ANALYSIS OF THE STRATEGY – STRUCTURE – PERFORMANCE OF THE INDIAN IT INDUSTRY USING THE INSTITUTIONAL THEORY PRESENTED BY GROUP 2 ANKITA BAHETI RAVI RANJAN KISHORE SALANA LAVANYA SUDHEER TATIKONDA
ANALYSIS OF THE STRATEGY – STRUCTURE – PERFORMANCE OF THE INDIAN IT INDUSTRY USING THE INSTITUTIONAL THEORY
PRESENTED BY GROUP 2
ANKITA BAHETI RAVI RANJAN KISHORE
SALANA LAVANYA SUDHEER TATIKONDA
IT industry in IndiaBefore 1980s
Software exports started in 1974Software Export SchemeHigh import dutyPresence of few players
1980-90New Computer PolicyLower import dutiesGrowth in exports
1990-2000Offshore provisioning of servicesMany playersSetting up of Software Technology Parks of India
Post 2000High demand for IT professionalsStrong global delivery modelLarge sized contractsIssues of Y2K, dot.com
The contribution of the IT sector to Indian GDP rose to approximately 8 percent in FY13 compared to 1.2 percent in FY98
Out of the total market 70 percent of the revenue in FY14 was obtained from exports
US has been the biggest importer of Indian IT exports, accounting for 60 percent of Indian IT exports
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201413.4 18.2 24.1 31.3 40.9 47.5 50 59 69 76 868.3 10.2 13.2 16.5 23.1 21.9 10
29 32 32 32
Market Size of IT Industry In India
(in USD Bn)Exports Domestic
Top players in IndiaCompany Name
Market Share ( In %)
Employees Global Spread
TCS 10.7 2.5 Lakhs 47 countriesWipro 7.2 1.3 lakhs 54 CountriesCognizant 6.8 1.8 Lakhs 29 countriesInfosys 6.3 1.4 Lakhs 68 countriesHCL Tech 4.2 0.85 lakhs 18 Countries
The top five firms contribute around 35 percent of the total revenue, indicating the market is fairly competitive
The number of global delivery centers of IT firms in India reached 580, spreading across75 countries as of 2012.
Evolution of Top players
TCS• It was founded in 1968• Its early contracts were
punching card service to its sister company TISCO.
• Its first project was with Central Bank of India,
• In 1979, it delivered an electronic depository and trading system to a Swiss Company
• 1981,it established of Tata Research Development and Design Center
• 2004, it went into public• Its headquarters are in
Mumbai, India
Infosys• It was founded in 1981• Its first Client was Data
Basics New York• 1987, It established its
first International Office in Boston
• In 2004, its-revenues reached $1 Bn
• 1993, it went into public• Its headquarters are in
Banglore, India
Wipro Technologies• The company was
incorporated in 1945 as Western India Products Limited
• It was started as small consumer products business
• In 1980, Wipro employed IT Services
• Wipro BPO was founded in 2002
• 68% of its revenue are from IT sector
• It is Headquartered in Banglore, India
HCL• It was Founded in 1976• It was one of India’s
original IT garage startups
• HCL Enterprise comprises of two companies- HCL Technologies and HCL Infosystems
• HCL is the fourth largest IT company in India and is ranked 48 in the global list of IT service providers
• It is headquartered in Noida, India
The Institutional Theory
HABITS
ROUTINES
INSTITUTIONS Examines the structure of organizations through the
lens of “rationalized myths”, accepted ceremoniously in order for the organization to gain or maintain legitimacy in the institutional environment.
Makes the assumption of Bounded Rationality. Rational decisions of the actors are bounded by the “reality” of the normative and/or regulative environment.
Organizations will take on structures that are isomorphic with the institutional environment in which the organization exists and that doing so confers legitimacy, resources and a survival advantage to these organizations.
.Adoption of structural characteristics which may not be efficient
.External measures dictate value of these structures
.Conformation reduces Uncertainty and ensures Survival
Coercive
Normative
Mimetic
Isomorphism
Legitimacy
Survival
SOCIAL PRESSURES
Frequency based
Trait based
Outcome based
ECONOMIC VIEWPOINT
UNCERTAINTY
BENCHMARKING
Key Gaps and Criticisms There is little evidence supporting the constraints of legitimacy - it is the
middle-status players who feel the need to act legitimately. High-status players have the reputational capital to deviate from the norm, and low-status players have to do whatever it takes to survive, whether legitimate or not.
Overlooking the problem of appropriately measuring institutions - institutional research should only value instances of significant, profound, field-level change, and not merely incremental changes.
Institutional theory has tended to focus on the effects of institutionalization rather than on the process through which organizations become institutionalized. This has resulted in a view of organizations merely as “black boxes” with nothing of value inside.
Top 10 Trends in IT during 2007-2013
Distributed co-creation moves into the mainstream
Making the network the organization
Collaboration at scale
The growing ‘Internet of Things
Experimentation and big data
Wiring for a sustainable world
Imagining anything as a service
The age of the multisided business model
Innovating from the bottom of the pyramid
Producing public good on the grid
Company response to trendTCS Infosys Wipro HCL
Distributed co-creation moves into the mainstream
Co-creation Model with ClientsTCS Co-Innovation Network (COINTM)
Eco-system partnerships
Making the network the organization
GNDMOffshore-onsite Global Delivery Model
Global Delivery Model
Global Delivery Model
Collaboration at scale
iON – a fully integrated IT-as-a-Service (ITaaS) modelTCS’ tool brand MasterCraft‘eTransform’: an analytics-led toolset
cloud based service delivery platform
Driving Certainty & Efficiency through hyper automation
Cross-Functional Services like ITIL (Information Technology Infrastructure Library) and MTaaS™ (Management Tools-as-a-Service)
Company response to trend
TCS Infosys Wipro HCL
The growing ‘Internet of Things
production automation and high performance computing
Connected vehicle solutions.
HCLT ERS offers end-to-end engineering services and solutions in hardware, embedded, mechanical and software product engineering
Experimentation and big data
mobile applications and consumer analytics on top of core applications
Edge suite of products and platforms. ‘Walletedge’
Mobility Solutions analytics and big data
Enterprise Mobility Services. iEM (mobile energy mgmt. app)
Wiring for a sustainable world
environmentally profitable solutions (intelligent buildings & green product lifecycle management programs
Company response to trend
TCS Infosys Wipro HCL
Imagining anything as a service
significantly invested in digital technologies
outsourcing shifted to cloud
Integrated Cloud Services
Cloud Computing Services
The age of the multisided business model
technology solutions in digital technologies like mobile and social media.
Innovating from the bottom of the pyramid
GNDM Entering into emerging markets
Expansion to emerging markets
Producing public good on the grid
‘Clin e2e’ and ‘Med Mantra’
DCAS contract for state of art health and human service solution
2013-14 and the Future Outlook
Emergence of Tier II and Tier III Cities as Centres of IT Excellence – 43 new cities with an expected 28% reduction in cost
BFSI Telecom Manufacturing0
200
400
600
Growth Trend of Traditional Industries – expected to
average 15%
FY10 FY13E FY15F
Education Healthcare Retail01020304050
Growth Trend of Emerging Verticals
FY10 FY13E Series 3
0 100 200 300 400 500 600 700 8000%10%20%30%40%50%
SMAC future growth
Social Media
Big Data
Cloud
Enterprise Mobility
Country IT Spend India’s Penetration
Key Segments
Canada USD63 billion ~1.5 per cent Cyber Security, Healthcare ITEurope USD230
billion<1.5 per cent It Sourcing, BPM, CAD
Japan USD235 billion
<1 percent CRM, ERP, SI
Spain USD26 billion <1.5 per cent IT Sourcing, SIBrazil USD47 billion ~2 per cent Artificial Intelligence, R&DChina USD105
billion<1 per cent Software Outsourcing , R&D
New Geographical Markets – BRIC provides USD 380-420bn opportunity by 2020
Company Response to TrendTCS Infosys Wipr
o HCL
The growing ‘Internet of Things
production automation and high performance computing
Connected vehicle solutions.
HCLT ERS offers end-to-end engineering services and solutions in hardware, embedded, mechanical and software product engineering
Experimentation and big data
mobile applications and consumer analytics on top of core applications
Edge suite of products and platforms. ‘Walletedge’
Mobility Solutions analytics and big data
Enterprise Mobility Services. iEM (mobile energy mgmt. app)
Wiring for a sustainable world
environmentally profitable solutions (intelligent buildings & green product lifecycle management programs
Conclusion IT industry is very volatile due to rapid technology changes. Also it is not shielded by
geographic boundaries as around 80% revenue comes from abroad. Revenues of IT industry is mostly dominated by top 5-6 firms commanding around
45% of revenue. Hence we have chosen top 4 firms for our analysis The analysis is carried out based on the response of the companies to external
stimulus of changing trend in the IT industry The analysis suggests that though the responses are not exactly replicating, the
deviations are minute proving the institutional theory. For e.g. the potential of co-creation is realised by TCS and Wipro whereas Infosys was the
lead taker in “The internet of things”
Thank You