Infosys
Infosys
Agenda
Topic 1
• What is the essential strategic insight behind Business Process Outsourcing?
Topic 2• What is
the business model that underpins the software services provided by Infosys and how does it capture BPO contracts?
Topic 3
• How has Infosys utilized stretch goals to acquire the capabilities that enable it to compete with the established giants? What is the role of capability standards such as CMM?
Topic 4
• What is Infosys’ strategy today?
What drives India?
Stable economyLow cost technical workers
& software engineers
Supportive government
policies
World class telecom
infrastructure
World class companies
Work culture
English-speaking manpower
Top managerial talent
Project management capabilities
Clients’ acquisition of
specific capabilities
Source Where do capabilities come from and how do they matter? A study in the
software industryS.K. Ethiraj, P. Kale, M.S. Krishnan, J.V. Singh
History of IT in India
1981 Found
ed
1993IPO
1997 CMM 4
1999 CMM 5
1999NASD
AQ
2009$ 5.05
b
1977Tightened
Rules
1986 Loosened
restrictions
1991 Economic
Liberalization
Late 1970’s MNC
Left India
Early 1990’s MNC
re-enterd
Indian Government
Infosys
Source Infosys Technologies
Harvard Business School
IT in India
• IT as a sector• Providing satisfactory
services to existing increase in demand
• Government controlling infrastructure and technology
• IT for specialist• Fullfilling external
demandFrom
• IT as an industry and for masses
• Adding value to sustain the growth
• Government faciliting infrastructure and the technology
• Creating internal demand
To • Export promotion and tax/duty incentives
• Liberal policy frame work for the sector
• Foreign export reforms
Through
Infosys
Industry :Software - IT
services
Founded : July 2, 1981
Products :Finacle ( UBS )
Headquarter :Bangalore, India
Source Infosys’ Annual Report 2009
Infosys
The most profitable
subsidiary :Infosys BPO
Development Centers:
India,China,UK, Canada,Japan and Australia
Employees :103.905
Source Infosys’ Annual Report 2009
Completed projects :>20000
Infosys : the story of a successful latecomer
Early bird catches the worm, but the second mouse gets the cheese...
English proverb, Unknown author
Infosys : the story of a successful latecomer
As a Latecomer a firm is able to exploit its late arrival adopting advanced technologies, rather than having to replicate the entire previous technological trajectory.
The market is already developed by the previous firms, so the latecomer firm will spend less resources in the communication of the services. The consumers already know that it is available, they seek only for the best deal.
The strategic goal of the latecomer is clear: it is to catch up with the advanced firms, and to move as quickly as possible from imitation to innovation.
In the context of globalization, latecomer firms are faced with new opportunities for linking up with emergent institutions and networks. Global value chains, are being formed by leading firms in the advanced countries as they seek to cut costs and enhance flexibility through outsourcing. This creates huge opportunities for latecomers as Infosys, to link up with these global value chains as suppliers.
Source Latecomer strategies for catching-up : the cases of renewable energies and
the Led programmeJohn A. Mathews
Infosys : the story of a successful latecomer
Founded : 1968
Founded : 1978
Founded : 1977
Founded : 1981
Founded : 1959
New Delhi
Mumbai
Bangalore
Porter’s Five Forces ( Static )
Raising of other offshore locations such as Eastern Europe, Philippines and China, are emerging and are a serious threat to Indian IT industry because of their cost advantage. Anyway it will affect India only in medium-long run.
• It improved due to the slowdown, the Job cuts, the layoffs and bleak IT outlook
• Availability of a vast talent pool
Large numbers of It companies focused on It projects, results: really high competition• Huge decline
in IT expenditure due to the crisis
• The clients keep sticking to the old partners
• Large companies require special condition
• Low capital requirements• Large value chain, space
for small enterprises• MNCs are ramping up
capacity and employee strength
• Need to get reputation• Certificate of quality
• Commoditized offerings• High industry growth• Strong competitors with
huge experience and valuable brands
• Few numbers of large companies
Barg
ain
ing
p
ow
er
of
su
pp
liers
Barg
ain
ing
p
ow
er o
f cu
sto
mersThreats of substitutes
Threats of entry
Industry Rivalry
Porter’s Five Forces ( Dynamic )
Threats of Substitutes
Today : may sub easily to be imitated but Infosys has competent engineers (low salaries and low prices).
Threats of Entry
Today : need to invest in HR and computer tech.(Innovation).Be a reliable company (CMM).
Bargaining Power of Suppliers
Today: low because most of the softwares are not so much expensive.
Bargaining Power of
CustomersToday: huge easy to switch. Need to be open to external auditing and adhere to the SLA.
Industry Rivalry
Today : number of competitors is also increased nationally.
BPO : a socio-technical phenomenon
The Business Process Outsourcing can be defined as:"the movement of business processes from inside the organization to external service providers“.
Business Process Outsorcing: The Competitive Advantage, by Rick Click, Thomas Duening
The origin of BPO comes from a set of driving factors that enable the shifting of work to its lowest cost/highest quality provider careless about the
provider’s physical location.
BPO : a socio-technical phenomenon
Internet security
Business specialization
Inexpensive data storage
Educational attainmentBPO set of
driving factors
Broadband Internet
BPO : a socio-technical phenomenon
Near shoring/ sourcing
• It is a derivative of the business term offshoring in which an activity is replaced to locations which are geographically nearer
Onshore outsourcing
• (also called domestic outsourcing) is the obtaining of services from someone outside a company but within the same country
Offshore outsourcing
• is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured
Types of BPO
Body Shopping
The Infosys’ Body Shopping can be defined as:”the ability to export talents ( software engineers ) to provide on-site services to customers, at lower costs and on time”.
FinancialDictionary.com
Body Shopping
InformationWeek
The H-1B is a non-immigrant visa ( limit 65000 units ) in the United States under the Immigration & Nationality Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in special
occupations. The duration of stay is three years, extendable to six.
Body Shopping
ConsConsProsPros No technology focus Low compensation Frequent transfers and no
accommodation falicities beyond 1 week
High level of working hours Top-down policy
The Infosys brand value in India
Impressive infrastructure Very strong delivery
structure World class facilities
Valu
e A
dd
ed
How to get contracts?
Body Shopping
ODC’s
Quality & Trust
Fixed price contracts
Increase complexity
Source Infosys Technologies
Harvard Business School
How to get contracts?
Source Activity transfer to Agilent’s Indian operation by date, sophistication and
employmentR. Dossani, M. Kenney
Resource Based View
The resource-based view (RBV) argues that firms possess resources, a subset of which enable them to achieve competitive advantage, and a subset of those that lead to superior long-term performance. Resources that are valuable and rare can lead to the creation of competitive advantage. That advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution.
J. Barney, E. Penrose
Resource Based View
( also called Resource Heterogeneity ) Refers to a firm owns a resource or capability that is also owned by numerous other competing firms, then that resource cannot provide a competitive advantage.
Refers to a resource that is difficult to obtain by competitors because the cost of developing, acquiring or using that resource is too high.
Source Information technology and sustained competitive advantage : a resource-
based analysis J.Mata, W.L. Fuers, J.B. Barney
Resource Based View
Resource Immobility
• Respect and acute focus on employee satisfaction
• Consistent financial performances
• Fair meritocracy
• Agility• Engineering
excellence• Quality,
reliability and speed
Resource Diversity
• Telecom infrastructure
• Low delivery cost
• Technical and management education
• Staff training• Training
centers• Development
centers
Competitive Advantage
Focus High quality and
capabilities CRM Time-delivery Risk Management
Differentiation High in/High end services
of VC Low in/Low end services
of VC
Cost Leadership Global delivery Model
24/7 New offices Training centers
Business Models : Global Delivery Model (GDM)
Requirement definition
AnalisysHigh level design
Onshore
Detailed design
DevelopTestPackage
Offshore
Deploy solution
Phase 1
Phase 2
Business Models : PSDP Model
ProfitabilityHigher value services
Increase revenue predictivity
Offshore model- Global delivery
Sustainability
Translating clients to partners
De-risking
Managing client concentrationGeographical diversification
Predictability
Annuity RelationshipsForecasting systems
Source Infosys Technologies
Harvard Business School
Stretch Goals
Strategic stretch goals are goals that cannot be achieved with what is known and how is worked today. They aim for something that is impossible today.
B. Schindlholzer
Stretch Goals
J. Welch, ex CEO General Electric
“By reaching for what appears to be the impossible, we often actually do the impossible. And even when we do not quite make it, we inevitably wind up doing much better than we would have done”.
Stretch Goals
• The ability to make more from what is available, maximize available capital, financial and human resources.
Leveraging
Resources
• Differently, unconventionally, from a new perspective;
• Come up with new radical ideas and execute them to achieve extraordinary business results;
• Encourage your employees to try something new and give them a “permission to fail”;
• Learn to break the model,change,destroy monotony.
Think outside the box
• Concentrating resources : Convergence and Focus
• Accumulating resources : Extracting and Borrowing
• Complementing resources : Blending and Balancing
• Conserving resources : Recycling Co-opting & Shielding
• Recovering resources : Expediting Success
The arenas of Resource Leverages
Hamel, Prahalad: Strategy as stretch and leverage
Capability Maturity Model ( CMM )
The Capability Maturity Model is a framework that focuses on processes for Software development.
It was developed by the Software Engineering Institute (SEI) at the Carnegie Mellon University.
The CMM categorizes software process maturity at 5 Levels.
Capability Maturity Model ( CMM )
Role of CMM/SE
I Benefits
• Aims to distinguish mature processes from immature processes;
• Differentiate firms in the market;
• Study and improves software capabilities and PMC;
• Show that the firm is doing serious, because it requires enormous investment;
• It’s a standard quality process model;• Status and
exclusivity. It’s a very difficult to get it. Only 2% of the assessed firms received a SEI level 5;• Convince
customers that the company is trustworthy;• Regularly
benchmark the process for process and capability maturity;
Source Osiris
https://osiris.bvdep.com/
Results
New Strategy : Think Flat
The world is getting flattened by forces of globalization, changing demographics, ubiquity of
technology and regulatory compliance. Companies must address the shifts of the Flat World.
•Migrate to a variable cost structure from a
fixed cost structure•Prepare in advance to manage business risk
•Respond faster to business cycles
•Capturing and optimally using unstructured infos
•Building analytics and information stewardship capabilities
•Facilitating seamless flow of information across boundaries
•Increase speed of information
•Innovate customer experience
•Understand customer behaviour
•Co-create with customers and partners
•Creating new offerings for price sensitive markets
•Creating differentiated offerings, leveraging talent and technologies
•Creating globally optimized and efficient low-cost operations
Optimize Cost Fuel Growth Thinking Faster
Innovation
Think Winning in the turnsThink
Money for
Information
Infosys
All that glitters is not gold...
English proverb, Unknown author
Infosys
Difficulties when non Indians have to fit on Infosys corporate culture
Good brains usually leave the company in 1-2 years
24/7 workday because of time difference between USA and India
Inability to plan workday, last minute changes
Easy to get lost in the crowd (>100.000 people)
Average and complicated salary (variable)
Thank you!
Team :Giuseppe De PeppoAlessandro H. SansonettiPatrizia Spagnolo
Costantino UrciuoliEleonora VegliantiLuca Zevola