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Infosys Technologies Ltd. was started in 1981 by seven people with US$ 250. Today, Infosys is leading the next generation of IT with revenues of more than US $4 Billion. Infosys is successful in providing technology enabled business solutions to more than 500 global companies by delivering a complete range of services to users via efficient use of leveraging various business expertise and forming strategic alliances with technology leaders of the market. (Kamath, 2010)
I have analysed that Infosys pioneered the Global Delivery Model (GDM), which led to evolution of offshore outsourcing . I have understood that 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 and its subsidiaries have 103,905 employees as on June 30, 2009.
Figure: GDP of Infosys
To be globally respected corporation that provides best of breed business solutions, leveraging technology, delivered by best in class people.
To achieve all objectives in an environment of fairness, honesty and courtesy towards customers, employees, vendors and society at large. (Infosys.com, 2009)
The core values form the organizational culture at Infosys captures five important aspects termed together C-LIFE:
â€¢Customer Delight: A commitment to surpassing customer expectations.
â€¢Leadership by Example: A commitment to set standards in business and transactions and be an exemplar for the industry and teams.
â€¢ Integrity and Transparency: commitment to be ethical, sincere and open in our dealing.
Fairness: A commitment to be objective and transaction oriented, thereby earning trust and respect.
â€¢Pursuit ofÂ Excellence: A commitment to strive relentlessly, to constantly improve ourselves,
Â Our teams, ourÂ services and products so as to become the best. (Bhatnagar, 2010)
In order to get a successful growth Infosys has adopted a client focused strategy by using Custom Built Software and Quality driven business model that cater its clients in friendly manner. It has also been able to command low cost by premium margins.
Increase Business from existing andÂ newÂ clients: Infosys is tremendously increasing the services offered by launching many new projects so the existing customers are engaged for long with the company and to get attention of new customers Infosys is leveraging industry expertise and providing ample of value added solutions like maintenance, software re engineering that requires frequent contact with the clients.
Global Strategy is to ExpandÂ geographically: Infosys is establishing many new centers and offices for global development like Infosys China is a new sales office for Infosys in china market. In Latin America it is going to open marketing offices via Infosys Mexico and many more that shows the global expansion of Infosys in order to increase the current profit margin (refer to appendix ).
Pursue alliances andÂ strategic acquisitions: Infosys takes advantage of all the possible options for raising more revenue it follows the risk adverse strategy and is very famous for its organic growth in a cost effective manner. It goes for strategic alliances with best technology providers in order to benefit both companies mutually.
Dividend policy: the below data from financial statements of Infosys elaborated by me of key findings which are observed by me as follows:
As the data depicts year by year paid dividend was able to conclude that Infosys technologies follows a Residual Dividend Policy.
Total dividend paid is first decreasing then increasing in the current year showing the fluctuation in growth rate.
There will be a decline in share price as Infosys is currently paying 30% more dividend so company will have to issue more shares. Also it will increase Equity by decrease the D/E ratio.
Competitive Advantage and Strengths
In early 90s Indian government decimated at that time Infosys exploited the golden opportunity opt for Internationalization as taxes and trade barriers were very so it was easy to globalize the company. Global outsourcing of the company was done by use of its GDM (Global Delivery Model) that defragments the task into smaller valuable chunks & generating maximum value from each. GDM delivered better services and quality to customers on low cost as in India level of education was high but labor cost was low.
Strategic advantage through technology
Infosys fully advanced through best use of technology like Sparsh which was the central information resource serving intranet of Infosys similar to veins of the body. Sparsh provided amazing connectivity for all members at Infosys and served as internal social network similar to face book which I used while providing services to the company and customers. To give best services to users employees with expert knowledge in particular subject were available speedily and all the time. Company members used Sparsh to exchange ideas via email and also to hold quick discussions. Lately Infosys Coupled Sparsh with Kshop. Kshop is a collective database where employees can download FAQs, Software's, book reviews and case studies. This technological advancement has given Infosys a dominant position in its industry. This was not the step where company stopped it continued its advancement by forming a differentiating tool to defend its competitors called SET labs to carry research & focuses on emerging technology for customers. SET Labs was able to increase commodity productivity by 35% increasing customer satisfaction and high premium rates due to better quality. (Mittal, 2009)
Global Talent ManagementÂ
Infosys enfosters its culture to the next generation employees by giving them training through world's largest Leadership institute who sync all employees with the organization culture before they are on job thereby increasing productivity and employee commitment to the company. Narayana Murhty says, "In our business the only constant is change. Training is hugely important as it is the only way one can keep in touch with contemporary issues" and this facility allows for that to happen.Â So bright young talent are highly attracted to the company. I was also taught the companies culture the day I entered the company for voluntary services.
Figure: Business Model of Infosys Source: http://www.knowtheco.com/index.php?news=25
Future Opportunities/ Globalization
Indian rupee is expected to be weak in near future due to halting of US economy. Infosys has most of earnings in US dollars which can hinder the economic growth of company. So Infosys is getting alert and trying to form strategic alliances in various regions like France, Germany that can prove beneficial. Infosys is soon going to foothold other appliances like VOIP, E commerce. The best strategy they are planning is VERTICAL Integration that will give company control of all activities from latest technology to mainframe proving to be a boon and giving Infosys a competitive advantage as compared to its competitors.
Key Success Factors
1- Delivering locally relevant business value-Infosys has been able to customize its services and solutions to the requirement of its clients. Infosys has delivered enhanced customer value
to its clients; Understanding client-specific needs and the value Proposition to increase the current position in market as reflected by its balance sheet (refer to appendix).
2- Coherent Market Strategy-Â Infosys has made strategic investments with a clear focus on future expansion plans. The range of investment encompasses not only Infrastructure, but also covers areas such as Human resource, technology and networking Infrastructure. These investments have enabled Infosys to increase its new client penetration Rate and have helped in attracting the best of global talent.
Figure : Drivers of success
One of the challenges for global corporations are diverse workforce to cope with this challenge Infosys has build a global base with 91,000 employees across 90 different countries with more than 70 nationalities. Infosys has adopted the enthusiastic policy of "follow the sun" to encourage work and deliver full services globally.
As reviewed by me Infosys has "ethno-centric" corporate culture where The Company believes that their own cultureÂ is superior to all others and is the standard by which all other cultures should be measured. Initially all the staff was of Indian ethnicity. in order to reap maximum benefit of global opportunities Infosys must create diverse multiethnic top management as I believe that the cultural misinterpretation are result of ethnocentrism that distorts a good and affluent communication among staff. (Kamath, 2010)
Infosys is soon going to globally expand its R & D through strategic partnership with Alstom
Company who is a leading company in energy and infrastructure. They are soon going to develop affordable and durable power solutions. In times of India article of 11 may 2010 Infosys has announced the expansion. Both the companies will be benefitted form this deal. (Refer to appendix) the strategic alliances are providing a boon to company as compared to its competitors. The following figure depicts it:
Corporate Governance Practices by Infosys
Corporate governance as understood by me while learning this unit is all about company's ethical code of conduct and managing commitment to values. It incorporates the stakeholder relationship of company its structure and all policies for ethical business including performance reports and sound financial performance of company so the company can gain trust of its various stakeholders and attract investors to increase funds. Currently Corporate Governance Guidelines are published by Indian government that should be followed by all companies and helps in achieving high standards of corporate governance.
At Infosys it is truly believed that retaining investor's trust and achieving performance goals with integrity is the most important thing and that can be done by sound corporate governance. The Board of Infosys exercises its fiduciary responsibilities in the widest sense of the term. Infosys has always tried to attain the best in international corporate governance as well to enhance long term shareholder's value. Corporate governance philosophy of Infosys is based on the following principles:
Satisfy the spirit of the law and not just the letter of the law. Corporate governance standards should go beyond the law
Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose
Make a clear distinction between personal conveniences and corporate resources
Communicate externally, in a truthful manner, about how the Company is run internally
Comply with the laws in all the countries in which we operate
Have a simple and transparent corporate structure driven solely by business needs.
The Board of Directors ('the Board') is at the core of corporate governance practice and oversees how the Management serves and protects the long-term interests of all stakeholders at Infosys. Company believes that an active, well-informed and independent Board is necessary to ensure highest standards of corporate governance. The majority of Infosys Board, eight out of 14, is independent members. As part of commitment to follow global best practices, Infosys comply with the Euro shareholders Corporate Governance Guidelines, 2000, and the recommendations of the Conference Board Commission on Public Trusts and Private Enterprises in the U.S... Further, a note on Infosys compliance with the corporate governance guidelines of six countries (Australia, Canada, France, Germany, Japan and U.K.) in their national languages is available on website of company. (Infosys.com, 2009)
After implementing the extensive knowledge of Corporate Management in Action to Infosys as a brand I was able to know the key success factors of company's steady growth and many things like impact of globalization on Infosys and its corporate responsibility towards society. Infosys is positioned among top leading companies of IT due to its strategic alliances with many branded companies like Motorola; Sun etc. the strategies of Infosys were biggest boon along with the global delivery model. The company is highly ethical and follows governance rules.
I was able to enhance my knowledge and know the reason why Infosys was able to develop globally. Infosys had a sustainable business environment that fostered its global economic growth.