Cost Efficiency of Infosys

An important strategic capability in any organization is to ensure that it is successful in achieving and continually improving cost efficiency. The resulting low cost would help an organization to attain a competitive edge and this would be an important differentiating factor in todays competitive IT industry. Cost efficiency is determined by a number of cost drivers as discussed below.

Economies of Scale

Experience

Cost Efficiency

Supply Cost

Product/Product Design

Economies of Scale When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. For Infosys Economies of scale can be said to have been attained considering that the company has offered its services to wide range of industry, which helps it to use it work force more efficiently and also use the knowledge and experience gained in one industry project to be successfully implemented in other industrys project. Thus owing to its diverse nature of services provided to different industries, it can practice the concept of division of labor, which would lead to Managerial Economies of scale. Being a global leader in IT consulting. With nearly 115,000
employees, it operates from more than 50 offices and development centers around the world.

Some of the services offered by Infosys are: Management Consulting Services Business Application Services Business IT Services

Engineering Services BPO Services Cloud Mobility Sustainability

Some of the industries served by Infosys are: Aerospace & Defense Airlines Automotive Communication Services Consumer Packaged Goods Education Energy Financial Services Healthcare High-Tech Hospitality and Leisure Industrial Manufacturing Insurance Life Sciences Logistics and Distribution Media & Entertainment Publishing Resources Industries Retail Utilities

Supply Cost: Considering Infosys being in service industry the most important for the company is to maintain a pool of efficient and well trained employees. Thus for Infosys the most important cost is incurred in maintaining work force. India has low labor costs. The workforce has relatively high skills levels in Information Technology. Coupling these two elements together, it gives Infosys the operational basis that offers low-cost based, highly skilled competitive advantage. Infosys has also developed a well established offshore business model. It realized that an essential component of its competitive advantage was itsa access to low cost engineering talent

in India. It was disruptive to ship this talent across a long distance to perform work on site for a short duration. Instead the company decided to make significant investment in infrastructure to manage multiple projects from the country itself. Also it build on its brand to gain the credibility of the clients. This offshore arrangement helped Infosys to reduce its cost and pass on the same benefits to the customers.

Product(Service) Design/ Product (Service): Infosys as a company invests heavily in research and development that help it to come up with new services at a competitive pricing. Infosys Labs has been established as part of the company's new strategic direction of 'Building Tomorrow's Enterprise'. Consisting of a dedicated research and innovation facility, Infosys Labs builds on the successes of the award winning Software Engineering and Technology Labs (SETLabs), and envisages a broader mandate. The 600member technology and domain-focused team focuses on driving innovation across trends identified by the company to transform the businesses of our clients globally. These trends include digital consumers, emerging economies, healthcare economy, sustainable tomorrow, new commerce, smarter organizations, and pervasive computing. Working together with clients, technology partners, universities and the larger innovation ecosystem, Infosys Labs focuses on setting up joint innovation centers and developing solutions to complex business problems. Infosys Labs is organized as a global network of research labs and innovation hubs.Infosys Labs collaborates with leading national and international universities such as the University of Southern California, University of Cambridge, Queensland University of Technology, University of Illinois at Urbana Champaign, Indian Institute of Technology Bombay Monash Research Academy, Purdue University,Indian Institute of Information Technology, Bangalore. Infosys also had the SharePoint Server 2010based ICP environment which made it easier for Infosys employees to share information and respond to customers needs more efficiently. These sites were centrally managed, making the administration easier and maintenanc cheaper.

Experience Infosys has a program The Global Talent Program , which is the largest sustained effort by any company to recruit from campuses outside India and develop the skills of a global workforce through training assignments in India. Thus the employees are well experienced and experts in their field of work, thereby it gives Infosys an opportunity to reduce costs while initiating new services for its clients, on additional training of employees. Infosys has also developed a wide range of programs that foster an environment that provides the best aspects of universities, but with professionalism that a work place demands. These programs have kept the attrition rate below industry average at Infosys and save Infosys the cost of losing their experienced employees.