SM-II Project

Infosys 3.0
Building tomorrows Enterprise

Participants Abhinav Rastogi (WMP 08001) Kaustubh Sohoni (WMP 08019) Pankaj Bhardwaj (WMP 08025) Vaibhav Goel (WMP 08043) Vidit Kumar (WMP 08044)

Contents
1. 2. 3. 4. 5. 6. 7. 8. Company Information ........................................................................................................................... 3 Strategy Evolution ................................................................................................................................. 3 Why Infosys 3.0 ..................................................................................................................................... 3 Infosys 3.0 Positioning for the future................................................................................................. 4 Infosys view for the transformation ..................................................................................................... 5 Outcomes .............................................................................................................................................. 5 Conclusion ............................................................................................................................................. 7 References ............................................................................................................................................ 7

1. Company Information
Power by intellect, driven by values Infosys Limited, mantra of success for this Indian multinational IT giant (head quartered at Bangalore) providing business consulting, information technology, software engineering and outsourcing services for clients varied on different geographies. One cannot resist the Eye of Infosys staring at you through the shiny silver buildings gazing at you while you drive past on the 11km long flyover towards Electronic City at Bangalore. So called Dream Company of an IT professional was started by seven Ex-Patni Computers employees in 1981 with an investment of Rs10,000 ($250). It has 7 other Indian. development centers in Hyderabad, Pune, Trivandrum, Bhubaneswar, Chandigarh, Mangalore and Chennai. It has a global presence in more than thirty countries. Today with annual revenues of more than seven billion and a total workforce is more than 150,000+ employees; Infosys is the third largest software services provider in India in terms of revenue. Infosys has been a trusted IT services provider along with support and enhancement services, enterprise services, technology outsourcing and business consulting, services and serves a host of Fortune 500 and Fortune 1000 companies in 20 domains. Its biggest clients include, Southern California Edison, DHL, Bank of America, Citibank British Telecom, British petroleum, ABN AMRO etc. Commitment to new ideas is in its DNA. In other words, spirit of innovation has been an inseparable part of Infosys journey and it has powered their success for three decades. It will also continue to guide them in building tomorrows enterprise. However, IT service industry is rapidly commoditizing which is seen as an opportunity by this IT giant to transform their business and be more relevant to the clients i.e. Infosys 3.0. This means an improved portfolio of business which will ensure high quality, industry leading growth with enhanced revenues and margins.

2. Strategy Evolution
IT giant during its course has introduced three strategies so far as represented by the diagram. Infosys started as a retail business unit and then they created various industrial units. When these units have gained critical mass, it had virtualized them.

3. Why Infosys 3.0

Today, IT industries are facing a twin challenge of scalability and commoditization. Client, today, look for those service providers who

understand them in terms of both their business and challenges. Shift in demand is clearly evident from traditional horizon offering to industry specific high value offering. Clients are looking for increases ROI (return on investment) by converting their capex into opex. For the same they are looking out for transformation partners. Market trend has left Infosys with two options viz. Concentrate on the existing model or Transform to address the current demand and challenges in order to achieve superior growth in medium to long term. Hence, Infosys 3.0 was announced. With this Infosys continued to make focused investments in their organization capabilities and trying to align their offerings or business portfolio more closely to the business priorities of the client.

4. Infosys 3.0 Positioning for the future

Infosys 3.0 New and improved version. With this type of strategy Infosys wants to transform into a business solution provider i.e. working with the business sides of the client. With this, it wants to focus primarily on its existing customers. From the past it is evident that Infosys gets majority of its business (around 95%) from its existing clients. In general, there are two basic growth strategies viz. 1. Same to more Selling same products and services to more clients, thereby, increasing their market share and, 2. More to same Selling higher value products and services to the existing/ same client. More is same is what is Infosys focus. This is the differentiating factor that will help it to keep an edge over other s as well as to escape commoditization. The key constituents of Infosys 3.0 are: 1. First change was to restructure service lines or offerings into three groups: Transformation Change of business initiatives Innovation Business Operation Run the business Goal for next 5-7 years is to make each of the services to contribute to 1/3 to the total revenue. More investment would be required towards Innovation in order to achieve that. 2. Secondly, consolidating existing verticals into 4 verticals and introduction of 1 new vertical BFSI (Finance services and insurance) Manufacturing Energy, Utilities and Telecom Retail, CPG, Logistics and Life Sciences Public Services and Healthcare
Current Target 63%

33% 25% 12%

33%

33%

Transformation

Innovation

Business Operation

These will be looked upon as separate Profit and Loss accounts giving more flexibility and ability to scale up the within the units. New vertical focus will be on government contracts where the competition is non-significant. 3. Last but not least, 7 new themes/ trends as key focus areas for tomorrows business model Digital Consumer New Commerce Healthcare Economy Sustainable Tomorrow Smarter Organizations Emerging Economies Pervasive Computing Vertical heads will focus on trends which are most relevant to them. Some live examples as follows: 1. Flypp - a mobile applications platform for telecom service providers and handset vendors (Digital Consumer) 2. iTransform a comprehensive platform for the healthcare vertical to address HIPAA and CD-10 regulations (Healthcare Economy).

5. Infosys view for the transformation

Infosys sees 3.0 as a strategically correct and necessary step towards the growth of the company in current hostile and volatile environment. We have evident a change in leadership while adopting this strategy. Infosys is thinking of ripping benefits from this strategy as an early mover advantage. With this it indents to focus more on the external environment than the internal environment of the company. They have a strong believe on their top management to help the company to stand again more strongly this time. Hence, Infosys 3.0 Accelerating growth can be seen as a mix of following strategies: Growth through transformational partnerships Growth through differentiation Enhancing growth through innovation Nurturing tomorrow's talent Infosys transformation of 3.0 strategies from older strategy was to transform into business Solution Company from technology Solution Company. During such transition organization structure led to some changes in hierarchy where industrial units, service lines and industrial verticals were realigned into four key groups as: Banking, Financial services and Insurance Manufacturing Energy, Utilities and Telecom Retail, CPG, Logistics and Life Sciences

6. Outcomes
The Infosys 3.0 strategy was to move Infosys higher up in the value chain of IT - into areas such as innovation, products & platforms, consulting, and greater value addition in business management. However, the strategy came at a time when global economy was going through a

downturn and clients were focused on cost-cutting rather than on developing new business strategies. The company has many problems, some easier to solve than others. Lack of morale and a cohesive direction Murthy can solve this issue father figure; great visionary 3.0 was a transformation strategy which helps in measuring its in effect, the problem is not Infosys 3.0 as a strategy but the less-than-enthusiastic approach to implement it. Lack of thought leadership from Infosys on its identified themes.

Infosys is in the midst of its Infosys 3.0 strategy. The firm has launched 7 new products and 7 new platforms. Consulting and integration business now comprises 34% of overall revenue. The Business and IT Operations team closed $1B in revenue last year. Total contract value booked in products and platforms is $725M as of the last quarter. In Innovation Infosys has been not able to outcast their competitor in innovating products, the only product & platforms which has been a successful story is of Financle platform on Banking. Infosys compared with its other IT service providers such as Accenture, CapGemini , IBM has been on low margin with the customized delivery only, but other providers have taken the value margin to a higher value. Infosys is losing out on its traditional strengths, dealing with large clients. The number of USD 100-million clients went from 13 to 15 in the last two years. At the same time, for TCS, it went up from 8 to 16, and even for underperforming Wipro it went from 3 to 10. With too many Delivery centers, Infosys was unable to manage its diversity and size due to which re-doing the wheel proves to be the roadblock for the organization growth. Large chunk of Revenue (around 97%) for Infosys have been from existing customer and a very small amount of revenue of 3% have been attributed by new customers. In North America Infosys is losing its market share to TCS and Cognizant

Revenue Exhibit of top 3 Service Providers North America Infosys lack of aggression in implementing the strategy was clearly visible from its acquisitions, and market share revenue which has declined or has been stagnant and other players from competitors have emerged as winners in the race the only big acquisition was of Lodestone and later on no such deal has happened.

7. Conclusion
Vision and aspiration values of Infosys must drive the organization to high quality growth and to believe in the strategy to meet the organization goals. Low Operating Margin than competitor is one of major issue which is Infosys is facing in the competitive market. Prices are more than Competitors (The onsite component contributes to at least 46% of Infosys' costs and contributes more than 50% to revenues) Infosys should not lose focus on High Volume but low margin contracts.

8. References
http://www.moneycontrol.com/news/business/what-is-infosys-30strategy_887924.html http://www.rediff.com/business/slide-show/slide-show-1-tech-what-is-infosys-version3-point-0-and-how-it-will-compete/20110603.htm http://www.globalservicesmedia.com/global-services/analysis/189680/is-narayanamurthy-answer-faltering-infosys http://www.enterpriseirregulars.com/64837/event-report-infosys-global-analystsummit-awaiting-the-post-infosys-3-0-emergence/ http://www.hitbullseye.com/currentgk/1370589921.pdf http://smartinvestor.business-standard.com/BSCMS/PDF/info_050511_01.pdf http://www.keynoteindia.net/documenthosting/research/065_Infosys_InitiatingCoverage.pdf http://www.slideshare.net/achalraghavan/infosys-case-analysis

http://www.stevieawards.com/pubs/iba/awards/408_2659_22092.cfm http://www.financialexpress.com/news/3.0-strategy-is-about-winning-in-allportfolios/1016156 http://ronnie05.wordpress.com/2013/06/01/infosys-3-0murthy-2-0-9-reasons-why-itwouldnt-work/ http://www.kumaralok.com/infosys-3-0-the-future-version-of-infosys-with-no-releasedate http://forbesindia.com/article/boardroom/did-infosys-get-it-wrong-with-its-3.0strategy/35299/1 http://www.hindustantimes.com/StoryPage/Print/1069230.aspx