Presented by: GROUP 4

Jinoj G R PGP/13/23 Mohamed Sabir PGP/13/30 S M Sundarajan PGP/13/40 Sachin Kumar PGP/13/43 Vikas Yadav PGP/13/61 Shashank Murthy PGP/13/63

AGENDA
A.

IT Industry Overview Infosys

PESTLE Analysis Market Size, Share, Customer Profile PORTERS Five Forces SWOT Analysis

B.

C.

D.

A. B. C. D. E. F.

Introduction McKinsey·s 7 S Model SWOT Analysis Business Model BCG Matrix Analysis of Strategy using Ansoff·s Matrix Recommendations

G.

INDIAN IT INDUSTRY OVERVIEW

INTRODUCTION Indian economy impacted by recessionary trends, Slowdown in GDP growth to seven per cent, IT-BPO industry in India is become a growth engine for the economy, During the year, the sector maintained its double digit growth rate and was a net hirer, Growth has been fuelled by increasing diversification in the geographic base and industry verticals.

7 billion in FY2010. Software and services exports (including BPO) are expected to account for over 99 per cent of total exports. going past its USD 60 billion export target in FY2011. Indirect job creation is estimated to touch 8 million. .INDIAN IT INDUSTRY OVERVIEW-(CONT. While the current mood is that of cautious optimism.) Indian IT-BPO industry is estimated to achieve revenues of USD 79. the industry is expected to witness sustainable growth over a twoyear horizon.23 million. Direct employment is expected to reach nearly 2.

.

EXTERNAL ENVIRONMENT .

S companies that outsource IT work to other locations other than U. Government owned companies and PSUs have decided to give more IT projects to Indian IT companies. will not get tax benefit. government has declared that U.S.S. 4. U. Terrorist attack or war. Political stability: Indian political structure is considered stable enough expect the fact that there is a fear of hung parliament (no clear majority). Positive Deep -ve Positive Negative . 3.Political 1. 2.

NASSCOM 3. the layoffs and jobcuts have resulted in low attrition rate. ECOMONIC ATTRACTIVENESS due to cost advantage and other factors. Global IT spending (demand) 2. 5. Negative Positive Negative Mildly +ve Mildly +ve Positive . Currency Fluctuation 4. Real Estate Prices: Decline in real estate prices has resulted reducing the rental expenditures. 6.Economic 1. Attrition: Due to recession. Domestic IT Spending (Demand): Domestic market to grow by 20% and reach approx USD 20 billion in 2008-09 .

BREAK UP OF TOTAL GLOBAL IT SPENDING The Global IT spending is expected to decline steeply below the expected levels of $869 billion by 2010. .

FINANCIAL ATTRACTIVENESS OF TOP 5 GLOBAL SERVICES LOCATIONS ON A SCALE OF 4 India continues to the leader in terms of Financial Attractiveness .

India boasts of large English speaking population. 2. Working age population Highly +ve Highly +ve Positive .Social 1. Thus. English medium being the most accepted medium of education. Education: A number of technical institutes and universities over the country offer IT education. 3. Language spoken: English is widely spoken language in India.

to meet industry requirements .NUMBER OF IT GRADUATES IN INDIA India creates a large pool of skilled IT professionals each year.

WORKING POPULATION AS A PERCENTAGE OF TOTAL POPULATION As per NASSCOM Strategic Review report. . India is one of the few countries to have an increasing share of working population.

etc and innovation in low cost technologies is presenting new challenges and opportunities for Indian IT industry.6 per month. High-definition content. c) ARPU for GSM is USD 6. d) India has the second largest telephone network after china. New IT technologies: Technologies like SOA. Telephony: a) India has the worlds lowest call rates (1-2 US cents).86 % f) Enterprise telephone services. Highly +ve Positive Positive . e) Teledensity 19. Web 2. Indian cities and India is well connected with undersea optical cables. 3G. Internet Backbone: Due to IT revolution of Å90s. 3.Technological 1. grid computing. b) Expected to have total subscriber base of about 500 million by 2010.0. Wi-max and VPN are poised to grow. 2.

etc. Companies operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.IT Act: Indian government is strengthening the IT act. 2. 3. 4. 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.Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work. 2000 to provide a sound legal environment for companies to operate esp.Legal 1. related to security of data in transmission and storage. which is not legally required. Positive Negative Positive Mildly +ve .

water consumption. Energy Efficient processes and equipments: Companies are focusing on reducing the carbon footprints.Environmental 1. energy utilization. etc. Positive .

OPERATING ENVIRONMENT Current Position of IT ² ITES Sector of India .

0 4.5 6.4 Total Software & services revenues 16.7 -of which Exports are 12.9 12.0 40.3 6.8 23.3 . 2.9 -Exports 2.9 1.5 17.1 3.2 IT Services Exports -Domestic BPO -Exports -Domestic Engineering Services & R&D.3 8.5 13.2 4.4 0.6 0.3 FY 2006 13.9 1.1 0.5 -Domestic 0.6 FY 2009 31.5 31.1 7.1 0.3 2.5 5.4 7.0 23.5 4.3 23.3 52.7 30.3 18.INDIAN IT INDUSTRY SECTOR FY 2005 10.6 3.2 9.9 22.1 5.5 7.5 6.3 3.4 3.3 4.6 8.0 3.5 5.5 10.9 1.8 3.7 FY 2007 FY 2008 17.6 39.0 1.5 10.

1. MARKET SIZE: Revenues from domestic and export (in USD billion) More than 80% of revenues come from Exports and only 20% from domestic business .

!! . indirect employment number goes far beyond. Number of employees in IT Sector (Direct employment) IT industry provides direct employment to more than 20 lakh people.. Contribution of IT industry to Indian GDP IT industry contributes to around 5.2% to Indian USD 1 trillion GDP.

MARKET SHARE: Indian IT industry Revenue Break-up by company Indian IT market is dominated by a few large companies with presence of a number of small and medium companies .2.

hurting the bottomline of IT majors.SOURCES OF REVENUE: Indian IT industry Revenue Break-up by sector IT industry is largely dependent on Banking and financial industry. With the decline in these sectors. . This calls for exploring new verticals. the revenue from these is expected to decline.

Revenue By Geography Indian IT industry Revenue Break-up by Country of Presence (Geography)

The Americas and Europe continue to be the key markets for the Indian IT-ITeS sector.

R&D Spending of IT majors.

As compared to International IT giants, Infosys and other Indian companies are lack in R&D spending.

3. CUSTOMER PROFILE:
Major ClientsDomestic Major Clients-Global (Export Market)
British Govt., Australian Govt., Saudi and Kuwait Govt. AIG, Bank of America, UBS, JP Morgan, Barclays, Goldman Sachs, Morgan Stanley British Telecom, AT & T, SingTel, Telstra, Vodafone

Sector

Govt. and Public Railways, LIC, MMRDA, Sector Companies BMC, BPCL, ONGC HDFC, ICICI Bank, Citi Financial India, ABN AMRO India, NSE, BSE, Max New York life, India Bulls Financial Airtel, Vodafone, Reliance Communications

BFSI

BT (British Telecom) is Infosys largest client contributing 6.9% to Infosys revenue.

Telecom Manufacturing

Tata Motors, Tata Steel, L&T, Ford Motors, GM, Exon RIL Mobile Pantaloon India Ltd, Tata Sky, DLF, Apollo Hospital Pfizer, Wal-Mart, British Airways

Others

RECENT ANNOUNCEMENT OF LARGE IT PROJECTS:Region / Company AUSTRALIA Telstra, Qantas, National Australian Bank JAPAN Nissan Motor Corp INDIA LIC Most Likely IT Players/ Short listed Companies Infosys, Satyam, IBM, EDS TCS, Wipro, Infosys, Patni TCS, Infosys, Wipro, L&T Infotech

UK Dept. of works & pensions, HM Revenue and Customs, Ministry of Justice (Worth US $ 2-3 Billion )

TCS, Infosys, Wipro, Accenture, Atos Origin

.

.

RIVALRY AMONG FIRMS: High 1. clients continue the old companies. the quality companies. little-differentiation' Substitutes positioning. the Philippines 1. Demand and supply should majority power of revenues. andAMONG of its Power have an ofimpact longer the 3. However. Large number of IT companies 3. Commoditized offerings 2. Threat of 'low-cost. for the existing major differentiator. the clients has reduced tremendously. and to slowdown. are emergingjob-cuts. Eastern Europe. capacity and employee favourable to employees. 2. large companies. Low capital requirements. Availability of vast projects is a However. this of IT RIVALRY Bargaining Bargaining 2. 1. high industry growth vying for IT projects resulting Other offshore 4. few numbers of locations such as in high competition for projects. fresher's and experienced. Price quoted for talent pool continue the old 3. Huge decline in IT expenditure: posing threat to Indian IT 2. Large value chain. the and are 1. 3. Due China. space for the layoffs and bleak IT outlook. Indian IT sector is dependent on industry because of their costsmall enterprises. FIRMS recent Customers medium to long term. Barriers to Entry . the of products being same. products and services. the new spending from these strength. MNCs are ramping up professionals is noonly in that with thesupplier financial crisis. USA and BFSI in particular for advantage. Strong competitors1. 2.

.

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 . 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 India's population is less than 25 years old.

. 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.

getting higher incremental business from overlapped clients. Infrastructure. Satyam fiasco Likely to have positive impact on business considering corporate governance. 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. etc. possibility of shifting of business. and winning new business from new clients .

Global economic slowdown may continue for several years hence low IT spending globally US Govt. Increased competition from low-wage countries like China. . Indonesia etc. IBM etc. against outsourcing Shrinking margins due to rising wage inflation Rupee-dollar movement affects revenue and hence margins Increased competition from foreign firms like Accenture.

Australia. Went Public in 1993 Total No:of employees 109882 Revenue USD 4.6 billion Total No:of clients 568 ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Uk etc. China. Second Largest IT company Offices in 22 countries Development Centers in India.INFOSYS ‡ Founded in 1981 by Narayana Murthy and six others.

" Mission "To achieve our objectives in an environment of fairness. vendors and society at large. and courtesy towards our clients. delivered by best-in-class people. honesty." .INFOSYS Vision "To be a globally respected corporation that provides best-of-breed business solutions. leveraging technology. employees.

.

SHAREHOLDING PATTERN .2009 .

FINANCIAL SUMMARY .

INFOSYS STOCK PERFORMANCE ON NSE OVER LAST ONE YEAR Infosys always beats stock market expectations. It believes in ´delivering more than expectationsµ .

2009 Infosys is highly dependent on North American and European markets for 90% revenues«!! .REVENUE BREAK UP BY GEOGRAPHY .

REVENUE GROWTH FROM DIFFERENT GEOGRAPHICAL SEGMENTS OVER YEARS Revenues from US have declined and that from Europe improved. .

2009 BFSI and Telecom contribute more than 50% to revenues.REVENUE BREAK UP BY INDUSTRY SEGMENT. .

.REVENUE GROWTH FROM INDUSTRY SEGMENTS OVER YEARS Focus must shift from BFSI sector to other sectors.

REVENUE BREAK UP BY SERVICES OFFERED. .2009 Infosys must move up the value chain ² concentrate more in consulting. BPO and KPO business.

MCKINSEY·S 7 S MODEL .

LEADERSHIP STYLE: Infosys believes that leadership is one of the most essential ingredients of organizational success Leadership is based on high business vision and predominantly supportive styles Company has established Infosys Leadership Institute . ‡ Takes inputs from employees in decision making. ‡ Top management emphasizes on ‡ Open door policy. & ‡ Builds personal rapport with employees . ‡ Continuous sharing of information.

it focuses on the quality of the human resources At the entry level. ‡ Technical skills. ‡ Superior academic records. The company emphasizes on training and development of its employees on continuous basis .STAFF (HUMAN RESOURCES): Infosys is in knowledge-based industry. it emphasizes on ‡ Selecting candidates who find the company's meritocratic culture satisfying. and ‡ High level of learn ability.

.

STRATEGY: Infosys has adopted a client-focused strategy to achieve growth Focuses on limited number of large organizations throughout world Infosys commands premium margins Company has a image of quality driven model rather than cost-differentiating model Increase business from existing and new clients .

systems integration and infrastructure management. such as consulting. business process management. which are major contributors to its growth.STRATEGY (CONT. Develop deep industry knowledge Enhance brand visibility Pursue alliances and strategic acquisitions .) Expand geographically Enhance solution set It has added new service offerings.

SHARED VALUES C-LIFE Values are important part of Infosys organizational culture ‡ Customer Delight ‡ Leadership by Example ‡ Integrity and Transparency ‡ Fairness ‡ Pursuit of Excellence .

A member. who might have been team leader in one project.ORGANIZATIONAL STRUCTURE The company has adopted a free form organization devoid of hierarchies. may be replaced by another member of the same team for another project. Everyone is known as associates irrespective of his position in the company. . Software development is undertaken through teams and the constitution of teams is based on the principle of flexibility.

.SKILLS Mandatory Technical and Domain Certifications Infosys has been CMM-Level 5 certified for its process capabilities Entered the Balanced Scorecard Hall of Fame for Executing Strategy for achieving breakthrough performance results using the Balanced Scorecard (BSC).

SWOT ANALYSIS OF INFOSYS .

Leadership in sophisticated solutions that enable clients to optimize the efficiency of their business Proven ´Global delivery modelµ Commitment to superior quality and process execution Strong Brand and Long-Standing Client Relationships Status as an employer of choice Ability to scale Innovation and leadership .

8 % of revenues Low expertise in high end services like Consultancy and KPO.3 % of total revenues Rising wage bill ² 42.9 % to 44. . Excessive dependence on US for revenues ² 67 % of revenues from USA Excessive dependence on BFSI sector for revenues ² 36 % of revenues from BFSI Weak player in domestic market. Only 1 % of revenues from India ² low as compared to peers Low R & D spending as compared to global IT companies ² only 1.

etc Infosys is cash rich (Around US $ 1 Billion) . Expanding into new geographies ² Europe. Domestic market set to grow by 20%. . KPO and package implementation capabilities Opening offices and development centres in cost advantage countries such as those in Latin America and Eastern Europe. Middle East.Acquiring companies to increase expertise in Consultancy.

High dependency on a small number of clients. Failure to complete fixed-price. fixed-time frame contracts within budget and on time Currency fluctuations Termination of Client contracts can typically be terminated without cause and with little or no notice or penalty. . The economic environment. pricing pressure and rising wages in India and overseas Intense competition in the market for technology services could affect cost advantages. and the loss of any one of the major clients could significantly impact business.

SWOT MATRIX .

BUSINESS MODEL 2009 2001 1996 1981 .

INFOSYS BCG MATRIX .

USA .

INDIA .

ANALYSIS OF STRATEGIES OF INFOSYS Core Strategies: .

3. Infosys Consultancy established to provide high end services in value chain. 2. Poland.ACTIONS TAKEN: 1. Thailand and Mexico. 4. . Has hedged currency for more predictability of revenues (risk management). Philippines. Invested in developing training centres Improved quality capabilities CMM level 5i company. Mauritius. To maintain low-cost advantage they have opened offices in Czech Republic. 5.

GENERIC STRATEGIES: 1) Little differentiation in low-end services of value chain. Focus on quality. customer relationship management. high differentiation in high end services of value chain like software products and package solutions. timely-delivery. 2) .

ANSOFF S MATRIX: .

KPO. Infosys needs to be more aggressive on cost and quality front. consultancy services (in BFSI. Result of strategy: Unlikely to yield good results . manufacturing and retail) and software products (financial products). BPO.MARKET PENETRATION STRATEGY: Current Markets: USA and Europe Current Products: ADM. Recommendation: As most large clients in US and Europe are cutting costs.

. KPO. Recommendation: Since these are fast developing IT market. BPO. Middle-east and Australia Current Product: ADM. Result of strategy: Likely to yield good result.MARKET DEVELOPMENT STRATEGY: New Market: India. consultancy services (in BFSI. manufacturing and retail) and software products (financial products). Infosys needs a paradigm shift in focus from US and EU markets to these markets.

(better the company acquired.PRODUCT DEVELOPMENT STRATEGY: Current Market: USA and Europe New Product: Consultancy and package implementation services in relatively growing sectors esp. life sciences and aviation sector. Result of Strategy: Likely to have good result. Recommendation: Concentrate on building expertise in these domains by strategic acquisitions. the better the result). healthcare. and KPO services. .

healthcare. Recommendation: Changing Brand image from low value service provider to high value service provider. Result of Strategy: Difficult to achieve overnight (possible in long term) . Middle-east and Australia New product: Consultancy and package implementation services in relatively growing sectors esp.DIVERSIFICATION: New Market: India. life sciences and aviation sector. and KPO services.

. Infosys has always believed in organic growth. INNOVATION: The Software Engineering and Technology Labs (SET Labs) at Infosys is the centre for applied technology research in software engineering and enterprise technology.OTHER STRATEGIES: CONCENTRATION: 90% of Infosys revenues from American and European nations. Infosys promotes a favourable work environment that encourages innovation and meritocracy. SET Labs conducted 24 Innovation Workshops with customers from the US and Australia. VERTICAL INTEGRATION: Infosys recently made a bid to acquire a European major Axon consultancy to improve its business in European markets. but finally called off the deal due to high valuation. Otherwise. to identify research collaboration possibilities.

STRATEGY SUCCESSFUL OR NOT«?? .

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