Narayan Murthy 2.0 versus Infosys 3.0

Management Control Systems

MBA EXE-II YEAR(IV SEMESTER)

Group-9 Manjul Awasthi, S-34 Naveen Navlani, S-41

HISTORY

• Seven man start-up Co-founded in 1981

– N.R. Narayana Murthy, Nandan Nilekani, Kris

Gopalakrishna, S. D. Shibulal, K. Dinesh,

Ashok Arora, N.S. Raghavan

• 155,629 person, $7 billion enterprise today

• Has time and again been called India's

most admired and respected company

The Backbone- Infosys • Vision

– “To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people”

• Mission

– "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large“

• Core Values

– Leadership by Example, Integrity, Transparency, Fairness and Excellence

Generally viewed High on Ethics

PORTER’S FIVE FORCE Analysis

THREAT OF ENTRY High • Low capital requirements

• Space for small enterprise

• MNCs ramping up the offshore capacity

and employee strength in India

BARGAINING POWER

Suppliers

High • Large No Firms

Buyers High •Due to slow down - resulting in lesser

projects, cost cutting, lay offs

•Dependence on US/Europe

THREAT OF

SUBSTITUTES

High •Other offshore locations such as Eastern,

Philippines, Mexico, Brazil and China

•Price is a major differentiator,

RIVALRY High •Intense competition and Rivalry

Infosys- SWOT

FACTOR

FACTOR FAVORABLE UNFAVORABLE

INTERNAL STRENGTHS

Strong Brand recognition

Comprehensive portfolio of

solutions

Strong base in India

Ethical Leadership

WEAKNESSES

Dependence on financial

services market

Poor implementation of

Strategy 3.0

Leadership Lacunae

Succession planning

EXTERNAL OPPORTUNITIES

Steady growth in IT sourcing

Positive outlook for Indian

BPO,EPO and KPO market

Labour cost arbitrage

THREATS

Economic Slowdown

Exchange Rate Variation

Intense Competition

Immigration restrictions

FINANCIAL PERFORMANCE

Questions

• What is the Strategy at Infosys?

• Identify the reasons for company’s lack

luster performance since 2010-11?

• Is Leadership change the answer?

• Can Narayan Murthy 2.0 be the answer to

faltering Infosys 3.0

Strategies at Infosys

The Problem • Since 2011:-

– Missed its revenue guidance a number of times before deciding to temporarily stop giving guidance in July 2013

– In a year when Nasscom has projected 11-14% annual growth in software exports from the country, Infosys has said it will grow revenue by 5%, while the rivals claim to beat the forecast

– Confidence of investors has touched an all time low and is seen in its market capitalization falling rapidly in comparison to its early days

– Cognizant—a company founded 13 years after Infosys- runs past it.

Strategy Analysis

Mechanics of Infosys 3.0

• Structuring service lines into three key

categories with goal to have each of these

contributing around 1/3rd of revenue-

– Transformation (will include 'change the business'

initiatives like Package Implementation, Consulting, etc.)

– Innovation (will include products, IP, Cloud, non-linear

initiatives, etc.)

– Business Operations (will include 'run the business' kind

of initiatives like ADM, testing, IMS, BPO, etc.)

Strategy Analysis

Mechanics of Infosys 3.0 Infosys 2.0 Infosys 3.0

Transformation

Package

Implementation,

Consulting

25% 33%

Innovation Products, IP, Cloud,

non-linear initiatives 12% 33%

Business

Operations

ADM, testing, IMS

and BPO 63% 33%

Infosys 3.0 • Question of timing

– Global economy was going through a downturn and

clients were focused on cost-cutting rather than on

developing new business strategies

– Infosys changed its tagline to ‘building tomorrow’s

enterprise’, whereas the rivals focused on saving

today’s enterprise

– While the sales teams in other companies were

mostly selling more of the same, the Infosys sales

team was also selling a vision of the future

“Infosys lost the plot on the core business”

Infosys 3.0 • Internal outlook

– Communicating the strategy across the layers of the company.

– Several people both within and outside Infosys had only a vague or partial understanding of what exactly Infosys 3.0 was.

– Dropped the ball on the core 65% of Infosys business of application development & maintenance, software testing, infrastructure management, business process outsourcing and focus too much on transformational business.

“Increased Bench and Lower Morale”

Leadership Analysis

• CEO’s post at Infosys Ltd has been the

preserve of its founders

• Four of the CO-founders have been CEOs

– N. R. Narayana Murthy

– Nandan Nilekani

– Kris Gopalakrishnan

– S.D. Shibulal

Narayan Murthy

Gopalkrishnan Nandan

Nilenkeni Shibulal

Narayan Murthy 2.0

Jun 2013- Murthy joins back as the CEO

• Investors greet the

return

• Market Capitalization

increases

• High Profile exits – – Ashok Vemuri, a member of the board

and the face of Infosys’ business in North America

– Basab Pradhan, head of global sales operations

– Sudhir Chaturvedi, head of the company’s financial services business in the U.S

– V. Balakrishnan the financial chief,

• Ethical issues – Retirement Age of 65

– Joining of family members

Way Ahead

• Strategy – Review Infosys 3.0

• Focus more on bread and butter services such as IT services, thereby concentrating on rejuvenating Infosys' IT services to return to the path of growth

• Focus immediately on commoditized offerings

• Morale

– He is a father figure for all at Infosys and he is a great visionary

• Clear Succession Planning to fill the gaps created

• Salary hike/Bonus

• Clarity in goals

• Utilisation of Bench

References • Market Overview of IT and ITeS(November 2010), India Brand Equity Foundation, www.ibef.org

• The IT-BPO Sector in India (2011), Strategic Review 2011, NASSCOM

• Matt Barney (2011), An introduction to Ili Cue See Model, White Paper on “ Helping Leaders Better execute Strategy and manage Enterprise Risk, Infosys Leadership Institute

• Motilal Oswal 9th Annual Global Investor Conference 2013

• Infosys Annual Report (1999)

• Infosys Annual Report (2000)

• Infosys Annual Report (2001)

• Infosys Annual Report (2002)

• Infosys Annual Report (2003)

• Infosys Annual Report (2004)

• Infosys Annual Report (2006)

• Infosys Annual Report (2010)

• Infosys Annual Report (2011)

• Infosys Annual Report (2012)

• Infosys Annual Report (2013)

• http://www.dnaindia.com/money/1842585/report-son-rise-at-infosys-as-narayana-murthy-returns

• http://economictimes.indiatimes.com/tech/ites/renaissance-man-infosys-brings-back-nr-narayanamurthy-

• as-executive-chairman-is-this-what-infy-needed/articleshow/20387396.cms

• http://www.thehindubusinessline.com/industry-and-economy/info-tech/narayana-murthy-is-backto-revive-infosys-fortunes/article4771759.ece

• http://forbesindia.com/article/boardroom/did-infosys-get-it-wrong-with-its-3.0-strategy/35299/2#ixzz2qarEK4Pl

•

Thank You