BRIEF INTRODUCTION OF A COMPANY

Infosys Limited (formerly Infosys Technologies Limited) is an Indian multinational

corporation that provides business consulting, information
technology and outsourcing services. It has its headquarters in Bengaluru, Karnataka, India.
Infosys is the second-largest Indian IT company by 2017 revenues and 596th largest public
company in the world in terms of revenue.
Infosys 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 leveraging our domain and business expertise and
strategic alliances with leading technology providers.

Infosys' offerings span business and technology consulting, application services, systems
integration, product engineering, custom software development, maintenance, re-engineering,
independent testing 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 outsourcing. 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 acceptable 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 client
relationships. Over 97% of our revenues come from existing customers.

In an increasingly globalised world, significant complexity and uncertainty is getting 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, contributing substantially to increases in the GDP, urban
employment and exports, to achieve the vision of a "young and resilient" India. During the
year, the sector maintained its double digit growth rate and was a net hirer.

Vision

"To be a globally respected corporation that provides best-of-breed business solutions,

leveraging technology, delivered by best in class people."

Mission

"To achieve our objectives in an environment of fairness, honesty, and courtesy towards our
clients, employees, vendors and society at large."
MACROLEVEL EXTERNAL ENVIRONMENT ANALYSIS

One method used to analyze trends in the macro environment is the PEST
(political, economic, social, technological) analysis. Some variations of the PEST
analysis method add additional categories for the legal and ecological
environments, and may be referred to by other acronyms such as STEEP or PESTEL.
Bounsoussan and Fleisher (2012) recommend the following process: begin by
defining the environmental boundaries in terms of: breadth (topical coverage),
depth (level of detail), and forecasting horizon (short, medium, or long timeframe)
based on the organization's current strategic plan, geographic reach, and product
or service scope.

1. Identify key events and trends within each segment. How have they
involved? What is the rate of change? How do they impact the organization
(negative, positive, or neutral)? Provide evidence.
2. Understand how the various trends relate to each other.
3. Identify the trends likely to have the greatest impact on the organization.
4. Forecast the future direction of these trends, including multiple projections
or scenarios.
5. Derive implications, focusing on structural forces within the industry which
will affect future strategies.

The following sources provide additional information on environmental scanning

and a variety of analytical tools including the PEST Analysis technique.

Pestle of Infosys:
Political:

1. Political stability: Indian political structure is considered stable enough expect the fact
that there is a fear of "hung parliament" (no clear majority).
2. 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.
3. Government owned companies and PSUs have decided to give more IT projects to
Indian IT companies.
4. Terrorist attack or war.

Economic:

1. Global IT spending (demand)

2. Domestic IT Spending (Demand): Domestic market to grow by 20% and reach approx
USD 20 billion in 2008-09 - NASSCOM
3. Currency Fluctuation
4. Real Estate Prices: Decline in real estate prices has resulted reducing the rental
expenditures.
5. Attrition: Due to recession, the layoffs and job-cuts have resulted in low attrition rate.
6. Economic Attractiveness:
Due to cost advantage and other factors

Social:

1. Language spoken: English is widely spoken language in India, English medium being
the most accepted medium of education. Thus, India boasts of large English speaking
population.
2. Education: A number of technical institutes and universities over the country offer IT
education.
3. Working age population

Technological:

1. Telephony:

a. India has the world's lowest call rates (1-2 US cents).

b. Expected to have total subscriber base of about 500 million by 2010.
c. ARPU for GSM is USD 6.6 per month.
d. India has the second largest telephone network after china.
e. Teledensity - 19.86 %
f. Enterprise telephone services, 3G, Wi-max and VPN are poised to grow

MICROLEVEL EXTERNAL ENVIRONMENT ANALYSIS

 Industry Analysis(Porter Five Force Analysis)

1) RIVALRY AMONG FIRMS:

The IT Industry landscape is characterised by intense completion for conventional IT

services: Application Development & Maintenance, IT Infrastructure Management
Services, Network Management Services, Data-center Services etc. leading therefore
to commoditization. There are several firms in the market offering similar services
and it is difficult to differentiate based on these service offerings. The existing
competition comes from both domestic players and international ones.

Infosys experience intense competition in traditional services and see a rapidly-

changing marketplace with new competitors arising in new technologies who are
focused on agility, flexibility and innovation.

In future, Infosys expect intensified competition. They expect increased competition

from firms that strengthen their offshore presence in India or other low-cost locations
and firms that offer technology-based solutions to business problems and from firms
incumbent in market segments that they have recently entered.
 2) BARGAINING POWER OF CUSTOMERS:

For conventional IT services, bargaining power of the buyer is large and the
possibility of pressure on rates exists. The buyer, having worked with both with
international IT providers as well as Indian ones is largely the price setter and has
negated (to a large extent) the offshore advantages through mature procurement and
global delivery. The international IT firms too have negated the advantage enjoyed by
Indian IT companies through captive centres in India and globally. In this industry, in
case of conventional IT services, the buyer is king!

In case of non-conventional services, i.e. those that cater to emergent technologies

and technology trends (in Data Analytics or Enterprise Mobility for instance) there is
potential for differentiation and higher margins. Also, this is the case for non-
conventional, partnership-style engagements where both risk and rewards are higher.

3) BARGAINING POWER OF SUPPLIERS:

The bargaining power for suppliers is very low and since high-standardization exists,
there is little scope of suppliers having any clout.

Software and computing technology are transforming business in every industry

around the world in a very profound and fundamental way. The continuous reduction
in the unit cost of hardware, the explosion of network bandwidth, advance software
technologies and technology-enabled services are fuelling the rapid digitization of
business process and information. Traditional business models are being disrupted in
every industry with digital and software-based business models.

The suppliers consist of IT Infrastructure providers (Servers, computers etc.),

Recruitment firms, Office Space Suppliers etc.

4) THREAT OF NEW ENTRANTS:

In context of the highly commoditized IT services, there is little threat of new

entrants. That said, the Industry is also characterised by high people dependence and
therefore can see veterans detach from existing companies to invest in new ventures.

The newer technologies allow the possibility of new niche players that are not
dependant on size or experience constraints.

MNCs are ramping up capacity and employee strength.

 5) AVAILABILITY OF SUBSTITUTES:

There are no substantial substitutes to IT services apart from Internal IT departments,

which have lost clout over the years and are ever thinner in numbers and significance.
One argument for internal IT is retaining control over pertinent aspects of business
but the argument against would be since the main business of the company is not IT
services, it should outsource as much as possible and focus on future growth in core
areas. Over time there has been a steady decrease in in-house IT development and
maintenance with more and more being outsourced and the internal IT staff has
settled into a supervisory (program management) role.

This has been a mixed bag for newer services as well since internal specialization is
very low, most of the work is outsourced. For critical areas, governance has been
retained in-house and this trend seems to have found favour with most large
enterprises worldwide.

Broadly speaking the market for conventional services is highly commoditised with
potential for differentiation concentrated around niche expertise in new technologies
and trends (SMAC + Internet of Things) and around non-conventional engagements
(revenue/profit share, risk-reward models). It is unlikely that the market for
conventional services will vanish overnight but the future promises to hold a highly
modified view. Application development is fast morphing into app-development and a
large part of revenues continue to be drawn from conventional services as the need to
adapt and incorporate new technologies and engagement models looms over an IT
industry that needs to reform and re-invent itself rapidly.

 Market Analysis(David A.Aaker Seven dimensions)

Market analysis helps us to determine the market situation in terms of its

attractiveness or otherwise. Organizations weigh their strengths and weaknesses
relating it to the opportunities and threats, to understand their capability to respond to
the market changes, based on such analysis.

Systematic market analysis benefits an organization in terms of new product

development, tracking changing demand pattern of customers. Also this helps in
demand forecasting and accordingly scaling up and down the activities of the
organizations.
David A. Aaker outlined the following dimensions of a market analysis:

i. Market size (current and future)

ii. Market growth rate

iii. Market profitability

iv. Industry cost structure

v. Distribution channels

vi. Market trends

vii. Key success factors

i. Market Size:
Market size is determined based on the current and future sales potentiality of an
organization. It is determined by browsing through the information from various
sources. A tentative list of such sources can be enumerated as follows:

i. Government data

ii. Trade associations

iii. Financial data from major players

iv. Customer surveys

ii. Market Growth Rate:

Extrapolating the past data into the future, market growth rate can be ascertained in
an organization. This is, however, very crude form of estimation of market growth
rate, as it cannot account for the fluctuations or any variation in the growth pattern
that may occur in future time period for change in any factor or factors, which may
influence the market growth.

There are many market growth drivers, like, demographic pattern, growth of sales in
complementary products, income level, changing lifestyle of users of products and
services, changing customers’ taste and preferences, etc.
For a better estimation of market growth pattern, often it is recommended to use the
product diffusion curve. Product diffusion curve is developed based on the study of
characteristics of adoption rate of similar products or services in the past. This
information ultimately helps us to reach the level of maturity.

We have already indicated the growth drivers. Some of the indicators of decline
phase in a product diffusion curve are price competition, decline in brand loyalty,
availability of new substitutes, market saturation, etc.

iii. Market Profitability:

Profitability levels in any organization, to a great extent, are market dependent.
Organizations may have different levels of profitability in different market situation,
which depends on number of factors. Michael Porter, through his five competitive
forces, explained the way to measure the market situation. This framework of
competitive forces, to a large extent influences the market profitability. Let us now
understand such competitive forces.

i. Bargaining power of buyers

ii. Bargaining power of suppliers

iii. Entry barriers

iv. Availability of substitutes

v. Rivalry

Such competitive forces exert pressure on market profitability. To take an example,

with a high degree of rivalry, i.e., availability of more competitors in the market, price
competition increases and market profitability declines. In the reverse case,
however, market profitability increases.

iv. Industry Cost Structure:

Industry cost structure is an important determinant of organizational success or
failure. Here, again we can refer Porter’s value-chain concept, which helps an
organization to add value to products and services, without, however altering the
cost. At times, it can even reduce the costs while increasing the customers’
satisfaction.
v. Distribution Channels:
Distribution channels facilitate in reaching the products to the end-users on real time
basis. Some of the distributions systems, which organizations need to consider while
doing market analysis are as under:

i. Understanding of the Existing Distribution Channels: This helps us to understand

how direct the products reach to the customers.

ii. Trends and Emerging Channels: This helps us to asses to what extent new
channels can enhance the competitive advantage for .the organization.

iii. Power Structure of Channels: Understanding the power structure of channels is

very important aspect of market analysis. Organizations with high brand equity can
weaken the channels power, as they dictate their terms. Similarly in the reverse
case, the channel partners enjoy the higher power.

vi. Market Trends:

Fluctuations in the market trends could be both an opportunity and threat for an
organization. Market trends may be industry specific or general. Industry-specific
market trends influence those organizations that falls under the same industry
category. General market trends, however, affect all organizations, irrespective of
their industry group. Such trends may be in terms of price sensitivity, nature of
demand or even regional trends.

vii. Key Success Factors:

Key success factors are those which help an organization to achieve its market
objectives. It also forms an important part of market analysis. Some of the key
success factors can be listed as under:

i. Accessibility to essential and unique resources

ii. Competence to reach economies of scale

iii. Accessibility to channels of distribution

iv. Accessibility to the state-of-the-art technology