Infosys Limited - Case Study Example

Assignment Ref Infosys Limited – A Case Study Introduction Services sector of late, has the largest share of national economies of most developed and developing countries. Infosys Technologies Ltd. (ITL) is a product of these changing times and is one of the finest in its class. Incorporated in 1981 in India by a team of technocrats, ITL today spans the Americas, Asia & the Pacific Rim Countries and Europe, employing over 66,000 people, garnering revenues in excess of US$2 billion (2005-06) and growing from strength to strength. This case study is an attempt at analyzing the company’s position in the background of the information technology industry, its goals/objectives, strategies, key success factors, and critical issues along with recommendations. External analysis and assessment of major trends During the latter half of the twentieth century, information and communication technologies (ICT) changed the character of national economies and human lives in an unprecedented manner. ICT relegated agriculture, industry and a host of services to lesser significance and promoted itself as the main engine of economic growth and improved life styles, across the globe. Today, information technology (IT) is practically inseparable from ICT. IT industry comprises of the hardware, software and related services. Developed countries, lead by the USA, Japan, Germany, UK, Canada and France, have been the main IT markets. Hardware product sales, which accounted for about 50% of the IT revenues worldwide (last name) 2 in 1990, saw a decline in the rate of growth in the subsequent years, while that for software and services increased substantially. Software and services comprise of i) Packaged software products ii) Professional services and iii) Operation / back office services. In the beginning, hardware companies themselves were developing the required operation and application software programs and also undertaking installation / maintenance services for hardware/software. This was followed by the growth of service providers for customized software development, data processing, installation, systems integration, training and maintenance. The explosive growth in the usage of personal computers and the Internet as well as the revolution in telecommunications technology during the 90s fuelled the demand for customized software development and other services. In the face of inadequate supply of qualified and trained manpower locally on the one hand, and their mounting costs on the other, and with data transmission from anywhere in the world made possible by the strides in communications technology, competitive forces in the market created the phenomenon of outsourcing and off-shoring. This trend continues today with more and more of the developing countries vying with each other for a share of the business. English speaking countries like India and Philippines and even non-English speaking country like China, with their cost competitiveness, took full advantage of these trends. Initially, they were providing hoards of software professionals for working overseas, mainly in the USA. Later global IT and consulting majors like Microsoft, SAP, Oracle, IBM, Dell, Accenture, and Deloitte recognized the advantage of setting up their own centers of development in these countries. (last name) 3 Software giants operating from India like TCS, Wipro, Infosys and Satyam Computers were all products of this era of changing global IT and consulting industry scenario. Today, while Asian engineers work in the USA and other countries, companies like Infosys employ large number of foreigners from many countries, in their Indian and overseas operations! The IT industry has thus created a win-win situation. Internal analysis The ITL’s vision statement says that it wants "To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people." This is complemented by their mission statement that reads, "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large." These statements significantly underline the key words: leveraging technology, best-in-class people and, values. ITL has the enviable record of being hailed as the ‘most desired employer’ and as the ‘most respected company’ in India. IT industry is knowledge intensive, with human resources as its main asset. As Narayana Murthy, Chairman and Chief Mentor of ITL once observed, “Our assets walk out of the door each evening. We have to make sure that they come back the next morning.” ITL provides business consulting and IT services globally. “As one of the pioneers in strategic offshore outsourcing of software services, Infosys has leveraged the global trend of offshore outsourcing…. Even as many software outsourcing companies were blamed for diverting global jobs to cheaper offshore outsourcing destinations like India and China, Infosys was recently applauded by Wired magazine for its unique offshore outsourcing strategy — it (last name) 4 singled out Infosys for turning the outsourcing myth around and bringing jobs back to the US.” says their website. In line with its vision and business strategy, ITL set up its first overseas office in the USA in 1987, went public in 1993, set up European operations in 1996/99 and in Canada in 1997, successively obtained international quality standards like ISO: 9001, TickIT, CMM Level 4 and 5, secured NASDAQ listing, expanded into e-business / enterprise solutions / business consulting practices and expanded operations in many countries through local offices and subsidiaries. This was followed by a US$ 1 billion public offer in the USA in 2005 and celebrating 25 years of successful operations with a turnover of over US$ 2 billions in 2005 - 06. Like any other business enterprise, ITL also faces competitive forces both within India and from abroad. Indian major IT companies like TCS & Wipro and global IT / Consulting firms like Microsoft, Oracle & Accenture offer similar services. These firms enjoy similar advantages as ITL in terms of cost advantages or technology competence. For example, TCS has its own banking solutions products that compete directly with ITL’s ‘Finacle’; consulting services of Accenture overlap those provided by ITL. However, the unique combination of niche products, leveraging competence in technology, global presence/partnerships and extreme focus on quality of services rendered, is the winning strategy adopted by ITL to successfully overcome competition and grow year on year at a scorching pace. This is clearly stated in their website: “We provide solutions for a dynamic environment where business and technology strategies converge. Our approach focuses on new ways of business combining IT innovation and adoption while also leveraging an organizations current IT assets. We work with large global corporations and new generation technology companies - to build (last name) 5 new products or services and to implement prudent business and technology strategies in todays dynamic digital environment.” It then comes as no surprise that ITL projects a revenue of over US$ 3 billions for the year 2006-07, a 50% plus growth year-on-year! One thus sees a clear view of Porter’s famous five forces of competitive position viz., market, brand power, competitors’ position, buyers’ power and product/technology development in ITL’s unique success story. PEST Analysis IT industry, while being the driving force of economies around the world also ruffles quite a few feathers especially in the USA and in Europe. The large-scale import of cheaper manpower, establishing BPO units around the world for back office functions, call center operations to contract research work etc. and the consequent loss of jobs for locals, continues to attract opposition from political and social organizations. To an extent such opposition has been overcome due to dramatic technological developments in data transmission whereby, much work is now done without moving many people from one country to the other. Further, for reasons of competitive cost efficiencies, more and more companies are globalizing their operations. This is expanding the markets and opportunities while scaling up the skill set of people who need to actually move to another country for implementing a project or transferring a technology. Thus, people movement is working satisfactorily both ways and the very character of employee community in a company like ITL is truly global. This is further enhanced by ITL’s global footprint with offices or subsidiaries around the world, with emphasis on local talent for employment. This is a successful integration of external concerns with the internal requirements of a firm. (last name) 6 Future challenges ITL is an enterprise with global employees – a new experience for any company anywhere in the world. It has ambitious growth plans, a mission to stride along with global giants and a vision with values at its core. Thus, its challenges are as much self-created as by the external environment. Managing employees with diverse cultural background and continuing business growth as in the past, if successful, would result in a new kind of global enterprise of the future, whose outlines are faintly visible today. As a pioneer in this trend, ITL would face formidable challenges. Conclusion ITL is a success story of a technology and value driven enterprise. It is operating in the services sector and charting for itself a course less traveled by rivals, now or before. In its quest for achieving its mission, it is implementing a strategy with astounding success, which many believe would one day be recorded as the pioneer in a new breed of global enterprises – built around people and values. References Academic cases on Infosys, accessed from: http://www.Infosys.com/about Read More