What is Infosys Technologies’ strategic position in the IT industry in 2006, and what are its distinctive competencies? Where does it fit in the industry value chain? (20 pts) Infosys Technologies was founded in 1981 to design, develop, and maintain software for US Corporate clients in banking, manufacturing and telecommunications (Lok 2005). In 2006, the market for IT services was large and growing (Hill and Jones). Forrester Research forecasted in 2003 that IT consulting would grow at 5 percent compounded annually for the next five years.
There were many other companies vying for a share in the industry. These companies include big names such as IBM and Accenture. Infosys Technologies was in this list of top companies. Infosys Technologies had to have a strategic position to be competitive. Strategic position, by definition, is the positioning of an organization in the future, while taking into account the changing business environment plus the systematic realization of that positioning.
At Infosys, theirs is to, “further strengthen our position as a leading global technology services company by successfully differentiating our service offerings and increasing the scale of our operations. ” (Infosys Annual Report 2005-2006). They are doing this in several ways. Some of these include increasing business from new and existing clients which are mostly large companies, expanding geographically (Infosys China and Australia are examples), investing in its infrastructure and employees. Out of over 1. 43 million job applications in 2006, only 12, 650 job offers were made. Infosys 2005-2006). Another aspect of its strategic positioning is enhancing its solution set. This has led to the creation of Infosys Consulting. Infosys is also always developing its knowledge of the industry, promoting its brand (an example is the Wharton Infosys Business Transformation Award, offered jointly with the Wharton School at the University of Pennsylvania to recognize visionaries and Global 2000 organizations that use technology innovatively to transform their industries), and forming strategic alliances and partnerships.
According to Narayan Murthy, CEO of Infosys Technologies, one of its distinctive competencies is its vast pool of English-speaking, analytically strong technical talent and the excellent work ethic among its professionals, and who had the essential ingredients for global success in customized software development (Infosys’s Murthy 2001). These employees are highly trained, and are comfortable in their respective fields. Infosys has also developed the Global Delivery Model (GDM). This distinctive competency is where projects are broken down, and distributed to different locations globally.
These projects entail the whole process, from defining the requirements to installation of the custom application. This has many advantages. For one, the projects are worked on 24 hours a day which in turn reduces time it takes to complete a project, and the costs it entails. Infosys claims that it reduces costs by 30% (Hill and Jones). For this model to work there has to be perfect communication between the various sites where the project is taking place. Another competency is the structured engagements with clients where the fees owed to Infosys (like in Infosys Consulting) were contingent on project outcomes.
Infosys Technologies occupies a top position in the IT industry’s value chain. This company works with the leading companies in banking, manufacturing, insurance and the healthcare industries to supply their IT, business, and consulting needs. As of 2006, they were # 13 as one of the largest computer and internet consulting companies, based on sales. (Hill and Jones). Why did Infosys Technologies decide to move into the IT consulting market segment? There are multiple reasons that you can deduce from the information provide. Please identify 3 of them and offer supporting rationale (citing the text if you need to). 15 pts) Infosys Technologies decided to move into the IT consulting market segment for several reasons. One of them is related to the outsourcing backlash in the USA, another was that it was considered a natural evolution of the services, and they also wanted to change the rules of the game within the consulting industry. Kris Gopalakrishnan of Infosys Technologies hinted that the backlash against offshore outsourcing played at least some role in the company’s decision to launch a division in the United States. “We definitely are investing in the (U. S. ) market,” he said. “We’re creating some jobs. (Frauhenheim 2004). Infosys Technologies has a number of US clients that offshore many jobs to India to cut back on costs. At the same time, Americans were losing their jobs to offshoring. US companies were under fire for this policy. As hinted by Infosys, this was a reason for creating the wholly owned subsidiary Infosys Consulting Inc (ICI). Additionally, Infosys Technologies considered creating ICI as a natural extension of their services. According to Navi Radjou, of Forrester Research, it has always been Infosys’ goal to stay ahead of the next big trend, and move up the value chain (Mendoza 2006).
They wanted to be ranked alongside the big players such as IBM and Accenture. They also wanted to grow and gain more profits. To accomplish these goals they needed to offer their clients more than just the plain IT implementation, and business outsourcing needs. They needed to offer strategic consulting services that meet clients’ innovation needs. ICI was the vehicle that could do this. Further, Infosys Technologies had by this time reached a point where they had enough of everything to create ICI. They now had the size, scalability, brand and ambition necessary to create the next generation consulting and software services Company.
From 1994 to 2004, revenues had grown from $9. 5 million to $1,063. Employees now numbered 25,634 in 2004, as compared to 573 in 1994 (Ramakrishna 2005). There were expansions globally including China and Australia. The Infosys Technologies brand was now better known. ICI was ready to be launched. As stated above, this was also a chance to move up the value chain. Infosys was now ready to battle with IBM, Accenture, EDS and others. Its Global Delivery Model (GDM) was going to be utilized to accomplish this task. With this model, a project can now be worked on 24 hours a day.
A 1-1-3 model was used to achieve this. This approach gives the client one ICI resource onsite, one Infosys Technology resource onsite, and three Infosys Technology resources offshore, such as in India, China, or Australia. With GDM, Infosys Technologies hoped to “change the rules of the game within the consulting industry” as spoken by Raj Joshi, a founding partner of ICI. One challenge Steve Pratt faces is to determine how Infosys Consulting can stay ahead of the game. Please prepare an action plan for Infosys Consulting. Exactly what the company needs to do?
Support your recommendations with rationale. The challenge that is facing Steve Pratt is how Infosys Consulting (ICI) can stay ahead of the game. As stated in the text, he outlines the problems he faces. These are the internal challenges of building the business, managing growth and interfacing productivity with the parent company, the external challenge of capturing and maintaining market share, but his key concern was finding the right people to do the right things. To stay ahead of the game, and resolve his challenges, his main goal is to hire and maintain top talent.
Other related goals will be to nurture a culture of growth, a commitment to client service, and differentiate itself through its brand. To accomplish these goals, Mr. Pratt should first of all have a meeting with his main managers, and decide there and then who should be responsible for what goal. The next step then is to determine the timeline for the completion of these goals. These individuals should be given the resources to accomplish these goals. Resources can be financial, human resources, or otherwise because there may be barriers in reaching the goals.
There must be some ways to measure success in achieving the goals. The main goal, as mentioned is hiring and maintaining the right people. This means that they must be top talent, and also local hires. Infosys Technologies is an Indian company, and most of the employees are Indian. So it doesn’t look like only Indians are hired from India, American born citizens should be hired as well. The Human Resources department has to give enormous support. One of the ways that the parent company attracts top talent is bringing in them from other top companies. This should be one of the avenues that ICI must exploit in hiring employees.
When they are hired, the salary and benefits packages must be attractive enough to keep them. The timing for this process can vary, but it must not go over six months. Hiring good people is not an easy and fast procedure. It takes time and expert recruiters. The hiring process then has to be evaluated and measured to determine how successful it was. One of the measurements that can be used is the turnover rate, if any, after a period of six months to a year. Another measurement can be the revenue per these employees after a year. This is one of the measurements that the parent company uses and must be used here as well.
Having the right employees, and being able to keep them is very important. ICI is a knowledge based company, and for Steve Pratt, having the right employees is the way to stay ahead of the game. With them all the other challenges he has can be resolved to a large extent. They can be groomed to have a culture of growth, they can be trained to have a strong and unwavering commitment to client service, and they must be able to perform tasks that will differentiate ICI’s brand from other companies. References Infosys Annual Report 2005-2006. Retrieved February 13, 2010 from http://www. omain-b. com/financials/companies/I/Infosys/2005-06a200742414121878. pdf Infosys’s Murthy: Sharing a simple yet powerful vision. (2001). Retrieved February 12, 2010 from http://knowledge. wharton. upenn. edu/article. cfm? articleid=364 Frauhenheim, Ed. (2004). CNET. Infosys launches consulting unit in the US. Retrieved February 13, 2010 from http://news. cnet. com/Infosys-launches-consulting-unit-in-U. S. /2110-1011_3-5188009. html Mendoza, Morice. (Sep 2006). Infosys reaches its milestone. Retrieved February 13, 2010 from http://www. managementtoday. co. k/news/593449/infosys-reaches-its-milestone/ Hill, Charles W. L; Jones, Gareth R. (8th Edition, 2008). Strategic Management. An integrated approach. Houghton Mifflin Company. Chapter 5. Lok, Corie. Technology Review, 2005. Two sides of outsourcing. Retrieved February 11, 2010 from http://web. ebscohost. com. ezproxy. metrostate. edu/ehost/detail? vid=4&hid=9&sid=3150cb2d-5c18-476f-97a8-5115b35acf17%40sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=aph&AN=16017759#db=aph&AN=16017759 Velamuri, Ramakrishna S. (2005) SSRN. Infosys Technologies. Powered by intellect, driven by values. Retieved February 13, 2010 from