Motivation and Learning Objectives of the Case. The $ 50 Billion IT-BPO industry is today the growing engine for the Indian economic system. A bulk of the $ 50 Billion is from outsourced work from developed markets, chiefly US, followed by Europe. The planetary IT industry is extremely competitory and Indian houses are confronting stiff competition from states like China, Mexico, Brazil a & gt ; and Thailand. To be able to prolong its growing the Indian IT houses need to diversify and capture new markets and travel to high value attention deficit disorder sections where Indian companies are non seen as strong rivals.
A It is against this back bead that we analyze the restructuring in the 2nd largest IT Company in the state, Infosys Technologies Limited. In October 2007, Infosys Technologies Limited had announced the reorganisation of its concern units and widening of its senior direction squad to expect alterations in the planetary IT Industry and distinguish vis-a-vis its rivals. The alterations were brought approximately to hold an increased focal point on growing markets including India and on “ R & A ; D and commercialisation of IP ” and to consolidate its confer withing accomplishments
A These were of import alterations at the organisation degree and deserve an in-depth analysis which would enable us to understand how a top IT company works in footings of feeling new market chances. This survey would let us to understand as to how a company is able to look at its ain strengths and failing and realine itself to be able to leverage its strengths to use the chances available and contradict the menaces it is confronting.
IT Industry Development and Current Scenario
Changing economic and concern conditions, rapid technological invention, proliferation of the cyberspace and globalisation were making an progressively competitory market environment that was driving corporations to transform the mode in which they operate.
The function of engineering has evolved from back uping corporations to transforming them. The ability to plan, develop, implement and maintain advanced engineering platforms and solutions to turn to concern and client demands has become a competitory advantage and a precedence for corporations worldwide.
Outsourcing the development, direction and on-going care of engineering platforms and solutions has become progressively of import. Companies were progressively turning to offshore engineering service suppliers to run into their demand for high quality, cost competitory engineering solutions. As a consequence, offshore engineering service suppliers have become critical in the industry and go on to turn in acknowledgment and edification.
The Indian IT companies offered advantages that others were seeking to but were non able to till this point. These advantages include
High quality bringing
Significant cost benefits
Abundant skilled resources
In add-on to the above factors, the authorities ‘s favourable revenue enhancement norms in assorted provinces, particular installations like SEZ etc make India financially the most attractive state for IT compared to the other possible finishs. ( Exhibit 1 )
Efficaciously integrate onsite and seaward executing capablenesss to present seamless, scalable services
Increase deepness and comprehensiveness of service offerings to supply a one-stop solution in an environment where corporations are progressively cut downing the figure of engineering services sellers are utilizing
Develop and maintain cognition of a wide scope of bing and emerging engineerings
Demonstrate important sphere cognition to understand concern procedures and demands
Leverage in-house industry expertness to custom-make concern solutions for clients
Attract and retain high quality engineering, professionals, substructure ( or installations ) throughout the concern rhythm.
About Infosys Technologies Ltd
Infosys Technologies Ltd. ( NASDAQ: INFY ) was started in 1981 by seven people with US $ 250. Today, we are a planetary leader in the “ following coevals ” of IT and confer withing with grosss of over US $ 4.5 billion.
Infosys defines designs and delivers technology-enabled concern solutions that help Global 2000 companies win in a Flat World. Infosys besides provides a complete scope of services by leveraging our sphere and concern expertness and strategic confederations with taking engineering suppliers.
Infosys pioneered the Global Delivery Model ( GDM ) , which emerged as a riotous force in the industry taking to the rise of offshore outsourcing. The GDM is based on the rule of taking work to the location where the best endowment is available, where it makes the best economic sense, with the least sum of acceptable hazard.
Infosys has a planetary footmark with over 50 offices and development centres in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan. Infosys and its subordinates have 105,453 employees as on September 30, 2009
Corporate Level Strategies of Infosys
Analysis of Infosys Technologies Limited
Infosys Technologies Ltd analysis for its strengths, chances and menaces is as below:
Organization Structure: Concept of IBU and its Success
Infosys is chiefly a package application development and care company. Software coders were able to leverage past experience most efficaciously if they concentrated on one industry. To accomplish these economic systems of experience, the primary organisational concept within Infosys was the industry concern unit ( IBU ) . In the early old ages, an IBU might function merely one client.
The company assigned new employees to an IBU and they tended to remain at that place for several old ages. Through several publicities, an employee could make the place of history director, gaining duty for keeping relationships with clients, guaranting client satisfaction, and selling extra work.
The construction efficaciously featured a big figure of little concern units, kept people experiencing empowered. Each IBU was efficaciously a separate company in itself and would look at it ain disbursals, gross and employee compensation and benefits. This was a immense success and was responsible for the phenomenal growing over the old ages.
Drivers for Change
The undermentioned subdivision is based on the treatment with Mr. Altaf Vohra, an Senior Manager at Infosys:
Two chief drivers for the alteration can be identified:
The growing opportunities available in the non-US, non- Europe Markets.
The demand to increase the presence in the high value add section like Consulting
Reduced Focus on US Markets
It was clear that the US markets were non to be focus country. Two major erasons were sited by him
The US market, a really unfastened one in that it is easy for different state participants to come in the market. So the menace from the other developing states like China, Mexico and Brazil were huge. So even though there were immense growing chances in US, the company was looking to spread out into other markets.
On the other manus the European and Southeast Asiatic markets were closed markets in that they did non accept foreigners easy. This was a natural entry barrier every bit good as immense chance in that when the market was broken into it could be captured easy and there was a natural barrier for others to non be able to come in easy.
Changing Business Model
Over the old ages, Infosys Business Model has evolved to accommodate the demands of the market and it has been able to fit up to the market outlooks and maintain up its phenomenal growing. But the company can non go on with the current theoretical account and needs to guarantee that the hereafter concern focal point is on high value attention deficit disorder services. These include SASS, Consulting.
Problems in Current Structure
The current construction had certain built-in drawbacks that were forestalling the company from working the new chances that presented themselves. These include:
A closed IBU construction which was non contributing for inter sphere expertness development which was necessary for confer withing services.
Lack of expertness in covering with the European markets. So the company was unable to negociate or close trades and so losing was out to rivals.
No section to capture the growing chances in the domestic Indian market.
Lack of sufficiently big IP ownership which was necessary to be able to capture the markets in the Southeast Asia, as a consequence of deficient disbursement on R & A ; D. ( Exhibit 6 )
Restructuring in 2007
Having realized the jobs with the current construction, Infosys restructured itself to assist broaden its client base and beef up its current portfolio through scale benefits. The new chances will leverage the strengths of the following coevals of leaders at Infosys.
Highlights of the Changes Made:
Business units realigned: Forms 8 perpendicular Industry Business Units ( IBUs ) and 5 Horizontal Business Units ( HBUs ) that cut across all the perpendicular units as below:
Increased focal point on growing markets: The New Growth Engines ( NGE ) unit has been formed to spread out concern in Australia, China, Japan, Middle East, Canada, South America and Latin America
Separate concern unit to concentrate on India
Increased focal point on R & A ; D and commercialisation of IP
Broaden Senior Management Team
The Finer Changes
Each of the 6 verticals from BCM to RETL had two separate divisions which were identified by the postfix D or X to mean US and non US units severally.
So BCMD and BCMX were now formed with BCMD looking after US market and BCMX looking at non-US markets.