A CASE STUDY OF INFOSYS – SHARE BUYBACK

CASE STUDY 1

1. REPORT FORMAT

Executive Summary: Infosys was founded in 1981 by Narayana Murthy and his six
colleagues, they shared a vision of providing “a fair deal to the stakeholders: shareholders,
employees and customers alike” (Evans & Barsoux, 2002, p.61). Infosys’ vision was to regain the
top position for the Best Employee and Best Performer Company by 2007 (Delong, 2006). The
head of HR leadership Hema Ravichander recognized that Infosys had some HR problems: From
1981-1991, Infosys had only one client and the organization was almost dissolved because of the
bureaucratic and regulated Indian environment. Murthy was able to save the organization by
energizing the rest of the co-founders (Delong, 2006). In 1991, Infosys shifted its focus from
“Body-Shopping to Off-shoring” (Delong, 2006, p.4) at the same time India was facing economic
liberalization. Infosys introduced off- shore development Center known as ODC and also
introduced Global Delivery Model (GDM) which is a project management system. GDM afforded
the organization to divide each project into components that was executed “independently and
concurrently” at client site from remotely development centers .Infosys is a NYSE listed global
consulting and IT services company with more than 292k employees. From a capital of US$250,
we have grown to become a US$ 15.64 billion (LTM Q3 FY22 revenues) company with a market
capitalization of approximately US$ 106.44 billion.

In our journey of over 40 years, we have catalyzed some of the major changes that have led to
India's emergence as the global destination for software services talent. We pioneered the
Global Delivery Model and became the first IT Company from India to be listed on NASDAQ. Our
employee stock options program created some of India's first salaried millionaire.

A. Situational Analysis:
 Established in 1981, Infosys is a NYSE listed global consulting and IT services
company with more than 292k employees. From a capital of US $250,we have grown
to become a US$ 15.64 billion (LTMQ3 FY22 revenues) company with a market
capitalization of approx US $106.44 billion.INFOSYS is the Indian multinational
provider of business consulting, information technology software engineering and
outsourcing services. It is the third largest India based IT Services Company by 2016
revenues. Its market capitalization was Rs 263,735 crores, making it India’s sixth
largest publicly traded company. This case focuses on Infosys demonstrate that it is
possible to create success and built prosperity among the poverty prevailing in India.
Infosys is a company that entire world looks up to, in terms of sticking to ones sound
ethical judgment and doing business in the right way. Overall we believe the
company to outperform its revenue guidance for FY 2011 on account of revival in IT
spending. However, we also expect the currency appreciation to limit the top-line
growth in rupee terms. Starting with limited capital, Infosys presently a dream
company to work for. With the right internal environment and the right kind of
leaders and employees, any organization could flourish. Bringing solution focus to all
that we do for our clients. Weaving together services, GDM, alliances, execution
excellence and deep domain knowledge to create innovative new solution.

This raises the question that:

1. How do we tackle down the problems faced in Indian stock market and beaten up
giant companies?
2. How often can we increases the customer satisfaction and more clients to be attracted
in this organization? What are the current problems they are facing to increase the
brand value?

Objectives of this study:

1. To provide effective and cost efficient solution to their customers.
2. To ensure the best software development in the country.
3. It provide the best of breed business solution, leveraging technology,delivered by
best in class people.
 B. Statement of the Problems:
This study aims in that most of the software project fail because what they produce is not
what the end user actually needs. In order to create an effective solution, it is critical to
first get a good grasp of the actual problem. nuances of the problem often come to light
only upon close investigation as the project makes. Innovation teams are more effective
when given a clearly defined problems to solve. The mistake many innovation program
do, however, is to confuse these strategic statement with problem statement. In more
agile design methodologies like design thinking, the team continuously validates the
problems with regular feedback from the end users. How to improve the software
developers in India beaten by other giant companies like TCS. Increasing competition
with TCS the biggest software exporters in India and other companies is also increasing
churn rate.

The problem arises that:

1. How can attract the investors to the organization and and increase the shares?
2. How Infosys has lagged the growth and how stocks gets tumbled?
3. It is able to beat small companies but how can they challenge or compete with giant
companies like TCS, WIPRO, Accenture.
4. What is Infosys doing to help its clients to navigate their journey?

Profit for Infosys rose 12 percent to Rs 5,197 crore firm raises FY22 revenue guidance. With the
COVID-19 pandemic emerging as a global crisis last year, remote working and online
collaboration became the mainstay of business productivity. Also they faces High Cash Reserves
Underutilized cash Another gripe with Infosys is its reluctance to part with the overflowing cash.
Flow of Industry growth rate stagnating industry the problems facing Infosys are not entirely of
its own making. The IT...
 C. List of critical factors or facts

Factors Significance
 The primary objective of share buyback  Infosys provides software
is to provide investors the opportunity to development, maintenance and
have access to the idle cash lying with independent validation services to
the company and to improve market companies in finance, insurance,
value of the share in the long run. manufacturing and others domains.

 Infosys provided the delivery of first   One of its known products is

sprint from onsite and second from Finacle which is a universal banking
offshore successfully. solution with various modules for
retail and corporate banking.

 This was also a major ‘ Confidence  This company creates a success and
Building exercise for the client to ensure build prosperity among the poverty
that the GDM model of scrum delivery prevailing in India.
provided by Infosys works.

D. ASSUMPTION:

1. From this study it focus on how company is surviving all the challenges and problems
while competing with other big companies.
2. As impact on COVID-19 the development of the company and the profits may
declined down. So employees where working from home which has resulted in a
whole host of problems particularly for younger, entry-level employees. 
 3. Our products help businesses develop deeper connections with stakeholders, power
continuous innovation and accelerate growth in the digital world
4. When the new CEO of Infosys got his first proper debriefing, he would have come
across a concept called the “Infosys financial model”. Torn of its complexities, the
financial model is a simple formula: Revenue – Profits = Cost.
5. Through the '90s and all the way till September 2008, when the company's revenues
were growing in excess of 30%, this was a stunning concept, which turned the
accepted formula of Revenue – Cost = Profit on its head. The company had enough
headroom, because of the revenue growth, to generate monstrous profits. It became
the darling of the bourses.

E. SWOT ANALYSIS

Strength in the SWOT Analysis of Infosys :

Cost advantage due to a presence in India: Majority of Infosys’ 119 development centres are
present in India, which gives it high-quality technical talent at a great cost advantage considering
the fact that wage costs have been significantly lower in India than the developed parts of the
world.

Provides strong end to end business solutions: The company offers a wide range of
consultancy services and provides comprehensive end to end business services in IT services,
software-based services, business consulting and business process management. This allows
Infosys to attract companies from various industries.

Strategic Association: Infosys has partnered with major technology and business players in

order to strengthen its services and business solutions. The company has earlier partnered
with HP, IBM, Microsoft and Amazon etc. The strong partnership network allows Infosys to deliver innovative and
collaborative solutions.

Weakness in the SWOT Analysis of Infosys :

Dependent on Limited markets: Infosys has concentrated operations majorly based out of the
America and Europe. Together, North America and Europe constitute over 80% of the
company’s revenue. This makes the company susceptible to instability and uneven growth.

Not covering growing markets: The emerging markets have been growing rapidly, and most of the
credit goes too fast growing technology. Infosys does not have services for the majority of the
emerging nations and thus misses out on a potential of growth.

High Attrition rate: Infosys is one of the tech companies in India which has been a victim of the
high attrition rate. Many employees leave for better career opportunities and higher education.
High attrition rates affect company’s image.

Opportunity in the SWOT Analysis of Infosys :

Invest in young technology companies: Infosys has been identifying potential and investing heavily
in early stage technology companies. For instance, investments in Trifacta, a data wrangling
software company and Waterline Data Science in the year 2016.Infosys should continue making
investments in such companies as it provides the competitive technological advantage to Infosys.

Growth in spend on Digital Transformational Technologies: In the period of the year 2014-2019, global
spending on Digital Transformational Technologies are expected to grow at a CAGR of about 17
percent. Infosys has increased its focus on providing digital transformation services and thus
increased global spending can be beneficial for it.

Increasing demand for cloud-based solutions: There is a positive outlook for cloud-based solutions as

the fundamental nature of computing has been changed by cloud computing. According to
industry estimates, global spending on cloud services is expected to grow at a CAGR of over 18
percent from the period 2015 to 2019. Infosys having a significant presence in cloud
computing market is set to be benefitted by the increasing demand.

Focus on emerging markets: Infosys need to focus on emerging markets which are expected to give
good business to IT services and consultancy firms in the future. Infosys should not fall behind
when the opportunity is up for grab.

Threat in the SWOT Analysis of Infosys :

Intense competition: The IT services industry is a highly competitive industry. Infosys competes
with large technology and consultancy firms like Accenture, Capgemini and TCS etc.  The
company also competes with software consultancy giants like Oracle and SAP. Intense
competition leads to pricing pressures and investment in innovative technology to
gain competitive advantage.

Changes in US immigration laws: Immigration laws are subject to political pressure and thus can be
changed with a change in political power in the US. US immigration laws can get stricter which
will affect the business of Infosys and other countries which are heavily dependent on the US
market.
F. Solution for the question in the case study:

1. This study states that to analyze the impact of buybacks on earnings per share and
market price of share.
2. This case study can be helpful to study the business opportunities and growth,
cash flow position,the stock position of Infosys and to analyse the factor that
would impact on the market value of the shares in the long run.
3. They providing the best solution to the entire customer and they put effort for
making the organization the world best software development and business
consultancy.
4. They use design thinking to spark cultural change in effective to the firm they
enable the organization and their customer changer to their approach to
innovation.

G. CONCLUSION:
Narayana murthy is a visionary who applied his leadership skills to build one of the
greatest IT companies in India. Stress on building and maintain the relationship.
Innovation is only means to sustain the customer loyalty in the flattening world.
Acceleration of innovation is an imerative that organization should address through
well defined framework. In the year 2012, ROA, ROIC, ROE and the profit margin
has increased. Hence the net income of Infosys has increased by 21% as compared to
2011. Thus Infosys has been profitable. Infosys has also retained maximum form of
its profit in the form of the cash, thus increasing days cash. Narayana murthy is a
visionary who applied his leadership skills to build one of the greatest IT companies
in India. Stress on building and maintain the relationship. Innovation is only means to
sustain the customer loyalty in the flattening world. Acceleration of innovation is an
imperative that organization should address through well defined framework.
H. REFERENCE:
1. https://www.infosys.com/
2. https://icmrindia.org/About_Us.htm
3. https://icmrindia.org/casestudies/catalogue/Finance/FINC133.htm

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