Infosys

Essay - 4
Choose from one of the following two topics, writing no more than 1000 words. Either "In your opinion, what are the key issues facing your organisation over the next five years?" OR "Identify the major strengths and weaknesses of an organisation of your choice. If you were the CEO, what three things would you change? Please limit your response to 1000 words. Identify the major strengths and weaknesses of an organisation of your choice. If you were the CEO, what three things would you change?

Infosys Technologies Limited is a company that specializes in Information Technology (IT) and is headquartered in Bangalore, India. It was founded in the early eighties and by year 2000 it was one the leading IT companies in India with a wide span global footprint. Currently, it has 68 offices and 70 development centers in US, India, China, Australia, Japan, Middle East, UK, Germany, France, Switzerland, Netherlands, Poland, Canada and many other countries with employee strength of 151,151 together with its subsidiaries. Infosys is a global leader in technology, outsourcing and consulting with annual revenue in excess of US$ 7 billion. Many of the world’s top organizations rely on Infosys to deliver measurable business value. I have always been in awe of Infosys primarily because of the underlying values the organisation is pillared on. The vision, integrity, transparency in its dealings along with focus, respect and sensitivity towards employees, environment, society and consumers is unparalleled. Its recent efforts and stress on green innovations like initiatives towards rain water harvesting and energy efficient zero-discharge campus are worth supporting and applauding. Also, a great connect of the leaders & workers have helped the organisation immensely. Over the years, Infosys has developed a global brand value with an international presence, thereby giving it a strong capability to support large enterprises in any geography. Furthermore, the comprehensive portfolio of solutions makes it a one stop shop for IT needs of any big enterprise. It has most of its centres in India which has a vast pool of Information Technology savvy workforce. This coupled with the relatively lower labour costs in India, enhances the competitive advantage for Infosys vis-a-vis its global counterparts. The below figures gives an overview of the revenue growth over the years and the Industry coverage of Infosys:

Industry Segments
Banking & financial services Insurance Manufacturing Retail & CPG Transport & Logistics Life Sciences Healthcare Energy & Utilities Telecom Others

% Revenue

28% 7% 22% 17% 2% 4% 1% 5% 10% 5%

Figure 1: Revenue Progression of Infosys Q1 2007 – Q1 2013 (up by 18%) extracted from the Investor report June 2012.

Figure 2: Revenue by Industry

Recently, Infosys announced its $349mn acquisition of a Swiss Management Consultancy firm, in line with its strategy to expand their consulting and system integration capabilities to tread into newer markets with upscale products. More so, the announcement to deploy $3.7bn towards acquisitions, gives good evidence about its healthy cash reserves. Nonetheless, to maintain the leading edge, apart from vision and resources, competitive intelligence and pipeline focus is a must. Infosys needs some catching up to do as compared to its global competitors like IBM, Accenture, EDS or HP in terms of its revenue, market penetration and certain services. Infosys is relatively Page 1 of 3

Essay - 4 weaker when it comes to high-end management consultancy, since it tends to dwell at level of operational value creation. Competitors such as IBM and Accenture tend to dominate the consulting space. Furthermore, it’s over dependence on the Americas and Europe markets make it vulnerable to financial volatility of these developed markets, a classic manifestation being the recent economic recession. Below is the service offering distribution of Infosys and the client distribution across different geographies (information extracted from the First Quarter, Fiscal 2013 report)
% Revenue by Service Offerings
6% 17%

Application Development Application Maintenance Infrastructure Management Services Testing Services
2% 21% 13%

Revenue by Geography
North America 64% Europe India Rest of the world

30%

Product Engineering Services
21%

Business Process Management
3% 5% 3% 7% 8%

Others Consulting, Package Implementation & Others Products, Platforms and Solutions

Figure 4: Revenue across geographies depicting an overdependence on the American and European Markets.

Figure 3: Service Offering Distribution shows an improvement scope in product development and innovations.

In recent times, low cost IT destinations mushrooming in China/ Korea/ Philippines, pose a threat due to their low cost advantage. These countries too are undergoing rapid industrial expansion with large pools of low-cost labour, though not as high skilled and English speaking as the Indian. Nonetheless, the gap is narrowing fast and customers switching to alternative offshore service companies seem like an impending possibility. To compound to this, India is plagued by high rates of inflations hence expectations of steep wage hikes is always imminent which eat into the profit margins of the organisation as a whole. Also, the monetary and career progression aspirations of the younger workforce are not always consistent and realistic. This leads to dissatisfaction and hence attrition and thereby loss of valuable resource pool which ultimately is the main asset of an organization like Infosys. Today, Infosys and Indian IT outsourcing industry as a whole are in difficult times, worsened by global economic instability and a volatile rupee. Also, Infosys’ focus for high quality services and products has lead to rival companies gaining their share in low cost services and thereby higher operating margins as compared to Infosys. Its ability to achieve and usually exceed revenue forecasts in the past made Infosys the IT Industry bellwether. However, over the past few quarters, Infosys has been unable to keep pace with its forecast, and has repeatedly revised revenue growth lower. From a company that exceeded forecast, Infosys went on to cut its forecast more than expected. It cut its FY13 sales outlook to 5 per cent to $7.34 billion, down from its April estimate of 8-10 per cent growth. To surmount these difficult times and augment / prolong its past success, Infosys needs to create an environment for innovation in business models, ecosystems and knowledge. Thinking ahead of times is the key, e.g. digital consumerism is an undeniable phenomenon and the faster adaption will give Infosys a good head start. The transition of computing from Mainframes to desktop to laptops and recently to mobiles/tablets has opened up unprecedented opportunities by leveraging the computing power for social and economic progress. Understanding the market and moving from being a mechanical problem-solver to a proactive opportunity-definer and building innovative flagship products unparalleled across the industry will take Infosys to new heights. Cloud Computing space is still evolving but will surely play an integral role in business strategies going ahead. If not converted into an opportunity, it can possibly render the IT service Industry jobless. Page 2 of 3

Essay - 4
Furthermore, staying ahead of competition is paramount and opening development centres in countries with budding talent will help tap the talent and opportunity is these countries. Training and grooming the current resource pool to give the customers “value for money” along with an upfront planned career progression to keep the most important assets of Infosys inspired and on their toes is needed. Empowering HR to look for innovative ways to keep every worker/function within the organisation motivated, nurtured, rewarded, contented and cared for. Whilst aiming the aforesaid, Infosys should maintain a tab on the regulatory environments, etc. and its impact on Client and Markets, bring the engineering and B-schools of India and overseas on a common platform to renovate the curriculum to meet the IT needs of tomorrow and last but not the least continue to strive for operational excellence as for now it is the source of bread and butter!!

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