What is Infosys Technologies’ strategic position in the IT industry in 2006, and what are its distinctive competencies? Where does it fit in the industry value chain? (20 pts)
Infosys Technologies was founded in 1981 to design, develop, and maintain software for US Corporate clients in banking, manufacturing and telecommunications (Lok 2005). In 2006, the market for IT services was large and growing (Hill and Jones). Forrester Research forecasted in 2003 that IT consulting would grow at 5 percent compounded annually for the next five years. There were many other companies vying for a share in the industry. These companies include big names such as IBM and Accenture. Infosys Technologies was in this list of top companies.
Infosys Technologies had to have a strategic position to be competitive. Strategic position, by definition, is the positioning of an organization in the future, while taking into account the changing business environment plus the systematic realization of that positioning. At Infosys, theirs is to, “further strengthen our position as a leading global technology services company by successfully differentiating our service offerings and increasing the scale of our operations.” (Infosys Annual Report 2005-2006). They are doing this in several ways. Some of these include increasing business from new and existing clients which are mostly large companies, expanding geographically (Infosys China and Australia are examples), investing in its infrastructure and employees. Out of over 1.43 million job applications in 2006, only 12, 650 job offers were made. (Infosys 2005-2006). Another aspect of its strategic positioning is enhancing its solution set. This has led to the creation of Infosys Consulting. Infosys is also always developing its knowledge of the industry, promoting its brand (an example is the Wharton Infosys Business Transformation Award, offered jointly with the Wharton School at the University of Pennsylvania to recognize visionaries and Global 2000 organizations that use technology innovatively to transform their industries), and forming strategic alliances and partnerships.
According to Narayan Murthy, CEO of Infosys Technologies, one of its distinctive competencies is its vast pool of English-speaking, analytically strong technical talent and the excellent work ethic among its professionals, and who had the essential ingredients for global success in customized software development (Infosys’s Murthy 2001). These employees are highly trained, and are comfortable in their respective fields.
Infosys has also developed the Global Delivery Model (GDM). This distinctive competency is where projects are broken down, and distributed to different locations globally. These projects entail the whole process, from defining the requirements to installation of the custom application. This has many advantages. For one, the projects are worked on 24 hours a day which in turn reduces time it takes to complete a project, and the costs it entails. Infosys claims that it reduces costs by 30% (Hill and Jones). For this model to work there has to be perfect communication between the various sites where the project is taking place. Another competency is the structured engagements with clients where the fees owed to Infosys (like in Infosys Consulting) were contingent on project outcomes.
Infosys Technologies occupies a top position in the IT industry’s value chain. This company works with the leading companies in banking, manufacturing, insurance and the healthcare industries to supply their IT, business, and consulting needs. As of 2006, they were # 13 as one of the largest computer and internet consulting companies, based on sales. (Hill and Jones).
Why did Infosys Technologies decide to move into the IT consulting market segment? There are multiple reasons that you can deduce from...
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