on with the maintenance
work for the project without going for any special orientation program to understand the Ariba,
which will give cost saving as: 5 programmers take 12 weeks (3 month) to understand the Ariba
installed by another vendor = 5 x 3months x $8,000 = $1,20,000

4. How can Infosys PFS Account Team persuasively sell the firms ability to deliver a superior
end-to-end solution for the Ariba e-Procurement System project?
Ans: It is evident that Infosys has delivered on its promises to PFS over its 5years if relationship
by not only adding value but also saved costs for PFS. Proposal for Ariba project should focus on
the following strong points of Infosys-
a. High performance - Infosys has delivered consistently based on quality, reliability and
timeliness
b. Value offer and value delivered - Quantifiable savings over $13 million in the 5 years of
relationship
c. Process optimization - Continuous improvement and automation of processes followed by
optimization of resources resulted in smooth operations and increased productivity for PFS
Private and Confidential
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d. Capability in end-to-end implementation - Infosys should mention that fact that they have
done the installations at other clients for Ariba and testimonials of such clients can be
produced to claim their efficiency in managing end-to-end implementation projects
e. Best of both the world - Infosys is the only competitive company which can offer expert
off shore and equally competent on shore workforce
f. Pilot proposal - Infosys can offer a pilot project to prove their capability of managing end-
to-end project to PFS
g. Infosys should give special focus on its costing for this project because the local player who
has already done this for a long time will definitely have competent pricing. As a last resort,
Infosys may have to lower their margins to get entry into this consultative market.