Capstone Project

Infosys Transition from an IT bellwether to an industry outlier

(Synopsis)

Submitted by:
Manisha Tripathy
PGDM-IB (2013-15)
Roll No. - 55

Indian IT Industry - Current scenario and challenges

Growth of Indian IT industry has been phenomenal, with a consistent year-on-year growth of 14%
approximately. The success of IT industry is reflected on the growth of other Industries as well. The
Indian IT-BPM sector continues to be one of the largest employers in the country directly employing
nearly 3 million professionals, adding over 180,000 employees. There has been considerable research on
the competitiveness of the Indian industry. Cost advantage and abundance of human capital are cited
as two of the main advantages India have compared to the other countries. India has used these
strengths to its advantage and has built a foundation for a strong IT industry. However, the recent
trends have suggested that Indian IT industry is going to face serious challenges if it depends heavily on
its cost advantage. Global economic shifts, intensifying competition, and changing industry dynamics
have posed challenges for many companies in this sector.
FY2013 can be characterized as the year of rapid transition and transformation leading the industry into
expanding into newer verticals and geographies, attracting new customer segments, and transforming
from technology partners to strategic business partners. To sustain this growth, Indian IT-BPM industry
is focusing on greater efficiencies, verticalized structures, geographical presence, IP based solutions,
domain and increased collaboration across all stakeholders.
Company Overview
Infosys, a company that grew from a seven man start-up in 1981 to the 1.6 lakh employees, $8 billion
enterprise it is today, has time and again been called India's most admired and respected company. The
company is headquartered in Bangalore, the IT hub of India.
For over three decades, the company has been focused on bringing to life great ideas and enterprise
solutions that drive progress for their clients. Infosys stands for a lot more than just the boom in
outsourcing and Indian IT. It stands for creating wealth amid the middle class, for values and high
corporate governance norms. That's why its disappointing results mean more than just the numbers.
Background
Infosys was once known as the bellwether of Indian IT industry. But its halo seems to have dimmed for
the past few years. An internal restructuring, a leadership vacuum, complacency towards customers,
rigid contracting terms, and a stubborn high-margin pricing model have made recording growth at
Infosys as difficult as walking on wet tar. So much so, the company is now struggling to beat even the
average industry growth rates. Its biggest rival, Tata Consultancy Services (TCS), has pulled away and
widened its revenue lead by about $3 billion, while third-placed Cognizant has already overtaken Infosys
in terms of quarterly revenues for two consecutive years.

Objective
With regard to recent turbulence faced by the company, the main objective of this project is:

To understand and analyze the challenges resulting in the overall decline of the company from
its bellwether position

The sub objectives include:

Understanding various strategic inflection points of the company from 2009 until now
Understanding the trigger points leading to underperformance as compared to peers (mainly
TCS)
Finding and analyzing reasons for failure in the top management, leading to recall of NRN
Murthy
Analyzing the current strategies implemented and its effectiveness with the help of latest
financial results

Methodology
The methodology would mainly entail understanding of the major challenges faced by the company and
its reflective actions through secondary data analysis in the form of scholarly articles, financial reports,
news reports, interviews and press releases, etc.
Various strategic tools and frameworks would be applied as relevant to the analysis of information
gathered.
Expected Outcomes
The expected outcomes include:

A better understanding of current opportunities and challenges in the Indian IT industry

Understanding effects of leadership on Infosys journey through various inflection points
A greater insight into companys current strategies and measures taken to meet performance
benchmarks

References:
1. http://www.nasscom.in/positive-outlook-itbpm-industry-fy-2014
2. http://businesstoday.intoday.in/story/infosys-q4-earnings-results-up-revenue-growth-201213/1/23976.html
3. http://www.livemint.com/Companies/beFc2rmqEpgybNaVcyzkyH/What-went-down-atInfosys.html
4. Technology led catch-up in Indian IT industry- Opportunities, Challenges and Strategies