Infosys_Consulting_in_2006

case: Infosys consulting in 2006 1. In 2006, how well is Infosys Technologies doing' ● Infosys Technologies ○ 1999: ■ 3,700 employees ■ $120m annual revenue ○ 2004 ■ 25,000 employees (p3) ■ $1B annual revenue (p3) ○ 2005 ■ $1.5B annual revenue (p22) 43% compounded annual growth rate ● Infosys Consulting: ○ More than100 consulting engagements (p1) ○ More than 200 employees (p1), achieving its 2 year recruiting target ○ Contributed to Infosys Technologies’s ranking in Wired What is the company’s strategic position in the IT industry and what are its distinctive competencies' We need define how we interpret distinctive competencies. If this means competitive advantage: ● Global Delivery method provides: ○ shorter project life cycle ○ reduced costs ○ measurable results for clients IT offers a broad range of IT services (p2) - all downstream activities ● package implementation ● R&D ● infrastructure management ● testing ● BPO ICI was designed to complement IT’s offerings, with the upstream consulting services Tsiness consulting, whereas a lot of other firms seem stronger in one area or another. The firm is able to offer top quality services in both domains. It has a global network which allows for quicker project competition and lower prices. ICI is very customer focused. It focuses on delivering what client’ value, and it has a range of mechanisms to support this. Well integrated with parent. Work as a team. Unique implementation model, several real time iterations of configuration Where does it fit in the industry value chain' ● Infosys Consulting provides IT strategy and process consultation ● Infosys Technologies provides implementation through to BPO services ○ package implmentaion ○ R&D ○ infrastructure management ○ system integration ○ testing a service ○ BPO How would you describe its culture' Philosophy of ‘measure everything” p11 IT’s values: p13 ● Delivering high quality work ● measuring every aspect of performance ● maintaining a sense of humility IT seems open to encourage change that will benefit the firms, e.g. on page 17 it talks about transforming IT’s culture and building a stronger and slightly different brand. Collaboration. GDM. Inter-organisation relationships. 2. Why did Infosys Technologies decide to move into the IT consulting market segment' “Consulting services drives downstream work, and wanted to control the client account” (p2) It seemed to be a natural extension to offer consulting services which lead into its traditional services. There also seem to be higher margins in business consulting (refer to rates on p10) How big is this market segment and what is its structure' Wordwide IT services: ● 2003: ○ revenue $524b ○ expected to grow at compounded annual rate of 7% through to 2009, to $803.9b (p3) IT consulting, 5% compounded annually over the next 5 years (2006 to 2011). $866 trillion in 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 524 560.68 599.9276 641.9225 686.8571 734.9371 786.3827 674.0187 721.2 771.684 825.7018 866.9869 The 2 largest players are IBM and Accenture, although they held a relatively small market share. Very fragmented. Global providers are increasing the size of their developing country workforces because of competition from companies from these countries. Low barriers at the lower end, but high barriers to entry at the larger end of the market (size, recruiting, brand, relationships, capability). Both segments are still highly fragmented. Why did they form a wholly owned subsidiary to enter this market segment' IT wanted to “establish a new model in the consulting space”, therefore it decided against an acquisition. It also realized that growing organically would limit its ability to attract the right kin of talent. It decided to creatae a hybrid model by setting up a US based wholly owned subsidiary. (p3) Other Indian technical firms suffered weakness in 1) identification assessment of strategic issues, 2) an onsite presence, and 3) an understanding of the client’s local culture ad market, and 4) domain expertise. Operating as a US based wholly owned subsidiary addresses these issues. Other Indian IT service providers consulting operations were managed through their technology businesses. (p7). Therefore, operating as a US subsidiary would grant IT advantages over all other Indian firms. The skills required to provide high quality business consulting is different from the core competencies of technical firms. Having a subsidiary helps create a break to establish group with its own core competencies. 3. In Raj Joshi’s words, one of the goals of the leadership team of Infosys Consulting was to "change the rules of the game." What are the rules of the game currently and how is Infosys Consulting trying to change them' - shortening the lifecycle between the business consulting and the tech implementation - reduce the price - measure performance gains (i.e. benefits to clients) - there were two approaches used to leveraging global delivery - US firms leveraging offshore development and implementation aspect of value chain - offshore firms (Tata, Infosys) that have developement but started business consulting. - Competition from india is forcing US firms (accenture and ibm) to strongly increase their work force in india and emerging markets. - Accenture has yet to fully leverage global delivery in terms of process, method and tools, as well as cost. - The other offshore companies do not offer localized branches that help understanding the clients local culture and market. - Other indian companies are strong in tech consulting but not in business consulting. - Infosys techonologies developed a unique approach to GDM 20 years ago (1-1-3) --> meaning the company can probably do this better than competitors, the organizational structure complements the GDM, people are trained and knowledgeable about the GDM (pg 43), they understand the benefits and limitations of the model better than comp. - ICI has different approach to technology implemenation (reduces lifecyle) -traditional: design phase and implementation phase, processes were changed and analyzed based on functional silos (e.g. marketing, manuf, etc). Design is onsite and data/report building is offsite. -ICI approach: looking at process as a whole instead of functional reqs. Also looked at process metrics. ICI required impact measurements. With the GDM, onsite consultants can design specs during the day, then offsite ppl can configure specs at night. Many iterations, realtime, closer to clients requirements. - Challenge, can they scale model fast enough (competitors are trying to imitate their model) What do they mean by the "Global Delivery Model"' - Under this model, companies have a local presence with the client which enables them to better understand the culture and realities of the market. Which ultimately translates to a better understanding of customer requirements. - organization has access to resources of varying costs that allows it to deliver services to its customers at an optimal cost, typically a mix of costlier 'on-site' resources combined with cheaper 'offshore' resources. -wiki - firm can work round the clock for its customer, handing off work from one location to another at the end of the 'day shift' ('follow the sun' model) - thus providing twice or even three times the capacity they would have if they worked in a single location/ time-zone only. - wiki 4. How important are client relationships and institutional knowledge in the consulting industry' -Institutional knowledge is crucial in the consulting industry as the experience gained through prior engagements helps develop a better understanding of the issues at hand as well as best practices. -Client relationship is important to ensure continued business as well as to maintain credibility and reputation, as that is paramount to a consultants business. How would you assess Infosys Consulting’s competencies in these two areas' -Institutional knowledge: ICI has significant experience in technical consulting however due to its short life span has not developed business institutional knowledge. ○ IT and ICI both seem to be learning oriented organisation ○ IT has had long relationships with many clients, therefor they know their businesses well. The ICI consultants brought in former clients. -Client relationship. Currently the company is building off Infosys Techs client base (70%) and using their reputation and synergies. ○ If ICI really does deliver the desired value to clients, clients are likely to be happy ○ Customer satisfaction ratings indicate exceeds expectation p12 ○ Win-Win model reduces clients’ risk Does Infosys Consulting have a sustainable competitive advantage' If so, what is it' -Institutional knowledge: ICI’s unique approach to process oriented solutions as well as thorough performance evaluations helps the company gain knowledge of what works and what doesn’t more accurately and more efficiently. GDM. Most efficient in this area. Should last for at least 5 years. 5. How are IBM and Accenture likely to view what Infosys Consulting is trying to do' How can they respond' (Engin in detail) IBM and Accenture likely to view that Infosys Consulting is trying to get sufficient scale and once they get sufficient scale, they will tip the market and collapse the price point in the consulting industry. This will hurt IBM and Accenture in the capital Market by squeezing their margins. Therefore, Accenture and IBM should learn lessons from Infosys to operate in India and enhance their faster, cheaper solution providing abilities . IBM and Accenture also likely to view Infosys’ goal of capturing market share by building relationship with the emerging players who would most probably like the Infosys’ lower cost, faster and lower risk solutions. Thus, IBM/ Accenture should develop lower cost process strategies and provide agile and customized solutions to emerging players in order to to be able to attract them while tightening the connections with the existing customers. Moreover, there is a specific problem with IBM’s operation structure. It shouldn’t be operated like a multinational company which is trying to recommend something just to sell additional software or hardware rather than a trusted global company . On the other hand, the irony is that Infosys should try to emulate Accenture and IBM for higher value offerings. AB: ● ● ● ● I think IBM and Accenture will view this as threat Initially they may not be worried because of the relative small size of ICI They will probably be most concerned about the impact of lower rates on their businesses Likely responses: ○ lowering rates ○ brand building ○ attempt to adopt ICI’s an IT’s model 6. What interface challenges exist between Infosys Technologies and Infosys Consulting' - Sushant o o o o o o Seamlessly work together efficiently for optimum performance ICI, a new subsidiary and small firm, initial increased continuous intervention/ monitoring by Infosys Technologies senior management required Continuous learning from each other through interactions Transform culture, build brand as global transformation enabler Migration of management from ICI to Infosys in long term ICI needed to learn more initially and then prove its success Bid ownership - which org should own the bid Projetc collaboration - consultants onsite coordinating with technicians in India Airtime - ICI is a initial increased continuous intervention/monitoring by Infosys Technologies senior management required Cultural alignment - having both organization with compatible cultures Management migration - IT would like foreign ICI managers to transfer to IT. ICI may not want to let them go To what extent do the parent company and subsidiary go to market together' ICI leveraged existing Infosys relationships to get client engagements where ever needed o The more engagements ICI and Infosys work together with clients, the more the understanding of what each one does o Existing (70%) Infosys clients with more strategic requirements, need of consulting skills, open minded clients, who shared common values with ICI o Greater collaboration – One Infy program – structure incentives and set goals for collaboration set the culture of collaboration. Alignment with the goal of serving clients and winning the market o Focus of whole organization on the value of leveraging the whole set of deep skills and capabilities o “The Fork in the Road” approach to determine which entity led the client relationship, best serving the client situation o ICI also brought new clients through their old relationships o AB: ● ● Account teams collaborate Conscious present “One Infy” 7. What are the challenges associated with managing growth for Infosys Consulting and for Infosys Technologies' AB: ● ● ● Hiring sufficient # ICI staff, ensuring high calibre Finding local staff in non-US locations, e.g. Germany & UK As the overall organisation grows, it will become more complex and harder to manage Scalability of GDM All the capabilities of the firm need to be in alignment with the goal of serving clients and winning in the market place 1 make clients see infosys as one company - One Infy 2 Transformation process may produce unclarity of client engagement - they can choose different departments all pieces of the company needs to collaborate in an optimized way 1 ICI receive enough attention, given that it’s small in size and revenue 2 position ici at the right position to obtain global impact and brand equity 8. One of the challenges Steve Pratt faces is: "How can Infosys Consulting stay ahead of the game'" Please prepare an action for Infosys Consulting and assess the company’s strengths and weaknesses to "stay ahead of the game" in terms of its strategic position, distinctive competencies, and culture. CHALLENGES: · Compete with business and IT consulting leaders such as IBM and Accenture moving forward. · Internal challenges of leveraging Infosys Technologies, interfacing productively with parent company and managing growth as they built the organisation. Also to better collaborate with parent company to get continued business and clients. · In terms of recruitment, taking people from different consulting firms who want come from different work cultures and integrate them into a common culture which resonates with the culture of the parent company Create a local presence in the countries of operation. Constantly measuring the relationship with Infosys tech, how well set the interface with Infosys technology is also important. · · · STRENGTHS: · · · · Hybrid Model, setting up a wholly owned US subsidiary. Provides a complete end to end solution from consultation to design, to implementations, testing and maintenance. Line of business is focussed. To provided software consultation services and custom application offering. Great relationship with parent company, despite the autonomy ICI enjoys. There’s timely intervention by senior managers from Infosys Technologies. ICI reciprocates by bringing in clients who require end-to-end solutions for Infosys. Distinctive Competencies: GDM Model · ICI was able to make a 24 hour work day a reality with their unique Global Delivery Model(GDM) · Value proposition of the GDM (1-1-3 model) was to offer premium business consulting resources onsite for a lower price when coupled with the implementation rates of offshore employees. By offering a full service, ICI could provide consulting at a blended rate of $100 per hour · Real time development by synergising onsite and offshore operations. · Inimitability of the model due to structural limitations. US based competitors would have challenge in de-scaling US based operations which would invariably lead to an unsustainable cost structure. Measurement Based Approach · A CMMI Level rating of 5. · ICI has a measurement based approach where evaluation is done based on process metrics which are pre-defined. · ICI has also developed its own set of metrics to track the quality of work the firm performs. Unique Company Culture · The company’s culture is meritocratic and transparent. § Staffing system with each employee could bid on projects they were interested in. § Personal Margin Contribution for individual monitoring of contribution to project. § Staff nominations for promotion. § Give employees the flexibility to choose block certain work hours so as to not get burned out by the 24 hour work day. § Bonus based on value delivered to client. WEAKNESSES: · The company is still very small, with only 200 consultants worldwide. · Still at a somewhat nascent stage, the company’s trying to still establish clear linkages with other working divisions such as Infosys’ Enterprise Solutions business unit. There’s still lack of clarity of what work is assigned to ICI. · Global Delivery Model seems to put too much emphasis on Implementation aspect of the project by deploying 3 resources offshore Over reliance on the US Economy. Low brand equity. RECOMMENDATIONS: · Hiring. To gain a footprint on the Infosys Technology which has a constantly growing employee base, it is essential to employ some more employees and establish the consultancy. Hire more people. Creating a more pronounced brand value for ICI. Infosys is still known as a services company; ICI has not been well established. Building the brand, ICI is more important. Build brand equity Consulting is all about understanding the culture of the business and business practices. It is easier to tap into the Indian market where there’s a huge potential and since ICI already has consultants to cater to this market, expansion would be easier. Build consulting practice in India · · · Rather than Infosys technologies bringing business for ICI, the relationship should be better streamlined such that a consultant from ICI should be deployed on each major project which Infosys tech pitches so as to identify where the potential opportunities to provide consulting services are. Involve ICI consultants in IT pitches to identify service opportunities GDM can not be replicated in every business scenario for 2 reasons: § The low cost value proposition might not work for all clients especially those clients looking only for business consulting. § Number of resources deployed onsite are less than the number of resources deployed offshore. For a client looking purely for a consultation, this model might not work. · Characters: Steve Pratt: CEO & Managing Director Paul Coe: COO & Managing Director Romil Bahl: Managing Director Raj Joshi: Managing Director and Founder Ming Tsai: Managing Director Timeline 2004, April - Infosys Consulting established 2006, Jan - MD meeting at start of case, 200 Ee’s Submission Structre Introduction Market Situation ● Market size, growth ● Major competitors ● Infosys’ size, growth IT and ICI description ● ● ● Strength’s, ○ GDM ○ Unique structure as a US based subsidiary ○ Use of metrics ■ quality ■ client satisfaction ○ Structures to reinforce objectives ○ Openness to change ○ weaknesses ○ key issues Alternatives: identification and assessment strengths, weaknesses, opportunities, threats Challenges