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A PROJECT REPORT ON Analysis of Business Policies of Infosys SUBMITTED BY Abhaybharati A. Goswami M.COM (SEM. I): STRATEGIC MANAGEMENT





This is to certify that Mr/Ms. Name Abhaybharati A. Goswami of M.Com Business Management Semester I (2012-2013) has successfully completed the project on Title under the guidance of Prof.__________________

Course Co-ordinator
Dr. (Mrs) Vinita Pimpale

Dr.(Mrs) Shobana Vasudevan

Project Guide/Internal Examiner Prof. ____________________________

External Examiner Prof. ____________________________


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I acknowledge the valuable assistance provided by S. P Mandalis R. A. Podar College of Commerce & Economics. I specially thank the Principal Dr.(Mrs) Shobana Vasudevan for allowing us to use the facilities such as Library, Computer Laboratory, internet etc. I sincerely thank the M.Com Co-ordinator Dr. (Mrs) Vinita Pimpale for guiding us in the right direction to prepare the project. I thank my guide Prof. ___________ (Name of Guide) who has given his/her valuable time, knowledge and guidance to complete the project successfully in time. My family and peers were great source of inspiration throughout my project, their support is deeply acknowledged.

Signature of the student



I, Abhaybharati A. Goswami of R. A. PODAR COLLEGE OF COMMERCE & ECONOMICS of M.Com SEMESTER I, hereby declare that I have completed the project Analysis of Business Policies of Infosys in the academic year 2012-2013. The information submitted is true and original to the best of my knowledge.

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Sr. No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Objective Introduction to Business Policy Nature, Scope & Significance Elements & Processes Factors Determining Business Policy Scope of Business Policy Introduction to IT World Environmental Scanning Market Size Infosyss Background Timeline Mission, Vision & Values Target Markets & Competitions Strategies Analysis of Strategies of Infosys Growth of Infosys Development of Infosys Changes in Infosys Conclusion References

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To understand the meaning and importance of business policies and to analyse the business policies and strategies of Infosys.


The organisation sets the objectives and works towards their achievement. Once these objectives are defined and strategies determined, certain policies have to be made to put them

into action. Business policies act as a guide to action. They provide the frame work within which an organisation has to meet its business objectives. The policy points out the direction in which the company ought to go. Decision making is the primary task of a manager. While making decisions, it is common that managers consult the existing organizational policies relevant to the decisions. Policies provide a basic framework within which managers operate. Policies exist at all level in the organization. Some may be major policies affecting the entire organization while others may be minor in nature affecting the departments or sections in the organization. It has to be remembered that a policy is also a decision. But it is an due time standing decision, in the light of which, so many routine decisions are made. Following are examples of business policies. (i) "We promote employees on the basis of experience" (ii) "We sell televisions only for cash" From the above policies, one could understand that there is a problem and the policies help as a guide for finding the solution. Some policies are just broad guidelines while some can be more specific. According to Koontz and O'Donnell, "Policies are plans in that they are general statements of principles which guide the thinking, decision making and action in an organisation." Policies aid in decision making and are the basis for procedures. They are responsibilities of top management. Policies are applied in long range planning and are directly related to goals. They are concerned with estimating availability of resources, their procurement their augmentation and their efficient utilization. Types of Policies: Policies come into being in any orgnisation in different ways. Koontz and Odonnel have classified policies on the basis of their source under the following categories1. Original Policy: The top management formulates policies for the important functional areas of business such as production, finance, marketing etc. The objective is to help the concerned functional managers in decision making in their respective areas. Thus originated policies are the result of top management initiative. These policies are formulated in the light of the enterprises objectives. They may be broad or specific depending on the degree of centralization

of authority. If they are broad, they allow the manager some operational freedom. On the other hand, if they are specific they are implemented as they are. 2. Appealed Policies: Managers often confront with particular situations as to whether they have the authority to take a decision on a particular issue or problem. The policies regarding some issues may be unclear or may be totally absent. In such case, he appeals the matter to his superiors for thinking. Appeals are taken upwards till they reach the appropriate level in the hierarchy. After thorough examination of the issues involved, policy decision would be taken at the appropriate level. 3. Implied Policies: In some cases there may not be specific policies. Managers draw meaning from the actions and behaviour of their superiors. Though there is no explicit policy, managers may assume it in a particular way and go about in their day-to-day operations. 4. Externally Imposed Policies: These are the policies which are not deliberately conceived by the managements. They are rather, imposed as the organisations by the agencies in the external environment like Government Trade Unions, Industry Association, Consumer Councils etc. These agencies to protect the interest of the respective groups may lay down certain policies to be followed by the business. As the interaction of the business with external environment is increasing, one can find many policies thus coming into being in any modern business. For instance, the recruitment policy of the organization is influenced by the Govts policy towards reservation to weaker sections. Anti-pollution measures, concern for the quality of the product, customer care and service etc. come under this category.


Business policy is the guide post to decision making. It helps in the managerial thinking process and thus leads to the efficient and effective attainment of the objectives of any organisation.

Business policy has been defined as "Management's expressed or implied intent to govern action in the pursuit of the company's objectives." Business policy clarifies the intention of management in dealing with the various problems faced. It gives the managers a transparent guideline to take their decisions by being on the safe side. Business policy helps the manager in identification of the solutions to the problem. It provides the framework in which he has to take the decisions. Following are the different view points of leading authorities as to what is business policy ?
1. The first category holds the opinion that policy and strategy are synonymous. Business

policy has been defined by William Glueck as "Management policy is long range planning. For all practical purposes, management policy, long range planning and strategic managernent mean the same thing." However, this view is quite controversial as strategy and Business policy do not mean the same thing. Strategy includes awareness of the mission, purpose and objectives. It has been defined as, "the determination of basic long term goals and objectives of all enterprise, and the allocation of resources necessary to carry out these goals", while policies are statements or a commonly accepted understandings of decision making and are thought oriented guidelines. Therefore, strategy and Business policy cannot be used interchangeably as there is a clear line of differentiation between the two terms. This view stress upon the assumption that business strategy and policy are more or less the same. However, this view did not receive much support from various authorities in the area of business management.
2. The second group of experts view Business policy as the process of implementing

strategy in the words of Frank 1. Paine and William Naumes, "Policies guide and channel the implementation of strategy and prescribe the processes within the organisation will function and be administered. Thus the term policy refers to organisation procedures, practices and structures, concerned with implementing and executing strategy."

Supporting this view, Robert Mudric has defined Business policy as "A policy establishes guidelines and limits for discretionary action by individuals responsible for

implementing the overall plan."

The view represents Business policy to be:

Restrictive Laying stress only on the practical side and ignoring the strategic dimension.

3. The third group considers business policy to be decisions regarding the future of an

organisation. Robert J. Slockler defines Business policy as, "Strategic guidelines for action and spells out what can and what cannot be done in all areas of a companys operation." According to the policy manual of General Electric Company, "Policy is definition of common purpose for organisation components of the company for benefit of those responsible for implementation, exercise discretion and good judgment in appraising and deciding among alternative courses of action." The views of different management authorities differ because of following reasons: There is no clear differentiation of policy from other elements of planning. There are different policies made at different levels of management for directing executives. Business policy encompasses and relates to the entire process of planning.

Thus, Business policy focusses on the guidelines used for decision making and putting them into actions. It consists of principles along with rules of action that provides for successful achievement of Business objectives.


After understanding the concept of Business policy, following features can be identified:

General Statement of Principles: Policies are general statement of principles followed guide to action for the executives at different levels.

by Business for the attainment of organisational objectives. These principles provide a

Long Term Perspective: Business policies have a long life and are formulated with a long term perspective. They provide stability to the organisation.

Achievement of Objectives: Business policy is aimed at the fulfillment of organisational objectives. They provide a framework for action and thus help the executives to work towards the set goals.

Qualitative Conditional and General Statements: Business policy statements are qualitative in nature. They are conditional and defined in general manner. These statements use words as to maintain, to follow, to provide etc. They call be specific at times but most of the times, a Business policy tends to be general.

Guide for Repetitive Operations: Business policies are formulated to act as a guide for repetitive day to day operations. They are best as a guide for the activities that occur frequently or repeatedly.

Hierarchy: Business policies have an hierarchy i.e. for each set of objectives at each level of management there is a set of policies. The top management determines the basic overall policy, then the divisional and / or departmental policies are determined by the middle level management and lower level policies are more specific and have a shorter time horizon than policies at higher levels.

Decision Making Process: Business policy is a decision making process. In formulating Business policy one has to make choices and the choice is influenced by the interests and attitudes of managers engaged ill making the policies.

Mutual Application: Business policies are meant for Mutual application by subordinates. They are made for some specific situation and have to be applied by the members of the organisation.

Unified Structure: Business policies tend to provide predetermined issues and thus avoid repeated analysis. They provide a unified structure to other types of plans and help mangers in delegating authority and having control over the activities.

Positive Declaration: Business policy is a positive declaration and a command to its followers. It acts as a motivator for the people following it and thus they work towards the attainment of the objectives efficiently and effectively. The Business policy lays

down the values which dominate organisation's actions.


The Business policy of an organisation is influenced by various interrelated and interacting, factors. These factors can be classified as internal and external factors. The determinants which are internal to the firm/organisation and which influence the decisions directly are known as the internal factors. External factors include all those factors which act from outside the firm and influence the organisation externally. We discuss these determinants one by one below: Internal Factors The determinants include the Business mission, Business objectives, Business resources and the management values which are all internal to the organisation and play a very important role in the formulation of Business policy. 1. Business Mission: The policy maker has to understand the Business mission, so that the policy is in tune with it. Business mission provides the company with the meaning for which it exists and operates. Because policy provides guidelines for managerial action, it has to be made in a manner that it accomplishes the Business mission. 2. Business Objectives: Another internal determinant of Business policy are the Business objectives. All organisations frame organisational objectives and work towards their achievement. Policy makers must take into account the economic, financial and other objectives of the company. 3. The Resources: The organisation has to carry out its activities keeping in mind the resources it has. The Business policy has to identify the various resources available and then only call it be made sound. The size of plants, capital structure, liquidity position, personnel sk0is and expertise, competitive position, nature of product etc. all help in the formulation of Business policy. 4. Management Values: Business policy reflects the values imbibed in the organisation. The personal values of the managers forming Business policy influences its formulation. Management values differ from organisation to organisation. It is an important determinant of Business policy. External Factors

These include the forces external to the firm. The external determinants of Business policy are industry structure, economic environment and political environment. 1. Industry Structure: The formulation of Business policy is influenced by the industry ill which the firm exists. The structure of industry comprises of size of firms, the entry barriers, number of competitors etc. The Business policy is formulated keeping in mind competitors, strategies, policies, etc. 2. Economic Environment: Economic environment comprises of the demand, supply, price trends, the national income, availability of inputs, the various institutions etc. It includes all these factors which influence the policies of the firm. Therefore, it becomes one of the most important determinants of Business policy. 3. Political Environment: The firm has to carry Out its activities in accordance with the government regulations and policies. If these are not complied with the firm would not be able to meet its objectives in ail efficient manner. The various policies like monetary policy, fiscal policy, credit policy influence the Business policy of the firm. 4. Social Environment: The firm affects various sections of the society. The various sections ill turn influence the activities of the firm. The social beliefs of the managers influence policies. The religious, cultural and ethnic dimensions have to be dealt with while formulation policies of an organisation. 5. Technology: Every now and then, new technologies are entering the market. An organisation has to change with the changes in the environment. It has to remain up to date with respect to technology it uses. Thus technology also plays an important role in formulation of Business policy.


Business policies are statements of guidelines for Business thinking and action. They lay down the approach before the management to deal with the challenges in the environment. They cover the following broad areas that affect the decisions of the Organisation. 1. Business policy consists of a variety of subject that affect various interest groups in the

Organisation and Outside it.

2. Business policy is concerned with the various functional areas like production, human resources, marketing and finance. 3. We call understand Business policy areas in two broad categories: Major and minor policies. The overall objectives, procedures and control are covered in major policies. These policies are concerned with each and every aspect of the Organisation, its structure, its financial status, its production stature, its human resources and all those issues which require attention like mergers, research, expansion, etc. Basically, the top management is involved in the framing of such major policies. Further, the operations and activities are also carried Out by executives so that the organizational objectives are met. The minor policies are concerned with each segment of the Organisation with emphasis oil details and procedures. These policies are part of the major policies. The operational control call be made possible only if the minor policies are implemented efficiently. The minor policies are concerned with the day to day operations and are decided at the departmental levels. The minor policies may cover relations with dealers, discount rates, terms of credit etc. Thus, Business policies cover wide range Of Subjects ranging from operational level policies to the top level policies.


In an increasingly globalised world, significant complexity and uncertainty is getting attached to the unprecedented economic crisis. The Indian economy has also been impacted by the recessionary trends, with a slowdown in GDP growth to seven per cent. The focus and exponential growth in the domestic market has partially offset this fall and insulated the country, resulting in net overall momentum. The IT-BPO industry in India has today become a growth engine for the economy, contributing substantially to increases in the GDP, urban employment and exports, to achieve the vision of a young and resilient India. During the

year, the sector maintained its double digit growth rate and was a net hirer. This growth has been fueled by increasing diversification in the geographic base and industry verticals, and adaptation in the service offerings portfolio. While the effects of the economic crisis are expected to linger in the near term future, the Indian IT-BPO industry has displayed resilience and tenacity in countering the unpredictable conditions and reiterating the viability of Indias fundamental value proposition. Consequently, India has retained its leadership position in the global sourcing market. The Indian IT-BPO industry is estimated to achieve revenues of USD 71.7 billion in FY2009, with the IT software and services industry accounting for USD 60 billion of revenues. During this period, direct employment is expected to reach nearly 2.23 million, an addition of 226,000 employees, while indirect job creation is estimated to touch 8 million. As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 5.8 per cent in FY2009. Software and services exports (including BPO) are expected to account for over 99 per cent of total exports, employing over 1.76 million employees. While the current mood is that of cautious optimism, the industry is expected to witness sustainable growth over a two-year horizon, going past its USD 60 billion export target in FY2011. While the industry has significant headroom for growth, competition is increasing, with a number of countries creating enabling business environments aimed at replicating Indias success in the IT-BPO industry. Hence, Concentrated efforts are required by all stakeholders to address the current challenges, to ensure that India realizes its potential, and maintains its leadership position.




1. Political Stability: Indian political structure is considered stable enough and Govt. of India has set up a National Task Force on IT and software development to examine the feasibility of strengthening the industry. - Positive 2. U.S government declaration that U.S companies that will outsource I.T works to other locations other than U.S will not get tax benefit. - Negative 3. Government owned companies and PSUs have decided to give more IT projects to Indian companies. - Positive 4. Terrorist attack or war. - Negative Economic 1. Global IT Spending (Demand) from USA will increase in FY 2010. - Positive 2. Domestic IT Spending (Demand): The Indian domestic market will grow by 12.9 percent through 2013. - Positive 3. Currency Fluctuation. - Negative 4. Real Estate Prices: Decline in real estate prices has resulted in reduction of rental expenditure. - Positive 5. Attrition: After U.S recession in 2008-2009, companies are on a hiring spree and there is a revival of the job market, attrition rate is going to be high in 2010. - Negative 6. Economic Attractiveness due to cost advantage and other factors. - Positive


Social 1. Language Spoken: India has the second largest English-speaking scientific professionals in the world, second only to the U.S. English medium being the most accepted medium of education. Thus India boasts of large English speaking population. - Highly Positive 2. Education: It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year. - Highly Positive 3. Working age population - Positive

Technological 1. Telephony: a. India has the worlds lowest call rates (1-2 US cents). b. Expected to have total subscriber base of about 500 million by 2010. c. ARPU for GSM is USD 6.6 per month. d. India has the second largest telephone network after china. e. Teledensity 19.86 % f. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow.

- Highly Positive

2. Internet Backbone: Due to IT revolution of 90s, Indian cities and India is well connected with undersea optical cables. - Positive 3. New IT technologies: Technologies like SOA, Web 2.0, High-definition content, grid computing, etc and innovation in low cost technologies is presenting new challenges and opportunities for Indian IT industry. - Positive Legal 1. IT SEZ requirement: IT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits. - Positive 2. Contract / Bond requirements: Huge debates surrounding the bonds under which the employees are required to work, which is not legally required. - Negative 3. IT Act: Indian government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate esp. related to security of data in transmission and storage, etc. - Positive 4. Companies operating in Software Technology Park (STPI) scheme will continue to get taxbenefit till 2010. - Mildly Positive

Environmental Energy Efficient processes and equipments: Companies are focusing on reducing the carbon footprints, energy utilization, water consumption, etc. Positive



INTERNAL ANALYSIS It includes the SWOT analysis.



Fig: Revenues from domestic and exports (in USD billion)

More than 80% of revenues come from exports and only 20% from domestic market.


Fig: Number of employees in Indian IT Sectors (Direct Employment) till FY 2009.

Infosys Technologies Ltd. was started in 1981 by Narayan Murthy along with six other partners after borrowing US$ 250 from their wives. They shifted with an unexpected way and in a short period to become Global Market leaders and still are by providing end-to-end IT business solutions. The Company offers Technical Consultancy, Design, Development, Software ReEngineering, Maintenance, System integration, package evaluation, implementation, infrastructure management services. With a vision of delivering best -of- breed solutions delivered by best-in-class professionals, Infosys is reaching an annual earning averaging between $ 2 to $3 B annually, over 69,000 people, operating in 8 different countries, within 50 major cities. The company provides business process management services including offsite customer relationship management, finance accounting, administration and sales order processing through its subsidiary Infosys BPO. Rated in the 100 List of NASDAQ, Infosys Ltd has been nominated in 2001 Best Employer in India, and often called as Microsoft of India.

1981: Establishment in India. 1987: First international office in US 1993: Successfully completed IPO in India 1995: Set up development centers across cities in India 1996: Infosys foundation setup for CSR 1996: e-Business initiative started 1997: Assessed at CMM level 4 1999: $100 Million in annual revenue 1999: Listed on NASDAQ 1999: Assessed at CMM level 5 2000: Opened offices in UK, US, France, Hongkong 2000: Combined e-Business with rest of organization 2001: Rated Best Employer of India in a study by Business Today-Hewitt associates. 2002: Touched half a billion US dollars in annual revenue 2003: Establishes subsidiaries Infosys China and Infosys Australia 2004: Crossed US $1 Billion in annual revenue 2004: Launches Infosys Consulting Inc 2005: Largest international equity offering of US $ 1 billion from India 2006: 60,000+ Employees. Revenues crosses $ 2 billion. Celebrates 25 years



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

Vision "To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people."


Customer satisfaction expectations.

: striving to keep customers satisfied and to exceed their

Leadership by example : to be an example for other companies in the industry Justice Pursuit of excellence Integrity : to be fair and to earn the trust of customers : to keep on improving in every way possible. : to be ethical


Infosys has several target market to satisfy their customer. In addition, there are nine markets used by Infosys: 1. Auto and Aerospace => auto manufacturers 2. Banking and capital markets => all banks, stock exchange, brokers and traders. 3. Communication Service providers => cable and satellite, data and messaging

4. High Tech and discrete MFG => computer hardware and software, telecommunication infrastructure equipment. 5. Insurance and health care => all types of insurance and health care products and services. 6. Life Science => All types of biotechnology and pharmaceuticals manufacturing. 7. Resources, energy and utilities => Agriculture, chemicals, paper and pulp. 8. Retail, Distribution and CPG => Beverages, food and food retail. 9. Transportation and services => Education, business services and all transportation services.


Computer Services. Information Technology Services (primary). Business Services. Consulting. Staffing Outsourced Human Resources Services.

Infosys competitors include:

Satyam Tata Consultancy Wipro Technologies


Current Products: ADM, BPO, consultancy services and software products MARKET DEVELOPMENT STRATEGY: New Market: India, Middle-east and Australia Current Product: ADM, BPO, consultancy services and software products PRODUCT DEVELOPMENT STRATEGY: Current Market: USA and Europe New Product: Consultancy and package implementation services DIVERSIFICATION: New Market: India, Middle-east and Australia New product: Consultancy and package implementation services

GLOBAL DELIVERY MODEL GDM is the most important strategic initiative; its aim is to accelerate the schedule in order to achieve high time and cost predictability. Infosys has a complete set of patents rights and systems to management. These tools which are important for development are based on GDM to maintain the applications globally, on-budget and on-time. IPM: All information relevant to a project flows into IPM. The decisive achievement and the evaluation analyses are based on the information of this tool. They help the organization to perfect its capabilities. MaST is a tool for scheduling and tracking a maintenance project. It is integrated with other tools like IPM, PS-Web The key features of MaST are: -Multi-user system - Customized life cycle tasks - Request based tracking and scheduling

-Ease in preparation of milestone reports and closure reports

DART: Daily Activity Report is an intranet based tool used for tracking the time sheet of every person. It is a real-time tool. RADAR: a web based tool to track defects found in a lifecycle stage of a project. It can be defined as history of defects of the project (origin, severity etc). PRISM: is a tool used for project review by Senior Management. The SM personnel use his experience and assess risks, changes etc. ensuring supports to schedule and budget. Internal Audit System: is a tool used by the Process Consultants (Quality Assurance) to reach the desired quality standards and to improve the outcome. SPC (Statistical Process Control): is to analyze the defects occurred in a project and ensure the quality of the delivered code and strengthen the application. Process Database/Process Capability Baseline: these 2 tools capture information related to execute a project. The conclusions derived from data are used as guidelines. I-Lite: is the follow up of a training plan which is required to each employee. IPSP (Intelligent Production Support Platform): it is used in Production Support Assignments. It ensures the support to desired Service Level and improves the productivity. Packaged application implementation/management: INSPIRE framework aids to assess the maturity level of the business. Infosys has developed tools that enable to move from one level to higher levels of maturity. Impact Analysis Kit: it configures the assessment for each level of maturity. It helps to analyze the current configuration compared with the expected one. The gaps are bridged to take the business process to higher levels of maturities. Estimation kit: is a by-product of Impact Analysis. When the last identifies the gaps, the estimation kit analyzes each gap and what is required to bridge them. The effort is used as a basis to reach the cost-estimate for the business.

ROI toolkit: enables the evaluation of the dollar-returns arising out of the IT initiatives that take the business to higher levels of maturity as per the INSPIRE framework. Upgrade toolkit: it aids in upgrading to higher versions that improve the productivity, efficiency and effectiveness of the business. InTune: is a methodology that isolates the activities required at different stages up gradation. InTune powers the global model of Infosys that delivers the values of lower cost of ownership, faster time to market and superior quality of software. It comprises 5-phased approach distributed between offshore and onsite locations: 1 System Study and Solution Design Documentation: customization and interfaces that can be automated. 2 Offsite Trial Upgrade Documentation of new architecture: test environment. 3 Offsite Upgrade: upgrading, testing and fine tuning the plan. 4 Test Upgrade Finalize: checklist onsite tasks. 5 Production Upgrade: Upgrading production environment plan. IntERPryz: a methodology describing a clear path for planning, executing, testing and supporting the implementation process. It also leverages Infosys strength as to capture the unique business processes that differentiate the client from competitors. It harnesses the power of business and delivers optimal value by: - Stressing accountability - Integrating people, process, and technology - Managing change effectively - Invoking business transformation and not process automation

Customer Service Process:


It has seven parts:

1- Customer service approach: Infosys is a leading IT solutions company. Innovation, Quality and Customer satisfaction are essential part of Infosys Value system. Relationship Management: Infosys gives it a great importance. - Relationship team with experience of managing engagements with multiple shareholders. - Engagement Manager focusing on partnering with the client. - Balanced scorecard for defining achievements vs. objectives. - Tight coupling between strategy and execution to ensure relationship objectives are in line with the clients essentials. Technology Competence: Infosys uses its SETLABS (Software and Engineering Technology) department to build technology competency along three dimensions: * Building thought leadership. * Creating methods and frameworks like .NET and M-Commerce. * Deepening knowledge through specialist research. Tools and Methodologies: Clients will have visibility into in-house tools & methodologies. These alliances give access to the latest of technology. Quality and Customer Satisfaction Quality: over 90% of the business comes as a repeat one. Infosys Quality System Documentation (QSD) has a repeated process for every stage in the service lifecycle which would translate to higher customer satisfaction. 2- Issue Resolution and Escalation Mechanism: the framework covers * Issue identification. * Issue resolution and communication. The Infosys relationship team identifies issues including weekly status reports, daily/weekly conferences/video conferences. He identifies the risk arising and options to resolve the issues. 3- Client Feedback Mechanism: Infosys conducts an annual Customer Satisfaction Survey

through an external agency.

This is aimed at obtaining formal, direct and honest feedback on the performance and ability to meet client expectations. The survey is analyzed and the findings are discussed by the Board of Directors.


Corporate level Strategies: Global Delivery Model: Producing where it is most cost effective and selling where it is most profitable. Moving UP the value chain: Getting involved in a software development project at the earliest stage of the life cycle. PSPD Model: Predictability of Revenues, sustainability of revenues, Profitability, De-Risking for Risk Management. Actions Taken Expansion into low cost countries like Mauritius, Philippines, Thailand, Mexico, etc. Improved Quality capabilities - CMMi Level 5 Emphasis on delivering high value services Currency hedging for predictability of revenues. Investing heavily in training centers. Generic Strategies: Low cost Global delivery Model (24/7) Little differentiation in low-end services of value chain. High differentiation in high end

services in value chain like software products and package solutions. Focus on Quality, Customer relationship management, timely delivery.

Market Penetration and Development Strategies: Current Markets: USA and Europe Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing and retail) and software products (financial products Finacle). Recommendation: As most large clients in US and Europe are cutting costs post recession, Infosys needs to be more aggressive on cost and quality front. Since these are fast developing IT market, Infosys needs a paradigm shift in focus from US and EU markets to markets such as India, Middle East, Eastern Europe and Latin America, China, Philippines. Result of strategy: Unlikely to yield good results. Product Development and Diversification Strategies: Current Market: USA and Europe New Product: Consultancy and package implementation services in relatively growing sectors esp. healthcare, life sciences and aviation sector, and KPO services. Recommendation: Concentrate on building expertise in these domains by strategic acquisitions. Changing Brand image from low value service provider to high value service provider. Result of Strategy: Likely to have good result. (better the company acquired, the better the result for Infosys) and long term strategy to change brand image interms of diversification. Other Strategies by Infosys: Concentration: 90% of Infosys revenues from American and European nations. Vertical Integration: Infosys made a bid to acquire a European major Axon 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 (SETLabs) at Infosys is the center for applied technology research in software engineering and enterprise technology. Future Strategies to be followed by Infosys: Global sourcing strategy is aligned with business strategy. Enhancing operational efficiency and delivering value added services.

Structuring processes and services into modules thus leading to enhanced flexibility and productivity. Aggressive focus on ERP solutions like Oracle and SAP. Expand into high end consulting. Consolidation and Strategic acquisitions are essential for future growth of revenues. Shift in focus from low cost advantage to high quality services. Quick adoption to high growth markets is necessary. Provide high end services in value chain. Consolidation among key IT players. Compromise on High margin for sustainable growth. In order to increase revenue growth, only organic growth will not help the company.

One element of Infosys operational excellence is its Global Delivery Model, based on doing work where it adds most value that is, utilizing the best global resources with the lowest associated cost and at the highest possible quality. Reliable telecom infrastructure and Indias low-cost skilled manpower allowed most of the work to be conducted offshore. Onsite aspects of the project are limited to those aspects requiring market proximity and customer interaction. The resulting ratio of 30:70 onshore/offshore provides a strong customer focus, as well as significantly reduced delivery costs. Thus, close to 45,000 Infosys employees are based in India. Customer satisfaction is another key to Infosys breakneck rate of profitable growth. Over a 25year period, the company has successfully completed more than 20,000 projects with a 99.998% error-free record. Over 93% of the projects were delivered on time and on budget, far above the industry average of 30%. Such high customer satisfaction rates have resulted in 95% of clients coming back to Infosys for further projects. Building on such exceptional customer satisfaction, Infosys proactively seeks to expand the scope of the work it does with existing clients, further fueling revenue growth. Infosys fully

understands that in the business of outsourced services, lower cost alone is not sufficient. Quality, reliability, speed and customer orientation are fully part of the equation. Infosys concern to provide its customers with a competitive advantage led to the creation, in 2001, of the Corporate R&D unit SETLabs (Software Engineering and Technology Laboratories). This unit develops methodologies, frameworks and tools to drive efficiency in project execution and delivery. SETLabs help clients

with development projects, addressing specific technology or business problems, while also looking into radical innovations and long-term strategic issues supporting business process innovation for the customers. By mid 2007, SET Labs had grown to 500 consultants and software engineers, filing numerous patent applications. Concerning staff training, Infosys massively invests in technical and management education. Young staff joining the firm typically follows a four month course. This is carried out in Infosys training center in Mysore, West of Bangalore, where 6 000 employees can be trained simultaneously. This contributes to Infosys having a staff much lower staff turnover than is typical in the industry. Today, Infosys market capitalization is $30 billion. Revenues have consistently grown at over 50% annually through the past decade. As a result, it took 23 years for Infosys to reach $1 billion in revenues, but only 23 months to reach the $2 billion mark.

Developing competencies is usually an internal process that is driven by the behaviors of highperformers, as well as an internal view of what makes these individuals successful. For companies in the service economy, there is another important constituency; "the end-users" of the company's talent - that can be brought into the process.

Infosys has rapidly grown into one of the largest IT companies in the world. Headquartered in India, the company serves clients worldwide and needs to improve those clients with qualified, well-trained talent. Infosys also has an excellent reputation within the L&D community, providing its new employees with first-rate educational opportunities. One way to meet challenges in the Flat World is to merge your existing in-house R&D models into one that includes an eco-system of partners. Other challenges facing companies include how to achieve on-time development to meet the opportunity window, a need to achieve operational efficiency (high quality and reduced cost of development and overcoming resource constraints in terms of skill sets and infrastructure. The Infosys R&D labs have undertaken more than 1,000 projects in the past few years and have zero IP infringement lawsuits in the 25 years since Infosys' inception. Our R&D labs can help you stay ahead of the innovation game by helping you to realize the following benefits:

Predictability in enhancing your time-to-market Increase your profitability by sustaining innovation and reducing the cost of ownership Increase and sustain your ability to innovate rapidly Innovate to create a unique differentiator for your product Ensure rapid concept-to-systems development to derive the best benefits Predictability in enhancing your product's quality

Infosys is not amused by reports that it will see changes at the company's helm in the immediate future. In an exclusive chat, CEO S Gopalakrishnan drew a distinction between strategic HR changes and full-blown overhauls, reports CNBC-TV18s Sunanda Jayaseelan. The winds of change are blowing through the IT industry. Wipro has just re-jigged its top management, and analysts are accepting the possibility that US based cognizant will beat Wipro's revenues in the next couple of quarters.

But bellwether Infosys says it is in a comfortable position. It adds that while there may be some changes internally, there will be no changes like the one Wipro has made. It also says it has a strong plan in place. However, Infosys is making some changes in its HR policies. Under a programme called Talent Strategy 2015, it is reviewing its talent retention plans, and aims to rein in attrition from the current 17.5% to a more manageable 10%. This programme, designed to be implemented over the next 5 years, will take consensus on company policies from the employees.

The company declared fairly good results for 2009 with a topline and bottom line growth of around 30%. The ROE has been maintained at 30%+ levels and in addition the company continues to hold almost 10000 Crs of cash on its books. The company continues to maintain one of the highest net margins (around 30%) in the industry. In the addition the various asset ratios such as fixed asset turns and working capital turns continue to be maintained at very high levels (in excess of 5). The positives of the company are apparent. The company has very high margins, high returns on capital, has shown extremely high growth rates in the last 10 years and has one of the best managements in the country. The positives of the company as far as the financial parameters are concerned are also the risks faced by the company. Contrary to the media reports, I dont consider the recession to be a serious issue for the company in the long run. The recession is bound end sooner or later. The company has substantial scale to ride out the recession. Inspite of the huge drops in the IT services market the company has been able to maintain its ROE and other financial ratios. At the same time, the company has now grown into

a 4.5 billion dollar company and now competes with the likes of accenture and IBM.

Companies like accenture earn net margins in the range of 8-10% (with ROE in excess of 50%). These companies are fairly profitable companies in their own right, however not as obscenely profitable as the Indian vendors such as Infosys. I personally feel, the tier I vendors have a good business model and will be able to do well in the long run. However their margins and profitability should eventually converge to the same levels as their foreign counterparts as they really dont have any special competitive advantage over their foreign competitiors. The above convergence could result in decent topline, but a lower bottom line growth Management compensation : Management compensation seems to be fair. The CEO and top managers make less than 1% of the net profit. In addition the promoters/ managers have never awarded themselves any stock options till date. The company has always exceeded their guidance (although they under commit everytime). The company has performed quite well for the last 10+ years and have managed the growth fairly well. Infosys is now a mature, well run company with above average growth. It has a shareholder friendly and competent management. The company should provide decent returns in the long run, but one should not expect very high returns.

Strategic Analysis of Infosys Shiv Kumar Chaudhari, Anushree Goyal, Shahid Hussain and Ravi Rai

History of Infosys


Strategic Management Prof. (Dr.) S. Gopinadhan