Motivation and Learning Objectives of the Case. The $ 50$ 50 Billion IT-BPO industry is today the growth engine for the Indian economy. A majority of the $50 Billion is from outsourced work from developed market segments, mainly US, followed by European countries. The global IT industry is highly competitive and Indian firms are facing stiff competition from countries like China, Mexico, Brazil a>and Thailand. To be able to sustain its growth the Indian IT companies need to diversify and take new market segments and move to high value add segments where Indian companies aren't viewed as strong contenders.
It is against this rear drop that we analyze the restructuring in the second greatest IT Company in the united states, Infosys Technologies Small. In Oct 2007, Infosys Systems Limited had declared the reorganization of its business units and broadening of its mature management team to predict changes in the global IT Industry and differentiate vis- -vis its challengers. The changes were brought about to have an increased concentrate on growth market segments including India and on "R&D and commercialization of IP" and also to consolidate its consulting skills
We were holding important changes at the organization level and merit an in-depth evaluation which would permit us to understand how a top IT company works in terms of sensing new market opportunities. This review would allow us to comprehend as to what sort of company can look at its talents and weakness and realign itself to be able to leverage its strengths to work with the opportunities available and negate the risks it is facing.
IT Industry Development and Current Scenario
Changing financial and business conditions, rapid technological innovation, proliferation of the internet and globalization were creating an increasingly competitive market environment that was driving corporations to change the manner in which they operate.
The role of technology has developed from supporting corporations to changing them. The ability to design, develop, put into action and keep maintaining advanced technology platforms and solutions to solve business and consumer needs has become a competitive advantages and important for firms worldwide.
Outsourcing the development, management and ongoing maintenance of technology platforms and solutions has become progressively more important. Companies were significantly turning to just offshore technology companies to meet their dependence on high quality, cost competitive technology solutions. Because of this, offshore technology companies have grown to be critical in the industry and continue to grow in acceptance and elegance.
The Indian IT companies offered advantages that others were endeavoring to but weren't able to till this aspect. These advantages include
High quality delivery
Significant cost benefits
Abundant skilled resources
In addition to the above factors, the government's beneficial tax norms in various areas, special facilities like SEZ etc make India economically the most attractive country for this set alongside the other possible areas. (Exhibit 1)
Success Factors
Effectively integrate onsite and just offshore execution capabilities to deliver seamless, scalable services
Increase depth and breadth of service offerings to provide a one-stop solution within an environment where companies are increasingly lowering the number of technology services vendors are using
Develop and maintain knowledge of a wide range of existing and rising technologies
Demonstrate significant area knowledge to understand business functions and requirements
Leverage in-house industry experience to modify business alternatives for clients
Attract and hold on to high quality technology, specialists, infrastructure (or facilities) throughout the business cycle.
About Infosys Systems Ltd
Infosys Technology Ltd. (NASDAQ: INFY) was were only available in 1981 by seven people with US$ 250. Today, we have been a global innovator in the "next era" from it and consulting with earnings of over US$ 4. 5 billion.
Infosys defines designs and gives technology-enabled business alternatives that help Global 2000 companies gain in a set World. Infosys also offers a complete range of services by leveraging our site and business experience and proper alliances with leading technology providers.
Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive push in the industry leading to the rise of just offshore outsourcing. The GDM is dependant on the basic principle of taking work to the location where the best talent is offered, where it creates the best financial sense, with minimal amount of satisfactory risk.
Infosys has a global footprint with over 50 office buildings and development centers in India, China, Australia, the Czech Republic, Poland, the united kingdom, Canada and Japan. Infosys and its own subsidiaries have 105, 453 employees as on Sept 30, 2009
Corporate Level Strategies of Infosys
Analysis of Infosys Solutions Limited
Infosys Technologies Ltd analysis because of its talents, opportunities and dangers is really as below:
Organization Composition: Idea of IBU and its Success
Infosys is primarily a software program development and maintenance company. Software programmers were able to leverage previous experience most effectively if they concentrated using one industry. To attain these economies of experience, the principal organizational construct within Infosys was the industry business device (IBU). In the early years, an IBU might serve only 1 customer.
The company assigned new employees to an IBU and they tended to remain there for quite some time. Through several campaigns, a worker could reach the position of account administrator, generating responsibility for retaining associations with clients, guaranteeing client satisfaction, and providing additional work.
The composition effectively featured a big number of small company units, placed people sense empowered. Each IBU was effectively another company in itself and would consider it own expenses, income and employee settlement and benefits. This was an enormous success and was responsible for the phenomenal growth over time.
Drivers for Change
The pursuing section is based on the talk with Mr. Altaf Vohra, an Senior Administrator at Infosys:
Two main motorists for the change can be discovered:
The expansion opportunities available in the non-US, non- European countries Markets.
The need to improve the presence in the quality value add portion like Consulting
Reduced Concentrate on US Markets
It was clear that the united states markets weren't to be concentration area. Two major erasons were sited by him
The US market, an extremely open one for the reason that it is straightforward for different country players to enter the market. So the danger from the other growing countries like China, Mexico and Brazil were immense. So even though there were huge expansion opportunities in US, the business was seeking to expand into other marketplaces.
On the other hands the European and Southeast Asian marketplaces were closed markets in that they didn't allow outsiders easily. This was a natural admittance hurdle as well as huge opportunity in that when the marketplace was broken into it could be captured easily and there was a natural hurdle for others to not be able to enter into easily.
Changing Business Model
Over the years, Infosys BUSINESS DESIGN has evolved to suit the needs of the marketplace and it's been able to match up to the marketplace expectations and continue its phenomenal progress. However the company cannot continue with the existing model and needs to ensure that the near future business focus is on high value add services. These include SASS, Consulting.
1981
1996
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2008
Source: Infosys. com
Problems in Current Structure
The current structure possessed certain inherent downsides that were preventing the company from exploiting the new opportunities that shown themselves. Included in these are:
A shut down IBU structure which was not conducive for inter domain name expertise development that was necessary for talking to services.
Lack of experience in working with the European market segments. So the company was struggling to work out or close offers and so dropping was out to challengers.
No department to capture the growth opportunities in the home Indian market.
Lack of sufficiently large IP possession which was essential to be able to capture the markets in the Southeast Asia, as a result of insufficient shelling out for R&D. (Exhibit 6)
Restructuring in 2007
Having realized the problems with the current structure, Infosys restructured itself to help broaden its customer platform and strengthen its current profile through scale benefits. The new opportunities will leverage the talents of the next generation of leaders at Infosys.
Highlights of the Changes Made:
Business items realigned: Varieties 8 vertical Industry SECTIONS (IBUs) and 5 Horizontal SECTIONS (HBUs) that minimize across all the vertical devices as below:
Increased give attention to growth market segments: THE BRAND NEW Growth Machines (NGE) product has been made to increase business in Australia, China, Japan, Midsection East, Canada, South America and Latin America
Separate business device to focus on India
Increased give attention to R&D and commercialization of IP
Broaden Senior Management Team
The Finer Changes
Each of the 6 verticals from BCM to RETL got two different divisions which were determined by the suffix D or X to signify US and non US items respectively.
So BCMD and BCMX were now formed with BCMD looking after US market and BCMX looking at non-US market segments.
