ACKNOWLEDGEMENT

On the onset, I would like to take this opportunity to express my thanks to all those who helped me in this project. This project study has proved to be a wonderful opportunity to know about the various dimensions and strategic analysis of Indian IT industry. I am greatly indebted to my Faculty Guide Prof. Sanjay Sharan, IBS Hyderabad for his constant guidance, advice and help which enabled me to finish this project interim report properly in time. This project is a very good practical exposure because I have to apply the various methods to do research in reality in order to conduct the research, which in itself is a great learning experience. The practical insight and invaluable support from the faculty from the beginning of the project was extremely obliging to me. I continue to acknowledge with gratitude the constant support and assistance received from the IBS Hyderabad library staff and computer lab assistant for access to useful material as and when needed as per my convenience.

Madhusudan Mohapatra

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TABLE OF CONTENTS
Acknowledgement. 01

List of Illustrations..... 04 1. Abstract ..... 05

2. Introduction........... 07 2.1 Purpose and Scope of the Project 2.2 Data Collection........ 2.3 Limitations... 2.4 Outline of work 2.5 Literature Survey. 07 07 07 07 08

3. Project Analysis. 09 3.1Competition in the Indian IT/ITES Industry 09 3.1.1 External Environment PESTEL Analysis of Indian IT industry 09 3.1.2 Operating Environment. 3.1.4 Porters Diamond Model (Indian IT Industry).. 3.1.5 SWOT Analysis of Indian IT Industry (Snap Shot).. 3.1.6 Established IT/ITES HUBS in India 13 3.1.3 Porters five forces Model (Indian IT Industry) 20 21 23 29

3.2 Infosys.. 30 3.2.1 McKinseys 7 S Model 36 3.2.2 SWOT Analysis of Infosys. 37 3.2.3 Business Model of Infosys.. 39 3.2.4 Infosys BCG Matrix 40 3.2.5 Analysis of Strategy of Infosys.. 41 3.2.6 Opportunities in IT Industry... 44

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3.3 Wipros Mission, Vision and Values.. 45 3.3.1 Companies under Wipro Umbrella.. 46 3.3.2 Environment 46 3.3.3 SWOT Analysis of Wipro 48 3.3.4 Shareholding Pattern 49 3.3.5 BCG Matrix: Wipro SBUs.. 50 3.3.6 Wipros six dimensional Strategy 51 3.3.7 Globalization Strategy. 52 3.3.8 Acquisition and Restructuring Strategy.. 57 3.3.9 Innovation Strategy. 58 3.3.10 Green Strategy.. 61

3.4 Suggestions and Recommendations.. 63

4. References.....

64

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LIST OF ILLUSTRATIONS
1. Exhibit I: Break of total IT Spending. 10 2. Exhibit II: Financial attractiveness of top 5 global services location on a scale of 4..... 10 3. Exhibit III: Number of IT graduates in India. 11 4. Exhibit IV: Working population as a percentage of total population. 11 5. Exhibit V: Current position of IT ITES Sector of India.. 13 6. Exhibit VI: Indian IT BPO Industry Sector-wise revenue break up. 13 7. Exhibit VII: Indian IT BPO Revenues from domestics and exports (in $ billion).. 14 8. Exhibit VIII: Contribution of IT industry to Indian GDP. 14 9. Exhibit IX: Number of employees in Indian IT sectors till FY 2009. 14 10. Exhibit X: Revenue break up by Company... 15 11. Exhibit XI: Indian IT industry revenue break up by sector... 15 12. Exhibit XII: Indian IT industry revenue break up by Country.. 16 13. Exhibit XIII: R & D spending of IT majors.. 16 14. Exhibit XIV: Customer Profile.. 17 15. Exhibit XV: Recent Announcement of large IT Projects.. 17 16. Exhibit XVI: Number of Clients and revenue generation from them... 18 17. Exhibit XVII: Global footprint of IT/ITES Companies. 19 18. Exhibit XVIII: Business Units of Infosys. 31 19. Exhibit XIX: Shareholding Pattern 2010.. 32 20. Exhibit XX: Infosys Stock performance on NSE over last 10 years .. 33 21. Exhibit XXI: Revenue break up by Geography.. 33 22. Exhibit XXII: Revenue growth from different geographical segment over years.
34 23. Exhibit XXIII: Revenue break up by Industry Segment 2010.. 34 24. Exhibit XXIV: Revenue growth from industry segments over years. 25. Exhibit XXV: Revenue break up by service offered 2010.. 34 35

26. Exhibit XXVI: Business Model of Infosys over the years. 39

27. Exhibit XXVII: Perceptual Mapping of Infosys with respect to other IT companies 44 28. Exhibit XXVIII: Green Initiative of Wipro 62

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1. ABSTRACT
My study is to find out Strategic Management of Indian IT Industry in particular Infosys. This study is to find out the current prevailing market condition in software Industry in India in particular Infosys. The Indian economy was also impacted by the recessionary trends, with a slowdown in GDP growth to seven per cent in 2008. However the focus and exponential growth in the domestic market has partially offset this fall and insulated the country, resulting in net overall momentum during recession. Even the current European crisis has put the brakes on the momentum of software Industry. The ban on outsourcing of software services to Indian IT firms by some states of USA has put a constraint on growth of Indian IT industry. I have tried to find out various external and internal environmental factors associated with Indian IT industry. What are the strategic steps taken by these major IT companies is also part of my study. Since I have decided to research on areas of improvement by Indian IT industry and what other markets to capture in the long run for sustained growth. Since other US based software companies such as CSC, Oracle, IBM, Accenture have started their operations in India in big way by capturing major Indian government projects such as UIDAI and various state government projects. It is time for Indian companies like TCS, Infosys, Wipro and other mid sized firms to look out for Indian market as potential. As Indian IT Industry has achieved revenue of more than 7 billion USD in FY 2009, the growth is going to be more in future time. Also countries like USA and Europe are slowly coming out of recession, it is expected that there is going to be boom in near future. Emerging countries like China, Philippines and Mexico are emulating the successful model of Indian software industry with low cost models. So all the major Indian IT players have their establishment in these countries as well for low wage rates. So I will focus my study on various strategic management by Indian IT firms in particular Infosys to negate this threat. I have decided to study further on other related business models like BPO and KPO and acquisition by IT firms to go for forward integration and backward integration as well. Also this will help in capturing other emerging markets in the world. It is the knowledge industry that will help take the Indian economy to a sustained higher rate of growth and the policy makers are fully aware of this. The domestic market of Indian IT industry will be USD 50 billion by 2020. Hence there is a huge potential in the domestic market for all major IT and ITES companies. In my study I have identified the competitive forces using Porters five forces model that determine the intrinsic long run attractiveness of the Indian IT Industry. . I have also identified the value chain proposition, PESTEL framework and Porters diamond force in the Indian IT industry in particular Infosys. The SWOT analysis of Indian IT Industry and Infosys will help to identify the key points for market segments in this industry in my study. I have identified which are the actual and potential competitors of Infosys in this industry. It will also include various strategies, objectives, strengths and weaknesses of Infosys with respect to its competitors in my analysis. The study will include the financial aspects and revenue generation model of Infosys. Resources, strategic competence and cost efficiency of Infosys with respect to other IT companies will also feature in my further analysis. I will focus on the current and prospective customers of Infosys. Organizational framework of Infosys and other IT major companies will be part of my further study. Which are the major strategic business units of Infosys, the pricing structure of Infosys with respect to other IT/ITES companies, the competitive advantage of Infosys with respect to its competitors and what could be the future collaboration it can make
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with others will be part of my study. The growth share matrix (BCG) can be used to find out the market share and growth of Infosys and other IT companies. The HR policies, Corporate Governance, Vision, Mission statements and objectives of Infosys will be included in the final report. Infosys is planning to set up new development centers across different parts of the globe such as Latin America, Eastern Europe and other low cost centers. So my area of study includes demand of IT and ITES services and products in domestic markets of India and abroad. It will help in finding out the employment generation in the Industry and contribution to GDP growth of India. The study will also help in find out what are the new technological challenges and initiatives Indian IT companies can adopt to be more competitive.

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2. INTRODUCTION
Title of the Project: Strategic Management in the Indian IT Industry in particular Infosys. 2.1 Purpose and Scope of the Project: Harnessing IT to bring transformational business results requires a strategic approach to managing IT. There is no denying that managing complexity and uncertainty while sustaining competitive advantages has become inevitable challenge for business in todays world. In an increasingly globalised world, significant complexity and uncertainty is getting attached to the unprecedented economic crisis. The Indian economy was also impacted by the recessionary trends, with a slowdown in GDP growth to seven per cent in 2008. The focus and exponential growth in the domestic market has partially offset this fall and insulated the country, resulting in net overall momentum. The IT and ITES industry in India has today become a growth engine for the economy, contributing substantially to increase in the GDP, urban employment and exports to achieve the vision of a Young and Resilient India. During these years, the sector maintained its double digit growth rate and was a net hirer. This growth has been fueled by increasing diversification in the geographic base and industry verticals, and adaptation in the service offerings portfolio. While the effects of the economic crisis are expected to linger in the near term future, the Indian IT and ITES industry has displayed resilience and tenacity in countering the unpredictable conditions and reiterating the viability of Indias fundamental value proposition. Consequently, India has retained its leadership position in the global outsourcing market even during recession time. Thats why I have chosen Indian IT/ITES sector as my area of research work in particular Infosys. It includes competition in the Indian IT/ITES Industry which takes in to account Porters Five Force Model, Vision, Mission and Objective and value proposition of Infosys. The scope of this project include growth and comparison of major Indian IT/ITES players in the currently fast changing global scenario. My main focus is on Infosys and its marketing strategy in comparison to other major IT players. 2.2. Data Collection: I have collected data and information for competition in the Indian IT Industry and various strategies of Infosys primarily from secondary sources such as Companys website, other internet websites, journals and brochures. I have also decided to collect data for some of the research work from the primary sources of the company as per the need in the final report. 2.3 Limitations: I do not have access to data regarding the sales figure and accurate information of the company. So I have to limit my study to secondary sources so far. Since the study is purely exploratory, smaller sample size could create problem. The study requires forecasting software. Bad data in recent month can cause great error in analyzing the Indian IT/ITES industry growth. 2.4 Outline of work: The project schedule include data collection from different sources like internet, Nalcos Journal etc, comparison of data with other similar industry, analysis of data, data interpretation of the project work and comparison and final results and recommendations.

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2.5 Literature Survey: The Indian IT and ITES industry achieved revenues of USD 71.7 billion in FY2009, with the IT software and services industry accounting for USD 60 billion of revenues. During this period, direct employment reached nearly 2.23 million, an addition of 226,000 employees, while indirect job creation touched 8 million. As a proportion of national GDP, the sector revenues have grown from 1.2 percent in FY1998 to an estimated 5.8 per cent in FY2009. Software and services exports (including BPO) are expected to account for over 99 per cent of total exports, employing over 1.76 million employees. While the current mood is that of cautious optimism, the industry is expected to witness sustainable growth over a two-year horizon, going past its USD 60 billion export target in FY2011. While the industry has significant headroom for growth, competition is increasing, with a number of countries such as Brazil, Mexico, Philippines etc. creating enabling business environments aimed at replicating Indias success in the IT and ITES industry. Hence concentrated efforts are required by all stakeholders to address the current challenges, to ensure that India realizes its potential, and maintains its leadership position. The major IT/ITES players in India are TCS, Infosys, Wipro, Cognizant, HCL, IBM, Accenture, Oracle, SAP etc. Indias most prized resource in todays knowledge economy is its readily available technical work force. India has the second largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. Government of India is stepping up the number and quality of training facilities in the country to capitalize on this extraordinary human resource. It is the knowledge industry that will help take the Indian economy to a sustained higher rate of growth and the policy makers are fully aware of this. The domestic market of Indian IT industry will be USD 50 billion by 2020. Hence there is a huge potential in the domestic market for all major IT and ITES companies.

Infosys Technologies Limited: Infosys Technologies Limited was established in 1981 by seven people with USD 250. Infosys is the second largest IT Company in India with 114,822 employees (including subsidiaries) as of 2010. Infosys has a global footprint with 63 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan. Infosys takes pride in building strategic long-term client relationships. Over 97% of its revenues come from existing customers. Infosys defines designs and delivers technology enabled business solutions that help global 2000 companies win in a flat world. Infosys also provides a complete range of services by leveraging domain and business expertise and strategic alliances with leading technology providers. Its offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing.

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3. PROJECT ANALYSIS
3.1 Competition in the Indian IT/ITES Industry:
In my study I will identify the competitive forces using Porters five force model that determine the intrinsic long run attractiveness of the Indian IT Industry. I will also identify the value chain proposition, PESTEL framework and Porters diamond force in the Indian IT industry in particular Infosys. In this industry which are the actual and potential competitors of Infosys. It will also include various strategies, objectives, strengths and weaknesses of Infosys with respect to its competitors. The SWOT analysis of Indian IT Industry and Infosys will help to identify the key points for market segments in this industry.

3.1.1 External Environment - PESTEL Analysis of Indian IT Industry:

Political

1. Political Stability: Indian political structure is considered stable enough and Govt. of India has set up a National Task Force on IT and software development to examine the feasibility of strengthening the industry. 2. U.S government declaration that U.S companies that will outsource I.T works to other locations other than U.S will not get tax benefit. 3. Government owned companies and PSUs have decided to give more IT projects to Indian companies. 4. Terrorist attack or war.

Positive

Negative

Positive Negative

Economic

1. Global IT Spending (Demand) from USA will increase in FY 2010. 2. Domestic IT Spending (Demand): The Indian domestic market will grow by 12.9 percent through 2013. 3. Currency Fluctuation. 4. Real Estate Prices: Decline in real estate prices has resulted in reduction of rental expenditure. 5. Attrition: After U.S recession in 2008-2009, companies are on a hiring spree and there is a revival of the job market, attrition rate is going to be high in 2010. 6. Economic Attractiveness due to cost advantage and other factors.

Positive Positive Negative Positive

Negative Positive

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Source: NASSCOM

Exhibit I: Break up of total IT spending

Source: NASSCOM

Exhibit II: Financial attractiveness of top 5 global services locations on a scale of 4 1. Language Spoken: India has the second largest Englishspeaking scientific professionals in the world, second only to the U.S. English medium being the most accepted medium of education. Thus India boasts of large English speaking population. 2. Education: It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. 3. Working age population
Highly Positive

Social

Highly Positive

Positive

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Source: NASSCOM

Exhibit III: Number of IT graduates in India

Exhibit IV: Working population as a percentage of total population

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Technological

1. Telephony: a. India has the worlds lowest call rates (1-2 US cents). b. Expected to have total subscriber base of about 500 million by 2010. c. ARPU for GSM is USD 6.6 per month. d. India has the second largest telephone network after china. e. Teledensity of India is 49.50% f. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow. 2. Internet Backbone: Due to IT revolution of 90s, Indian cities and India is well connected with undersea optical cables. 3. New IT Technologies: 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.

Highly Positive

Positive

Positive

Environmental

Energy efficient processes and equipments: Companies are focusing on reducing the carbon footprints, energy utilization, water consumption, etc.

Positive

Legal

1. IT SEZ Requirement: IT Companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits. 2. Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work, which is not legally required. 3. IT Act: Indian government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate especially related to security of data in transmission and storage, etc. 4. Companies operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.

Positive

Negative

Positive

Negative

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3.1.2 Operating Environment:

Exhibit V: Current Position of IT ITES Sector of India

Source: NASSCOM

Exhibit VI: Indian IT BPO Industry Sector-wise revenue break up

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1. Market Size More than 80% of revenues come from exports and only 20% from domestic market.

Source: NASSCOM

Exhibit VII: Revenues from domestic and exports (in USD billion). Indian IT industry contributed around 5.8% Indian GDP in FY 2009.
% of Indian GDP

% of Indian GDP
7 6 5 4 3 2 1 0 2004 2005 2006 2007 2008 2009

Source: NASSCOM

Exhibit VIII: Contribution of IT industry to Indian GDP

Exhibit IX: Number of employees in Indian IT Sectors till FY 2009

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2. Market Share

Source: NASSCOM

Exhibit X: Revenue break up by Company

Source: NASSCOM

Exhibit XI: Indian IT Industry revenue break up by sector

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Source: NASSCOM

Exhibit XII: Indian IT Industry revenue break up by country

Source: NASSCOM

Exhibit XIII: R&D spending of IT majors

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3. Customer Profile (Exhibit XIV) Sector Major Clients Domestic Major Clients Global (Export Market) US Govt., British Govt., Australian Govt., Saudi and Kuwait Govt. AIG, Bank of America, UBS, JP Morgan, Barclays, Goldman Sachs, Morgan Stanley

Govt. and Public Sector Companies BFSI

Railways, LIC, MMRDA, BMC, BPCL, ONGC

HDFC, ICICI Bank, Citi Financial India, NSE, BSE, MAX New York Life, India Bulls Finance Airtel, Vodafone, Reliance Communications Tata Motors, Tata Steel, L&T, RIL Pantaloon India Ltd, Tata Sky, DLF, Apollo Hospital

British Telecom is Infosys largest client contributing to 6.9% of Infosys revenue.

Telecom

British Telecom, AT&T, SingTel, Telstra, Vodafone Ford Motors, GM, Exon Mobile

Manufacturing

Others

Pfizer, Wal-Mart, British Airways

Source: NASSCOM

Source: NASSCOM

Exhibit XV: Recent Announcement of large IT Projects

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Source: NASSCOM

Exhibit XVI: Number of Clients and Revenue generation from them 4. Suppliers 1. Employees/ Professionals 2. Manpower suppliers like Manpower ITES, Quest, MaFoi, etc.

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Exhibit XVII: Global Foot print of IT/ITES Companies

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3.1.3 Porters five forces Model (Indian IT Industry):

THREAT OF ENTRY: 1. Low capital requirements 2. Large Value Chain, Space for small enterprise 3. MNCs ramping up the offshore capacity and employee strength in India

BARGAINING POWER OF SUPPLIERS: 1. Due to slow down Shift from during recession, job cuts, lay offs and High to Low bleak IT outlook. 2. Current surge in the market for new projects after recession in US, demands for IT professional and lateral hires have increased 3. Availability of a large number of talented pool - Freshers and lateral IT professionals

Low

BARGAINING POWER OF BUYERS: 1. Large Very High

no. of IT companies looking for IT projects - resulting in high competition for projects. 2. Decline in IT expenditure: Indian It sector is dependant on USA, Europe and BFSI in particular for major share of its revenue. With the recent financial crisis in USA and Europe, the new spending from these has reduced considerably. 3. For existing products and services, the clients continues old companies.

COMPETITIVE RIVALRY: High 1.Commoditized Offerings 2.Low cost, little differentiation & Positioning 3.High Industry Growth 4.Strong competitors & few no. of large companies

Medium THREAT OF SUBSTITUTES: 1. Other offshore locations such as Eastern Europe, Philippines, Mexico, Brazil and China are emerging and posing a threat to Indian IT industry because of their cost advantage as salary and other costs will be lower there. However this should have an impact only in medium to long term. 2. Price quoted is also a major differentiator, the quality of products being same.

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3.1.4 Porters Diamond Model (Indian IT Industry):

Firm Strategy, Structure & Rivalry

Factor Conditions

Demand Condition

Related & Supporting Industry

a. Factor Conditions: There are specific factor conditions in Indian IT industry that help explain the basis of advantage on a national level. These provide intial advanateg built upon to yield more advanced factors of competition. As a relatively poor country, India is not normally thought of as a nation that is capable of building a major presence in a hightechnology industry, such as computer software. In a little over a decade, however, the Indian software industry has astounded its skeptics and emerged from obscurity into an important force in the global software industry. By 1997, there were over 760 software companies in India employing 160,000 software engineers, the third-largest concentration of such talent in the world. Much of this growth was powered by exports. In 1985, Indian software exports were worth less than $10 million. India created its own important factors such as skilled resources, strong technology and Knowledge base, upgradation of these factors over time to meet the demand, new methods in the growth of Indian IT Sector.

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b. Home Demand Condition: It provides the basis up on which the characterstics of the advantage of an organization are shaped. A more demanding local market leads to national advantge. Howvere it was not with the case of Indian IT industry. As there was not much home demand condition, most of the major IT firms looked at outside India as their demand. As most of the services sector demanded backend operations in USA, the software export grew rapidly. Most of the growth of the Indian software industry has been based on contract or project-based work for foreign clients. Many Indian companies, for example, maintain applications for their clients, convert code, or migrate software from one platform to another. Increasingly, Indian companies are also involved in important development projects for foreign clients. c. Related and Supporting Industry: One succesful industry may lead to advantage in related and supporting industries. Due to boom in Software industry, other related industries such as telecommunication, infrastructure, avaiation and retail sectors boomed during these years. Also increas in per capita income and more jobs creation lead to stability in economy of the country. Due to increase in IT industry, other subsidiaries such as BPO and KPO also boomed and India became hub for these industries as well. Also Increase in IT business by companies, more engineering and technical colleges were opened up which leads to increase in education and technical studies in India. d. Firm Strategy, Stucture and Rivalry: The IT and ITES firms strategy, industry structure and rivalry in different countries also help explain bases of advantage. Domestic rivalry and the search for competitive advanatges within the nationcan help provide organizations with bases for achieving advantage on a global scale. As there was demand for software and related industry, and most of the indian IT firms looked at the outside India as a potential market and helped in revenue genartion, other major IT firms invested heavily in Indian Software development operation including Microsoft, IBM, Oracle, and Computer Associates, the four largest US-based software houses. These major US based major firms looked at nascent Indian market as potential software market. As major Indian IT firms traditonally took USA, Canda and Europe as their market for software export, they even didnt give much empahsis on grwoing Indian software market. In recent times as there was a recession in USA in 2008 and Europe in 2009, most of the Indian IT firms changed their strategy and trying to reduce the risk of over dependancy on foregin market and capturing new developing markets such as Middle East, Africa and Indian Market. US based Software companies also tried to take the advantage of nascent Indian market. Companies like IBM, Accenture even took the projects of Indian Government and Indian Telcom Major Bharti Airtel projects. So there is cut thraot competition outside India and inside India. Even China, Phillipines and other low cost countries have started their opertion and tryint o replicate Indian Software Model and pose as a threat to Indian IT firms. So competition should be encourgaed at home rather than being protected from overseas competition.

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3.1.5 SWOT Analysis of Indian IT Industry: (Snap Shot)

STRENGTHS
Cost advantage most financially attractive country in a study by A T Kearney on global IT destinations. Breadth of service offering end to end solutions including high end services like IT consultancy and KPO. Ease of scalability more than half of Indias population is less than 25 years old. English speaking IT ITES professionals growing at a good pace. Quality and maturity of process many players have quality standards such as CMM to differentiate from other low cost advantage countries. Global and 24/7 delivery capability excellent internet backbone and telecommunications facilities enabling companies to develop 24/7 delivery capabilities from India itself.

WEAKNESSES
Excessive dependence on USA for revenues US Companies are cutting down IT budget hence revenues to be hit hard of Indian IT firms. Excessive dependence on BFSI sector for revenues Banking sector is facing a crisis globally and is going to spend less on IT. 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 India.

OPPORTUNITIES
Greater scope for product innovation Increased focus on high end work like consulting and KPO. Domestic demand for IT services is to grow at 20 %. Greater scope to service domains other than BFSI such as Transportation, Infrastructure, etc. Satyam fiasco Likely to have positive impact on business considering corporate governance, possibility of shifting of business, getting higher incremental business from overlapped clients, and winning new business from new clients.

THREATS
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.

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Strengths:
High Quality & Price Performance: Quality is the hallmark of Indian I.T. software and, services. ISO 9000 certification and SEI Level 5 are the order of the day. High quality knowledge workers and attractive price performance have been and will continue to be a key component of India's value proposition. Large Pool of Knowledge Workers: The basic raw material for any software development activity or a dotcom start up is the availability of quality knowledge workers. India's main competitive advantage is its abundant, high-quality and cost effective human resources. Currently, India trains more than 73,000 professionals a year and has around 80,000 people working in the software and services sector. This is the second largest I.T. work force in the world. Recently, the Government of India has committed to providing computer education in every school by year 2003. State-of-the-art Technologies: A majority of Indian software companies use state-of-the-art technologies, including the latest in client-networking, E-commerce, Internet, ASP, CASE tools, communication software, ATM, protocols, GUI etc. Flexibility and Adaptability: Indian software professionals easily adapt themselves to new technologies. In the software industry, where technological obsolescence is the order of the day, flexibility to adapt to new technologies a major strength. Reliability: Software programmers from India are able to provide expertise for all or large projects with dollar savings. The motto is ultimate adherence delivery schedules and customer satisfaction. Off-shore Development through Datacom links: Off-shore software development in India especially through high-speed datacom (satellite links), provides immense cost and time saving. Large Projects: Indian companies increasingly large numbers are demonstrating their ability to handle large projects (more than 500-700 man- ears), including turnkey projects. High Growth: Software exports as well as the domestic demand in the last few years has been consistently growing at annual growth rate of about 50 percent. Engineering Base: A strong base of national institutes, engineering college and universities has laid a strong foundation of education in engineering skills amongst Indian software professionals. The IITs (Indian Institute of Information Technology) in various cities are the new institutions to join the bandwagon. Mathematical and Logic Expertise: Indias success in providing efficient software solutions can be also attributed to the mathematical and logical ability Indians. High Aspirations: The Indian IT software and services industry has set itself higher aspirations and goals. The recent aspiration is to reach annual revenues of U.S.$ 87 billion by 2008 (from a level of U.S.$3.9 billion during 1998 99), achieve 100 percent literacy, more, employment and entrepreneurship opportunities.
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Indians in Silicon Valley: As per a recent survey, 23 of the Fortune 500 Company CEOs are of Indian origin. It has been reported that a business plan of a dotcom company in Silicon valley, U.S.A. receives higher priority if an Indian name associated with it. The successful India in Silicon Valley has organized them selves under the Indus Entrepreneurs Group (TiE). Government Encouragement: Since 1999 the Government of India has accorded thrust area status to the software sector. The Government has amended the Copyright Law to make it one of the toughest in the world; eliminated import duty on computer software; exempted profits derived from software exports from Income Tax etc. The Government of India has also set up innovative scheme like Software Technology Parks, etc., for promoting software exports. Infrastructure: A growing number of State Governments and cities are building hi-tech buildings and habitats to accommodate the ever increasing numbers of software companies and enterprises. These are in the form of intelligent habitats and buildings and include infrastructural support like high- class value-added data communication services, captive power, recreational facilities, etc. They incorporate state-of- art facilities viz. plug-and-play features. This is assisting companies to quickly set up their software operations in India. Global Research & Development: More and more multinationals are setting up their global R&D units in India, recognizing the immense power of local talent.

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Weaknesses:
Lack of Package Orientation: Although, a few companies have started making shrinkwrapped software packages, the industry as a whole is still not oriented towards development of world class 'shrink-wrapped' software packages. Thus, the industry is not able to take advantage of a multiplier effect for growth in revenues. Lack of Domestic Computerization: Lack of adequate computerization has led to a relatively weak domestic software market. Even, the PC penetration rate is very low. Lack of Internet Penetration: With low penetration of PCs, it is obvious that Internet penetration is also poor. At the end of the year 1999, India could only boast of 6,10,000 Internet connections with about 2.1 million users. The recently announced Internet Service Provider policy is expected to improve the situation. Original Technology: The Indian software industry possesses the expertise to absorb and use the latest technology. However, barring a few exceptions, it has still not produced enough original technology breakthroughs. Succinctly put, the industry has not created original operating systems or new computer languages and technologies, which could be used globally. Mission Critical Real Time Operations: Some of the leading companies in India have handled software development for mission critical real time operations. However, the industry as a whole does not have much experience in this field.

Project Management Skills: As the Indian software industry has been growing at a fast rate, most of the project managers are becoming entrepreneurs, thus creating a gap in demand and supply of project management skills. Venture Capital: In building a robust venture creation process, India still faces few constraints. To build a prolific venture community, India needs to focus on boosting all stages of venture creation process and have simplified procedures so that the domestic Venture Capital movement can flourish and overseas Venture Capital funds can be attracted. Localization: With the exception of isolated cases, not much exists in providing software applications in innumerable local languages. Thus, computer penetration in India is restricted to merely the English speaking population.

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Opportunities:
Global Market: The market is large and rapidly changing-from a mix of legacy client server to web / package-based services. Market openings are emerging across I.T. services, software products, I.T. enabled services and E-businesses, and creating a number of new opportunities for Indian companies. Domestic Demand: The corporate, government and consumer sector of the Indian domestic market offers a U.S.$ 18 billion opportunity by 2008 to software and services companies. Outsourcing: The global outsourcing business was worth U.S.$ 77 billion in 1997 and has been growing at the rate of 15-18 percent per annum. A recent survey indicates that by 2002, more than 59 percent of the Fortune 1000 companies and other multinationals will outsource some part of their application development and maintenance activities. India can gain and corner a greater marketplace. E-Commerce/E-Business: India not only has a huge opportunity to service this market but also has a unique opportunity to address the needs of the NRI community around the world. Overseas Listings: India today commands a very high respect among investors in India and overseas. Almost all major overseas stock exchanges -are keen for Indian software companies to list themselves on their respective exchanges. This is a major opportunity for the Indian software industry to attract the requisite investments. Internet Service Provider (ISP) Policy: The recent permission to allow private ISP's operate in India and set up their own gateways will unprecedented Internet proliferation throughout India.

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Threats:
Government Interference: In the past decade, the Government and industry have worked very well together in India for the success of the I.T. software and services industry. Now the Government's role needs to be increasingly directed towards providing suitable infrastructure and continuing its role in the simplification of policies. Any further plans for Government control, restrictions or undue interference could well pose a threat to the industry. Telecom Infrastructure: The immediate need of the hour in India is to have a world class telecom infrastructure at globally competitive tariffs. The Department of Telecommunications has taken a number of initiatives including the National Telecommunication Backbone, National Internet Backbone, and plans for providing high bandwidth Internet connectivity to remote corners of India. However, Government monopoly, lack of speed and adherence to archaic telecommunication rules and regulations can prove to be a threat to the industry. Lack of Speed: The world is moving at the speed of Internet. The decision- making and time taken for implementation in India needs to be at a much faster pace so that the Indian I.T. software and services industry does not lose any opportunities. Infrastructure: Although, the software industry is growing at a phenomenal rate, many other sectors in India have not yet been able to keep pace with it. Lately, almost all major cities are building hi-tech buildings to house the software industry. These buildings have state-of-art infrastructure, data communication facilities, captive power etc. But, lack of power, highways, housing and international airports is some cities has become a major constraint. Cost: Rising cost of infrastructure, basic amenities and salaries can pose a threat if not adequately balanced with value addition. Protectionism by Export Destinations: Many countries in North America and Western Europe are creating protective and non-tariff trade barriers, especially with regard to the movement of skilled manpower. Visa issues and non-tariff trade barrier may prove to be a threat. India should insist for removal of non-trade tariff barriers at WTO.

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3.1.6 Established IT/ITES HUBS in India:

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3.2 INFOSYS
Vision
"To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people."

Mission
"To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."

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INFOSYS BUSINESS LINE

Exhibit XVIII: Business Units of Infosys

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EXHIBIT XIX: Shareholding pattern 2010

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FINANCIAL SUMMARY

Infosys always beats stock market expectations. It believes in delivering more than expectations.

Exhibit XX: Infosys Stock performance on NSE over last 10 years

Revenue break up by Geography - 2010

Exhibit XXI: Revenue break up by Geography - 2010

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Exhibit XXII: Revenue growth from different geographical segment over years

Exhibit XXIII: Revenue break up by Industry Segment 2010

Exhibit XXIV: Revenue growth from industry segments over years

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Exhibit XXV: Revenue break up by service offered 2010

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3.2.1 McKinseys 7 S Model

Leadership Style: Infosys believes that leadership is one of the most essential ingredients of organizational success which is provided by its chief mentor Mr. N R Narayanmurthy. Leadership is based on high business vision and supportive style. Hence emphasis is given on developing leadership qualities among employees in Infosys. For this purpose it has established Infosys Leadership Institute for grooming the budding mangers from the beginning. Thats why Infosys is ranked tenth in global survey for best leaders because it invests time, effort and money in leadership development, and has "a talent pipeline that can feed this growth."Top managements open door policy, continuous sharing of information, inputs from employees in decision making and making personal rapport with employees are some of the key factors in the organization. We have also seen there is a smooth transition from Mr. N R Narayanmurthy to Mr. Nadan Nilekani and then to Mr. Krish Gopalkrishnan. With out any adverse effect on the company outlook and each one proved worth during their tenure. This shows leadership being carried forward to others in the hierarchy instead of being holding one person the key position for long time unlike other organizations. Staff: Since it is a knowledge based industry, it focuses on quality of human resources. Out of total workforce, about 90 percentages are engineer. At the entry level, it emphasizes on selecting candidates who find the companys culture satisfying, superior academic records, technical skills and high learnability. The company emphasizes on training and development of it s employees on continuous basis and spends around 3% of revenue on up gradation of employees skills and 50% as employee cost. It maintained highly matured process oriented training methodology and infrastructure. Strategy: Infosys has adopted client focus approach for achieving growth. Its objective is to focus on limited number of large and medium organizations throughout the world. In order to cater to the client, it emphasizes on custom built soft wares. Another differentiating factor is it quotes for premium margin. The company doesnt negotiate on margin beyond a certain limit
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and sometimes walk out rather than compromise on quality for low cost contract. Hence it has differentiated it self as quality driven model not cost driven model. It has strong engagement with existing clients. It also focuses on value added services to new clients. It also focuses on increasing geographical base by planning to expand through Infosys China in China, Eastern Europe and Czech Republic through Infosys BPO, Infosys Australia in Australia and in Latin America through Infosys Mexico. Infosys also focuses on enhanced solutions through consulting, Business Process Management, System Integration and Infrastructure Management. It has also deep industry knowledge in BFSI, Telecommunications and Manufacturing Sectors. It also invests on brand building through media and Industry analyst events etc. It also believes in organic growth through risk aversion and enhancement through new technology innovation with various partners. Shared Value: The shared values include C- Customer Delight, L Leadership by Example, I Integrity and Transparency, F Fairness, E Excellence (CLIFE). Structure: The organizational structure at Infosys includes free form, Flexible Team structure, equality among employees etc. Skills: Infosys has employed domain specific and technical certification, competency building measures. It has been CMMi level 5 for process capabilities. It has devised strategy for achieving break through performance results using the balance scorecard.

3.2.2 SWOT Analysis of Infosys:

Strengths: Leadership in sophisticated solutions that enable clients to optimize the efficiency of their business. It has proven Global Delivery Model. (GDM). Commitment to superior quality and process execution. Strong Brand and long term client relationship. Status as an employer of choice in 2004. Ability to scale up. Innovation and leadership. Weakness: Excessive dependence on US for revenues 67% revenue from USA Excessive dependence on BFSI sectors for revenues. Weak player in Indian market. Only 1% revenue from India. Low as compared to TCS. Low R&D spending as compared to other global IT companies. Only 1.3% of total revenue. Rising wage bill. 42.9% to 44.8% of revenue. Low expertise in high end consultancy and KPO.

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Opportunities: Domestic market to grow by 20%. Expanding into new geographies like Europe, Middle East, Latin America, China etc. Cash Rich (around USD 1 Billion) Acquiring companies to increase expertise in consultancy, KPO and package implementation capabilities. Opening new offices and development centers in cost advantage countries such as Latin America and Eastern Europe. Aggressive strategy of expansion of ADMs, BPO, and software products into emerging markets. Diversification into new areas such as aviation, telecom and health care. Threats: The economic pressure, rising wage, pricing pressure in India and abroad. Intense completion in market for technology services could affect cost advantage. High dependency on a small number of clients and loss of major clients could impact adversely. Failure to complete fixed priced, fixed time frame projects on time. So the company needs to shift to Time and Money kind of projects. Indian currency fluctuation Termination of client contracts can be terminated without cause or little notice or penalty.

SWOT Matrix

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3.2.3. Business Model of Infosys

Exhibit XXVI: Business Model of Infosys over the years

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3.2.4. Infosys BCG Matrix

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3.2.5 Analysis of Strategy of Infosys

Corporate level Strategies: Global Delivery Model: Producing where it is most cost effective and selling where it is most profitable. Moving UP the value chain: Getting involved in a software development project at the earliest stage of the life cycle. PSPD Model: Predictability of Revenues, sustainability of revenues, Profitability, DeRisking for Risk Management. Actions Taken Expansion into low cost countries like Mauritius, Philippines, Thailand, Mexico etc. Improved Quality capabilities - CMMi Level 5 Emphasis on delivering high value services Currency hedging for predictability of revenues. Investing heavily in training centers. Generic Strategies: Low cost Global delivery Model (24/7) Little differentiation in low-end services of value chain. High differentiation in high end services in value chain like software products and package solutions. Focus on Quality, Customer relationship management, timely delivery. Market Penetration and Development Strategies: Current Markets: USA and Europe Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and retail) and software products (financial products Finacle). Recommendation: As most large clients in US and Europe are cutting costs post recession, Infosys needs to be more aggressive on cost and quality front. Since these are fast developing IT market, Infosys needs a paradigm shift in focus from US and EU markets to markets such as India, Middle East, Eastern Europe and Latin America, China, Philippines. Result of strategy: Unlikely to yield good results. Product Development and Diversification Strategies: Current Market: USA and Europe New Product: Consultancy and package implementation services in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services. Recommendation: Concentrate on building expertise in these domains by strategic acquisitions. Changing Brand image from low value service provider to high value service provider.

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Result of Strategy: Likely to have good result. (better the company acquired, the better the result for Infosys) and long term strategy to change brand image interms of diversification. Other Strategies by Infosys: Concentration: 90% of Infosys revenues from American and European nations. Vertical Integration: Infosys 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. Future Strategies to be followed by Infosys: 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. 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. Provide high end services in value chain. Consolidation among key IT players. Compromise on High margin for sustainable growth. In order to increase revenue growth, only organic growth will not help the company.

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Strategy Successful or not?

Infosys is one of the most successful global IT Company.

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3.2.6 Opportunities in IT Industry

Exhibit XXVII: Perceptual Mapping of Infosys with respect to other IT companies This represents huge opportunities for Indian IT players in consulting domain.

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3.3 Wipro's Mission, Vision and Values

Mission: Quality: According to Wipro: No longer is Quality perceived to be just a buzzword in the corporate aisles, its touching our customers lives in more ways than we can imagine. Vision: Having already achieved the pinnacles of process and quality credentials (through ISO 9000, SEI CMM, PCMM and Six Sigma), Wipro's Vision is focused on attaining leadership in the areas of Business, Customer People and Quality.

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Values: Wipro Beliefs (1971) Wipro as an organization had the following beliefs for a long time. These were Respect the individual. People are our greatest asset. Achieve and maintain a position of leadership in each of the businesses we are in. Govern individual and company relationships with the highest standard of conduct and integrity. Serve our internal and external customers through Defect free products, services and processes.

3.3.1 Companies under Wipro Umbrella

3.3.2 Environment
Wipro: Exploring the external environment

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1. Demographic and cultural forces: Wipro being a multinational operates across different continents and variety of cultures. One of the major challenges for Wipro is to adjust to and sustain common organizational culture in the world of Mergers and acquisitions across geographies. 2. Environmental forces: The various environmental forces viz. Natural forces such as calamities and other forces such as various social factors such as Anti Outsourcing demands in US affect Wipros day to day business. 3. Economic forces: Various Macroeconomic factors such as Forex rate, Inflation effect Wipros working. 4. Technological forces: Wipro being a Technology oriented firm has a major impact of change in Technology on its business. Some of the key stakeholders in Wipros Business are:Customer Wipro being a service organization believes in the theory Customer is King. As per there guiding principle Spirit of Wipro they believe in making customers successful. With its prominent presence across economies, Wipro boast of several Fortune 500 clients. Competitors Wipro faces competitions from home companies such as Infosys, TCS as well as some of American giants such as IBM, Accenture and other IT Services organization. Employee With around 100,000 employees across 56 countries, employees form the critical part of Wipros business. There are several employee empowerment programs conducted as well as employees are provided ESOP options. Government and regulatory bodies In India Wipro is guided by IT Acts as well as by Nasscom. Various government decisions such as SEZ policy, STPI policy, Forex Rate affects Wipros business.

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3.3.3 SWOT Analysis of Wipro

Strengths: Global R&D facility twice as large as TCS and Infosys. Retention of the man-power is the best in the industry. Impressive list of clientele. Relatively lower receivable compared to the industry average. Weaknesses: Low operating margin of the other group companies. Free floating stock is very less. Over dependence on US and European markets. Opportunities: In the branded product category. In the consultancy area. In the emerging technology areas like Blue Tooth, WAP etc. Threats: Increasing cost of human capital. Slowdown in the US economy. Will face fierce competition in the areas of e-business and ASP services. Increase in English speaking people in china. While strengths and weaknesses of the Indian software sector have been an outcome of the past decisions and initiatives, what lies ahead is well captured in the opportunities and threats. While Indias share in the global technology marketplace continues to remain miniscule (at 1.8%), this presents an opportunity for Indian software companies to increase their penetration into newer markets and newer domains. Further, as more global companies are looking towards outsourcing their tasks to Indian software companies with a view of becoming more cost competitive, the imperative for the former (Indian software companies) lies in moving rapidly up the software value chain, into high-end domains like telecom and banking services. In this initiative of moving up the value chain, Indian companies are then likely to benefit from the scale advantages of the selling and marketing expenditure that have been made in the past. Talking about probable threats to the fortunes of these Indian tech companies, the most serious being the successful replication of the Indian off shoring model by the global tech biggies like EDS, IBM and Accenture. While, at present, most of the managements of Indian software companies are of the belief that it would be rather difficult for these global giants to completely replicate the Indian model owing to the changes that they would have to make in their revenue and cost structures, as and when these MNCs are successful in the replication process, it would pose tough times for the Indian companies. Finally, Indian software companies, in retaliation to increasing pressure due to global economic slowdown, have reengineered their business models and widened their service base through moving up the software value chain. Not only have these changes helped these companies in improving their financial performance, even the stock markets have rewarded them as seen by the rally that these stocks have been witnessing since their April 2003 lows. However, there have been several bouts of volatility in between this rally and the rapid rise witnessed in the month of November raises some serious questions regarding the sustainability of this rally.

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3.3.4 Shareholding Pattern

The company has an equity capital base of Rs.45.8 crore and the number of shares are 22.92 crore. The face value per share is Rs. 2. The share is currently, as on 18th May, 2001, is trading at Rs.1642.60. The market capitalization of the company is Rs. 37648.39 crore. The Indian promoters are holding 75% stake in the company. The free float available in the market is 18.5%.

Wipro: Financial Analysis Revenue Breakup of Wipro

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Stock price for past 2 years of Wipro

3.3.5 BCG Matrix: Wipro SBUs

Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. Cash cows use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. However if needed, any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept.

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3.3.6 Wipros six dimensional Strategy

The six key market facing dimensions of Wipros strategy to grow, and to help make customers successful are: Comprehensive Service Lines: Their differentiated Services, Infrastructure Management Services, Testing Services and Package Implementation will help them to continue their rapid growth. They are building on their leadership in high-value and niche area like Security Consulting and Outsourced R&D Services. They have recently acquired Info crossing will help manage long term Managed Services contracts. Technology Investments: They have knowledge of the new technologies that are changing the fundamentals of doing business. They have made significant investments in technologies like SOA, Unified Communications, Rich Internet and Web 2.0. These are geared to leverage these for customers. Applied Innovation: Key to sustainability of success would be the drive for Innovation and continuous improvement. Investments and focus on driving Innovation to cut costs, reduce time to market and improve reliability for the customers is a significant differentiator. Innovation is a culture that needs to be created consciously and pursued assiduously by the organization, and everyone in Wipro can contribute to this effort.

Market Expansion: They are continuing to invest in all their markets. They have announced new development centers in Monterrey, Mexico, Detroit and Atlanta. They are looking for places where they can be close to clients, places that have a good education and are affordable. As their mix of business is changing and they are moving up the value chain, they need more face time with the Customer
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 and these centers are a great strength for that. See figure 4 appendix. They also have headroom for growth in emerging markets like India, the Middle East and Asia. They have recently created a joint venture in Saudi Arabia and announced plans to enter Egypt. Some of other key markets like France, Germany and Japan are maturing very fast on outsourcing and will fuel future growth. Strategic Alliances: As the industry matures and resources are constrained, partners become even more critical in Capturing client mindshare and addressing the market need for new solutions. As Wipro is best Positioned to be the global system integrator, they have identified alliances as an area for market Differentiation. They already have three key strategic partner relationships and expect that revenuesfrom this channel to contribute at an increasing pace. Customer Engagement: They are systematically investing in a stronger account management team for all the key accounts. The Mega/Gama Account Management initiative launched last year, targets both at larger accounts and those which have the potential to become large accounts. Again, in this effort each one in Wipro can contribute by seeking opportunities to create value for these customers and by executing better and better. The backbone of all the market facing initiatives by Wipro is its deep commitment to execution and organizational excellence driven by the Wipro Way, and to the Spirit of Wipro, which each and everyone demonstrate in their action every day.

3.3.7 Globalization Strategy

1. Past strategies: Growth has four faces: organic; acquisitions; diversifications and joint ventures. Premji's growth strategy over the past years shows a marked change from earlier patterns. Between 1966-2000 Wipro grew through diversification, partnerships and organically, through innovations it pioneered. Today, growth is also through acquisitions and borrowed ideas, and there are fewer partnerships. Interestingly, Premji's entry into the BPO (business process outsourcing) was remarkably late in coming, and seems to be a somewhat knee-jerk reaction to slowing growth rates in his core businesses. In July 2002 Wipro acquired Spectramind in a Rs4320mn deal. The takeover caused a few rumblings amongst analysts who felt that Wipro overpaid for India's largest non-captive call-centre (GE's operations in India are estimated to be larger) but Spectramind is already a growth driver, contributing about 4% to Wipro's total revenues. Moving up the value curve is another growth strategy. It is no secret that Premji would like Wipro to join IBM and Accenture in the sophisticated and lucrative tech consulting business, helping customers design their IT systems, and not labor in the lower level space of offshore coding. Moving towards this goal, he bought NerveWire Inc, a financial services consultancy located in Newton, Massachusetts, for Rs912mn. The next shot in the arm was the November 2002 acquisition of American Management Systems Inc, a Boston based 100 person energy practice, for Rs1152mn. Today research led consulting represents 7% of Wipro's revenues, up from zero two years ago. Enroute he has made some impressive gains: in April 2002, Wipro won a contract to provide tech services to the Scandinavian TeliaSonera, beating world leaders like Oracle Corp on their own turf.

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2. Recent strategies: IT Services and Products segment accounted for 69% of the Company's revenue during the fiscal year ended March 31, 2006 (fiscal 2006). Wipro provides its clients customized IT solutions in the areas of enterprise IT services, technology infrastructure support services, and research and development services. The Company provides a range of enterprise solutions primarily to Fortune 1000 and Global 500 companies. Wipro addresses the banking and financial services segment, the manufacturing sector, and the retail, energy and utilities industries through its range of service offerings. The Company's enterprise solutions division accounted for 63% of its IT Services and Products revenues in fiscal 2006. Wipro Technologies is expanding its portfolio of IT services by offering high value services such as IT consulting and systems integration, bringing it into direct competition with global IT consulting giants like Accenture. Wipro's strategy revolves mainly around three points: Service line expansion - Wipro will build a full port- folio of technology services. The company has already added a number of new services such as package implementation, infrastructure outsourcing (including remote network management), business process outsourcing and so on. Quality leadership - Wipro has been well-known for embracing cutting-edge quality standards such as six sigma. It has also begun six sigma consulting in an effort to become a global six sigma leader. Investing in human capital - Wipro Technologies is investing a lot in training, not only onthe technical side but also on teaching its engineers how to be consultants. The company's employees, who several years ago were basically "code cutters", have demonstrated the ability to take on large, complex projects and run them out of India. Now, they must be able to develop a peer-like relationship with customers, persuading customers instead of just accepting direction and doing a good job of execution. The Company develops strategies and implements solutions for its clients to manage multiple sources of data for use in their decision-making processes. Wipro uses its expertise in package software to architect, implement and maintain client-specific solutions. The Company also provides consulting services. Wipro provides offshore testing services. The Company's service portfolio in testing covers the entire gamut of user needs from product concept to deployment, across the stages of the product/application life cycle. Effective as of July 1, 2005, the Company reorganized the Global IT Services and Products segment into two operating segments: IT Services and Products, and BPO Services. In December 2005, Wipro acquired mPower Software Service Inc. and its subsidiaries. Pursuant to the terms of this acquisition, the Company also acquired MPact India, a joint venture between MasterCard International and mPower Software Services Inc. In December 2005, Wipro acquired BVPENTE Beteiligungsverwaltung GmbH and its subsidiaries (NewLogic Technologies AG), a European system-on-chip design company. In April 2006, the Company acquired cMango Inc., a provider of business service management (BSM) solutions. In May 2006, Wipro acquired, subject to completion of certain closing conditions, Enabler, a Europe-based retail solutions provider. In the same financial year, Wipro Technologies announced yet another acquisition Finlandbased Saraware Wipro's third acquisition this financial year. The company has spent over Rs 400 crore on the acquisitions and added around 1,600 employees In May 2006, the Consumer Care and Lighting segment acquired North-West Switches business from North-West Switchgear Ltd, an Indian company engaged in the business of switches and sockets.
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Wipro competes with Accenture, EDS, IBM Global Services, Cognizant, Infosys, Satyam and Tata Consultancy Services. Wipro GE Medical Systems Private Limited is a joint venture with General Electric. General Electric holds 51% of the equity in the joint venture and Wipro holds 49%. The joint venture provides customers in South Asian markets after-sales services for all GE Medical Systems products sold to them. Products offered in this market consist of GE Medical Systems products manufactured worldwide and portable ultrasound equipment manufactured in India by this joint venture for the global markets. The Company competes with Hindustan Lever, General Electric, Philips, Hitachi Ltd., Hyundai Motor Company, UT Limited (India), Danfoss Group, Komatsu Ltd. and Siemens. 3. Strategy for Middle East: Middle East forms a critical component of our global strategy,' says Wipro. Being a rapidly growing IT services market, Middle East forms a critical component of our global strategy,' said Suresh Vaswani, President, Wipro during his visit to the region. Wipro Limited (NYSE:WIT), the Global IT Services Company, has further consolidated leadership position and has extended its commitment in the region by implementing two projects in Qatar. Wipro announced the successful completion of two projects in Qatar. The company has successfully completed the Engineering Consultancy and IP Telephony testing project for Qatar Petroleum for the proposed QP Complex and also implemented an Enterprise and Desktop management suite for College of North AtlanticQatar campus. This 11-month project involved Wipro consultants working on designing, architecting and testing the solution in Qatar Petroleum. The IT major implemented the project on time and within schedule. Furthermore, the company also implemented HP Openview Enterprise Management suite for College of North Atlantic in Doha, Qatar. Some of its customers in the region include-Doha Bank, Gulf Insurance Company, Sharjah Electricity and Water Authority, Dubai Metal and Commodity Center, SPC and Dubai Municipality among others. Wipro delivers high end IT services and consulting services to its client in the Middle East region through its two regional offices. One in Dubai Internet City handling operations in UAE, Qatar, Oman and Kuwait, and the second at Al Khobar catering to Saudi Arabia and Bahrain. 4. Strategy for west Asia: WIPRO sees a tremendous synergy in the Indo-Gulf markets and it aims to further strengthen this relationship in the years to come, according to Mr Rajat Mathur, Vice- President, International Operations. Speaking at the recently-concluded IndiaGulf Partnership Summit in Dubai, Mr Mathur said that West Asia and the Gulf were moving into higher value services as IT was increasingly relied upon to drive business momentum. He said this region formed a critical part of Wipro's global business strategy. "Wipro as a company is extremely committed to building a strong customer base in the UAE and across the region. We are confident that our efforts in bringing best practices will spur healthy growth of ICT industry in UAE,". In 2004-05 alone, Wipro had year-on-year growth of 85 per cent in APAC/Middle East region. In Q2, 2005-06, the company had a growth of 28 percent in the Asia Pacific/Middle East region. In Q2 ending September 2005-06, Arab National Bank, Saudi Arabia, selected Wipro as its partner for managing the data centre operations of the `Disaster Recovery Centre'. In addition Manso Group, a diversified business group in KSA, having interests in petrochemicals, steel, laminates and transportation business has chosen Wipro to Implement Enterprise Application Platform - SAP Enterprise Version.

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5. European market perspective: (1) Fragmented market: Distinct streams of customer behaviour across Europe High cultural and linguistic diversity (2) Regulated market: European Union and country-level regulations Global Delivery Model adoption is lower (3) Demographic profile: Ageing work force Decline in computer science graduates in Western Europe High adoption of telecom technology (4) Customer uniqueness: More detailed and demanding on service delivery IT groups focusing more on business value and Return on Investment 6. Strategy for future growth

Wipro, a leading India based provider of IT services, has drawn up its strategy to become a world leader in the field. The company has stated in its latest annual report that the markets addressed by it are undergoing rapid change due to the pace of technology development and change in business models. It believes that these trends provide significant growth opportunities. Wipro expects to significantly grow its global IT services business and the percentage of its total revenues and profits contributed by this business over the next few years. It hopes to achieve this
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objective by identifying and developing service offerings in emerging growth areas as separate business opportunities, such as infrastructure support services, business intelligence services and telecommunication, internet and application service providers. It is also planning to aggressively develop the research and development services by focusing on high growth markets such as telecommunication, mobile communication and the internet and high growth technologies such as embedded software. Also, the company will be leveraging its experience in providing IT services in the Indian market and its access to existing clients outside India to provide global support services. The intention is also to increase the number of clients through a dedicated sales team focused on new client acquisitions and increasing its presence in Europe and Asia. The goal is to make every new client account earn over $1 million in annual revenues within twelve months. Also the company intends to increase its share of business with existing clients by expanding its range of IT solutions and by increasing its knowledge of industry segments and individual client businesses to allow it to better understand client requirements. The focus would be on improving operating margins by increasing the revenue per IT professional by providing higher value added services, increasing the number of productized services and increasing the proportion of the company's fixed price contracts. In India, the growth plan includes offering a full service technology solution including systems integration, support services, software and networking solutions along with branded hardware products which the company hopes would enhance profitability significantly. The company is also planning to pursue selective acquisitions of IT service companies that would allow it to expand service offerings and acquire additional skills. This would strengthen its relationships with clients and allow the company to realize higher revenues from them. In pursuing acquisitions, the focus would be on companies where a significant portion of their work can be moved offshore to India to leverage the company's low cost offshore delivery model and realize higher margins. Traditional business: The Company has been in the consumer care business since 1945 and the lighting business since 1992. The consumer care business has historically generated surplus cash for the company to be able to grow in other businesses. The strategy is to maintain a steady growth in operating income through efficient capital utilization, strong brand name recognition and expanding nationwide distribution network It has put through half a dozen acquisitions over the past 12 months. There are three types of regions we want to be in. One is emerging markets, such as India and the Middle East. The Middle East is a huge growth area. In places like Dubai and Saudi Arabia, there are no players who hold a monopoly and we have long ties there, so its a good market for us to target. Were also looking at developed countries where the outsourcing market has not matured yet, like Japan, Germany and France. And the third is new markets like Canada or Mexico. If youre looking at why we open specific development centres, sometimes its purely to get access to certain skills in that particular market. We did some acquisitions in Austria and Finland because we do a lot of wireless work. Another reason we might open a specific centre is for proximity reasons. Were looking for places where we can be close to clientsplaces that have a good education system and are not terribly expensive. As our mix of business changes and we move up the value chain, we need more face time with the customer. Thats why were opening the centre in Atlanta and were looking for two other cities in the U.S. Were growing so muchwe already have over 8,000 employees in the U.S.it made sense to have a dedicated centre there. Similarly, we have
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locations in Portugal because its a lower cost centre to serve the European Union market and it has a retail focus. A third reason we might go into a specific area is because clients want us to have operations there. Were opening a centre in Mexico because one of our clients had a presence there. Its a client-centric strategy.

3.3.8 Acquisition and Restructuring Strategy

Wipro has embarked upon a clear acquisition strategy to fill up gaps in its service offerings. The strategy entails adding pearls to the string to create a string of pearls, implying a complete set of services technology and domain expertise that the company endeavours to build to offer to potential clients. Each of the companies it acquires operates in niche areas where Wipro did not earlier have a presence. Wipro planned an aggressive inorganic growth strategy based on acquiring entities in new markets and geographies. Working closely with the Cisco Internet Business Solutions Group (IBSG), Wipro crafted a comprehensive strategy for building the internal competencies and capabilities to integrate new companies rapidly and ensure that new acquisitions deliver desired results. Wipro executives recognized that to fully integrate a new company into a single, global Wipro culture, the assimilation had to be comprehensive and begin on day one, starting with combining disparate IT systems and processes. For a growing and global company like Wipro the complexity of integrating processes across different cultures and geographies into a single corporate environment posed an enormous challenge. Developing a strong philosophy toward acquisition integration was the most important step in building a comprehensive integration strategy. Furthermore, this philosophy had to start at the top of the organization. 1. Treat acquisitions as an ongoing corporate program fundamental to the companys success and not as an event-specific response to a particular transaction. 2. Work with business-unit leaders in sales, IT, human resources, finance, and other areas to reinforce these ideas, sharing best practices to help leaders develop the necessary capabilities to support the acquisition integration program. 3. A comprehensive IT playbook is one of the most significant outcomes of the CISCO IBSG partnership with Wipro. This playbook formalizes Wipros IT integration approach and encompasses infrastructure, applications, and security elements. 4. Wipros new acquisitions integration philosophy supports the structure and people that each functional area needs in order to seamlessly incorporate newly acquired organizations into a single, global Wipro culture Different acquisition carried out by Wipro over the years:2001-Wipro acquires American Management Systems global energy practice. 2002-Wipro acquires Spectramind. 2003-Wipro acquires Nervewire

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2005-Wipro acquires mPower to enter payments space and also acquires European System on Chip (SoC) design firm NewLogic 2006 - Wipro acquires Enabler to enter Niche Retail market .Also acquires Finish Company called Saraware 2007 - Wipro acquires US's Infocrossing for 600mn. 2008 - Wipro acquires Gallagher Financial Systems to enter mortgage loan origination space. 2009 -Wipro buys Yardley businesses for $45.5 million Acquisition of Infocrossing In August 2007, Wipro announced its acquisition of Infocrossing, a US based provider of business process outsourcing and infrastructure management solutions. The deal was worth approximately USD 600 million, and is the largest acquisition by an Indian software solutions provider. This was also the first listed company that Wipro has acquired. Infrastructure management services was identified by Wipro as an area of good growth, and hence the acquisition. Through the deal, Wipro has gained access to five data centers in the US and expertise in the areas of server management, mainframe outsourcing etc. Extract from a Forrester research report The move separates Wipro from its offshore competitors like Satyam and Infosys Technologies and, more importantly, represents a new threat to the incumbents, such as IBM, Hewlett-Packard, EDS, Computer Sciences Corporation (CSC), and Dell. With the acquisition of Infocrossing's data centers and infrastructure outsourcing business, Wipro has gained instant credibility and a strong US presence from which to continue its expansion of services beyond applications development and maintenance. The acquisition has already started producing results Wipro Infocrossing recently won a deal worth USD 275 million outsourcing deal. The deal is to provide business process outsourcing and IT services to Missouri HealthNet Division. The above cases show how Wipros reading of trends and its proactive approach to change has benefited it in the long run.

3.3.9. Innovation Strategy

Applied Innovation The fact that innovation is incorporated in Wipros statement of purpose is indicative of the importance given to innovation in the organization. Wipro has strived consciously to make innovation a part of everything they do in the organization. Wipro recognizes that innovation leads to better value creation for customers, and as such, drives initiatives that they think will lead to ultimate benefit for the customer. This emphasis on innovation lead Wipro to conceptualize the Lab on Hire model, which laid the foundation of the now ubiquitous global delivery model for software services. In order to ensure that this focus on innovation remains constant, Wipro has constituted two formal bodies to deal with innovation. One of these bodies makes strategic decisions on all matters pertaining to innovation, while the other assesses the potential of ideas received from employees. Several channels are open to employees to provide new innovative ideas and take them to fruition. The internal employee self help portal can be used, the business unit to which the employee belongs can be used, and innovation teams can be setup to

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implement new ideas. All of these are proof of the importance of innovation at Wipro. Wipro has recognized quite clearly that in order to survive in the highly competitive business environments of today, creating continuously improving value for the customer is essential. This can be done through the improvement of existing processes and systems, or the setting up of new ones. Innovation cannot be owned by a business group or a group of individuals. It needs to be driven by all the employees in the organization, and the culture of innovation needs to be ingrained in the employees. This dedicated attitude to innovation has yielded impressive results, from a cross industry rapid application development framework to a Business Process Management framework that reduces the cost of running a business and increases agility and productivity. Source of innovations Big ideas often come from customers. Big ideas can emerge from constant interaction. Several unsaid things can be elicited and developed making way for big innovations. Meaningful dialogues with customers will go a long way in delivering excellent products. Innovation also comes from hiring hire people who are from different work cultures and see to it that they grow in the organization and are not pushed out in the long run. Complacency kills creativity. Complacency should be rooted out of all levels of management. Difference between innovation and creativity According to Wipros Chairman Mr. Azim Premji there is some subtle difference between Innovation and Creativity. While innovation is 'doing' things differently, creativity is all about 'thinking' differently. Innovation is essentially the application of high creativity. It need not be restricted to just products; it applies to services, employee attitude and across all levels. Innovation is a fundamental mindset pursued seriously by an organization. It is imperative to imbibe the culture of innovation. There is a need to include more people with a creative bend. India is known for its great art and literature. The same spirit must be incorporated in business and economics. Innovation at Wipro Wipro has three types of innovation: technology innovation, process innovation and delivery innovation. At the apex end, they have an IT management council, where normally all decisions about breakthrough innovations or quantum innovations are taken. To assist the IT management council, they have an IT innovation council, where they go through four gates before an IT project gets done. At Wipro, 5% of the total revenue of $3 billion comes from innovation projects. And to top it, Azim Premji, Chairman gets involved in key innovative projects. At Wipro every year a fixed amount of revenue per year is earmarked for innovative projects, largely for quantum innovations and those that lead to process innovations. Wipro is working on building brand awareness in the U.S. According to Paul, CMO Wipro, Its driven by a need to differentiate. In the past, we could say were an Indian offshore provider. Now everyone else has set up shop in India, so now we have to figure out what makes us different not only from Infosys and TCS, but also from Accenture and IBM. We did a study to figure out what we could use that others hadnt talked about and was relevant to us. One of the things that differentiate Wipro is that for the last nine years weve had an innovation council. Any employee could say, I have a great idea, and we would fund it for three years. We had some real success with that initiative as a way to get ideas from the ground up. At the corporate level, were one of the few service providers who has a target for revenues from innovation. We have a goal of 10 percent by 2009. At the end of [March 2007], we had 7.5 percent of our revenues generated by innovation, so we
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think well hit our goal. The other thing is that one-third of our IT services revenues comes from R&D outsourcing, which allows us to offer end-to-end IT service and gives us access to new technologies. Putting it all together, we came up with the message of applied innovation. Its not pure innovation. Its not new technology or IT patents for their own sake. Its innovating for clients to cut costs or reduce time to market or improve reliability. For example, Wipro invests in building techniques for software quality such as lean software development [a translation of lean manufacturing principles and practices to the software development] and Six Sigma, but in the past you never really knew what the benefit was. Now we can say that weve done it on 600 projects and seen an average cycle time reduction of 20 to 30 percent. So were able to say when we share this innovation with you, this is how much youre going to save. Awards for Innovation Awards recognizing Wipros approach and results in the area of innovation have been numerous dating as far back as 1993.

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3.3.10 Green Strategy

In September 2009, Wipro Ltd (Wipro), a global corporation in the Information Technology Enabled Services (ITES) industry which was head-quartered in Bangalore, India, was reviewing its Green IT plan. Wipro had been taking steps since 2006 in the larger context of climate change. Some of them were in the only measures of their kind in India. The company had articulated a goal of becoming carbon neutral by 2014. It had set up a governance council, called EcoEye, comprising seven senior managers three of whom were reporting directly to the companys chairman in their functional roles. The council had endorsed 120 projects aimed at carbon neutrality. Wipro had also diversified into manufacturing and marketing computer hardware it called Greenware. The company had identified Green IT as one of its ongoing innovation themes which were meant to unearth opportunities for getting into businesses and product lines that will make a big difference to our customers. It had set up a team, spun off in June 2008 from the EcoEye pool and expanded gradually into a 35 member enterprise-wide virtual squad, led by Raghuraman Kalyanaraman, a Wiproite since 1994. Drivers of Green IT Green IT was defined as optimal use of information and communication technology (ICT) for managing the environmental sustainability of enterprise operations and the supply chain, as well as that of its products, services, and resources, throughout their life cycles. The concept had acquired global recognition with the release in December 2007 of a report entitled Green IT: The New Industry Shock Wave by Gartner Inc, a US-based IT research firm. The report was the first to reveal that the ICT industry accounted for 2% of worldwide carbon dioxide (CO2) emissions, equivalent to the airlines industry, which had long been perceived as the single largest contributor, at about the same percentage. CO2 was one of four types of greenhouse gases (GHGs)the others being methane, nitrous oxide and fluorinated gaseswhich trapped heat in the atmosphere, leading over time to the phenomenon known as global warming. The Gartner report provided a breakdown of the contribution of each component of the ICT sector to overall CO2 emissions. The emissions came primarily from data centers housing monitors, servers and other components, which were integral to the operations of IT companies. Strategic Role While quantifying the contribution of the ICT industry to CO2 emissions at 2%, the Gartner report pointed out that the industry was also strategically positioned to bring down 98% of CO2 emissions caused by non-IT industries. The influence of computing and communications technologies that it commanded could help non-IT companies in myriad industries that were regular users of IT to bring down their carbon footprints. For example, they could substitute travel with teleconferencing, reduce employee commutes with telecommuting and minimise transactional delays with e-governance. Each step, however small, helped in achieving the larger goal or reducing emissions. Green IT was thus not about IT industry alone. It was a lot about non-IT industries discovering better ways of doing business. Green IT was also not about reducing the overall carbon footprint alone. It was about a world of opportunities for IT companies to generate new streams of what was being called Green revenue. Green IT thus had a spin-off - IT for Green. At its simplest, Green IT helped IT companies reduce their own carbon footprint while IT for Green enabled them reduce the carbon footprint of their clients.
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Ever since the Internet made a debut during the early 90s, the IT companies had been in a rush to deploy the fast-paced advances in web and mobile technologies. As a result, although they were helping clients improve their efficiencies, they were hard-pressed to pay attention to the efficiencies - or otherwise - of their own internal processes. For example, for every 100 kilo-watt hours (kWhs) of electricity supplied by a power company to a typical data centre, only three kWhs are actually doing productive work. The remaining 97 kWhs are consumed by first powering and then cooling under-utilised hardware. It was the cumulative effect of such micro-level wastages that had led to the ICT industrys contribution to global warming as highlighted by the Gartner report.

Exhibit XXVIII: Green Initiative of Wipro

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3.4 Suggestions and Recommendations

Product Diversification: All the major Indian IT companies especially Infosys can move to related-diversified towards telecommunication and Mobile handsets in India, which is a 3rd largest user for Mobile phones and other emerging countries. Strategic Business Units which are right now in question Mark (BCG Matrix) should increase their market share by implementing long term strategies to become in the star mark (BCG Matrix). Both Infosys and Wipro should strengthen the domestic market as well by taking the advantages of liberalization and Globalization. Establish presence in emerging markets such as Brazil, China, Korea, where there is a huge potential for further growth. Since being the first player in the market results in market leadership in subsequent years when the market is more open and attractive for other investors. Infosys and other major Indian IT Industries should try to improve net profit margins to improve its valuations in the coming years. Infosys and Wipro can take the strategic advantage of growing market demand of retails which is booming in Indian Market by having strategic alliance with different Retail Companies.

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4. REFERENCES
Indian IT/ITes Industry: Impacting Economy and Society: 2007-08 A NASSCOM and DELIOTTE Study IT/ITeS Market and Opportunities IBEF (India brand equity Foundation) NASSCOM Strategy Review 2009, 2008, 2007 Annual Reports and Quarterly reports, Infosys 2008-09, 2007-08, 2006-07, 2005-06, 200405, 2003-04 SETLabs Briefings. VOL 3 NO 3. BUSINESS INNOVATION through TECHNOLOGY. Jul Sep2005. STRATEGIC MANAGEMENT. OF INFORMATION. TECHNOLOGY SETLabs Briefings. VOL 3 NO 4. Oct - Dec 2005. Management (IEFM) Investor Presentations, Infosys - 2008-09, 2007-08, 2006-07 NASSCOM McKinsey Report 2005 JM Financial Report on Infosys February 2, 2008 Emerging Destinations for IT/ITeS Industry NASSCOM and KPMG Report Journal of Cases on Information Technology, 7(4), pp. 127-142, 2005 ww.gfe.de/Publication/IndianSoftwareIndustry.doc www.infosys.com
www.wipro.com

www.moneycontrol.com www.nasscom.org www.nasscom.in www.indianembassy.org/indiainfo/india_it.htm

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