infosys. agenda topic 1 what is the essential strategic insight behind business process outsourcing?...

Infosys

Agenda

Topic 1

• What is the essential strategic insight behind Business Process Outsourcing?

Topic 2• What is

the business model that underpins the software services provided by Infosys and how does it capture BPO contracts?

Topic 3

• How has Infosys utilized stretch goals to acquire the capabilities that enable it to compete with the established giants? What is the role of capability standards such as CMM?

Topic 4

• What is Infosys’ strategy today?

What drives India?

Stable economyLow cost technical workers

& software engineers

Supportive government

policies

World class telecom

infrastructure

World class companies

Work culture

English-speaking manpower

Top managerial talent

Project management capabilities

Clients’ acquisition of

specific capabilities

Source Where do capabilities come from and how do they matter? A study in the

software industryS.K. Ethiraj, P. Kale, M.S. Krishnan, J.V. Singh

History of IT in India

1981 Found

ed

1993IPO

1997 CMM 4

1999 CMM 5

1999NASD

AQ

2009$ 5.05

b

1977Tightened

Rules

1986 Loosened

restrictions

1991 Economic

Liberalization

Late 1970’s MNC

Left India

Early 1990’s MNC

re-enterd

Indian Government

Infosys

Source Infosys Technologies

Harvard Business School

IT in India

• IT as a sector• Providing satisfactory

services to existing increase in demand

• Government controlling infrastructure and technology

• IT for specialist• Fullfilling external

demandFrom

• IT as an industry and for masses

• Adding value to sustain the growth

• Government faciliting infrastructure and the technology

• Creating internal demand

To • Export promotion and tax/duty incentives

• Liberal policy frame work for the sector

• Foreign export reforms

Through

Infosys

Industry :Software - IT

services

Founded : July 2, 1981

Products :Finacle ( UBS )

Headquarter :Bangalore, India

Source Infosys’ Annual Report 2009

Infosys

The most profitable

subsidiary :Infosys BPO

Development Centers:

India,China,UK, Canada,Japan and Australia

Employees :103.905

Source Infosys’ Annual Report 2009

Completed projects :>20000

Infosys : the story of a successful latecomer

Early bird catches the worm, but the second mouse gets the cheese...

English proverb, Unknown author


As a Latecomer a firm is able to exploit its late arrival adopting advanced technologies, rather than having to replicate the entire previous technological trajectory.

The market is already developed by the previous firms, so the latecomer firm will spend less resources in the communication of the services. The consumers already know that it is available, they seek only for the best deal.

The strategic goal of the latecomer is clear: it is to catch up with the advanced firms, and to move as quickly as possible from imitation to innovation.

In the context of globalization, latecomer firms are faced with new opportunities for linking up with emergent institutions and networks. Global value chains, are being formed by leading firms in the advanced countries as they seek to cut costs and enhance flexibility through outsourcing. This creates huge opportunities for latecomers as Infosys, to link up with these global value chains as suppliers.

Source Latecomer strategies for catching-up : the cases of renewable energies and

the Led programmeJohn A. Mathews


Founded : 1968

Founded : 1978

Founded : 1977

Founded : 1981

Founded : 1959

New Delhi

Mumbai

Bangalore

Porter’s Five Forces ( Static )

Raising of other offshore locations such as Eastern Europe, Philippines and China, are emerging and are a serious threat to Indian IT industry because of their cost advantage. Anyway it will affect India only in medium-long run.

• It improved due to the slowdown, the Job cuts, the layoffs and bleak IT outlook

• Availability of a vast talent pool

Large numbers of It companies focused on It projects, results: really high competition• Huge decline

in IT expenditure due to the crisis

• The clients keep sticking to the old partners

• Large companies require special condition

• Low capital requirements• Large value chain, space

for small enterprises• MNCs are ramping up

capacity and employee strength

• Need to get reputation• Certificate of quality

• Commoditized offerings• High industry growth• Strong competitors with

huge experience and valuable brands

• Few numbers of large companies

Barg

ain

ing

p

ow

er

of

su

pp

liers

Barg

ain

ing

p

ow

er o

f cu

sto

mersThreats of substitutes

Threats of entry

Industry Rivalry

Porter’s Five Forces ( Dynamic )

Threats of Substitutes

Today : may sub easily to be imitated but Infosys has competent engineers (low salaries and low prices).

Threats of Entry

Today : need to invest in HR and computer tech.(Innovation).Be a reliable company (CMM).

Bargaining Power of Suppliers

Today: low because most of the softwares are not so much expensive.

Bargaining Power of

CustomersToday: huge easy to switch. Need to be open to external auditing and adhere to the SLA.

Industry Rivalry

Today : number of competitors is also increased nationally.

BPO : a socio-technical phenomenon

The Business Process Outsourcing can be defined as:"the movement of business processes from inside the organization to external service providers“.

Business Process Outsorcing: The Competitive Advantage, by Rick Click, Thomas Duening

The origin of BPO comes from a set of driving factors that enable the shifting of work to its lowest cost/highest quality provider careless about the

provider’s physical location.


Internet security

Business specialization

Inexpensive data storage

Educational attainmentBPO set of

driving factors

Broadband Internet


Near shoring/ sourcing

• It is a derivative of the business term offshoring in which an activity is replaced to locations which are geographically nearer

Onshore outsourcing

• (also called domestic outsourcing) is the obtaining of services from someone outside a company but within the same country

Offshore outsourcing

• is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured

Types of BPO

Body Shopping

The Infosys’ Body Shopping can be defined as:”the ability to export talents ( software engineers ) to provide on-site services to customers, at lower costs and on time”.

FinancialDictionary.com

Body Shopping

InformationWeek

The H-1B is a non-immigrant visa ( limit 65000 units ) in the United States under the Immigration & Nationality Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in special

occupations. The duration of stay is three years, extendable to six.

Body Shopping

ConsConsProsPros No technology focus Low compensation Frequent transfers and no

accommodation falicities beyond 1 week

High level of working hours Top-down policy

The Infosys brand value in India

Impressive infrastructure Very strong delivery

structure World class facilities

Valu

e A

dd

ed

How to get contracts?

Body Shopping

ODC’s

Quality & Trust

Fixed price contracts

Increase complexity



How to get contracts?

Source Activity transfer to Agilent’s Indian operation by date, sophistication and

employmentR. Dossani, M. Kenney

Resource Based View

The resource-based view (RBV) argues that firms possess resources, a subset of which enable them to achieve competitive advantage, and a subset of those that lead to superior long-term performance. Resources that are valuable and rare can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution.

J. Barney, E. Penrose

Resource Based View

( also called Resource Heterogeneity ) Refers to a firm owns a resource or capability that is also owned by numerous other competing firms, then that resource cannot provide a competitive advantage.

Refers to a resource that is difficult to obtain by competitors because the cost of developing, acquiring or using that resource is too high.

Source Information technology and sustained competitive advantage : a resource-

based analysis J.Mata, W.L. Fuers, J.B. Barney

Resource Based View

Resource Immobility

• Respect and acute focus on employee satisfaction

• Consistent financial performances

• Fair meritocracy

• Agility• Engineering

excellence• Quality,

reliability and speed

Resource Diversity

• Telecom infrastructure

• Low delivery cost

• Technical and management education

• Staff training• Training

centers• Development

centers

Competitive Advantage

Focus High quality and

capabilities CRM Time-delivery Risk Management

Differentiation High in/High end services

of VC Low in/Low end services

of VC

Cost Leadership Global delivery Model

24/7 New offices Training centers

Business Models : Global Delivery Model (GDM)

Requirement definition

AnalisysHigh level design

Onshore

Detailed design

DevelopTestPackage

Offshore

Deploy solution

Phase 1

Phase 2

Business Models : PSDP Model

ProfitabilityHigher value services

Increase revenue predictivity

Offshore model- Global delivery

Sustainability

Translating clients to partners

De-risking

Managing client concentrationGeographical diversification

Predictability

Annuity RelationshipsForecasting systems



Stretch Goals

Strategic stretch goals are goals that cannot be achieved with what is known and how is worked today. They aim for something that is impossible today.

B. Schindlholzer

Stretch Goals

J. Welch, ex CEO General Electric

“By reaching for what appears to be the impossible, we often actually do the impossible. And even when we do not quite make it, we inevitably wind up doing much better than we would have done”.

Stretch Goals

• The ability to make more from what is available, maximize available capital, financial and human resources.

Leveraging

Resources

• Differently, unconventionally, from a new perspective;

• Come up with new radical ideas and execute them to achieve extraordinary business results;

• Encourage your employees to try something new and give them a “permission to fail”;

• Learn to break the model,change,destroy monotony.

Think outside the box

• Concentrating resources : Convergence and Focus

• Accumulating resources : Extracting and Borrowing

• Complementing resources : Blending and Balancing

• Conserving resources : Recycling Co-opting & Shielding

• Recovering resources : Expediting Success

The arenas of Resource Leverages

Hamel, Prahalad: Strategy as stretch and leverage

Capability Maturity Model ( CMM )

The Capability Maturity Model is a framework that focuses on processes for Software development.

It was developed by the Software Engineering Institute (SEI) at the Carnegie Mellon University.

The CMM categorizes software process maturity at 5 Levels.

Capability Maturity Model ( CMM )

Role of CMM/SE

I Benefits

• Aims to distinguish mature processes from immature processes;

• Differentiate firms in the market;

• Study and improves software capabilities and PMC;

• Show that the firm is doing serious, because it requires enormous investment;

• It’s a standard quality process model;• Status and

exclusivity. It’s a very difficult to get it. Only 2% of the assessed firms received a SEI level 5;• Convince

customers that the company is trustworthy;• Regularly

benchmark the process for process and capability maturity;

Source Osiris

https://osiris.bvdep.com/

Results

New Strategy : Think Flat

The world is getting flattened by forces of globalization, changing demographics, ubiquity of

technology and regulatory compliance. Companies must address the shifts of the Flat World.

•Migrate to a variable cost structure from a

fixed cost structure•Prepare in advance to manage business risk

•Respond faster to business cycles

•Capturing and optimally using unstructured infos

•Building analytics and information stewardship capabilities

•Facilitating seamless flow of information across boundaries

•Increase speed of information

•Innovate customer experience

•Understand customer behaviour

•Co-create with customers and partners

•Creating new offerings for price sensitive markets

•Creating differentiated offerings, leveraging talent and technologies

•Creating globally optimized and efficient low-cost operations

Optimize Cost Fuel Growth Thinking Faster

Innovation

Think Winning in the turnsThink

Money for

Information

Infosys

All that glitters is not gold...

English proverb, Unknown author

Infosys

Difficulties when non Indians have to fit on Infosys corporate culture

Good brains usually leave the company in 1-2 years

24/7 workday because of time difference between USA and India

Inability to plan workday, last minute changes

Easy to get lost in the crowd (>100.000 people)

Average and complicated salary (variable)

Thank you!

Team :Giuseppe De PeppoAlessandro H. SansonettiPatrizia Spagnolo

Costantino UrciuoliEleonora VegliantiLuca Zevola

infosys. agenda topic 1 what is the essential strategic insight behind business process outsourcing?...

Documents