change management
TRANSCRIPT
Coventry University
M40EKM – Change Management
MODULE LEADER
Dr. R. K. Bali
Submitted by,
Kunal Joshi
MSc Management Information System.
Student ID: 3051931
21th May 2010
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Index:
1. Introduction...............................................................................................................4
1.1 Company Background.......................................................................................4
1.2 Infosys Change Management Frame Work.....................................................4
2. Company Strategies...................................................................................................6
2.1 Infosys IS/IT Strategies......................................................................................6
2.2 Infosys Business Strategy...................................................................................7
3. Organisational Information.....................................................................................12
3.1 Organisation Culture........................................................................................12
3.2 Organisation Structure.....................................................................................14
3.3 Risk Management..............................................................................................16
4. Internal and External Analysis of Organisation...................................................19
4.1 Internal Analysis...............................................................................................19
4.2 External Analysis..............................................................................................23
5. Company Future......................................................................................................26
5.1 Future Plans......................................................................................................26
5.2 Future Challenges.............................................................................................28
6. Recommendation.....................................................................................................29
7. Conclusion................................................................................................................29
8. References................................................................................................................30
List of Figures:
1. Infosys Change Management Frame Work.........................................................5
2. Infosys Top Management Responsibilities...........................................................15
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3. Infosys Risk Management Frame Work............................................................18
4. Infosys SWOT Analysis.......................................................................................19
5. Infosys Revenue Across Globe............................................................................22
6. Infosys Revenue From Different Sectors...........................................................22
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1. Introduction:
1.1 Company Background:
An Infosys technology was incorporated in 1981 by Mr. Narayan Murthy along with 6
colleagues. They saw a dream to provide high-class IT services at reasonable cost by
employing skilled engineers at lower salaries from India to serve clients in the US and
European countries. They all set a one aim “to become the most appreciated organisation on
the planet.”
Infosys maintained and updated its clients’ mainframe systems as their businesses and IT
requirements grew. Infosys straight away raced with U.S. based organisation. Initially,
Infosys was subcontracted with big IT companies from US who gives some part of their work
to Infosys. Infosys’s first client was Data Basics Corporation in New York.
Today, Infosys is second biggest software service company from India. It is globally branded
for its world-class management practices and work principles. Infosys invents and delivers
technology-enabled business solutions. It has been making constant efforts to move up the
software value chain and offers services like software development and maintenance,
technology consulting, testing and package implementation.
1.2 Infosys Change Management Frame Work:
Infosys change management frame work is people centric process. Infosys has designed,
deployed and tested this customised organizational change management frame work in order
to meet the client requirements. During the transition period from current state to future
state, this frame work which consists of tools and technology helps clients to understand
newly introduced people, process and technology in client environment. These elements and
resulting changes needs to be managed well in order to avoid risk of lower productivity, dip
in service level and higher employee turnover.
Infosys has established a change team that is supported by senior leadership. It consists of
representatives from each of the key business and IT areas impacted by the change.
Company’s change management team is integrated with the other program teams such as the
transition management and HR team. For managing their employees company has developed
and implemented risk management strategies. Moreover, Company proactively reacts to
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employee concerns. Communication programs and training programs are delivered regularly
within company (Masood and Benson 2005).
Fig.1 Infosys Change Management Frame Work (Masood and Benson 2005).
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2. Company Strategies:
2.1 Infosys IS/IT Strategies:
2.1.1 Globalisation strategy:
Making diverse workforce culture is main agenda for Infosys in a globalised world
(Sheelvant 2008). Infosys is a global firm with a multi-cultural and multinational personnel’s.
They have delivery centres all across globe. Company has built a global base to develop high
level of workforce diversity. They are employing more than 91,000 employees across 90
countries with 70 different nationalities. Moreover, it enhanced recruitment efforts in
different countries to develop high-level workforce diversity.
Global delivery model:
Infosys uses GDM as an outsourcing mean. With this strategy Infosys can move the project
work at place where it can be accomplished with best quality, minimum cost and lower risk.
The Global Delivery Model divides a bigger task into several subtasks in two categories:
activities that have regular interaction with customers, and activities that have little
interaction with customers. Activities that have regular interaction are necessarily delivered
on site, and activities that have little customer interaction are delivered from remote, scalable,
process-driven, technology-based, cost-competitive development centres (Trimble 2008).
With Globalisation strategy, project work teams are working for 24 hours a day, at different
locations in the world (icmrindia 2006).
All main clients of Infosys are from USA and Europe. In order to deal with these clients
Infosys has adapted Global delivery model from 2001 onwards. The GDM has many
competitive advantages. It is innovative business solution which not only reduces cost but
also delivers high quality software solutions. Additionally, the GDM upset the long-
established and comfortable tradition of IT services professionals working on site Clients are
more aware for accuracy of their requirements, and this improves a software development
project’s efficiency without considering from where the program has written. (Trimble 2008).
2.1.2 Higher Productivity:
Infosys always focuses on higher productivity. In order to do this company used to keep
employees within the same IBU (Industry Business Unit) for an indefinite period so they
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could gain more experience and become more efficient. In this manner, more senior
employees could also influence long-term client relationships in ensuing sales efforts. For
improving error correction, Infosys has purchased testing tools from outside software
companies. These tools allow newly developed application to be tested with wide range of
test cases (Trimble 2008).
Infosys uses another way for increasing productivity with increasing reuse of past work.
Infosys invested heavily in its knowledge management system. With the help of company’s
knowledge management system, software development teams can solve coding problems if it
is tackled by past project teams. Moreover, this system provides access to templates,
frameworks, or even modules of code. Software development team produces project
documents, when chances of reusing the project are mostly high (Trimble 2008).
Infosys has developed software’s for its own software developers, for convenient reuse of
past work. SET Labs has developed InFlux tool for generating quick and error free model,
when company needs to agree with a client on the requirements for a new custom software
application. In case of software development process, many times misunderstanding between
clients and software developers takes place at the beginning software development. InFlux
provides a common visual language for relating software developers and customers.
Moreover, Infosys developed a rapid development toolkit, that converts visual process
diagrams into code in certain scenarios, and a rapid development framework for Java
programming, known as Radien (Trimble 2008).
2.2 Infosys Business Strategy:
As Infosys is growing across globe, it is becoming more complex to manage. The top
management focused on developing operational quality and innovation. By 2006, Infosys
managed its business through concurrent, integrated plans with three different time horizons:
one year, three years, and five years plans. These plans were developed within business units
as well as at the corporate level. Online-planning tools are incorporated in the planning
processes, to ensure internal consistency across business units and time horizons.
At the starting of the annual planning cycle of 2006, the senior decision-making team
developed a five year plan considering a long-term ambitions and growth of the company.
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The plan was base on a precise set of assumption about primary forces of change like changes
in technology, client behaviour patterns, and the global economy.
Company identified that linear extrapolation is a bad assumption. From then company starts
reviewing their assumptions every year. The senior management team was keen to take inputs
from multiple parties; in addition to this they look at broad range of market data. Each year,
Infosys started promoting a group of nine high performers under the age of 30 to participate
in eight senior-management meetings throughout the year. This Youth program was proposed
to improve the opportunity for great ideas from all departments and employees in the
company to search out visibility from top levels (Trimbl2 2008).
Three-year plan states the multiyear actions essential to achieve the five-year target. This plan
begins with a market investigation which finds the data about major market forces, likely
competitive actions, identifying strong points of existing account set, and strategies to expand
it. Three year plans set financial and nonfinancial goals and recognizes the investments and
plans required to achieve these goals, including major marketing thrusts, pricing strategies,
potential acquisitions, and recruiting plans. Finally, the plan consists of risk analysis of
business.
Three-year plans are merged at the corporate level. If there is a discrepancy between the
three-year plans and the five-year plans, the corporate team either resettles the three-year
goals with business unit heads or discovers new growth opportunities outside the existing
business units (Trimble 2008).
Every business unit develops one-year plans, dependant with its three-year plans. The one-
year plans are tactical based and includes exact financial plans and profit targets. They are
periodically revised, so that they always reveal outlook for the next four quarters. In addition,
business unit heads meets regularly on every fortnight by teleconference to update plans and
the latest estimates for the current quarter.
The company ensured there was a closed learning-loop associated with each plan. In order to
evaluate both managerial performance and business output, management arranges meeting as
post action reviews. Infosys’s strategic planning team provides detailed report on business
results to each manager participating in the review (Trimble 2008).
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2.2.1 Infosys strategies are based on four elements:
A World-class Operating Model:
Pursuing high quality standards in all parts of it business is the most significant factors of
Infosys’ success. The company sticks on highly evolved processes, including a detailed move
towards to planning and execution, multi-level testing, and careful tracking and analysis of
quality control. For maintaining high class standard, company has created goal for a quality
and productivity agreement. The company has adapted the ‘zero-defect’ strategy and
achieved ISO 9001 certification and Level 5 CMM (Singh 1999).
Human resources as Core Strength:
Infosys is knowledge intensive firm, who focuses on managing, recruiting, training, highly
talented professionals. Company believes that its success depends upon managing and
training recruited IT professionals. The Human Resources Department stresses on capturing
investigative talent and candidates are selected on the basis of analytic ability and learn
ability. Infosys have tie up with several top Indian universities and colleges, who invite them
to recruit talented students on day one of recruiting season. Infosys is a first Indian company
to put a value on its human resource capital and brand equity in its balance sheet, stressing
the importance it placed on these intangibles (Singh 1999).
Providing managed software solutions.
Infosys had committed to provide managed software solutions. Company offers such
solutions on fixed price and fixed time basis. They always emphasising on producing highest
quality and cost effective solutions to their clients. To preserve long-term business, company
moved from on-site programming to IT consulting and product development. In addition to
this, they also expanded into the area of packaged software solutions to deal with customers’
common requests. They successfully established a brand of bank automation solutions known
as Bancs2000. This principle of working on customer satisfaction is another key of Infosys
success which exceeds customer expectations and helps them in repeating business with
existing clients (Singh 1999).
Offshore development model:
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Infosys realized that a vital component of its competitive advantage is low cost engineering
talent in India. However, it is physically inconvenient to send these people abroad to do on-
site work with clients for short period of time. In addition, it is also costly considering
company’s savings. To avoid this, company made several major investments in infrastructure
to manage and execute projects in multiple locations. While doing this, company wants to
establish the reliability of the Infosys name among its customers. To that end, Infosys
typically undertook its first on-site project and gained customer trust by providing better
quality and problem-free work. After providing confidence to the customers about the
offshore concept, Infosys had the procedures in place to ensure continuous quality monitoring
as determined by its Level 5 status in CMM (Singh 1999).
Offshore development also had a number of advantages.
Increases flexibility in resource allocation.
Less uncertainty about obtaining visas and documentation for programming staff to
travel abroad.
Increases cost benefits for the customer and profits for company.
Faster execution of projects due to time difference between India and US, as projects
are working in different time zones. So, 24 hour working is possible.
One of the major advantages of an offshore model is preventing the loss of key human
assets to the global marketplace. Countries like India face a brain drain of talent as
foreign corporations recruit increasing numbers of their technical personnel.
After 1998, Infosys was able to effectively perform over 80% of its project work in India
while managing high levels of customer satisfaction. The company had 11 development
centres in India and planning to increase these a lot as their global presence is rising. It results
in faster deployment of software projects and advantageous as allows working in different
time zones and markets (Singh 1999).
2.2.2 Infosys PSPD Model:
The PSPD model stands for
Predictability.
Sustainability.
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Profitability.
De-risking.
Predictability:
The Company has tradition to follow lasting relationships with its main clients. This strategy
is helping them to understand future trends in the global technology marketplace. Company is
having highest repeat business levels, which helps them in enhanced visibility growth
(Equitymaster 2005).
Sustainability:
Infosys have strategy to make partnership with their customers. Over the years, they have
converted many customers into partners. The company has constructed new processes and
developed new technologies with these partners. This strategy has helped Infosys to offer
sustainability to their growth (Equitymaster 2005).
Profitability:
As mentioned above, Infosys has been gradually moving up the value chain. While this has
impacted margins in recent times on account of a higher onsite proportion that these services
carry, the fact that a lot of these are being gradually moved offshore will help the company
pare margin decline. Rising contribution of high-value services also aids improvement in the
productivity levels (Equitymaster 2005).
De-risking:
Infosys definition of de-risking is limiting its exposure to businesses of various kinds. Infosys
implemented a de-risking strategy to ensure low dependence on any one customer. The
company has been gradually shifting its revenues from the US region to other large markets like the
EU and Asia Pacific. Apart from this, the company has also reduced its exposure from a few clients
and now has one of the largest client bases in the industry. With this model Infosys ensures that no
single business segment accounted for more than 25% of its revenues. This strategy is helpful
for company to adapt changing market conditions, as well as, in attracting and retaining
highly skilled professionals who seek the opportunity to learn new skills (Equitymaster
2005).
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3. Organisational Information:
3.1 Organisational Culture:
Organisation culture has significant impacts on organisation structure. Organisational culture
reflects underlying assumptions about the way work is performed. A cultural value enhances
authority and power of management. (Mullins 2007).
Leadership Style:
Leadership style is a key factor of Infosys success story. They believe in fact that leadership
is important factor in organisational success. Company has started “Infosys Leadership
Institute” to develop leadership quality in employees. Flexibility in team leadership is helping
them in developing more project leaders.
Top management focuses on open door policy. They use to share information continuously.
Managers are taking inputs from employees in decision making. Employees are free to
dissent with the views of their supervisors and are encouraged to set forth their ideas, but
everyone works towards implementing it to the best of their abilities once a decision is
reached. This helps in building trust between managers and employees. Infosys also
empowers employees to an extent unheard of in India and more than most company’s
worldwide do. Infosys now has an internal ‘best practices’ forum so that other managers can
see how to use the methods other managers have developed for their own needs. Because of
these policies, Infosys enjoys a very high employee retention rate (Chaudhari, Goyal, Hussain
and Rai 2009).
Quality of Human Resources:
Infosys focuses on the quality of the human resources, as it is in knowledge-based industry.
Infosys’s work culture is meritocratic. They are giving value to the individual skills and
quality. Out of total personnel, about 90 per cent are engineers. During recruitment process,
they are giving stress on selecting candidates with superior academic records, technical skills,
and high level of learn ability. To ensure that employees will fit into the corporate culture,
they selects individuals who are not only extremely bright but also have an attitude and
openness that is conducive to teamwork and a willingness to learn.
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The company pays more attention to on training and development of its employee’s skills on
regular basis and spends about 2.65 per cent of its income on enhancing employees‟ skills,
and around 50% as employee costs. In spite of thousands of people joining every month,
Infosys has been able to maintain its training standard mostly due to its highly matured
processes capabilities and investment in infrastructure. The company invests heavily in
training, including 14-week training sessions for newly recruited employees, as well as a
variety of two-week skills enhancing workshops and continuing education programs that are
administered by a 35-person faculty (Chaudhari, Goyal, Hussain and Rai 2009).
Never to use company resources for personal benefit:
In many Indian organisations, officers are using company assets for personal use. Such
behaviour leads to a growing isolation and disloyalty, which may affect company
performance. Such things are not happened at Infosys, because of the rule, never to use
company resources for personal benefit (Singh 1999).
Deep Concern for Employees:
Infosys treats all its stakeholders, customers, employees, shareholders, vendors, or society
with equal respect, fairness, and honesty. This culture reveals that Infosys have a deeply
rooted concern for its employees. The company headquarters consists various different
facilities like a, a gymnasium, tennis courts, library, volleyball and basketball courts, quality
day-care centre with trained teachers, a fully staffed medical centre, and highly subsidized
cafeteria with excellent food. Moreover, employees who need to work late to finish a project
for them company provides comfortable sleeping facilities. This uniqueness from other
Indian companies shows that Infosys cares their employees as much about their convenience.
Infosys was the first Indian company to offer low-cost stock options and low interest loans to
most of its employees. Based on seniority, over 60% of employees are eligible to receive
stock options. Also, company invests heavily in maintaining its campus well and provides all
employees with state-of-the-art technical equipment.
There are some drawbacks about Infosys’s policy to involved new people into senior
positions. It would cause problems when company gets expanded globally. A lot of the new
people are coming directly into senior levels and changing things to their way of working
style. Because of this some of newly joined employees, may not understand the company’s
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operations and culture. This may move from a company with a single culture to a company
with many individual departmental cultures. Senior management acknowledged that although
this practice was true in some instances, it still argued that since a majority of Infosys
employees joined the company fresh out of university, they were able to preserve the culture
of the company effectively (Singh 1999).
3.2 Organisation structure:
Organisation structure is very essential factor in order to achieve good performance level.
Individual managers require support of good organisational structure, in order to achieve
success. Infosys success story clearly indicates that the company’s organisational structure is
ideal. First step of any organisational change management is to obtain right structure.
Distribution of the task, definition of authority and responsibility, and the relationship
between members are the key elements of the organisational structure. (Mullins 2007)
Objectives of Organisational structure: (Mullins 2007)
To monitor organisational activities.
To provide co-ordination between different departments of the organisation.
To provide work satisfaction to the employees.
To provide economic and efficient organisational performance.
To provide flexibility for responding the future demands and development.
Infosys’s starting point was in software applications development and maintenance. More
than 60% of revenues still generates from this kind of work even though the company had
added new services. Infosys founders were aware about fact from their experiences that,
those software programmers who have written custom applications for corporations in past
can able to use past experience most efficiently if they concentrated on one industry. To
achieve these economies of experience, Infosys had built Industry Business Unit’s (IBU).
The company allocated new employees to an IBU ensuring they will stay there for several
years. Organisational structure was build in fashion that, through several appraisals, an
employee can reach to the account manager position, earning responsibility for maintaining
client relations, ensuring client satisfaction, and selling additional work. Projects were sold
through long-term trust-based relationships (Trimble 2008).
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To manage client relations, an account manager is partnered with a delivery manager in each
IBU. The delivery manager handles responsibility of daily client interactions and also
manages one or several project managers. Each project managers is responsible for defining,
planning, and executing specific projects. Infosys experimented with organizing by
geography in 1999, however from 2001 onwards they returned to a structure in which the
IBU was the primary organizational unit (Trimble 2008).
Infosys’s current policy is to have Non-Executive Chairman and Chief Mentor, a Co-
Chairman, a Chief Executive Officer and Managing Director, and a Chief Operating Officer
and Director (Infosys Technologies 2009). Each of these top managers and directors has
separate authorities and responsibilities, which are shown in fig.
Fig. 2 Infosys Top Management Responsibilities (Infosys Technologies 2009).
The board official’s meeting takes place periodically, in which these directors and managers
are presenting their responsibilities, performances and targets. This meeting is to analyse
company’s current position. This strategy is very crucial for top companies to achieve main
goals, maintain their brand and position in industry. It also helps company to update their
working scheme and use of technology; moreover it is essential to build future plans and
targets (Infosys Technologies 2009).
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Chairman and Chief Mentor
Mentoring core management team and enhance leadership position.Leaveraged business solutions Bring IT benifits to every section of society.
Co- Chairman
To focus on client relationshipDealing with broader industry issues.Contribution to corporate strategy.
CEO and Managing Director
Responsible to corporate strategy Responsible for brand equity, planning, external contactsAcheiving annual business plans.
COO
Customer service operations.Responsible for new initiatives and investements.Use of existing and new technology.
The Infosys has adopted a hierarchy free structure. This modern system is based on flexibility
of employment, increasing team work approach, involvement of employees in decision
making, focus on empowerment. Flexible team working is important characteristics of
Infosys corporate structure. Any employee who is part of team in one project may be a team
leader in another project. Moreover, any two members may be working under each other’s
leadership in different projects. This system is helpful in developing the feeling of equality
among the employees. It is also useful in building team bonding, because team work is
important aspect of IT projects (Chaudhari, Goyal, Hussain and Rai 2009).
3.3 Infosys Risk Management Structure (Infosys Technologies 2009):
Infosys does its risk management task across different levels of organisations. Following risk
categories are considered in risk management framework.
Strategy:
Strategy risk involves risk of coming out of the choices and decisions taken for long term
competitive advantage of the company.
Industry:
Industry risk consists of risk from basic characteristics of IT industry including competitive
structure, market nature, and regulatory environment.
Counterparty:
It involves risk from clients, vendors, alliance partners and their respective industries.
Resources:
It consists of risk generating from unsuitable sources or organisational resources like talent,
capital, and infrastructure.
Operations:
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Risks arising from business operations like client acquisition, service delivery, business
support activities, and natural calamity.
Regulations and compliance:
Risks causes due to improper accomplishment of regulations, contractual obligations and
Intellectual Property violations which leads to loss of reputation.
Risk management practices (Infosys Technologies 2009):
Risk management involves risk assessment, measurement, monitoring, reporting and
integration with strategy and business planning.
Risk Assessment:
It means cyclic assessment to identify major risks to the company and risk prioritisation. The
risk identification and prioritisation is based on risk analysis, analysing business
environment, and discussions in RC and RMC. Risk surveys are conducted before annual
strategy exercise. Risk inventory and internal audit findings also contributes to risk
identification.
Risk Measurement and Monitoring:
Dashboard is risk measurement tool that captures internal and external indicators related for
the risks. Analysis of exposure and potential impact is carried out.
Risk Reporting:
The risk reporting outlines trend, exposure, potential impact which are discussed in RC and
RMC on regular basis. The risk updates are provided to the board members. Project risks and
account level risks are reported to project managers and account managers respectively.
Integration with strategy and business planning:
Identified risks are considered as major element while developing new strategy and business
plan.
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Fig. 3 Infosys Risk Management Frame Work (Infosys Technologies 2009).
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4. Internal and External Analysis of Organisation:
Fig. 4 Infosys SWOT Analysis
4.1 Internal Analysis:
4.1.1 Strengths:
Global Delivery Model:
Infosys has highly evolved GDM which enables to execute cost effective and sell services
where it is profitable. GDM provides seamless, high quality solutions which enables clients
to achieve operating efficiencies. Anticipating industrial moves company regularly refines
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GDM. Through modular global sourcing framework company assists their client in internal
business process segmentation, in IT processes, and in outsourcing. The company has bases
in 44 global development centres, most of which are located in India. In addition to this,
company has offices in many developed and developing nations. This means not only that
Infosys is becoming a global brand but also that it has the capability to support the global
operations of multinational clients (Infosys Technologies 2009).
Strong Brand and Long-Standing Client Relationships:
Infosys offers a wide range of customized software services and business solutions. It has
secured contracts with major firms in the market and established offices in 12 countries. It
has strong brand equity and can offer superior solutions at a fraction of its competitors’ fees.
Company’s record of delivering high quality solutions helps them to maintain relationship
with existing clients and increase business with existing clients.
Company experts from different departments contribute in consulting, creating solutions for
IT services and BPO which results in increasing customer loyalty. These experts help
company clients through innovative ideas, faster delivery, improving their efficiency.
Company’s comprehensive, end to end technology based solutions helps them to increase
client base. Through Infosys BPO, company is providing business process management
services. Through company’s consulting group and SETL (Software Engineering and
Technology Lab) they develop new solutions, provides strategic and competitive solutions,
and complex operational consulting services (Infosys Technologies 2009).
Superior Quality:
Infosys have sophisticated project management methodology to ensure consistent, accurate,
and on time delivery of high quality solutions. Infosys have received following certificates:
SEI-CMMI Level 5, CMM Level 5, PCMM Level 5, TL9000 and ISO 9002-2000 (Infosys
Technologies 2009).
Competitive Advantage:
Since the company is based in India its competitive advantage is enhanced. The India has
high inflation rate that results in low labour cost. In addition to this, India have high skilled
workforce in Information Technology. These two factors results in high skilled low cost
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competitive advantage. Trained Indian personnel often speak very good English and are
sensitive to Western culture, underpinned by India's colonial past (Marketingteacher 2009).
Strong Financial Position:
Infosys is in a strong financial position. The business turned over more than $4 billion in
2008. This means that it has the capital to expand, and also the basis to leverage potential
investors (Infosys Technologies 2009).
Status as an employer of choice:
Infosys believes that they have best talent in Indian technology services. Training program
ensures that newly recruited employees enhance their skills as per company requirements and
ready to take responsibilities after completing training. Company’s lean organisational
structure and strong unifying culture makes knowledge sharing possible among employees
(Infosys Technologies 2009).
Ability to scale:
Infosys have managed growth by rapidly recruiting, training, and deploying new
professionals. Company’s strong financial condition allows making investment in
infrastructure, and personnel to continuously rising business. Company’s workforce has
increased from 36,800 to 1, 04,900 from March 2005 to March 2009 (Infosys Technologies
2009).
4.1.2 Weaknesses:
Infosys is one of the big IT organisations in India; however, it is much smaller compared to
its global competitors. Infosys has crossed $4 billion figure in 2009, which is comparatively
low with large global competitors such as Hewlett-Packard ($91 billion), IBM ($91 billion),
EDS ($21 billion) and Accenture ($18 billion) (Marketingteacher 2009).
Infosys is works at the operational level; so they are not as better in management consultancy.
This field is dominated by their competitors such as IBM and Accenture (Marketingteacher
2009).
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North America Europe India Rest of the World
0
10
20
30
40
50
60
70
Revenue in Percentage Accross Globe
Revenue in Percentage
Fig. 5 Infosys revenue across globe (Infosys Technologies 2009).
The above figure reveals that Infosys is too much dependent on US for revenue and only
1.3% of revenue comes from home country India (Infosys Technologies 2009).
(Banking, Finance, Service, Insurance) sector for revenues:
Manufacturing19.7%
BFSI33.9%
Telecom18.1%
Retail12.6%
Energy and utilities5.7%
Transporta-tion2.3% Others
7.7%
Revenue from different Sectors
Fig. 6 Infosys Revenue from different sectors (Infosys Technologies 2009).
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The above chart shows that Infosys’s revenue is mainly based on BFSI sector. Economic
recession in these sectors will produce negative effects on business (Infosys Technologies
2009).
Infosys revenue and expenses are difficult to predict and can vary periodically, which results
in share price decline. Moreover, revenue is highly depends upon small number of clients.
4.2 External Analysis:
4.2.1 Opportunities:
Infosys clients are happy with company’s service, which creates god opportunity to
secure contracts with larger firms.
Infosys has more opportunities in the government marketplace because of an increase
of homeland security and defence spending.
Infosys’s alliance strategy is targeted at partnering with leading technology providers,
which allows company to take advantage of emerging technologies. The strategic
alliance between Infosys and Schlumberger gives the IT company access to lucrative
business in the gas and oil industries (Marketingteacher 2009).
Infosys strategy of outsourcing and cost reduction makes good opportunity during
financial crisis in the global economy, as clients look for cost reduction during such
scenarios.
There is a new and emerging market in China, as the country undergoes a huge
industrial revolution. Infosys also have opportunity to increase their presence in
Czech Republic, Eastern Europe through Infosys BPO, in Australia through Infosys
Australia, and in Latin America through Infosys Mexico. Infosys can open offices and
development centres in cost advantage countries such as those in Latin America and
Eastern Europe (Marketingteacher 2009).
From past few years for European and North American company’s offshore services
in India, this generates good opportunity to make deal with companies from these
countries (Marketingteacher 2009).
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Only 1.3% of total revenue is coming from India, which suggests that Infosys has low
client base in home country India. That means company have good opportunity to
expand the business in India (Infosys Technologies 2009).
4.2.2 Threats:
Infosys is operating in highly competitive and rapidly changing market, so they are
facing competition from following kind of firms:
Consulting firms like Accenture Limited, Cap Gemini S.A., Deloitte Consulting,
Atos Origin, etc.
Large Multinational technology firms like Hawlett-Packard, IBM Corporation, etc.
IT outsourcing firms like Computer Sciences Corporation, Keane Inc., Logica Plc,
Perot Systems Corporation, etc.
Offshore technology services like Cognizant Technology Solution Corporation, Tata
Consultancy Services Limited, Wipro Technologies Limited, etc.
Software firms such as Oracle Corporation and SAP A.G.
BPO firms such as Genpact Limited, WNS Global Services, etc (Infosys
Technologies 2009).
Countries such as China or Korea are undergoing rapid industrial expansion. Like
India there is also large amount of low-cost labour, and high skilled technical people
are available. So, there is threat of organisations from these countries in order to
attract clients from outside India (Marketingteacher 2009).
The economic environment, pricing pressure and decreased utilization rates could
make negative impacts on revenue and operating results.
Intense competition in the market for technology services could affect cost
advantages, can reduce business which may result in revenue decrease.
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Infosys is highly dependent on a small number of clients, and the loss of any one of
the major clients could drastically impact business and revenue.
Failure to complete fixed-price, fixed-time frame contracts within budget and on time
may affect profitability of company.
Client contracts can typically be terminated without cause and with little or no notice
or penalty. Also, these contracts are based on performance. So, providing satisfactory
performance is essential.
Threats of business suffer if company fails to anticipate and develop new services,
and enhance existing services.
Telecommunication disruptions, virus attacks and system failure may damage
execution of GDM which results in client dissatisfaction.
As company is investing heavily in new facilities, physical infrastructure, the
disproportionate growth may affect profitability.
Terrorist attack, war could adversely affect business. Moreover, there is risk of natural
calamities like earthquake, floods.
Continuous pressure on profit margins as clients demand lower prices and the
stronger rupee (currency of India) reduces earnings.
Threat of political changes and Indian Government policy changes (Infosys
Technologies 2009).
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5. Company Future:
5.1 Future Plans:
Global Sourcing and Business Value:
Infosys global sourcing strategy is in association with its business strategy, thus company
planning to enhance across the world with efficiency in operations and delivering value
added services to clients. In third quarter of 2009, Infosys has opened one office in Brazil and
two offices in New Zealand. In addition to this, company is leading to enhance flexibility and
productivity to its business process and IT services. Infosys is planning to be the point of
reference in the UK market by providing advance technology products and services (Lihiri,
Infosys Technologies 2009).
Adding more clients:
Infosys is aiming to focus on certain geographies to increase its client area and figure out new
business. At the same time they are focussing on dealing a business with its existing clients.
The company has also been reinforcing its front-end delivery capabilities.
Enterprise Solutions:
Infosys has plans to emphasis on the package enterprise applications such as SAP and Oracle
Suite. The company is also planning to focus on the service oriented architecture (SOA) like
software as a service. In order to do this, they are developing the cloud computing
architecture (Lihiri).
Moving beyond Application Development:
Infosys offers a range of services beyond its traditional strengths in Application Development
including BPO, infrastructure maintenance, software service, etc. The company already has a
strong foothold in the infrastructure and F&A segments. It plans to expand its offerings in
other service area as well (Lihiri).
Non-linear strategy:
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Infosys is going big on its IP (Intellectual Property) led growth plans. The company is
working in partnership with some of its clients for co-creating IT products and platforms. In
order to execute this plan, they have identified in seven new growth areas. This new business
model is critical for the company’s non-linear growth strategy (Equitymaster 2010).
Through the non-linear model, the company will be able to reuse its IPs across clients after a
pre-decided period of exclusivity. Moreover as the initial development expense will be
shared, it will require lower investments. Infosys aiming to generate about one-third of its
revenues from the high-margin non-linear business model in the next 5 years. Company
believes that strategy of focusing on non-people intensive, IP-led growth will help Infosys'
future growth (Equitymaster 2010).
Continue to invest in infrastructure and employees:
Infosys is determining to invest in physical and technological infrastructure to support
growing worldwide development, sales operations, and increase productivity.
Enhancing brand visibility:
Infosys will carry on branding efforts with participating in media and industry analysis
events, sponsorship of and participation in targeted industry conferences, trade shows,
recruiting efforts, and community outreach programs and investors relations (Infosys
Technologies 2009).
Continue to Develop Industry Knowledge:
Infosys will be going on to build specialised industry expertise in financial services, health
care, manufacturing, telecommunication, retail, transportation, and logistics industries
(Infosys Technology 2009).
Pursue alliances and strategic acquisitions:
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Infosys will continue to develop agreements that complement core competencies. They also
intend to follow achievements that add to existing skill sets, industry expertise, client base or
global presence (Infosys Technologies 2009).
5.2 Future Challenges:
Managing goal of rapid growth and maintain unique balance of organizational culture
with handling global employees.
Maintaining its leadership style at all levels in company considering rapid growth of
company.
Keeping company brand in software development area.
Handling change management issues considering company’s growth.
Finding out essential skills required to include in the employees for developing the
next generation of business leaders.
Finding out appropriate global business model for Infosys’ growth in future.
Improving the productivity of its workforce in order to raise profitability.
Checking whether existing offshore delivery model is sustainable.
Managing larger relationships as company is going for big deals and projects.
Looking to sustain company growth considering larger platform.
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6. Recommendation:
Considering Infosys’ globalisation strategy, they need to identify, mitigate and address
existing culture and operating challenges. In order to success this strategy, company need to
hire people with ability to work remotely across geographies and cultures. In order to
compete in flat world, company should focus on altering or lowering cost structure. As
Infosys is focussing on expanding clients across globe, they should focus on faster
innovations along with good service to existing and potential customers. Company should
emphasise on employee training in a way to train them to generate innovative ideas.
Infosys need to focus on markets apart from US and Europe, as they are heavily dependent on
them. Along with their globalisation strategy, they should focus on expanding business in
India. Infosys revenue is coming from banking, finance and Insurance sector, so they need to
consider opportunity from other sectors like transportation, healthcare, etc. They should
continue with their alliance policy to make partnership with big companies.
7. Conclusion:
Infosys open door work policy is very beneficial for new employees. Company’s risk
management frame work covers risks from all departments of company. The Infosys culture
is highly dependent on its important, people. As such, the end goal of Infosys’ change
management competency is to help clients and ensure long relationship with them. Infosys
has a modular change management framework that concentrates on the full range of change
management needs. Due to its modular design, the Infosys change management solution can
be deployed to assist clients in one or more change areas. Based on the unique needs of the
client, a customised approach can be defined.
The business model of Infosys is flexible and it requires dynamic changes in business
process. Company’s strategy of providing more attention on customer satisfaction and
employee efficiency results in exceptional performance. Company can achieve fast growth
and can expand clients. Company’s internal and external analysis reveals that apart from
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some weaknesses company have good opportunities to expand business in countries like
China, Mexico, and some European countries.
8. References:
Chaudhari, S and Goyal, A and Hussain, S and Rai, R. (2009). Strategic Analysis of Infosys. [Online]: <http://www.scribd.com/doc/14226359/Infosys-strategic-analysis.> [22 April 2010]
Lahiri, B. (N.A.). Infosys Technologies Limited. [Online]: <http://www.ibef.org/download/Infosys.pdf.> [13 May 2010].
Masood, N and Benson, H.(2005). Organisational Change Management and Global Sourcing - A Winning Combination.[Online]:
<http://www.infosys.com/global-sourcing/white-papers/Documents/OCM.pdf.>[19 April 2010].
N.A.(2010). Infosys' non-linear plans. [Online]: <http://www.equitymaster.com/tm/tm.asp?date=3/15/2010&title=Infosys%27-non-linear-plans.> [9 May 2010].
N.A. (2009). Infosys Annual Report. [Online]: <http://www.infosys.com/investors/reports-filings/annual-report/annual/Documents/Infosys-AR-09.pdf.> [10 April 2010]
N.A.(2005). Infosys: Envisioning a bright future! [Online]: <http://www.equitymaster.com/detail.asp?date=2/9/2005&story=2> [7 April 2010].
N.A.(2006). Infosys' Globla Delivary Model. [Online]: <http://www.icmrindia.org/casestudies/catalogue/Operations/Infosys%20Global%20Delivery%20Model-Operations%20Management%20Case%20Study.htm.> [15 April 2010].
N.A. (2009). Swot Analysis Infosys. [Online]: <http://www.marketingteacher.com/SWOT/infosys_swot.htm.> [25 April 2010].
Mullins, L. (2007). Management and Organisational Behaviour. 8th ed. Great Britain: Pearson Education.
Sheelvant, R. (2008). Infosys Globalisation Strategy. [Online]: <http://itstrategyblog.com/infosys%E2%80%99s-globalization-strategy/>. [27 March 2010]
Singh, J. (N.A.). Infosys Technologies Limited (A). [Online]: <http://knowledge.emory.edu/papers/873.pdf> [29 April 2010].
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Trimble, C (2008). Infosys: Maintaining an Edge. [Online]: <http://mba.tuck.dartmouth.edu/cgl/downloads/DisciplinedInnovation/20026-InfosysMaintaingAnEdge.pdf> [5 May 2010].
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