SWOT ANALYSIS

INTRODUCTION
Establishment Founded on 2 July 1981 in Pune by N. R. Narayana Murthy
and six others. Has global presence with 72 offices.
Divisions :

Infosys
Infosys
Infosys
Infosys
Infosys
Infosys
Infosys
Infosys

BPO
Consulting
Public Services
Australia
Brazil
China
Mexico
Sweden

INTRODUCTION
Initiatives :

Infosys Foundation
Academic Entente
Infosys Labs
Infosys Prize

INTRODUCTION

INTRODUCTION

INDUSTRY PROFILE

INDUSTRY PROFILE
Globally IT industry is going to grow steadily despite a
weakening global economy.
The Nexus of Forces social, mobile, cloud and
information are reshaping spending patterns across all of the
IT sectors Gartner Research Firm.
Consumers and enterprises will continue to purchase a mix of IT
products and services however the mix is going to change
radically in the future
E.g. transitions from PCs to mobile or licensed software to
cloud.

INDUSTRY PROFILE
TOP IT Companies in India (In Millions)
1. TCS (Revenue- 48426.14)
2. Infosys (Revenue- 36765)
3. Wipro (Revenue- 31682)
4. HCL (Revenue- 8907)
5. Mahindra Satyam (Revenue- 5964)
6. Tech Mahindra
7. Mphasis
8. Oracle Financial Services
9. Mindtree
10.Polaris Tech

INDUSTRY PROFILE

INDUSTRY PROFILE
The top five Indian providers grew 13.3% exceeding the
worldwide IT services industry growth of 2%.
Revenue contribution from project-based deals has continued
to decline for the top five Indian-based providers, and the
outsourcing service line component has steadily
increased.
Cognizant displaced Infosys to become the second-largest
Indian IT services provider in 2012-13.

PEST ANALYSIS

POLITICAL
Very little influence of political situation including change
of government.
No tax discrimination to US companies outsourcing IT jobs
Diverse employment practices-qualification, abilities,
gender, skill sets
Certain levels of ambiguity surrounding taxation of IT products
and services,
IT SEZ requirement
Continuous change of stand on applicability of labour
legislations to the sector
Strengthening of the IT Act- security of data in transmission &

ECONOMICAL
Stage of business cycle: Growth Stage
Increases contribution to GDP and employment
Exchange rate:

Indian IT sector is dependent on foreign clients, especially US, for

more than 70% of its revenue. So, the fluctuation in the exchange rate
can bring a considerable difference in the performance of a company.

IT sector undertakes various measures like hedging exchange risks

using forward and future contracts. This helps them in mitigating some
of the loss due to exchange rate fluctuation but none the less the
impact is substantial.

Every 1% movement in the Rupee against the US Dollar has an

impact of approximately 50 basis points on operating margins
Infosys Annual Report

ECONOMICAL

Economic growth:

Due to global slowdown, exports of IT and ITeS services has

slightly dimmed but a great opportunity is waiting in Indias
domestic market with increasing technology adoption within the
government sector and the small and medium business (SMB)
sector.

SOCIAL
The social factors affecting ITindustry ranges from employee right,
language barriers (English), race nationality of company orother
issues.
Potential employment opportunity for women in this organized
sector.
EDUCATION : Large number of universities and institutes.
LABOUR : Indian labour is not only cheap but is technically skilled
too.
CAREER : In the year 2006-07, theindustry hired approximately 3,
80,000 people. Out ofthese, the ITeS sector hired 2, 00,000 people
and the rest were taken by IT sector.

TECHNICAL
Government Research spending : Government IT spending in
India reached $6.4 billion US Dollars (USD) in 2013, a 7 percent
increase over 2012, according to Gartner, Inc
New Inventions and Development :
National optical fiber network (NOFN)
National Knowledge Network
ADHAR ( Unique Identification Authority of India)
eSeva
Proposed global learning center of the TCS.
(Changes in) Internet : Indian Internet Companies with Innovative
business model
Naukri.com
Flipkart
Redbus

TECHNICAL
(Changes in ) Mobile Technology : The exploding mobile
technology includes telecommuting, working from partner or
client locations, from a plane or train or simply moving more
fluidly around the company's own premise through the use of a
wireless local-area network.

PORTERS 5 FORCE
MODEL

THREAT OF MOBILITY
Since in IT software and services, the players enjoy significant
economies of scale and the switching costs are also very high,
therefore, the entry barriers for the IT Software and Services
are very high. Therefore, threat of new entrants is low in the
case of IT software and services.

In contrast to this, in ITeS- BPO, lower economies of scale are

reached and the switching cost is also very low. This leads to very
low entry barriers. There is high threat of new entrants in the
ITeS- BPO sector .

SUPPLIER POWER
Knowledge Professionals have a high bargaining power in
the IT Software and Services sectors because they demand
high level of skill and expertise to render their services. In the
ITeS- BPO sector, the level of skill and expertise required is low,
therefore, they have a lower bargaining power on the industry.
For the IT industry to function properly, proper hardware
infrastructure is required. Therefore, the bargaining power of
hardware manufacturer grows. This is supported by the fact
that hardware manufacturing industry is very concentrated (HP,
IBM, Dell etc.)

BUYER POWER
The switching costs in case of IT Software and Services, is very
high, the Bargaining power of the buyers becomes low.
But just opposite to this, in case of ITeS- BPO sector, the
switching cost is relatively very low, which makes the
bargaining power of the buyer very high.

SUBSTITUTES
IT industry is driven by technology, which itself is ever evolving,
therefore, there is a high risk of substitutes for the industry.

RIVALRY
With the increase in rivalry, the players resort to a number of
strategies being followed by the players to acquire new customers
or to retain older ones. Earlier players used to provide
customized services to attract customers, but now this practice,
also fails to attract them. Therefore, they resorted to providing end
to end solutions, niche services etc.

SWOT ANALYSIS

STRENGTH
Early positioning as a high end differentiated player.
Diversified revenues across regions, services and verticals.
Infosys also gets a higher share of revenues from
Consulting which has helped it maintain its margins.
Infosys has better distribution of verticals and it has
started focusing on healthcare which is an emerging sector.

STRENGTH

STRENGTH

STRENGTH
Identification of seven game-changing trends
1.Digital Consumers
2.Emerging Economies
3.Healthcare Economy
4.New Commerce
5.Pervasive Computing
6.Smarter Organizations
7.Sustainable Tomorrow
Products, platforms and solutions was set up as a dedicated
organization to focus on innovation-led business growth for
our clients.
Infosys manages the portfolio of software assets and offerings

STRENGTH

WEAKNESS
Large proportion of revenues from developed markets,
especially the US, that are facing economic difficulties.
Lagging peers in making strategic, 'game-changing'
acquisitions
Consulting business has not delivered the results as
expected.
Infosys' strategy of charging a premium for its services
(as compared to its peers) is putting strain on its
clients who are pressured to cut costs in the backdrop
of a slowdown. ( e.g. Infosys doesnt favor reverse auction
processes )
Infosys has always focused on the high margin business.

WEAKNESS

WEAKNESS

WEAKNESS

WEAKNESS

OPPORTUNITIES
Best positioned to replicate the Accenture model from
offshore
A game-changing acquisition in a new geography could
help the company raise its profile.
Profit Margins among the best in the industry which
offers cushion for further growth.
Geographical expansion into relatively untapped regions.
Potential for strong revenue growth from home market in India.

OPPORTUNITIES

THREATS
Management transition from founders to professionals
will bring uncertainty.
Vulnerable to global economic climate, with demand from
developed market financial institutions still a key part of its
revenue mix.

THREATS

THREATS

COMPETITOR ANALYSIS
TATA Consultancy Services

COMPETITOR ANALYSIS
TATA Consultancy Services

COMPETITOR ANALYSIS
TATA Consultancy Services

COMPETITOR ANALYSIS
TATA Consultancy Services

COMPETITOR ANALYSIS
TATA Consultancy Services - Strategies
Strategy for long term growth Customer Centricity For
repeat business
Full Service Capability Present in all segments and
geographies
Global Network Delivery Model Facilitate cost arbitrage
across geographies
Strategic Acquisitions For quick growth across segments
and geographies
Non Linear Business Models Strategies to ensure growth
without increasing the head count.

COMPETITOR ANALYSIS
Cognizant Technology Solutions

COMPETITOR ANALYSIS
Cognizant Technology Solutions

COMPETITOR ANALYSIS
Cognizant Technology Solutions

COMPETITOR ANALYSIS
Cognizant Technology Solutions

COMPETITOR ANALYSIS
Cognizant Technology Solutions
Closer to the clients Spends heavily on sales and marketing .
Lobbying Spent $1.95 M for employees ( Wipro - $.29 M, Infosys
< $5000 )

Two in a box Strategy A relationship management team and

deep industry expertise are assigned to every client.

Consulting Practice - Helped increase its mindshare with clients,

thereby driving market share, and also win and execute large-scale
transformation deals.
Investment in SMAC (Social, mobile, analytics and cloud) Delivering SMAC stack related work for over 60 per cent of the top

RECOMMENDATIONS
Improvement in utilization rates
Training in diverse skills for the high performers i.e. consulting
+ programming and will require higher training costs.
Prevention of attrition among this group of high performers
( and or middle management ) and utilizing them to maximum
effect.
Combination of fixed price contracts and time and material
contracts
To grow revenues by attracting customers
Inorganic growth through M&A
For gaining expertise and gaining entry into the European and
Emerging Markets.

RECOMMENDATIONS
Ability to manage the 6 key risks will be important for growth
1.Exchange Rate Risk Using Derivatives and other hedging
instruments
2.Political Risk Increase use of lobbying as an instrument to
prevent such risks
3.Geographical Risk - Pushing for growth in new geographies like
Japan & Middle East
4.Competition Acquisition of companies in competing countries
like China
5.Vertical Increase presence in verticals with expectations of high
growth e.g. healthcare
6.Service Line Risk Have a presence in both high margin areas