Infosys: Life Cycle Management - Summary

For an organisation that provides its customers software and consultancy

solutions in product lifecycle management, Infosys clearly needs to re-invent
itself with respect to its organisational life cycle management if it is to catch up
with its competitors such as TCS and Cognizant.

Infosys followed an r-strategy and it was an early entrant into the nascent
software sector in India in 1981. As its co-counder, Narayanamurthy reflects,
Infosys required Government approval even to import computers for office use
and had to wait for weeks or months in certain cases for this. It rode the
worldwide IT boom of the 1990s to become a respected internationally
recognised IT services company and followed a generalist strategy, operating
in several niches such as IT Consultancy and package implementation services in
areas as diverse as engineering, healthcare, life sciences and aviation sector and
KPO services.

However, as the last recession from 2006 – 2012 showed, Infosys grew slowly
while other generalist competitors such as Cognizant and TCS grew much faster.
It has also been slower in geographic diversification than its competitors.

Infosys grew through creativity but it never had a full blown crisis of leadership.
Its top management and the path to reaching senior management levels have
remained fairly constant and predictable till 2006. Perhaps this was because its
founding members were entrepreneurs who were also somewhat seasoned
managers. This enabled them to scale up quickly through the growth through
direction, crisis of autonomy, delegation, crisis of control and growth through
coordination.

Using Geitner’s model, we feel that Infosys moved through stages One through
Five where it experienced a problem generally associated with stage 1: a crisis of
leadership. Infosys’ much vaunted 3.0 strategy failed to deliver adequate results
in the recent past. It grew in absolute terms but much slower when compared to
competitors. From stage 5, Infosys is transforming itself using the stage 1 route
where the problem area was identified as that of leadership. This crisis of
leadership was rectified with the return of Narayanamurthy and finally, with the
exit of most of the old guard and induction of Vishal Sikka, who was formerly with
SAP, and as a non-Infosysian, this marked a shift in Infosys’ recruitment norms.

In terms of Weitzel’s and Jonsson’s model of Organisational decline,

Infosys is in Stage 4 where there is a crisis and steps have been taken to restore
the organisation’s growth trajectory.

Infosys is weak when it comes to management consultancy services, since it

tends to work at the level of operational value creation. Competitors such as IBM
and Accenture dominate this area. Infosys’ current transformation could help it
break into this sector. Infosys has to morph towards being a management
consultancy with a significant IT component.
Perhaps hiring in significant numbers from the PGPEX program at IIM Calcutta
could also help in this endeavour.

Infosys: Life Cycle Management - Details

A business enterprise owes its existence to continuous value creation

resulting in better customer experiences. – Infosys Website
(http://www.infosys.com/engineering-services/service-offerings/Pages/product-lifecycle-
management.aspx)

For an organisation that provides its customers software and consultancy

solutions in product lifecycle management, Infosys clearly needs to re-invent
itself with respect to its organisational life cycle management if it is to catch up
with its competitors such as TCS and Cognizant.

There are clear cut moves in that direction. The old guard comprising of people
who had started the organisation as entrepreneurs or as early employees and
who rose to C-suite levels has made way for a complete overhaul of its senior
management positions. There is lesser room for nostalgia and more hard-nosed
thinking to work towards a higher growth trajectory.

Infosys followed an r-strategy and it was an early entrant into the nascent
software sector in India in 1981. As its co-counder, Narayanamurthy reflects,
Infosys required Government approval even to import computers for office use
and had to wait for weeks or months in certain cases for this. It rode the
worldwide IT boom of the 1990s to become a respected internationally
recognised IT services company and followed a generalist strategy, operating
in several niches such as IT Consultancy and package implementation services in
areas as diverse as engineering, healthcare, life sciences and aviation sector and
KPO services.

However, it has historically had a narrow base of clients and when business from
these clients shrunk owing to macro-economic reasons, Infosys’ growth
stuttered. It has been unable to achieve any significant volume in the market for
government funded services in international as well as domestic markets. This
has enabled it to survive the 2 worldwide recessions of the last 15 years.

However, as the last recession from 2006 – 2012 showed, Infosys grew slowly
while other generalist competitors such as Cognizant and TCS grew much faster.
It has also been slower in geographic diversification than its competitors.
Viewing Infosys through the prism of Greiner’model of organisational
growth

Infosys grew through creativity but it never had a full blown crisis of leadership.
Its top management and the path to reaching senior management levels have
remained fairly constant and predictable till 2006. Perhaps this was because its
founding members were entrepreneurs who were also somewhat seasoned
managers. This enabled them to scale up quickly through the growth through
direction, crisis of autonomy, delegation, crisis of control and growth through
coordination.

Infosys: A Brief Chronology

1981 Year of Incorporation

1992 Became a public limited company in India

1993 ISO 9001/TickIT Certification

1999 Listed on NASDAQ

Crossed $100 million in annual revenues
Attained SEI-CMM Level 5

2002 Crossed $ half a billion in revenues

2006 Crossed $ 2 billion in revenues

2013 Narayanamurthy rejoins

Massive restructuring of top level
management

2014 Narayanamurthy resigns after restructuring

is over
Vishal Sikka, formerly with SAP is selected
CEO

Source: http://www.citehr.com/118434-amazing-infosys-story-how-infosys-born.html#ixzz37SuC0pGT

Infosys took steps to cut through tape and grow through collaboration. But in a
rapidly changing business environment where worldwide recession and an
increasingly protectionist USA, the primary market for their services, slowed
Infosys’ business growth, it became necessary for the company to reach out
more to newer markets in Europe, East Asia, Australasia and the Middle East,
even Africa. Over-reliance on USA and its traditional customer base took a toll on
Infosys.
We feel that Infosys moved through stages One through Five where it
experienced a problem generally associated with stage 1: a crisis of leadership.
Infosys’ much vaunted 3.0 strategy failed to deliver adequate results in the
recent past. It grew in absolute terms but much slower when compared to
competitors.

In 2013, the signs of organisational decline were quite evident. Infosys was being
outperformed by competitors such as TCS and Cognizant. To its credit, Infosys bit
the bullet and its mentor and co-founder was mandated by the board to make
sweeping changes. From stage 5, Infosys is transforming itself using the stage 1
route where the problem area was identified as that of leadership. This crisis of
leadership was rectified with the return of Narayanamurthy and finally, with the
exit of most of the old guard and induction of Vishal Sikka, who was formerly with
SAP, and as a non-Infosysian, this marked a shift in Infosys’ recruitment norms.

In terms of Weitzel’s and Jonsson’s model of Organisational decline,

Infosys are in Stage 4 where there is a crisis and steps have been taken to
restore the organisation’s growth trajectory.
Infosys grew organically for most of its life though it has made acquisitions in the
past few years to develop expertise into newer areas.

Despite being a huge IT company in relation to its Indian competitors, Infosys is

much smaller than its global competitors. Infosys generated $4 billion in 2008,
which is relatively low in comparison with large global competitors such as
Hewlett-Packard ($91 billion), IBM ($91 billion), EDS ($21 billion) andAccenture
($18 billion).

Infosys is weak when it comes to management consultancy services, since it

tends to work at the level of operational value creation. Competitors such as IBM
and Accenture dominate this area. Infosys’ current transformation could help it
break into this sector. Infosys has to morph towards being a management
consultancy with a significant IT component.

Perhaps hiring in significant numbers from the PGPEX program at IIM Calcutta
could also help in this endeavour.