Case Summary:

Infosys technology is a billion dollar company with over 58000 employees all around the
world. Infosys operates in a number of business ventures that range from banking to retail
and services provided by the company mainly focuses on end to end IT solutions. The
company in 2004, established a strong brand equity and began to look for ways to combine
its excellent reputations with service by launching a consulting unit. The company did not
believe in acquiring existing companies as they thought it was not a viable option and solely
focused on creating its own brand that was Infosys Consulting (ICI). This consulting unit was
a wholly owned U.S based subsidiary. By the year 2006, this subsidiary employed over 200
employees. Through their model of low risk global delivery they accelerated their client
schedules and at the same time reduced the companys operating cost.
ICI focuses on providing consulting and IT services to the client globally and is driven
mainly to compete with consulting firms such as IBM and Accenture. Indian companies like
Infosys technology began to expand primarily because the US firms had gained confidence in
working with them as they offered high quality services at low price points. In order to
expand the company decided to carry out repeat business with the client base and also offer
clients new opportunity to work with the company. Company employed a Global Delivery
Model, this approach was called one-one-three model. The value proposition of the one-onethree model was to offer business consulting resources on site at the market rate for premium
business consulting services, an on site IT implementation resource at the rate that was lower
than the average on site developer, and three developers off shore at lower than the market
rate. Although the model was not difficult to learn but there was a structural challenge
involved in replicating it. Hence, the competitors would take sometime in replicating the
model.This gave the client on one ICI resource on site, one Infosys technology resource on
site, and three Infosys technology resources off shore (in countries like India, China,
Australia, Mauritius and Czech Republic)
By shortening the life cycle of solution designed, the subsidiary unit ICIs approach entailed
in looking at the process requirements rather than the functional requirements. The subsidiary
ICI in order to build a unique culture decided to differentiate from the other businessconsulting firms while maintaining the attributes required for successful consultancies and
adopting the essential values of the parent company Infosys. ICI also focused on hiring the
right kind of people who they felt was convincing enough to get the job done. They also tried

to hire more women. The goal of the company was also to hire more and more representatives
from the local communities, as currently most of the employees in the company were Indian.
Hence, to really emerge as a global company they needed more local representation. ICI also
decided to build an organization structure based on meritocracy and transparency. The firm
also purchased an auctioning module for its staffing system so that employees could bid on
projects in a reverse auction.
ICI generally compensated employees at the higher end of market rates. They came up with
an internal program called One Infi for improving internal collaborative mechanisms. Both
the parent company and ICI worked together to create a methodology known as the fork in
the road where the pursuit of client relationship would be allocated to the area of the
company that best served the clients situation.

Questions and Answers:

1. In2006, how well is Infosys Technologies doing? What is the companys strategic
position in the IT industry and what are its distinctive competencies? Where does it fit
in the industry value chain? How would you describe its culture?
Ans1. In 2006 first quarter Infosys technology revenue by 30.3% to $ 593 million and net
income increased by 19.6% percent to $152 million from the previous year. The profit
margins for the company fell by the end of the quarter in March to 26.3% from 29.4% in the
previous quarter. The company also faced stronger rupee, higher depreciation on buildings
and equipments and accelerated hiring for the fall off and there was a 15% wage in the
spring. Infosys technology was expecting a profit margin of 28% to 30 % for the fiscal year
2007.
The companys strategic position
When comparing the Infosys technology with other It industries:

Higher buyer power

Commoditized technology
Many providers
Dependency on large firms

Low supplier power

Many resources available at low cost

High competitive rivalry
Fragmented market
Many players
Not much differentiation
Moderate switching cost
Low threat of substitutes
Moderate threat of new entrants
Difficult to copy brand value

Distinctive competencies of Infosys Technology are:

Global Delivery model: In which the projects are broken down into logical components
which are then distributed to onside and off shore locations where they can be delivered at
maximum value. This results lower cost, faster implementation lower risk and measurable
value. Through this they are innovating to meet the new customer needs.
Culture of the company:

Delivering high quality work

Measuring every aspect of performance
Maintaining a sense of humility
Open and transparency in doing work

2. Why did Infosys Technologies decide to move into the IT consulting market
segment? How big is this market segment and what is its structure? Why did they form
a wholly owned subsidiary to enter this market segment?
Ans2. Infosys Technologies by the year 2004 was billion dollar company with an employee
base of 25000 and had strong brand equity in the market hence it decided to enter the
consulting market segment. They believed that the IT service space was undergoing a
disruptive change there was new way of delivering by applying the global delivery model
into this space. The company had a vision to create next generation IT services company by
combining the reputation for business execution with consulting services.
The market for the IT services was large and growing according to study done by IDC, it
was anticipated that the overall spending on the world wide IT services would at 7%
annually and would $803.9 billion. The projected growth rate for the IT consulting is 5% in
which the market largely fragmented with 2 key segments

on- shore consulting and off-

shore IT service players. The majority of the market share is held by Accenture and IBM. IT
consulting is considered as a subset of the overall it services market.

The company believed that if they subcontracted the consulting to some other company then
the Infosys brand would get diluted. The objective of the company was to have control of the
client account so a partnership wouldnt be the best interest of the company. They also
believed that joint ventures had limited validity as there would be a conflict in objectives
which would result in the overlap of the businesses as the partners often competes with each
other.
3. In Raj Joshis words, one of the goals of the leadership team of Infosys Consulting
was to change the rules of the game What are the rules of the game currently, and
how is Infosys Consulting trying to change them? What do they mean by Global
Delivery Model?
Ans3. By applying the Infosys technologies approach to global delivery, the leadership team
at ICI believe that the firm had created a unique model in business and information
technology consulting that shorten the life cycle from business consulting to technology
consultation, reduce the cost of the typical client engagement and delivered measurable
benefits to clients. They had a different approach to implement the technology which enabled
operational improvements. Earlier if a client wanted to implement SAP to improve its
operation then the company would analyze the forms process and then redesign them. So the
traditional approach included the design phase which was different from development phase.
The specifications would be written following the process requirements and then it would be
grouped by vertical functions such as Sales, marketing etc. SAP would then be implemented
to deliver the implementations and client employees would be trained to use the technology.
The company started expanding by adding service lines to its portfolio.

Global Delivery Model (GDM)

GDM refers to the delivery of IT implementation projects using globally distributed teams. In
this the projects are broken down into logical components and distributed along three
different locations mainly, onsite, offshore and near shore where they then be delivered at
maximum value in the most cost efficient manner. It has the following advantages:
Reduced cost of offsite resources in India
Increased delivery time through 24 hrs operations
Measurable benefits of deliverables

4. How important are client relationships and institutional knowledge in the consulting
industry? How would you assess Infosys Consulting competencies in these two areas?
Does Infosys Consulting have a sustainable competitive advantage? If so, what is it?
Ans4.The client relationships are of extreme importance in the consulting industry as it helps
in repeat business with would increase the revenue. A better client relationship helps to
identify the problem and to propose and implement the solution. This results in client
satisfaction and retention of the clients. The institutional knowledge of great importance for
the consulting industry since it helps in understanding the issue at hand and how the best
possible solutions could be prepared and provided.
The following competencies are prevalent in Infosys consulting regarding client
relationships:
Offer opportunity for the clients to work with the company
Expanded services to include package implementation, R&D, infrastructure
management, system integration and BPO
Working on both the client organization as well as IT side
The competency of Infosys consulting with respect to the Institutional knowledge is the
GDM.
The sustainable competitive advantages that Infosys possess are:

strong
operationa
l skill

large
supply of
low cost
IT/process
resources

sustainabl
e
Competiti
ve
Advantag
e

unique
model i.e.
1-1-3

easy to
integrate
onshore
with off
shore

access to
ITL's
clients

5. How are IBM and Accenture likely to view what Infosys Consulting is trying to do?
How can they respond?
Ans5. IBM and Accenture are going view ICI as small player in consulting which would take
a long time to establish itself in the market segment further IBM and Accenture have a bigger
market share when compared to ICI and also have their own integrated services hence there is
no need for them to feel threatened by ICI in the short term.
The competitors can respond in the following ways:

Increase their value proposition

Decreasing buyer power and increasing competition
Integrate management and IT consulting further
Remove complexities in integration
Need not try to replicate 1-1-3 model everywhere
Use GDM for complex processes

6. What interface challenges exist between Infosys Technologies and Infosys

Consulting? To what extent do the parent company and subsidiary go to market
together?
Ans6. The interface challenges that exist between Infosys Technology and Infosys consulting
are:

by

7. What are the challenges associated with managing growth for Infosys Consulting
and for Infosys Technologies?
Ans7. The challenges associated with managing growth for Infosys consulting are as
follows:

Low brand equity

Challenge in attracting top consulting talent
Inexperience with consulting relationships
Easy replication of the GDM
Cultural clash

Increased competition
The challenges associated with managing growth for Infosys technologies are as
follows:

Over reliance on U.S economy

Limited position in the value chain
Wage inflation due to competition on talents (15%)
Threat from business models of the competitors

8. One of the challenges Steve Pratt faces is How can Infosys Consulting stay ahead of
the game? Please prepare an action plan for Infosys Consulting and assess the
companies strengths and weaknesses to stay ahead of the game in terms of its
strategic position, distinctive competencies and culture.

Ans8. The company can stay ahead of the game by leveraging with Infosys Technologies
thereby it can strengthen its position in the current market and prepare for further industry
transformation.