Company Analysis

Infosys Technologies Ltd.

Presented by
Group 15
B Prathik B08075
Neha Patil B08091
Pallavi Pradhan B08093
Shwetank Jain B08110
Agenda
Thank You

Infosys coping up..

Future Trends in Industry

Strategic management

SWOT

Infosys - Organization
Introduction
þalues
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4agnet for the

Best Global Talent

Industry
Leader
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Strategic Research

Customer Delight
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^^ global development centers
People across 70 nationalities
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Fuel for growth..!

Faster Innovation..!
4oney from Information..!
Winning in the turns..!
Integrated Risk 4anagement
4aking a difference..!
 SWOT Analysis of INFOSYS
u low labor costs
u has relatively high
skills and English speaking
workforce
u strong financial position
u ^^ global development
centres
u global brand
STRENTHS
OPPORTUNITY
u hard times could be profitable
for Infosys
u There is a new and emerging
market in China
u The strategic alliance between
Infosys and Schlumberger
gives the IT company access
to lucrative business (gas and
oil)
u offshore services
u Depends on US markets
u Infosys is much smaller than
its global competitors
u Infosys is weaker when it
comes to high-end
management consultancy
WEAKNESSES
THREATS
u Competitors from countries
such as China or Korea
u Customers may switch to
other offshore service
companies
u all global IT players, Infosys has
to compete for skilled labor
and this may have the effect of
driving up wage levels, and
making it more difficult to
recruit and retain staff.
Competitors Analysis
Industries Where Infosys Competes:
- Computer Services
[ Information Technology Services (primary)
Õ Business Services
Consulting
[ Staffing
r Outsourced Human Resources Services
 CO4PETETORS ANALYSIS cont.
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Sales 17,^ 1.20 15, ^8.00 8,137.28 18,533.72
Operating profit 3, 8^.30 ^,9 3.00 1,828.5^ 5,020.11
Interest 11 .8 - 5.9^ 3.^2
Gross profit 3,925.80 5, ^ .00 2,079.80 5,^ 2. ^
EPS (Rs) 20.9 78.15 25.59 ^ .07

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PE ratio 11 1 .35 1.7 11
EPS (Rs) 20.9 78.15 25.59 ^ .07
Sales (Rs crore) 5,397.00 5,^29.00 2,700.52 5,875.^8
Net profit margin (%) 17.19 27.37 20.38 2^.11
Return on average
equity 2 .51 33.13 23.32 ^1.3^
Porter·s 5 Forces

Bargaining Bargaining Threat of

Threat of Competitive
Power of Power of New
substitutes Rivalry
Suppliers Buyers entrants

High High Low Low High

Human
Large Organisatio IT services
resource Large
number of ns strive on keep on
has high number of
software existing evolving but
bargain firms
firms clients by no quantum
power as fighting for
offering maintaining change
low the same
similar relationship expected
switching customers
services s soon
cost
Infosys Strategic 4anagement

Bargaining
Power of
Bargaining Buyers
Power of Competitive
Suppliers Rivalry

Threat of Infosys
New Strategic
Threat of
entrants 4anagement substitutes
Tackling Competitive Rivalry

Õ Creating diverse workforce greatest challenge for global

firms
Õ Infosys·s Answer: 91,000 employees from 70 nationalities
working across 90 countries
Õ ´Ethno-centricµ corporate culture
Õ Diversity at the top management level is must
Õ ? 


 



Hiring multinational top
executives along with hiring multinational employees.
Reducing Bargaining Power of Buyers

m   

Õ From the CEO to the shop-floor worker

Õ Awarding Champions, black belts and green belts

Õ Champions, senior executives and managers accountable
for the results of the Six Sigma projects
Õ Green Belts, project team members or employees who
execute Six Sigma as part of their jobs
Õ Black Belt is a key change agent for the Six Sigma
process (1%-3%)
Õ 4ore than 200 Black Belts to monitor projects
Reducing Bargaining Power of Buyers





Õ Six Sigma certification, a confirmation of an

individual·s capabilities with respect to particular

competencies
Õ Involves training, written tests, and a hands-on display
of competencies.
Õ It gives options to employees to specialize in various
competencies
Õ Employee knowledge as well as skill-set develops.
Reducing Bargaining Power of Buyers

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Õ 4any changes in the work culture in Infosys

Õ Open and transparent culture
Õ Ideas invited from everyone
Õ lack of hierarchy
Õ Focus on a learning environment
Õ Leads to quality thinking at every level and in every
operation
Reducing Bargaining Power of Buyers

 
  
Õ Initiated Six Sigma processes in 1997 with consultation
services from 4otorola
Õ Already achieved the ^.8 level in more than 300 projects
(3 being industry average)
Õ Implementing an action plan to equip all of its associates
with analytical skills
Õ Complete a minimum of 500 projects of different
processes and services under Six-Sigma guidelines
Õ Focus on a learning environment
Õ Future plans - training an additional 50-75 Green Belts,
initiating an additional 5-10 key Six Sigma projects in the
next few months.
Reducing Bargaining Power of Suppliers

Õ þoted the best employer in the country in many HR

surveys in the recent years
Õ Well-known for its employee friendly HR practices
Õ A perfect mix of USD 2 Billion Company and culture
of a small company
Õ Recruits candidates through one of the toughest
selection process
Õ Intensive 1^ week training program
Õ One of the first companies to offer ESOPs to its
employees
Õ þariable compensation structure
Changing Industry conditions and
Future course of Infosys
Software Industry Structure ² Porter·s 5-
5-forces
Force 1: Intensity of Rivalry and Competition
Then (1990) - Low Now (200^) - High
Õ þery high growth in Õ Growth stabilized (see
industry later slides)
Õ Low relative fixed cost Õ Fixed cost are higher
now
Õ Wide variety of Õ 4ore difficult to
differentiating capabilities differentiate
Õ Smaller number of
players from mostly Õ Numerous players
developed world around the world with
entry of low-cost
developing world
Software Industry Structure ² Porter·s 5-
5-forces
Force 2: Barriers to Entry
Then (1990) - Low Now (200^) - Higher
Õ Product Õ Product
differentiation was differentiation is
easier harder
Õ Brands evolving Õ Brands established
Õ Switching costs Õ 4uch higher
lower switching costs
Õ Network effects not Õ Network effects
completely create significant
established barriers
Software Industry Structure ² Porter·s 5-
5-forces
Force 3: Bargaining power of Suppliers
Then (1990) - High Now (200^) - Low
Õ Strong developers in Õ Large supply at low
short supply cost from around the
world
Õ Few experienced Õ 4ore experienced
project/program managers available
managers
Õ Education/training Õ 4atured education/
concentrated & training freely
evolving available
Software Industry Structure ² Porter·s 5-
5-forces
Force ^: Bargaining Power of Buyers
Then (1990) - Lower Now (200^) - Higher
Õ Could not clearly Õ Can clearly articulate
articulate needs needs
Õ Technology was Õ Technology has been
Strategic thrust commoditized
Õ Demand far Õ Supply has
exceeded supply significantly increased
Software Industry Structure ² Porter·s 5-
5-forces
Force 5: Threat of Substitutes
Then (1990) - High Now (200^) - Lower
Õ Bespoke software Õ Bespoke software
lower in the stack higher up the stack
Õ Technology was Õ 4ust have; efficiency
strategic advantage ² focus - less custom
more custom development
development Õ Higher switching
Õ Lower switching costs
costs
Software Industry Structure ² Porter·s 5-
5-forces
Summary

Then (1990) Now (200^)

Õ Rivalry Lower Õ Rivalry Higher
Õ Entry Barrier Lower Õ Entry Barrier
4oderate
Õ Supplier power Õ Supplier power
higher lower
Õ Buyer power lower Õ Buyer power higher

Õ Substitutes higher Õ Substitutes lower

Industry has matured Industry has matured
Top 10 firms control 58% of Revenue Top 10 firms control 72% of 4arket Cap

Software Industry Consolidation

 Software Industry Consolidation

 
  

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Õ Industry has matured

Õ Top 10 firms control 58% of Revenue
 Software Industry Consolidation

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u Industry has matured

u Top 10 firms control 72% of 4arket Cap
Software Industry as Oligopoly

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41% 39%

4icrosoft
7% 9%

4%

IB4 SAP Oracle

 Company Performance

50
2500
^ .57 223 ^5
^2. 3 2122
^2.2
2000 39.8 ^0.1^ ^0
38.29
37.2
35
15^0
1500 30

1132 25

1000 20

89 15
510
^5^ 10
500

0 0
2002 2003 200^ 2005 200 2007 2008

EþA PAT% of avg capital employed

Source : Infosys Technologies Pvt. Ltd. , Annual Reports 200 -08

4ajor future Trends

Õ Increasing Labour costs

Õ 4oving up the value chain
Õ Consolidation
Õ 4anpower Shortage
Õ Outsourcing Backlash
Õ Engineering Services Outsourcing
(ESO), Avionics and other opportunities
Thank You!