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Abstract :

This case describes Infosys Technologies' approach to growing the company by expanding its service offerings; moving up the value chain to offer higher-end consulting services; improving its brand equity and recognition as a global company; increasing revenue through repeat business from the company's client base; and entering client relationships earlier in the lifecycle by defining problems and identifying solutions before implementation. Considers whether Infosys Technologies--through the creation of a wholly owned U.S.-based subsidiary, Infosys Consulting--has created disruptive change in the IT consulting industry by leveraging its competency in global delivery to create a new model that shortens the lifecycle from business consulting to implementation, reduces the costs of a typical client engagement, and delivers measurable benefits to clients. The case is set in early 2006. An overview of the Information Technology (IT) services landscape is provided for this period. The case profiles leading onshore (U.S.) and offshore (Indian) competitors and describes their different approaches to global delivery in the IT consulting industry.

Company Overview : Infosys Consulting, Inc. provides information technology consulting services. The company focuses on strategic and competitive analysis, and operational change areas. It provides its services in the areas of customer operations, product operations, and corporate operations. The company serves aerospace and defense, high tech and discrete manufacturing, insurance, healthcare and life sciences, media and entertainment, resources, energy and utilities, retail, distribution, consumer packaged goods, and transportation services industries, as well as communication service providers, and banking and capital markets. Infosys Technologies Ltd. started in 1981 by seven people with US$ 250,today is a global leader in the "next generation" of IT and consulting with revenues of US$ 6.604 billion (LTM Q2-FY12).s Infosys Consulting, Inc. was founded in 2004 and operates as a subsidiary of Infosys Technologies Ltd.

Assigned framework for case analysis :

To evaluate Infosys Technologies' strategy with regard to the creation of Infosys Consulting on the following key themes : in India industry actions Interface challenges between the parent company, headquartered in India, and the subsidiary, headquartered in the United States Details of the framework : Managing growth. Globalization from the perspective of a company that has its roots

Company strategy to move up the value chain in a specific

Changing the "rules of the game" in an industry Anticipating competitive responses to "rule-changing" strategic

Drivers of globalisation : Additional resource availability Lowered Costs: Factor Costs Advantages Incentives from host government New market outside home

Narrowing of Demand Characteristics Across Markets: Homogeneity of Demand Economies of scale Synergy

Power & prestige

Orientation to globalisation-Geocentric :

Mission Profitability and public acceptance (viability and legitimacy) Governance Mutually negotiated at all levels of the corporation Strategy Global integration and national responsiveness Structure A network of organizations (including some competitors) Culture Global Technology Flexible Marketing Global product, with local variations Finance

Redistribution globally Personnel practices Global personnel development and placement Competitive advatage : Systemwide approach to competing worldwide

Mutually interdependent subsidiaries of the parent company , Infosys Technologies Ltd Centralized control and reporting of activities at the HQ Facilitates across-subsidization policies across markets Unique processes difficult to imitate in near term

Complexity of global environment : legal) Structural differences in the industry at global level PESTEL(political,economic,social,technical,environmental &

Location and coordination issues : Mode of entry : subsidiary Exporting/Licensing/Frenchising/Joint Ventures/Wholly owned Operations Marketing Service R& D Purchase

Competitive Pressures : Being locally responsive Cost reduction

Case analysis as per the assigned framework :

External Evironment : The market for IT industry was huge and expanding at a fast pace. However the market leaders were Accenture and IBM which had a negligent market share and rest was captured by small enterprises. Indian companies also ventured in the industry and due to their competition, IT multinational giants had to increase their base in India. Due to high opportunities, attrition rate was also high in this industry. As a result Indian companies like Wipro, Infosys increased their base level salaries. During this phase, Indian economy was transforming towards an era of information and knowledge. This can be seen from the fact that contribution of services towards the economys GDP was higher than 18% in 2001 as against in 1980. No other industry had done better standing against global competition. The annual exports had always been over 50% over a decade. U.S.A. share represents highest with 61% and about a third of Fortune 500 companies outsource their software work to India. To foster development, Indian government has taken a number of steps like liberalization of policies and providing necessary capital and infrastructure to foster growth. Thus Indian environment has been conducive for growth.

Industry Attractiveness- Business Consulting : Medium buyer power Established providers, dependency upon client brands Medium supplier power Higher skills required which are low in supply Low threat of new entrants Difficult to copy brand and culture, High entry barrier Low substitute No substitute High competitive rivalry Many players but high switching costs

Competitor analysisThe market for IT industry was fairly competitive with IBM and Accenture as global leaders and rest of the market was pretty diffused. IBM and Accenture had strong brand

and a global presence with a large customer base. They also offered panoply of services viz. technology implementation, business consulting, offshore services, customer relationship management etc. Both offered breadth and depth of services. IT market in India offered technical and business consulting with Tata Consultancy Services which was the market leader in IT exports and Wipro Technologies and Infosys being other major market players. TCS offered consultancy services, IT services, asset based solution etc. Wipro was third largest IT provider with service offerings in IT consulting, software solutions, BPO etc. Both had a strong global presence.

Intensity of Rivalry: Rivalry amongst competitors was pretty intense as can be seen the Indian competition caused IBM to increase their presence in India. However leaders like IBM and Accenture had a wide range of service offerings so competition was only amongst few sectors. Rivalry was to hire the top talent as human capital is the most important thing in the IT sector. This is the reason that attrition rate lead to a rise in pay packages.

Strategic Business Model Adopted by Infosys Consulting :

ICI delivered a 1-1-3 model. This provided ICI resource, an Infosys resource and 3 Offshore Infosys resources. Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM is based on the principle of taking work to the location where the best talent is available, where it makes the best economic sense, with the least amount of acceptable risk. This model had an advantage over competitors like IBM and Accenture who had no resources offshore.

The model provided some salient advantages as follows:

Shortening Life Cycle: The firm adopted a different approach toward analyzing the business. ICI studied the processes rather than the functional divisions. The horizontal approach identified the inefficiencies in a much better way. The organization of process was then ranked on a

scale of 0 to 5. The onsite and offsite consultants worked on a 24 hour basis due to global time difference and as a result shortened life cycle to half the time as required by competitors. This was crucial for technological firms who raced for bringing new products into market.

Cost Savings: The model was devised in such a way that it charged a blended price to the clients which was way below the market price charged by IBM, Accenture. The model would even take time to replicate as it needed competitors to build offshore units and take advantage of cost savings. ICI also decided to drop prices once the brand is established. This would further make competitors worse off and harder to sustain.

Delivering Measurable Benefits: Internal analysis ICI functioned as an independent organization and was granted liberty to create its own culture. The team created a unique culture based on Infosys principles which represented open and transparent culture. The team wanted more people representing local tastes. Also unlike typical software companies nobody sat idle in ICI. They followed a database in which employee skill set was entered and project manager recruited the right employees suitable for their projects. Promotions were also done transparently with employees nominated the senior positions. People were also allowed to block some times during their working schedule.

Company resources: Capabilities: ICI had the capability to deliver business solutions and IT consulting by integrating with Infosys Technologies. ICI could leverage Infosys reach to target global markets. By delivering measurable benefits, it created a win-win situation for client as well as company. Core Competencies: The foremost core competency ICI has is the Global Delivery Model. This delivered measurable benefits saving time as well as costs. Also the competency was sustainable for at least 3-4 years as competitors would have to build an offshore capability and

downsize present onshore resources. This is giving the company competitive advantage against competition.

Forging ahead: (keeping 2008 as horizon )

Analyzing Infosys Technologies Limited, the revenues have increased over the past year by almost 33% in spite of the current downturn in all sectors of economy. Net profits also rose by almost 26%. Dividend paid out had also increased by 66% over past year. During the year ended 2008, the company has invested an aggregate investment of $ 45 million in ICI. Infosys 5 year revenue and profit CAGR: Infosys also leads in Corporate Governance. The company has created Infosys foundation in state of Karnataka which operates in health care, social rehabilitation, rural uplift, education etc. The company has almost 100 Fortune 500 companies with 90% of repeat business. Though Infosys stock has plunged over some time, however we can reason that with current financial turmoil and recession. However analysts are positive of returns that the company would generate over long term perspective.

Conclusion and Recommendations: ICI has no doubt created a unique model for delivering business consulting solutions. The company is also creating value by leveraging its core competencies. The company delivers measurable benefits at a blended rate which is less than core competitors and also assures quality consulting. However in the era of competition, it is difficult to sustain any one competitive advantage. The company may be able to deliver much faster results by applying the Learning Curve rule. However the power of global leaders like IBM and Accenture should not be underestimated. They would replicate the model in matter of time. ICI should focus on creating brand value and goodwill as its parent company Infosys Technologies has created. Also as the industry is based on human capital, it should also keep a tab on attrition rate as an outflow of intelligence would lead to competitors benefit.

References: Business Outlook,, ,,