Info case study

7/28/2019 Info case study

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CASE STUDY ON INFOSYS

SUBMITTED BY:

Barun Kumar

Veeresh Tripathi

Saurabh Mehta

Rajesh Kumar

Aparna Vyas

Jayshree Bharti

Manoj Dubey


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OVERVIEW OF IT INDUSTRY

Indian economy has been impacted by therecessionary trends, with a slowdown in GDP growthto 7%.

But IT-BPO industry in India- a growth engine for theeconomy

Contributing to increases in the GDP

urban employment and exports


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INDIAN IT INDUSTRY SECTOR

1. MARKET SIZE:

More than 80% of revenues come from Exports and only 20% fromdomestic business

Revenues from domestic and export

(in USD billion)


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Contribution of IT industry to Indian GDP

IT industry contributes to around 5.2% to Indian USD 1 trillion GDP.


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IT industry provides direct employment to more than 20 lakh people, indirectemployment number goes far beyond..!!

Number of employees in IT Sector (Direct

employment)


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IT industry is largely dependent on Banking and financial industry. With thedecline in these sectors, the revenue from these is expected to decline,hurting the bottomline of IT majors. This calls for exploring new verticals.

Indian IT industry Revenue Break-up by

sector


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As compared to International IT giants, Infosys and other Indian

companies are lack in R&D spending.

R&D Spending of IT majors


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N. R. NARAYANA MURTHY

Born in Mysore, India on August 20, 1946.

Graduated with a degree in electrical engineering from theNational Institute of Engineering, University of Mysore .

Articulated, designed and implemented the Global DeliveryModel .

He served on the boards of Unilever, HSBC, Ford Foundationand the UN Foundation.

He served on the boards of Cornell University, Wharton School,Singapore Management University, Indian School of Business,Hyderabad, Indian Institute of Management Technology,Bangalore and INSEAD.

Padma Vibhushan by the Government of India 2008.

Legion d'honneur by the Government of France 2008.

CBE by the British government 2007.

World Entrepreneur of the Year - 2003 by Ernst & Young.

Holds over 26 honorary doctorates from universities across theworld.


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TRAITS OF ENTREPRENEUR (N. R. NARAYANA MURTHY)

Independence.

Persistence and Determination.

Self-Confidence.

Creativity. Organized and goal-oriented.

Risk-taking and Tolerance.

Perseverance and Hard Work.

Commitment.

Honesty and Honor.


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INFOSYS INDIA

Delivers measurable business value in 3 ways: Transform

They can transform the fundamental shape of thebusiness P&L. They call it IMPACT to ensure a clear lineof sight from process change to bottom-line impact,ensuring that you receive the business value you werepromised.

OptimizeBeyond transformation and innovation, it boils down toexecution - delivering on time, on budget and "on value".

InnovateThey can inject a level of product and service innovationinto your business to create new revenue opportunitiesthrough collaboration and co-creation as they keep abreastof the latest technology and how it applies to the businessissues.


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INFOSYS LEVERAGINGTHE GLOBALDELIVERY MODEL

The key to the success of Infosys has been its ability toleverage an innovative business model: "The GlobalDelivery Model" in order to help its clients economize oncosts linked to information technology and softwaredevelopment.

The term Global Delivery Mode is typically associatedwith companies engaged in IT consulting and servicesdelivery business and using a model of executing atechnology project using a team that is distributed globally.
http://en.wikipedia.org/wiki/Information_technology_consultinghttp://en.wikipedia.org/wiki/Information_technology_consulting


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DIVISIONS

Infosys BPO

Infosys Consulting

Infosys Public Services

Infosys Australia Infosys Brazil

Infosys China

Infosys Mexico

Infosys Sweden


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SWOT ANALYSISStrengths:

Leadership in sophisticated solutions that enable clients to optimize theefficiency of their business

Proven Global delivery model Commitment to superior quality and process execution

Strong Brand and Long-Standing Client Relationships

Status as an employer of choice

Ability to scale

Innovation and leadership

Weaknesses:

Excessive dependence on US for revenues 67 % of revenues from USA

Excessive dependence on BFSI sector for revenues 36 % of revenuesfrom BFSI

Weak player in domestic market. Only 1 % of revenues from India low ascompared to peers

Low R & D spending as compared to global IT companies only 1.3 % oftotal revenues

Rising wage bill 42.9 % to 44.8 % of revenues

Low expertise in high end services like Consultancy and KPO.


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Opportunities:

Domestic market set to grow by 20%.

Expanding into new geographies Europe, Middle East, etc Infosys is cash rich (Around US $ 1 Billion) - Acquiring companies to

increase expertise in Consultancy, KPO and package implementationcapabilities

Opening offices and development centers in cost advantage countries suchas those in Latin America and Eastern Europe.

Threats:

The economic environment, pricing pressure and rising wages in India andoverseas

Intense competition in the market for technology services could affect costadvantages.

High dependency on a small number of clients, and the loss of any one ofthe major clients could significantly impact business.

Failure to complete fixed-price, fixed-time frame contracts within budget andon time

Currency fluctuations

Termination of Client contracts can typically be terminated without causeand with little or no notice or penalty.


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PEST ANALYSISPolitical stability:

Indian political structure is considered stable enough expect the fact thatthere is a fear of hung parliament (no clear majority).

U.S. government has declared that U.S companies that outsource IT workto other locations other than U.S. will not get tax benefit.

Government owned companies and PSUs have decided to give more ITprojects to Indian IT companies.

Terrorist attack or war. Positive Deep -ve Positive Negative Political

Economic :

Global IT spending (demand)

Domestic IT Spending (Demand): Domestic market to grow by 20% andreach approx USD 20 billion in 2008-09 NASSCOM

Currency Fluctuation Real Estate Prices: Decline in real estate prices has resulted reducing the

rental expenditures.

Attrition: Due to recession, the layoffs and job-cuts have resulted in lowattrition rate.

ECOMONIC ATTRACTIVENESS due to cost advantage and other factors.

Negative Positive Negative Mildly +ve Mildly +ve Positive


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Social

Language spoken: English is widely spoken language in India, Englishmedium being the most accepted medium of education. Thus, India boastsof large English speaking population.

Education: A number of technical institutes and universities over the countryoffer IT education.

Working age population Highly +ve Highly +ve Positive

Number of IT graduates in India India creates a large pool of skilled ITprofessionals each year, to meet industry requirements. As per NASSCOMStrategic Review report, India is one of the few countries to have anincreasing share of working population

Technological Telephony: India has the worlds lowest call rates (1-2 US cents). Expected

to have total subscriber base of about 500 million by 2010. ARPU for GSMis USD 6.6 per month. India has the second largest telephone network afterchina. Teledensity 19.86 % Enterprise telephone services, 3G, Wi-maxand VPN are poised to grow.

Internet Backbone: Due to IT revolution of 90s, Indian cities and India is

well connected with undersea optical cables. New IT technologies: Technologies like SOA, Web 2.0, High-definition

content, grid computing, etc and innovation in low cost technologies ispresenting new challenges and opportunities for Indian IT industry. Highly+ve Positive Positive


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COMPETITIVE ANALYSIS

254,174.50

138,332.28

87,571.34

38,686.65

24,626.28

11,744.84

11,090.48

8,148.13

7,657.373,896.63

3,579.79

2,661.702,012.49

1,582.85

1,551.20

1,487.41

Market Cap. (Rs. cr.)

TCS

Infosys

Wipro

HCL Tech

Oracle FinancMahindra Satyam

Tech Mahindra

MphasiS

Patni Computer

Financial TechHexaware Tech

MindTree

Infotech Enter

NIIT Tech


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SALES TURNOVER

38,858.54

31,254.0032,053.60

8,907.22

2,605.85

5,964.21

5,243.02

3,404.13

2,202.43

425.55

678.58

1,915.20

863.8827.46

810.36

1,749.91

Sales Turnover

TCS

Infosys

Wipro

HCL Tech

Oracle FinancMahindra Satyam

Tech Mahindra

MphasiS

Patni Computer

Financial TechHexaware Tech

MindTree

Infotech Enter

NIIT Tech

Persistent


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BCG ANALYSISOF INFOSYS

In 2004, Infosys became Indias first listed IT firm to exceed $1

billion in annual revenues and was one of the top software exporterswith more than 97% of its revenues generated by software exports. So,

it could be regarded as the STAR of that time. Infosys is regarded as a

STAR in software products, QUESTION MARK in package

implementation and maintenance and became a DOG in BPO & KPO

industry.


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ANALYSIS OF STRATEGIES OF INFOSYS

Market Development Strategy:

New Market: India, Middle-east and Australia

Current Product: ADM, BPO, KPO, consultancy services (in BFSI,manufacturing and retail) and software products (financial products).

Recommendation: Since these are fast developing IT market, Infosys

needs a paradigm shift in focus from US and EU markets to these markets.

Result of strategy: Likely to yield good result.

Actions Taken: :

To maintain low-cost advantage, they have opened offices in Czech

Republic, Mauritius, Poland, Philippines, Thailand and Mexico.

Invested in developing training centres

Improved quality capabilities.

Infosys Consultancy established to provide high end services in value

chain. Has hedged currency for more predictability of revenues (risk

management).


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Generic Strategies:

Little differentiation in low-end services of value chain; high differentiationin high end services of value chain like software products and package

solutions. Focus on quality, customer relationship management, timely-

delivery.

Market Penetration Strategy:

Current Markets: USA and Europe Current Products: ADM, BPO, KPO,

consultancy services (in BFSI, manufacturing and retail) and software

products (financial products).

Recommendation: As most large clients in US and Europe are cutting costs,

Infosys needs to be more aggressive on cost and quality front.

Result of strategy: Unlikely to yield good results


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Product Development Strategy:

Current Market: USA and Europe

New Product: Consultancy and package implementation services in

relatively growing sectors esp. healthcare, life sciences and aviationsector, and KPO services.

Recommendation: Concentrate on building expertise in thesedomains by strategic acquisitions.

Result of Strategy: Likely to have good result. (better the companyacquired, the better the result).

Diversification:

New Market: India, Middle-east and Australia

New product: Consultancy and package implementation services inrelatively growing sectors esp. healthcare, life sciences and aviationsector, and KPO services.

Recommendation: Changing Brand image from low value serviceprovider to high value service provider.

Result of Strategy: Difficult to achieve overnight (possible in longterm)


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Other Strategies:

CONCENTRATION: 90% of Infosys revenues from American and European

nations. VERTICAL INTEGRATION: Infosys recently made a bid to acquire a European

majorAxon consultancy to improve its business in European markets, but finally

called off the deal due to high valuation. Otherwise, Infosys has always believed in

organic growth.

INNOVATION: The Software Engineering and Technology Labs (SET Labs) atInfosys is the centre for applied technology research in software engineering and

enterprise technology. SET Labs conducted 24 Innovation Workshops with

customers from the US and Australia, to identify research collaboration possibilities.

Infosys promotes a favourable work environment that encourages innovation and

meritocracy.


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RATIO ANALYSIS A. Profitability Ratio

B. Growth Ratio

Ratios

2012

2011

2010

2009

2008

1. Sales31,254.00 25,385.00 21,140.00 20,264.00 15,648.00

Ratios 2012 2011 2010 2009 20081. Profit Margin Ratio .25 .24 .28 .28 .272. Asset Turnover Ratio 4.37 3.67 3.33 3.39 3.473. Return on Assets 518.21 426.73 384.02 310.90 235.844.

Current Ratio4.68 5.11 4.28 4.71 3.30

5.Quick Ratio 4.60 5.02 4.20 4.67 3.28


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Ratios 2012 2011 2010 2009 2008

1. Debt. Equity Ratio 00 00 00 00 00

2. Interest Coverage Ratio 00 00 00 00 00

4. Net Worth29,757.00 24,501.00 22,036.00 17,809.00 13,490.00

C. Solvency Ratio


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CONCLUSION

Infosys over the period grew from being a developer ofsoftware programs to being a solution provider forbusiness problems.

Outsourcing enabled Infosys to establish itself as aglobal brand, achieve market penetration and market

extension. Infosys has nowadays realised the need of targeting tier

2 cities by opening BPO centres to bring stability in itsoperations and avoid attrition.

Infosys has established a reputation as a low-costoperation and a high-efficiency service provider in the ITservices field.

Infosys realised the need of opening offices anddevelopment centres in cost advantage countries suchas those in Latin America and Eastern Europe

Targeting the domestic market and strengthening it.


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THANK YOU

Documents

Info case study