Infosys Technologies Ltd: SWOT and PESTLE

Infosys Technologies Ltd SWOT and ruminatorINFORMATION TECHNOLOGYWe are using the term information technology or IT to refer to an entire industry. In actuality, information technology is the use of computers and software to manage information. In some companies, this is referred to as Management development Services (MIS) or simply as Information Services (IS). The information technology department of a abundant union would be responsible for storing information, protecting information, processing the information, transmitting the information as necessary, and after(prenominal)ward retrieving information as necessary.History of Information applied scienceIn relative terms, it wasnt long ago that the Information Technology department might have consisted of a single Computer Operator, who might be storing data on magnetic tape, and then putting it in a box down in the cellar somewhere. The history of information technology is fascinating These Information Technology resources for information on everything from the history of IT to electronics inventions and til now the top 10 IT bugs.Modern Information Technology DepartmentsIn order to perform the complex functions required of information technology departments today, the modern Information Technology Department would use computers, servers, database management systems, and cryptography. The department would be made up of several System Administrators, Database Administrators and at least one Information Technology Manager.In India, the software blare started somewhere in the easy 1990s. Most of the Indian software companies at that moment offered only limited software services such as the banking and the engineering software. The intersection pointion line software boom started with the emergence of year2000 problem, when a large number of good personnel were required to fulfill the mammoth database-correction demand in order to cope up with the approach of the bracing millennium.The profile of the Indian IT Services has been undergoing a change in the last few historic period, parti whollyy as it moves up the value chain and partly as a response to the market dynamics. Ten years ago, most US companies would non even consider outsourcing some of their IT projects to outside vendors. Now, ten years later, a vast majority of US companies use the professional services of Indian Software engineers in some manner, by large, medium or petty companies or through individuals recruited directly.The market rival is forcing organizations to cut down on be of products. The professional IT services on the other hand are sightly increasingly expensive. The offshore software development poser is today where onsite professional services were ten years ago. at that place is a game chance (almost a mathematical certainty), that in less than ten years, the vast majority of IT services (software development being just one of them) from developed countries, will be, one, outsourced and two, outsourced to an offshore vendor. notwithstanding the international economic slowdown, the Indian IT software and services industry is maintaining a steady pace of ontogenesis. Software development activity is not confined to a few cities in India. Software development centers, such as Bangalore, Hyderabad, Mumbai, Pune, Chennai, Calcutta, Delhi, Noida, Gurgaon, Vadodara, Bhubaneswar, Ahmadabad, Goa, Chandigarh, and Trivandrum are all developing quickly. All of these places have state of the art software facilities and the armorial bearing of a large number of overseas vendors. Indias most prized resource is its readily available expert work force. India has the turn largest English-speaking scientific professionals in the world, second only to the U.S. It is estimated that India has over 4 million technical workers, over 1,832 educational institutions and polytechnics, which train more than than 67,785 computer software professionals every year. The enormous base of skilled manpower is a major draw for global customers. India tins IT services at one-tenth the price. No wonder more and more companies are basing their operations in India.The industry is in an expansion mode right now, with dozens of new offshore IT services vendors emerging every day, the industry has a high hazard of being subjected to the 8020 rule in not too distant a future. In perhaps another ten years, 80 part of all outsourced offshore development work will be done by 20 percent of all vendors, a small number of high qualities, trusted vendors. Only a few select countries and only the most professional companies in those countries will emerge as winners. India will definitely be the country of excerpt for offshore software development. It has the potential to become and remain the country of choice for all software developments and IT enabled services, second only to the USA. The third choice could be far distant.India is among the three countries that have built super computers on their own. The other two are USA and Japan. India is among six countries that launch satellites and do so even for Germany and Belgium. Indias INSAT is among the worlds largest house servant satellite communication systems. India has the third largest telecommunications network among the emerging economies and it is among the top ten networks of the world.To become a global leader in the IT industry and proceed that position, India necessitate to constantly keep moving up the value chain, focusing on finished products and solvings, rather than purely on skill mints and resumes. It too needs to be able to package its services as products, rather than offering them as raw material. It needs to be able to recognize and build up on its abilitys and work on weaknesses.Another extension of the IT industry is the ITES (Information Technology Enabled Services) which is a sector dependent on IT sector.Information technology consulting (IT consulting or rail line and tech nology services) is a field that focuses on advising line of descentes on how best to use information technology to meet their byplay objectives. In addition to providing advice, IT consultancies often implement, deploy, and spread IT systems on businesses behalf.The PC industry is one of the strangest in the world. There is probably no other type of product that is so techni remembery sophisticated, sells for so some(prenominal) money, and yet is sold by so many companies for so little profit. The severe competition in the industry is the one reason why so many problems are encountered by those who deal with PC vendors. maculation I consider there to be absolutely no excuse for a company not treating its customers fairly, at the same time I think customers should have some idea of what vendors are up against in this demanding marketplace.PESTLE ANALYSISThere are many factors in the big-environment that will effect the decisions of the managers of any organization. Tax changes , new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To swear out analyze these factors, managers evoke categorize them using the PESTLE model.PESTLE stands for Political, Economical, Social, Technical, Legislative and Environmental. It is a st calculategic planning technique that provides a utile framework for analyzing the environmental pressures on a team or an organization. It describes a framework of macro environmental factors used in the environmental scanning particle of strategic management. It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. PESTLE factors play an important role in the value creation opportunities of a strategy. However they are usually outside the control of the corporation and must ordinarily be considered as either threats or opportunities.Kotler (1998) claimed that PESTLE analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PESTLE are a framework for reviewing a situation, and can in addition to SWOT and Porters Five Forces models, be applied by companies to review strategic directions, including marketing proposition.(P)olitical factorsThese refer to government policies such as the degree of intervention in the thrift. What goods and services does a government want to provide? To what extent does it believe in subsidizing firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system, Government rules and regulations can also affect a business heavily. Rules and regulations such as environmental regulations, industry specific regulations, competitive regulations, consumer protection and various kinds of employment laws.(E)conomical factorsThese take on interest rates, revenue enhancement changes, economic growth, inflation and exchange rates, governments spending levels, unemployment, job growth, tariffs, consumer confidence index and import or export rations. Economic changes can have a major impact on a firms behavior.Higher interest rates whitethorn deter investment because it costs more to borrow.A strong currency may exact exporting more difficult because it may raise the price in terms of alien currencyInflation may provoke high wage demands from employees and raise costsHigher national income growth may boost demand for a firms products(S)ocial factorsThese often look at the cultural aspects and include health consciousness, population growth rate, demographics (age, gender ,race, distribution), career attitudes and emphasis on safety , lifestyle changes, population shifts, education trends, fads, diversity, immigration/emigration, housing trends, fashion, attitudes to work, leisure activities, occupations and earning capacity.Changes in social trends can impact on the demand for a firms products and the availability and willingness of individuals to work. Today the aging of population has become a huge problem. This has extendd the costs for firms who are committed to pension payments for their employees because their staff is living longer. It also means some firms have started to recruit older employees to tap into this growing labour pool. The ageing population also has impact on demand for example, demand for sheltered accommodation and medicines have increased whereas demand for toys is falling.(T)echnological factorsTechnological factors include ecological and environmental aspects and can dete rmine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors look at elements such as RD activity, automation, technology incentives and the rate of technological change. New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar tag and computer aided designing are all improvements to the way we do business as a result of better technology. Technology can constrict costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products.(L)egal factorsThese are related to the legal environment in which firms wreak. In novel years in UK there have been many significant legal changes that have affected organizations behavior. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater sine qua nons for firms to recycle are examples of relatively recent laws that affect an organizations actions. Legal changes can affect a firms costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the equivalentlihood of customers buying the good or using the service).(E)nvironmental factorsEnvironmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is nice a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and p rocesses is affecting demand patterns and creating business opportunities.IntroductionInfosys Technologies Ltd. (NASDAQ INFY) was started in 1981 by seven people with US$ 250. Today, we are a global leader in the next generation of IT and consulting with revenues of over US$ 4 billion. Infosys defines designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. Infosys also provides a complete range of services by leverage our domain and business expertise and strategic alliances with starring(p) technology providers.Infosys offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent examen and validation services, IT infrastructure services and business process outsourcing Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore o utsourcing. The GDM is based on the principle of taking work to the location where the best talent is available, where it makes the best economic sense, with the least amount of bankable risk. Infosys has a global footprint with over 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan.Infosys has over 103,000 employees. Infosys takes pride in building strategic long-term knob relationships. Over 97% of our revenues come from existing customers.In an increasingly globalised world, significant complexity and uncertainty is directting attached to the unprecedented economic crisis. The Indian economy has also been impacted by the recessionary trends, with a slowdown in GDP growth to seven per cent. The focus and exponential growth in the domestic market has partially offset this fall and insulated the country, resulting in net overall momentum. The IT-BPO industry in India has today become a growth engine for the economy , bestow substantially to increases in the GDP, urban employment and exports, to come upon the vision of a young and resilient India. During the year, the sector maintained its double digit growth rate and was a net hirer. This growth has been fueled by increasing diversification in the geographic base and industry verticals, and adaptation in the service offerings portfolio. patch the effects of the economic crisis are expected to linger in the near term future, the Indian IT-BPO industry has displayed resilience and tenacity in countering the unpredictable conditions and reiterating the viability of Indias total value proposition. Consequently, India has retained its leadership position in the global sourcing market. The Indian IT-BPO industry is estimated to achieve revenues of USD 71.7 billion in FY2009, with the IT software and services industry invoice for USD 60 billion of revenues. During this period, direct employment is expected to reach nearly 2.23 million, an additi on of 226,000 employees, while indirect job creation is estimated to touch 8 million. As a proportion of national GDP, the sector revenues have grown from 1.2 per cent in FY1998 to an estimated 5.8 per cent in FY2009. Software and services exports (including BPO) are expected to key out for over 99 per cent of total exports, employing over 1.76 million employees. While the current mood is that of cautious optimism, the industry is expected to witness sustainable growth over a two-year horizon, going past its USD 60 billion export target in FY2011. While the industry has significant headroom for growth, competition is increasing, with a number of countries creating enabling business environments aimed at replicating Indias success in the IT-BPO industry. Hence, concentrated efforts are required by all stakeholders to address the current challenges, to escort that India realizes its potential, and maintains its leadership position.VisionTo be a globally respected corporation that pr ovides best-of-breed business solutions, leveraging technology, delivered by best in class people.MissionTo achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large.STP Analysis SegmentationGeographical regions US, India, Australia, China, UKPsychographics MNC, BFSI, Hospitality SectorDemographic Population or Employee strength of consumer company +5000TargetingInfosys Technologies Ltd, which offers its core banking solution under the brand Finacle, is targeting regional rural banks to achieve higher growth. There are over 90 rural banks in India they have come up with a solution called The Finacle Bank in a Box for this segment. The expenditure that each rural bank would have to make would depend on its existing level of automation. IT service providers would benefit a great deal if more people from rural areas were included in the banking services, and Infosys has. The solution will be deployed by a t hird party who will do the banking transaction on behalf of different banks as the model is expected to be cost-effectiveInfosys BPO is targeting the hospitality industry for its outsources processes offering. The company has formed a strategic alliance with New York-based hospitality consultancy major HVS International The alliance will help Infosys BPO (formerly called Progeon) to target hotels and other customers in the hospitality industry. HVS is a well-known consulting firm in the hospitality segment.PositioningInfosys is seeking to move away from its image as a cheap Indian offshore service factory to that of a global business technology (BT) leader. The company is investing in measures to enhance its visibility and footprint across a wider group of client stakeholders and markets. The aim is to position Infosys as a prototype for successful companies in a globalized market environment. While Infosys can justifiably point to its ongoing business growth as a major success stor y, its corporate positioning suffers from inconsistencies in its underlying messaging.Furthermore, its product positioning continues to mainly focus on technology and cost-related benefits, which represents a disconnect with Infosys corporate ambitions.Leadership StyleInfosys believes that leadership is one of the most essential ingredients of organisational success which is provided by its Chairman, N R Narayanmurthy. Leadership is based on high business vision and predominantly supportive styles. There is emphasis on developing leadership qualities among employees. For this purpose, it has established Infosys Leadership Institute. Top management emphasizes on open door policy, continuous sharing of information, takes inputs from employees in decision making, and builds personal rapport with employees. As we have seen over last few years, we have seen smooth transition from N R Narayanmurthy to Nandan Nilakeni and from Nandan Nilakeni to Kris Gopalkrishnan without any adverse effe cts on the company outlook and each one has proved to be an able leader taking company forward. Staff (Human Resources) Since Infosys is in knowledge-based industry, it focuses on the quality of the charitable resources. Out of total personnel, about 90 per cent are engineers. At the entry level, it emphasizes on selecting candidates who find the companys meritocratic culture satisfying, superior academic records, technical skills, and high level of learn ability. The company emphasizes on training and development of its employees on continuous basis and spends about 2.65 per cent of its revenues on up whole step of employees? skills, and around 50% as employee costs. In spite of thousands of people joining every month, Infosys has been able to maintain its training standard mostly due to its highly matured processes capabilities and investment in infrastructure.SWOT Analysis(S)TRENGTHSLeadership in sophisticated solutions that enable clients to optimize the efficiency of their bu siness.Proven Global delivery modelCommitment to superior quality and process executionStrong Brand and Long-Standing Client RelationshipsAbility to scale Innovation and leadership.(W)EAKNESSESExcessive dependence on US for revenues, 67 % of revenues from USA.Weak player in domestic market. Only 1 % of revenues from India low as compared to peers.Low R D spending as compared to global IT companies only 1.3 % of total revenues.Low expertise in high end services like Consultancy and KPO.(O)PPORTUNITIESDomestic market set to grow by 20%. smashing into new geographies Europe, Middle East etc.Infosys is cash rich (Around US $ 1 Billion).Acquiring companies to increase expertise in Consultancy, KPO and package implementation capabilities opening night offices and development centers in cost advantage countries such as those in Latin America and Eastern Europe.(T)HREATSGlobal economic slowdown may continue for several years hence low IT spending globally.US Govt. against outsourcing .Shrinking margins due to rising wage inflation, Rupee-dollar movementaffects revenue and hence margins.Increased competition from foreign firms like Accenture, IBM etc.Increased competition from low-wage countries like China, Indonesia etc.StrategyInfosys has adopted a client-focused strategy to achieve growth. Rather than focusing on many small organizations, it focuses on limited number of large organizations throughout world. In order to cater its clients, the company emphasizes on custom-built softwares. Another differentiating factor for Infosys is that it commands pension margins. Company does not negotiate over margins beyond a certain limit and some time prefers to walk-out rather than compromise on quality for low-priced contracts. This has helped in building an image for quality driven model rather than cost-differentiating model. Increase business from existing and new clients Infosys has focused on expanding the nature and cranial orbit of engagements for the existi ng clients by increasing the size and number of projects and extending the breadth of its service offerings. For new clients, it provides value added solutions by leveraging its in-depth industry expertise. It increases its recurring business with clients by providing software re-engineering, maintenance, infrastructure management and business process management services which are long-term in nature and require frequent client contact. Expand geographically Infosys plans to establish new sales and marketing offices, representative offices and global development centers to expand its geographical reach. It plans to increase presence in China through Infosys China, in the Czech Republic and Eastern Europe directly and through Infosys BPO, in Australia through Infosys Australia and in Latin America, through Infosys Mexico.Enhance solution set Infosys focuses on emerging trends, new technologies, specific industries and pervasive business issues that confront our clientsPestle of Infos ys(P)oliticalPolitical stability Indian political structure is considered stable enough expect the fact that there is a fear of hung parliament (no clear majority).U.S. government has declared that U.S companies that outsource IT work to other locations other than U.S. will not get tax benefit.Government owned companies and PSUs have decided to give more IT projects to Indian IT companies.Terrorist attack or war.(E)conomicGlobal IT spending (demand)Domestic IT spend (Demand) Domestic market to grow by 20% and reach approx USD 20 billion in 2008-09 NASSCOMCurrency FluctuationReal Estate Prices Decline in real estate prices has resulted reducing the rental expenditures.Attrition Due to recession, the layoffs and job-cuts have resulted in low attrition rate.Economic AttractivenessDue to cost advantage and other factors(So)cialLanguage spoken English is widely spoken language in India, English medium being the most accepted medium of education. Thus, India boasts of large English spea king population.Education A number of technical institutes and universities over the country offer IT education.Working age population(T)echnologicalTelephonyIndia has the worlds lowest call rates (1-2 US cents).Expected to have total subscriber base of about 500 million by 2010.ARPU for GSM is USD 6.6 per month.India has the second largest telephone network after china.Teledensity 19.86 %Enterprise telephone services, 3G, Wi-max and VPN are poised to grow.Internet BackboneDue to IT revolution in 90s India is well connected with undersea optical cables.New IT TechnologiesTechnologies like SOA, web 2.0, High definition content, grid computing, and innovation in low cost technologies is presenting new challenges opportunities for Indian IT industry.Internet BackboneDue to IT revolution of 90s, Indian cities and India is well connected with undersea optical cables.New IT technologiesTechnologies like SOA, Web 2.0, High-definition content, grid computing, etc and innovation in low cos t technologies is presenting new challenges and opportunities for Indian IT industry.(L)egalIT SEZ requirement IT companies can set up SEZ with minimum area of 10 hectares and enjoy a host of tax benefits and fiscal benefits.Contract / Bond requirements Huge debates contact the bonds under which the employees are required to work, which is not legally required.IT Act Indian government is strengthening the IT act, 2000 to provide a sound legal environment for companies to operate esp. related to security of data in transmission and storage, etc.Companies operating in Software Technology Park (STPI) scheme will continue to get tax-benefit till 2010.(E)nvironmentalEnergy Efficient processes and equipmentsCompanies are focusing on reducing the carbon footprints, energy utilization, water consumption, etcBIBILIOGRAPHYhttp//www.businessballs.com/pestanalysisfreetemplate.htmhttp//www.alacrastore.com/storecontent/datamonitor-premium-profiles/http//jobsearchtech.about.com/od/careersintechno logy/p/ITDefinition.htmhttp//www.wikipedia.com