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Infosys Technologies Ltd. was inaugurated in 1981 by seven people with US$ 250. Today, it is a global leader in the next generation' of IT and earning revenues of US$ 6.04 billion.
Infosys designs, defines and delivers technology-enabled business solutions for Global 2000 companies. Infosys provides a complete range of services by leveraging its dominion and
business expertise and strategic alliances with leading technology providers.
The objective of this assignment is analysis of Infosys Technologies Limited which provides consulting and IT services. Infosys has been the first one in this field to offer innovative
solutions to its clients. The company offers ample range of software services, namely application development and maintenance, independent validation services, infrastructure
services, corporate performance management, packaged application services and product engineering and systems integration.
Infosys established the Global Delivery Model (GDM), which emerged as a disturbing force in the industry leading to the rise of offshore outsourcing. The GDM is based on the formula
of taking work to the site where the best talent is available, where it makes the best economic sense, with the least amount of acceptable risk.
Infosys has a world-wide footprint with 64 offices and 63 development centers in US, India, China, Australia, Japan, Middle East, UK, Switzerland, Germany, France, Netherlands,
Poland, Canada and many other countries. Infosys and its subsidiaries have 130,820 employees working with it as on March 31, 2011. Infosys takes delight in building strategic long-
term client relationships.
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Political
While discussing PESTEL analysis of Infosys Technologies Ltd. firstly I discuss political aspect of PESTEL analysis of Infosys Technologies Ltd. As part of the countrywide movement
and revolutionize, Infosys Technologies Ltd. is immediately one pattern of dense that are triumphant in equally types of business that is familial and worldwide commerce (2003). The
positive aspects of the political analysis of Infosys Technologies Ltd. are that Indian political structure is considered stable enough expect the fact that there is a fear of hung parliament.
Government owned companies and PSUs have decided to give more IT projects to Indian IT companies. The negative aspects of the political analysis of Infosys Technologies Ltd. are
that U.S. government has declared that U.S companies that outsource IT work to other locations other than U.S. will not get tax benefit and terrorist attack or war.
Economic
While discussing PESTEL analysis of Infosys Technologies Ltd. secondly I discuss economic aspect of PESTEL analysis of Infosys Technologies Ltd. The positive aspects of the
economic analysis of Infosys Technologies Ltd. are that Domestic IT Spending(Demand): Domestic market to grow by 20% and reach approx USD 20 billion in 2008-09 - NASSCOM.
Decline in real estate prices has resulted reducing the rental expenditures and due to recession, the layoffs and job-cuts have resulted in low attrition rate. Along with that economic
attractivenessdue to cost advantage and other factors is also a positive factor. The negative aspect of the political analysis of Infosys Technologies Ltd. is of global IT spending trends.
Social
While discussing PESTEL analysis of Infosys Technologies Ltd. secondly I discuss economic aspect of PESTEL analysis of Infosys Technologies Ltd. The positive aspects of the
economic analysis of Infosys Technologies Ltd. are that English is widely spoken language in India, English medium being the most accepted medium of education. Thus, India boasts
of large English speaking population.Regarding educationa number of technical institutes and universities over the country offer IT education are there and working age population is
also a constructive societal factor.
Technological
While discussing PESTEL analysis of Infosys Technologies Ltd. secondly I discuss economic aspect of PESTEL analysis of Infosys Technologies Ltd. The positive aspects of the
economic analysis of Infosys Technologies Ltd. are telephony that is India has the world's lowest call rates (1-2 US cents). India expected to have total subscriber base of about 500
million by 2010. ARPU for GSM is USD 6.6 per month. India has the second largest telephone network after china. Tele-density - 19.86 %. Indian technology also give a chance to
enterprise telephone services, 3G, Wi-max and VPN are poised to grow. Another positive aspect of Indian technology is the Internet Backbone. Due to IT revolution of 90s, Indian cities
and India is well connected with undersea optical cables. Along with that new IT technologies like SOA, Web 2.0, High-definition content, grid computing, etc and innovation in low cost
technologies is presenting new challenges and opportunities for Indian IT industry.
Legal
While discussing PESTEL analysis of Infosys Technologies Ltd. secondly I discuss economic aspect of PESTEL analysis of Infosys Technologies Ltd. The positive aspects of the
economic analysis of Infosys Technologies Ltd. are that IT SEZ requirement ofIT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and
fiscal benefits. Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work, which is not legally required. IT Act like Indian
government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate esp. related to security of data in transmission and storage, etc.Companies
operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.
Environmental
While discussing PESTEL analysis of Infosys Technologies Ltd. secondly I discuss economic aspect of PESTEL analysis of Infosys Technologies Ltd. The energy efficient processes
and equipments that companies are focusing on reducing the carbon footprints, energy utilization, water consumption, etc.
Threat of Substitutes:
While discussing the Porter's analysis of Infosys Technologies Ltd. the very first point of discussion is threat of substitutes. Regarding threat of substitutes other offshore locationssuch
as Eastern Europe, the Philippines and China, are emerging and are posing threat to Indian IT industry because of their cost-advantage. However, this should have an impact only in
the medium to long term. Along with that pricequoted for projects is a major differentiator, the quality of products being same.
While discussing the Porter's analysis of Infosys Technologies Ltd. the second point of discussion is bargaining power of supplier. Due to slowdown, the job-cuts, the layoffs and bleak
IT outlook and supply of IT professionals is no longer that favorable to employees. Availability of vast talent pool that is fresher and experienced is also increase buying power of
supplier.
While discussing the Porter's analysis of Infosys Technologies Ltd. the third point of discussion is power of buyers. Large number of IT companies vying for IT projects resulting in high
competition for projects. On the other hand huge decline in IT expenditure: Indian IT sector is dependent on USA and BFSI in particular for majority of its revenues, and with the recent
financial crisis, the new spending from these has reduced tremendously. However, for the existing products and services, the clients continue the old companies.
WEAKNESSES
Excessive dependence on US for revenues - 67 % of revenues from USA.
Excessive dependence on BFSI sector for revenues - 36 % of revenues from BFSI. Banking sector is facing a crisis globally and is going to spend less on IT.
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Weak player in domestic market. Only 1 % of revenues from India - low as compared to peers
Low R & D spending as compared to global IT companies - only 1.3 % of total revenues
Rising wage bill - 42.9 % to 44.8 % of revenues
Low expertise in high end services like Consultancy and KPO.
revenues to be hit hard for Infosys
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).
OPPORTUNITIES
Domestic market set to grow by 20%.
Expanding into new geographies - Europe, Middle East, etc
Infosys is cash rich (Around US $ 1 Billion) - Acquiring companies to increase expertise in Consultancy, KPO and package implementation capabilities
Opening offices and development centers in cost advantage countries such as those in Latin America and Eastern Europe.
THREATS
Intense competition in the market for technology services could affect cost advantages.
High dependency on a small number of clients, and the loss of any one of the major clients could significantly impact business.
Termination of Client contracts can typically be terminated without cause and with little or no notice or penalty.
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.
Cash Cows:
While discussing BCG Matrix for Infosys Technologies Ltd. secondly cash cows are discussed. When market share is high and market growth is low then the situation is known as cash
cows. Here, Infosys Technologies Ltd is this situation is applied on maintenance application and development software products.
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Stars:
While discussing BCG Matrix for Infosys Technologies Ltd. thirdly Stars s are discussed. When market split and market enlargement both are high then the situation is known as stars.
Here Infosys Technologies Ltd.BPO is come under stars.
Question Marks:
While discussing BCG Matrix for Infosys Technologies Ltd. fourthly and finally question marks are discussed. When market share is low and market growth is high then the situation is
called question marks. Question marks are also known as problem child. Consulting KPO and package information are considered as question marks here.
McKinsey's 7 S Model
Strategy
Infosys has adopted a client-focused strategy to achieve growth. Rather than concentrating on numerous small organizations, it concentrates on limited number of large organizations
globally. In order to gratify its clients, the company stresses on custom-built software. Another contrasting factor for Infosys is that it commands premium margins. Company does not
adjusts over margins beyond a certain point and sometime prefers to walk-out rather than compromise and adjust on quality for low-cost contracts. This has helped in establishing an
image for quality driven model rather than cost-differentiating model.
Leadership Style
Infosys believes that leadership is one of the most primary and essential ingredients of organizational success which is provided by its Chairman, N R Narayanmurthy. Leadership is
based on high business vision and prevailing supportive styles. There is attention on developing leadership qualities among employees. For this purpose, it has constituted Infosys
Leadership Institute. Top management lays stress on open door policy, continuous sharing of information, takes inputs from employees in decision making, and builds personal
empathy with employees.
Shared Values
Values are essential part of Infosys's organizational culture. In fact its tagline characterizes how much emphasis it lays on basic values.
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Organizational Structure
The company has adopted a free form organization devoid of hierarchies. Everyone is known as assistant irrespective of his position in the company. Software development is
undertaken through teams and the content of teams is based on the principle of flexibility. A member, who might have been team leader in one project, may be substituted with another
member of the same team for another project. This system not only helps in developing the feeling of equality but also helps in developing project leaders.
Skills
From last year, Infosys has made it mandatory for every employee to clear a 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. Infosys has entered the Balanced Scorecard Hall of Fame for Executing Strategy for achieving breakthrough performance results using the
Balanced Scorecard (BSC).
GRAND STRATEGIES
Ansoffs Matrix:
Current Market New Market
Products:While discussing market penetration strategy the second point of discussion is products. For Infosys Technologies Ltd products are ADM, BPO, KPO, consultancy services (in
BFSI, manufacturing and retail) and software products (financial products).
Recommendation:While discussing market penetration strategy the third point of discussion is recommendation. For Infosys Technologies Ltd 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:While discussing market penetration strategy the last point of discussion is result of strategy. For Infosys Technologies Ltdthe result of strategy is unlikely to yield
good results.
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Current Product:While discussing market development strategy the second point of discussion is current product. For Infosys Technologies Ltd current products are ADM, BPO, KPO,
consultancy services (in BFSI, manufacturing and retail) and software products (financial products).
Recommendation:While discussing market development strategy the third point of discussion is recommendation. For Infosys Technologies Ltd current markets since these are fast
developing IT market, Infosys needs a paradigm shift in focus from US and EU markets to these markets.
Result of strategy:While discussing market development strategy the fourth point of discussion is result of strategy. For Infosys Technologies Ltd current markets are likely to yield good
result.
New Product:Consultancy and package implementation services in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services.
Result of Strategy:Likely to have good result. (Better the company acquired, the better the result).
DIVERSIFICATION:
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.
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 center for applied technology research in software engineering and enterprise technology.
SET Labs conducted 24 Innovation Workshops with customers from the US and Australia, to identify research collaboration possibilities. Infosys promotes a favorable work environment
that encourages innovation and meritocracy.
At the conclusion of this assignment I would like discuss the main points.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..
this conclusion is based on the rigorous analysis and one can learn for the conclusion to expand into high end consulting. Consolidation and Strategic acquisitions are essential for
future growth of revenues.Shift in focus from low cost advantage to high quality services. Quick adoption to high growth markets is necessary.
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