Professional Documents
Culture Documents
Introduction:
In an increasingly globalised world, significant complexity and uncertainty is
getting attached to the unprecedented economic crisis. The Indian economy has
also been impacted by the recessionary trends, with a slowdown in GDP growth
to seven per cent. The focus and exponential growth in the domestic market has
partially offset this fall and insulated the country, resulting in net overall
momentum. The IT-BPO industry in India has today become a growth engine for
the economy, contributing substantially to increases in the GDP, urban
employment and exports, to achieve the vision of a “young and resilient” India.
During the year, the sector maintained its double digit growth rate and was a net
hirer. This growth has been fueled by increasing diversification in the geographic
base and industry verticals, and adaptation in the service offerings portfolio.
While the effects of the economic crisis are expected to linger in the near term
future, the Indian IT-BPO industry has displayed resilience and tenacity in
countering the unpredictable conditions and reiterating the viability of Indiaĵs
fundamental value proposition. Consequently, India has retained its leadership
position in the global sourcing market. The Indian IT-BPO industry is estimated to
achieve revenues of USD 71.7 billion in FY2009, with the IT software and services
industry accounting for USD 60 billion of revenues. During this period, direct
employment is expected to reach nearly 2.23 million, an addition of 226,000
employees, while indirect job creation is estimated to touch 8 million. As a
proportion of national GDP, the sector revenues have grown from 1.2 per cent in
FY1998 to an estimated 5.8 per cent in FY2009. Software and services exports
(including BPO) are expected to account for over 99 per cent of total exports,
employing over 1.76 million employees.
While the current mood is that of “cautious optimism,” the industry is expected
to witness sustainable growth over a two-year horizon, going past its USD 60
billion export target in FY2011. While the industry has significant headroom for
growth, competition is increasing, with a number of countries creating enabling
business environments aimed at replicating India’s success in the IT-BPO industry.
Hence, concentrated efforts are required by all stakeholders to address the
current challenges, to ensure that India realizes its potential, and maintains its
leadership position.
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Govt. of India & IT Sector – Policies & Privileges
Policies:
Setting up IT software and services operations in India are governed by certain
rules and regulations. A brief list of guidelines for individuals/ companies
interested in setting up such operations is given below:
As an Indian Company
An Indian citizen can set up IT software and services operations in India in the
following manner:
• as an Individual/ Proprietor; or
• as a Partnership Firm/ Trust; or
• as a Company registered under the Companies Act, 1956 ("Co Act").
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• A foreign company is one that has been incorporated outside India and
conducts business in India. These companies are required to comply with
the provisions of Co Act.
Government Approval: Approval in all other cases where the proposed foreign
equity exceeds 26 percent, 50 percent, 51 percent or 74 percent in the specified
industries or if the industry is not in the specified list, it requires prior specific
approval from Foreign Investment Promotion Board ("FIPB").
Privileges:
To encourage units in this sector, Government of India has announced many
schemes:
Export Promotion Capital Goods ("EPCG") Scheme: This scheme allows import of
capital goods at a concessional customs duty rate of 5 percent, where the
importer as a condition is required to achieve a specified export obligation. The
export obligation and the period within which the same is required to be achieved
vary based on the nature of the unit and value of imported capital goods.
Special Economic Zones ("SEZs"): SEZs are designated areas dedicated towards
growth of exports, having full flexibility of operations that are permitted to import
duty free capital goods and raw material. The movement of goods to and fro
between ports and SEZ are unrestricted. The units in SEZ have to export the entire
production subject to permitted sales in the DTA. Currently, there are 11
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operational SEZs in India which include the Santacruz Electronic Export Promotion
Zone, Kandla Export Promotion Zone, Vizag Export Promotion Zone and Cochin
Export Promotion Zones which have been converted to SEZs. Fiscal incentives
available to SEZ units have been discussed ahead in detail.
The SEZ policy is welcome, very welcome. They need islands of non-interference.
The devil is in the details as usual. The centre has formally approved 212 SEZ units
with an in principle approval to 152 more. I don’t buy the usual rhetoric that poor
farmers will be affected and the like. First of all, large landowners are not
necessarily poor. Every day, dozens of large landowners are turning into instant
millionaires by turning in their lands to real estate / IT giants. The government
must assure prevailing rates to them and/or issue bonds tied to the future
development of the area. It must also take into account small and marginal
landowners interests and device a new scheme for them which tie them
monetarily into future development in that area. The issue must stop there.
The SEZs provide a 15 year tax holiday to the IT companies after 2009. The details
are 100% exempti0n for the first 5, 50% for the next 5, and variable for another 5
based on reinvestment in SEZs.
100 Percent Export Oriented Unit ("EOU"): In terms of the benefits available, the
EOU scheme, on a general basis, is similar to SEZ scheme. But in this scheme,
there is no need to be physically located in the designated area (as in the case of
SEZs). This scheme offers zero import duty on import of all capital goods, special
10 years income tax rebate (however, such rebate will not be available for
Assessment Year 2010-2011 and onwards). The incentives provided to EOUs are
generally similar to those provided to SEZ units, except the exemption from
central sales tax on purchases.
Software Technology Park ("STP"): This is a special scheme under the Ministry of
Information Technology, similar to EOU scheme, which is specific for the software
industry. STPs are located at Noida, Navi Mumbai, Pune, Gandhinagar,
Hyderabad, Bangalore, Chennai, Bhubaneshwar, Jaipur, Mohali and
Thiruvanathapuram. This scheme offers zero import duty on import of all capital
goods, special 10 years income tax rebate (however, such rebate will not be
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available for Assessment Year 2010-2011 and onwards), availability of
infrastructure facilities like high-speed data communication links, etc. The
incentives provided to EOUs are generally similar to those provided to SEZ units,
except the exemption from central sales tax on purchases.
STPI (Software Technology Park India) is a scheme that dates back to the early
years of the IT industry. It allowed for a 10-year exemption from Corporate
Income Tax (upto 90% of turnover), Sales Tax, Customs Duty, Excise duty. Back in
the day, the infant IT companies could not deal with the astronomical cost of
telecommunications, archaic customs duty rules, and a high rate of taxation. So
the initial 10-year tax holiday helped an infant industry attain critical mass. Even
though companies like Infosys are 20 years old, they are still able to avail of the
10-year tax holiday by setting up new units with fresh 10-year extensions. For
companies outside the STPI, the corporate income tax rate alone is 36-37%
(Corporate Income Tax = 35%, Surcharge = 2.5%, Education Tax = 2%). Sales tax
exemption is 10-12% for states and 3-4% for Union Territories (UT). This is why
you don’t find all IT companies in UTs. The contribution of the STPI tax holiday to
the overall success of the IT story cannot be underestimated. It is rated it as one
of the best initiatives undertaken by the Indian government.
The party it set to end in 2009. If all IT companies come out of the scheme – the
Indian government will realize between $3-5 billion dollars (15-25000 cr) in direct
taxes alone (this figure is based on projected size of the IT industry at a 36% tax
rate on a $50bn size).
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Breakup of the total Global IT spending:
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Financial Attractiveness of Top 5 Global Services Locations on
a scale of 4:
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Indian IT Industry Sector:
1) Market Size
More than 80% of revenues come from Exports and only 20%
from domestic business.
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Contribution of IT industry to Indian GDP
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Number of employees in IT Sector (Direct
employment)
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2) Market Share
TCS
11% Infosys
10% Wipro
6% Financial Technologies
4%
IBM India
3%
Capgemini India
2%
1% Others
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Sources of Revenue:
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Revenue By Geography
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R&D Spending of IT majors:
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ESTABLISHED IT/ITeS HUBS in INDIA
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Budget 2009 & its Impact on the IT industry
The Union budget presented gives a long term direction to inclusive growth,
Infrastructure development, Education and employment generation of 12 Million
jobs a year.
In terms of the Impact on the IT industry, steps like the scrapping of the FBT,
extension of the 10A benefits till 2011, increase in the MAT credit period to 10
years and increased allocation to education are welcome steps. However, steps
like the increase in MAT from 10 to 15% are going to have an adverse impact on
the Industry in the short run and this is something we could have avoided.
On the personal taxation, while the increases in tax limits are nominal, the
removal of surcharge on income tax will benefit number of employees in our
industry.
The Industry also welcomes the planned outlay of Rs. 2100 crores to create
‘Educational infrastructure’ including setting up IIT’s and interest waivers for
educating students. These reforms will clearly bring in a manifold resource
increase for employability in the technical stream.
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PEST ANALYSIS:
Political:
Economical:
Social:
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Technological:
• Telephony (+ve)
o India has the world lowest call rates
o Expected to have total subscribers base of about 500 million by
2010.
o India has the second largest telephone network after china.
o Enterprise telephone services, 3G, Wi-max, VPN, poised to
grow.
New IT Technologies: Technologies like SOA, web 2.0, High definition content, grid
computing, and innovation in low cost technologies is presenting new challenges
& opportunities for Indian IT industry.(+ve)
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STP Of IT Industry
Segmentation
Segmentation offers deals with a specific function within the enterprise such as
data processing, accounting, human resources, plant maintenance, engineering
design, manufacturing, inventory control, etc. This is the most likely domain for a
product or service, but you must recognize that the other domains may also get
involved if the purchase of the product or service becomes a high profile decision.
This purchase decision will be made by the prospect's functional management.
Targeting
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Positioning
India has firmed up its position in the global software industry and global
software biggies too are setting up huge R&D facilities in the country. However,
India still accounts for only about 2.5% of the global IT services market, according
to Nasscom.
But we have a strategic planning assumption that states India’s IT services could
grow to $50 billion in 2008 from $18-19 billion currently. In offshore IT services,
India has 85% share and so would by far be no.1. This is good considering that the
feat has been achieved in a span of less than two years. Over the years, Indian IT
service companies have established themselves firmly on the global stage. More
than two-thirds of Fortune 500 firms turn to them for part of their IT and business
process outsourcing needs. Some, such as Tata Consultancy Services (TCS), Infosys
Technologies and Wipro Technologies, have become global brands, competing
head-to-head with multinational IT service providers.
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8P’s of IT Industry
1. Product:
The product aspects of marketing deal with the specifications of the services, and
how it relates to the end-user's needs and wants. The scope of a product
generally includes supporting elements such as warranties, guarantees, and
support.
2. People:
For service marketers, the core of the service element is the interaction between
those providing services and the customer, which is known as service encounter.
To achieve customer satisfaction appropriate processes are designed to ensure
that the service encounter meets customer expectations.
3. Place:
4. Process
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architecture. They are implemented through process execution at the next level.
These processes are defined with clear ownership using the ETVX (Entry, Task,
Verification, and Exit) paradigm and clearly defined roles and responsibilities.
5. Physical Evidence
The environment in which the service is delivered and where the firm and the
customers interact; and any tangible commodities that facilitate performance or
communicate the service. Physical evidence enhances customer’s perception of
quality.
• Exterior facilities
o Exterior design
o Signage
o Parking
o Landscape
o Surrounding environment
• Interior Facilities
o Interior design
o Equipment
o Layout
• Other tangibles
o Business cards
o Stationery
o Billing statements
o Reports
o Employee dress/uniform
o Brochures
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6. Productivity
Productivity refers to the success or failure of any business, so the quality of the
product should be very good for his companies have different quality standards
which are certified by the quality department and are approved all over the
world. If one does not have approved quality standards then he develops its own
to meet the quality that are demanded by the customers
7. Price
Software pricing strategy is price planning for a software firm takes into view
factors such as overall marketing objectives, consumer demand, product
attributes, competitors' pricing, and market and economic trends. When a firm
launches a product, the pricing decision is one of the most critical decisions.
Software pricing has been concentrated the internal business objectives of
vendors such as costs, specified margins, and the competition.
On the marketing point of view, the goal of pricing strategy is to set a price that is
the pecuniary equivalent of the value perceived by the customer in the product in
order to meet the profit and achieve investment goals.
8. Promotion
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Porter’s 5 Force Model:
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Brief About Top IT Companies
Wipro Technologies
Our purpose of Innovation is to create higher value for our customers. This
continuous thought led us to foresee the benefit of partnering with technology
companies to bring value to our customers. Combining these relationships with
our strong R&D talent led to the idea of “Lab on Hire” and subsequently to
offshore development centers which made offshore outsourcing truly
mainstream. Pushing this idea a little further helped us conceptualize the remote
infrastructure service model, branded as global command center or GCC to
manage the customer’s IT infrastructure. Today, we serve our customers with a
wide spectrum of services fuelled by the power of innovation.
Products define the identity of technology companies, and the current business
environment is looking to adopt innovative ways to turn ideas into real products -
quickly. In addition, the complexities in technology and the advancement in chip
technology have created increasing dis-aggregation in the industry. Wipro is the
largest independent provider of R&D services in the world. Using “Extended
Engineering” model for leveraging R&D investment and accessing new knowledge
and experience across the globe, people and technical infrastructure, Wipro
enables firms to introduce new products rapidly.
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Wipro’s complete range of IT Services addresses the needs of both technology
and business requirements to help organizations leverage leading-edge
technologies for business improvement.Wipro takes charge of the IT needs of the
entire enterprise. The gamut of services extends from Enterprise Application
Services (CRM, ERP, e-Procurement and SCM), to e-Business solutions. Wipro’s
enterprise solutions have served and continue to serve clients from a range of
industries including Energy and Utilities, Finance, Telecom, and Media and
Entertainment.
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Tech Mahindra & Mahindra Satyam
Tech Mahindra is a global systems integrator and business transformation
consulting firm focused on the communications industry. With the convergence of
media and telecom, the changing landscape of the telecom industry is becoming
extremely competitive. As companies rapidly strive to gain a competitive
advantage, Tech Mahindra helps companies innovate and transform by leveraging
its unique insights, differentiated services and flexible partnering models. This has
helped our customers reduce operating costs and generate new revenue streams.
Recognizing that margins from connectivity are rapidly falling and that future
growth in revenues and margins will only come from new applications, content
and services, operators today are busy addressing business opportunities
revolving around Commerce, Content, Convergence and Customer Experience to
gain a sustainable Competitive Advantage.
For over two decades, Tech Mahindra has been the chosen transformation
partner for wireline, wireless and broadband operators in Europe, Asia-Pacific and
North America. Majority owned by Mahindra & Mahindra, one of the Top 10
industrial houses in India, in partnership with British Telecommunications plc (BT),
world’s leading communications service provider, Tech Mahindra has grown
rapidly to become the 6th largest software exporter in India (NASSCOM 2007) and
the second largest telecom software provider from India (Voice & Data
2007).Over 23,000 professionals service clients across the telecom eco-system,
from our global network of development centres and sales offices across
Americas, Europe, Middle-east, Africa and Asia-Pacific.
Committed to quality, Tech Mahindra adds value to client businesses through
well-established methodologies, tools and techniques backed by its stringent
quality processes. Tech Mahindra is ISO 9001:2000 certified and is assessed at SEI-
CMMI Level 5. Tech Mahindra has also been awarded the ISO 20000-1 (IT Service
Management standard) and ISO 27001 (Security Management standard)
certification for its development centers across India and UK.Tech Mahindra is
certified at PCMM Level 5 for its people-care practices and is the third company in
the world to have been appraised for SSE-CMM Level 3.
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Mahindra Satyam (the new brand identity of Satyam Computer Services Ltd. -
NYSE: SAY), a leading global business and information technology services
company, delivers consulting, systems integration, and outsourcing solutions to
clients in numerous industries across the globe. Mahindra Satyam leverages deep
industry and functional expertise, leading technology practices, and an advanced,
global delivery model to help clients transform their highest-value business
processes and improve their business performance. The company's professionals
excel in engineering and product development, supply chain management, client
relationship management, business process quality, business intelligence,
enterprise integration, and infrastructure management, among other key
capabilities. Mahindra Satyam development and delivery centers in the US,
Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore,
and Australia serve numerous clients, including many Fortune 500 organizations.
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HCL Technologies
HCL Technologies is a leading global IT services company, working with clients in
the areas that impact and redefine the core of their businesses. Since its inception
into the global landscape after its IPO in 1999, HCL focuses on 'transformational
outsourcing', underlined by innovation and value creation, and offers integrated
portfolio of services including software-led IT solutions, remote infrastructure
management, engineering and R&D services and BPO. HCL leverages its extensive
global offshore infrastructure and network of offices in 20 countries to provide
holistic, multi-service delivery in key industry verticals including Financial Services,
Manufacturing, Aerospace & Defense, Telecom, Retail & CPG, Life Sciences &
Healthcare, Media & Entertainment, Travel, Transportation & Logistics,
Automotive, Government, Energy & Utilities. HCL takes pride in its philosophy of
'Employee First' which empowers our 54,026 transformers to create a real value
for the customers. HCL Technologies, along with its subsidiaries, had consolidated
revenues of US$ 2.0 billion (Rs. 9,842 crores), as on 31st March 2009.
HCL is a $5 billion leading global Technology and IT Enterprise that comprises two
companies listed in India - HCL Technologies & HCL Infosystems. Founded in 1976,
HCL is one of India's original IT garage start-ups, a pioneer of modern computing,
and a global transformational enterprise today. Its range of offerings spans
Product Engineering, Custom & Package Applications, BPO, IT Infrastructure
Services, IT Hardware, Systems Integration, and distribution of ICT products
across a wide range of focused industry verticals. The HCL team comprises over
60,000 professionals of diverse nationalities, who operate from 23 countries
including over 500 points of presence in India. HCL has global partnerships with
several leading Fortune 1000 firms, including leading IT and Technology firms.
HCL has created the ability to distribute value across the customer's IT landscape
through its well-distributed services portfolio, significant domain strengths, and
locally relevant geographic distribution. HCL has the widest service portfolio
among Indian IT service providers, with each of its services having attained critical
mass. Our five mature lines of business are R&D and Engineering, Custom
Applications, Enterprise Applications, IT Infrastructure Management, and BPO
Services. In addition, HCL has recently launched its Enterprise Transformation
Service offerings comprising of Business, Technology, Application and Data
Transformation – the four broad needs of any enterprise. Our ability to
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synergistically integrate these service lines across the entire IT landscape creates
new zones for value creation. Additionally, HCL has created unique service
leadership in each of these areas through best-of-breed unique propositions.
HCL’s leadership in these service areas has been recognized by several leading
independent analyst.
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Patni Computer Systems:
Patni Computer Systems Ltd. (Patni) (BSE: PATNI COMPUT, NSE: PATNI, NYSE: PTI)
is one of the leading global providers of Information Technology services and
business solutions. Over 14,500 professionals service clients across diverse
industries, from 27 sales offices across the Americas, Europe and Asia-Pacific, and
22 Global Delivery Centers in strategic locations across the world. We have
serviced more than 400 FORTUNE 1000 companies, for over two decades.
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Polaris Software Lab
20 years ago, Citigroup began its quest to pioneer the utilization of the vast
human intellect capital in India & the seeds of Polaris were sown. Polaris was
fortunate to be one of the first vendors that Citigroup chose to partner with,
through this Indian quest. Simultaneously Citigroup also started its own company
called COSL (Citibank Overseas Software Ltd) which strategized and
operationalized Citigroup's vision of leveraging India. Today, Polaris is an
amalgamation of these two organizations that traveled the path of successfully
architecting & realizing Citigroup's India led vision.
The 2 Decade long journey was clearly an experience that helped Polaris
participate, witness and experience every pitfall, every hurdle & fallacy in this
path to leverage the Indian intellectual capital.
The challenges were many. The challenge of creating a successful global sourcing
model, the challenge of creating an alternative distributed banking platform, the
challenge of creating global competitiveness from a third world economy, the
challenge of replicating success from one country to another… The biggest
challenge was in being the first one in the world doing all this.
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As Citigroup gained the competitive edge, Polaris gained two very critical
experiences:
While the rest of the Indian market was busy building expertise on COBOL, Java
and Lotus, Polaris built expertise on Investment Banking, Retail Banking, Credit
Cards, Corporate Banking, Insurance etc.
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Oracle Financial Services Software Ltd
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• Only open-standards core banking solution, enabling new products,
relationship pricing, and consolidation of existing systems
• Most complete end-to-end risk and performance management solution,
extending into business operations and anti-money laundering
• World's leading financials solution for FSI with muti-GAAP, IFRS, and multi-
book code processing
• Only service-oriented architecture with a banking-specific data model and
process library
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Infosys
Powered By Intellect
Driven By Values
Vision
Mission
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Introduction:
Infosys Technologies Ltd. (NASDAQ: INFY) was started in 1981 by seven people
with US$ 250. Today, we are a global leader in the "next generation" of IT and
consulting with revenues of over US$ 4 billion. Infosys defines designs and
delivers technology-enabled business solutions that help Global 2000 companies
win in a Flat World. Infosys also provides a complete range of services by
leveraging our domain and business expertise and strategic alliances with leading
technology providers.
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 has over 103,000 employees. Infosys takes pride in building strategic long-
term client relationships. Over 97% of our revenues come from existing
customers.
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Analysis of the company:
STP Analysis
Segmentation
Geographical regions:
US, India, Australia, China, UK
Psychographics:
MNC, BFSI, Hospitality Sector
Demographic:
Population or Employee strength of consumer company: +5000
Targeting
Infosys Technologies Ltd, which offers its core banking solution under the brand
‘Finacle’, is targeting regional rural banks to achieve higher growth. There are
over 90 rural banks in India & they have come up with a solution called ‘The
Finacle Bank in a Box’ for this segment. The expenditure that each rural bank
would have to make would depend on its existing level of automation. IT service
providers would benefit a great deal if more people from rural areas were
included in the banking services, and Infosys has. The solution will be deployed by
a third party who will do the banking transaction on behalf of different banks as
the model is expected to be cost-effective
Infosys BPO is targeting the hospitality industry for it’s outsources processes
offering. The company has formed a strategic alliance with New York-based
hospitality consultancy major HVS International The alliance will help Infosys BPO
(formerly called Progeon) to target hotels and other customers in the hospitality
industry. HVS is a well-known consulting firm in the hospitality segment.
38 Amit C. Parekh
Positioning
Infosys is seeking to move away from its image as a cheap Indian offshore service
factory to that of a global business technology (BT) leader. The company is
investing in measures to enhance its visibility and footprint across a wider group
of client stakeholders and markets. The aim is to position Infosys as a prototype
for successful companies in a globalized market environment. While Infosys can
justifiably point to its ongoing business growth as a major success story, its
corporate positioning suffers from inconsistencies in its underlying messaging.
Furthermore, its product positioning continues to mainly focus on technology and
cost-related benefits, which represents a disconnect with Infosys' corporate
ambitions.
8 P’s of Infosys
1) Service Products:
B. Enterprise Services
• Packaged Applications
§ Supply Chain Management (SCM)
§ Customer Relationship Management (CRM)
§ Enterprise Application Integration (EAI)
§ Enterprise Resource Planning (ERP)
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• Systems Integration
§ Business Intelligence and Data Warehousing
§ Enterprise Content Management
§ Enterprise Information Portal
§ Enterprise Mobility
§ Enterprise Security
§ Identity Management
§ Migration and Re-hosting
2. People:
In service sector people refers to the employees which represent the firm. In IT
People are divided into 4 different zones.
3. Place:
§ USA
§ Canada
§ Australia
§ China
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§ India
§ Japan
§ UAE
§ France
§ Germany
§ UK
§ Italy
4. Process
5. Physical Evidence
6. Productivity
Productivity refers to the success or failure of any business, so the quality of the
product should be very good for his companies have different quality standards
which are certified by the quality department and are approved all over the
world. If one does not have approved quality standards then he develops its own
to meet the quality that are demanded by the customers
We go to great lengths to ensure that the IT services we deliver not only surpass
your expectations, but ours too. Quality is a way of life for us, and covers all our
processes, interfaces and outputs, in management, core and support process. It is
the way we deliver long term excellence, and ultimately, predictability of returns,
through the GlobalDeliveryModel(GDM). The quality systems at Infosys match the
best in the world. We benchmark ourselves against international quality
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standards, like ISO 9000, CMM and recently, the Malcolm Baldrige framework. In
addition, we use world-class techniques like the Six Sigma Cross Functional
Process Mapping (CFPM) methodologies (from Motorola University) to facilitate
process improvement. However, Infosys Quality is more than a mere adherence
to these benchmarks, but a proactive quest for process improvement, beyond
conventional limits.
7. Price
In its recent analyst meet in Pune, Infosys indicated the return of pricing discipline
in the market even as prices continued to stay cramped in high-volume deals. The
company in its bid to differentiate itself among the vanilla service providers is
moving from project-based services to solutions-based approach. Such a strategy
entails understanding of the clients' business problems and offer business
solutions. In this new model, pricing depends on value offered as against the
current cost plus margin approach. The shift has been aided by swelling service
offerings like package implementation and enterprise applications to business
process outsourcing and contributions from new services increased to 35 per cent
in last fiscal compared to 10 per cent in 1998-99. The cost rationalization has also
helped the firm retain margins. The company cut entry-level salaries for fresh
college graduates; it has rationalized high onsite salaries for fresh onsite
deployments and cut on subcontractors. However, Infosys affected a pay hike to
its middle level and senior code writers at an average of 13 per cent.
42 Amit C. Parekh
compensation for client facing functions has been linked to profitability over and
above revenue growth. Increasing utilization rates and greater offshore
component is expected to help the company arrest the slide in margins.
8. Promotion
SWOT Analysis
STRENGTHS:
WEAKNESSES:
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OPPORTUNITIES:
THREATS:
• Global economic slowdown may continue for several years – hence low IT
spending globally.
• US Govt. against outsourcing.
• Shrinking margins due to rising wage inflation, Rupee-dollar movement
affects revenue and hence margins.
• Increased competition from foreign firms like Accenture, IBM etc.
• Increased competition from low-wage countries like China, Indonesia etc.
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INFOSYS BCG MATRIX
In Infosys Software products adds to 40% of the revenue followed by 30-35% from
BPO, KPO and around 25% from ERP & Package Implementation.
Package Implementation
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Ansoff s Matrix:
Current Products: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing
and retail) and software products (financial products).
Current Product: ADM, BPO, KPO, consultancy services (in BFSI, manufacturing
and retail) and software products (financial products).
47 Amit C. Parekh
Recommendation: Concentrate on building expertise in these domains by
strategic acquisitions.
Result of Strategy: Likely to have good result. (Better the company acquired, the
better the result).
DIVERSIFICATION:
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TCS Financial Solutions
Vision
Mission
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Introduction:
At TCS, it means achieving real business results that allow you to transform, and
not just maintain, your operations. Our IT services, business solutions, and
outsourcing bring you a level of certainty that no other competitor can match.
You'll experience requirements that are met on-time, within budget, and with
high quality; greater efficiency and responsiveness to your business; and the
ability to shift investment to strategic initiatives rather than tactical functions.
TCS' Global Network Delivery Mode is the engine that allows us to provide
reliable, scalable and cost effective delivery of services and solutions. This time-
tested model has enabled us to achieve client satisfaction ratings of 89% for
meeting quality expectations and an average budget variation on projects of just
3% -- both figures far better than industry norms.
When you become TCS client, here's just a sampling of what TCS do for you:
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• Prepare community-oriented campaigns to identify a wide range of
promotional opportunities for product placement, test marketing or market
introduction
• Coordinate your identity branding to ensure that all materials communicate
the same message and appeal
• Provide effective, attention-getting RFPs (Request for Proposals) and
specific contracting with third-party vendors
• Ensure that you receive our cumulative experience and wide range of
networking opportunities to help you grow and succeed.
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Analysis of the company:
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STP Analysis
Segmentation
Geographical regions:
UK, France, India, Germany
Psychographics:
MNC, BFSI, Manufacturing & Telecom Industry
Demographic:
Population or Employee strength of consumer company: +3000
Targeting
TCS today said it is launching a strategic business unit targeting the small and
medium businesses (SMBs), which can generate a turnover of Rs 2,000 crore in
the next few years. Through this new unit, TCS wants to provide technological
solution for SMBs. TCS will offer IT-as-a-Service in an innovative business model
giving SMBs the experience of customized low-cost solutions scalable to their
growing business needs.
TCS is betting on SMBs because the next stage of growth would come from there
in India. SMBs are the most under-served segment. That is where the opportunity
lies. And they don't have to worry about the new technologies that keep coming
into the market.TCS would be targeting at companies that have a turnover of Rs
100-500 crore.
Positioning
TCS has also positioned itself as a major player in shaping the B2B/B2C
marketplace for automakers, buyers and sellers. The auto industry could drive
down the cost of automobiles for the end user while at the same time enabling
consumers to buy their own configured vehicle. TCS is providing enabling
technology in this area through Customer Experience, Knowledge Management
and Business Intelligence domain.
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The company's new R&D Center, scheduled to open within three months, will
support IT and engineering services for the automotive industry. They plan to
aggressively recruit approximately 50-100 new employees with backgrounds in
the automotive industry to assist with the development of new products for their
existing and new clients.
8 P’s of TCS
1) Service Products:
2. People:
In service sector people refers to the employees which represent the firm. In IT
People are divided into 4 different zones.
3. Place:
§ India
§ UK
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§ France
§ Germany
§ Korea
§ Hungary
§ Japan
§ Netherlands
§ Ireland
4. Process
5. Physical Evidence
6. Productivity
Productivity refers to the success or failure of any business, so the quality of the
product should be very good for his companies have different quality standards
which are certified by the quality department and are approved all over the
world. If one does not have approved quality standards then he develops its own
to meet the quality that are demanded by the customers
When it comes to quality levels, there systems and processes have been placed at
the top of the scale by various evaluating agencies. TCS has an organization-wide.
ISO 9001 certification. They have 14 'delivery centers’ spread across India
operating at 'Level 5', the highest point of SEI CMM certification. TCS has over
1,100 'certified quality assessors' (CQAs) among its people. This is the single
largest number of CQA employees for any organization, and it constitutes over a
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third of the CQA fraternity in the world, they were the first organization in the
world to be assessed at PCMM Level 4. This means that they have developed
measurable people practices by empowering their workgroups, and by managing
the capability and performance of their workforce quantitatively. They currently
have four centers functioning at PCMM Level 4. TCS has adopted 'Six Sigma'
practices at two of its centers, and has 12 Six Sigma black belts in its fold.
7. Price
Starting this quarter, the company will start offering clients ‘ticket-based pricing’
as opposed to fixed price and time and material-based pricing for software
maintenance projects. The move is aimed at increasing revenues without a
proportional increase in the number of employees. Under the traditional time and
material-based pricing, customers are billed based on the number of man-hours
spent on a project, while under the fixed price, as the name suggests, the
customer pays an agreed price that doesn’t vary with the manpower deployed on
the project. Under the new ‘ticket-based pricing’, a customer’s pay will be based
on certain parameters such as whether the client request or ‘ticket’ that is raised
is for a small enhancement in the software application, a big enhancement or a
bug-fix. “A software application becomes more stable with time. But if a client has
opted for a fixed price model, then even after the application becomes more
stable and the number of requests decreases, the same price has to be paid.
Ticket-based pricing will give them the flexibility to change that and reduce the
total cost of ownership
8. Promotion
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includes advertising, sales promotion, publicity, and personal selling. Branding
refers to the various methods of promoting the product, brand, or company.
Weakness:
• Lack of scale compared to global competitors like IBM, HP (which bought
EDS), and Accenture.
• Needs to establish a track record when it comes to large deals Consulting
accounts for less than 4 per cent of global revenues; IBM, Accenture score
on this count.
• Needs to strengthen other service lines besides application, development
and maintenance (ADM) that accounts for nearly 48 per cent of its
revenues.
• Man power strength is more than 10,000 employees and thus, it is
challenging to get personalized career development.
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• Bad real estate
• Limited Product Line
Opportunities:
Threats:
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BCG Matrix:
TCS SmartBox
Support Central-
Business Social Productivity Platform
In TCS Software products adds to 80% of the revenue followed by 20% from BPO,
KPO.
TCS SmartBox:
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TCS Rapid Sigma:
This is the world’s first certified composite on SAP xMII. It helps organizations
practicing Six Sigma in reducing the ‘Time to Measure’ of data to nearly nil and
also reducing the chances of statistically ‘un-fit’ data for analysis. Rapid Sigma is a
ready to use, highly configurable tool which gets deployed on SAP xMII
environment. The solution allows seamless integration to shop floor databases
and SAP ERP. This integration saves valuable time of data collection and ensures
that right data is collected in the right DMAIC phase from the right place. It
cannot be treated as a separate, independent product which runs on its own (It’s
a composite built using xMII). Also the functionality of this needs to be validated
from a six sigma black belt champion before deploying it at the customer site.
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Having developed this solution for one of the world’s largest organizations, where
it is the most used platform after Email, TCS is uniquely positioned to partner with
your enterprise to maximize Return on Investment through significant dollar
savings as well as increased productivity.
This highly flexible and customizable solution offers post- processing solutions for
various CNC machines and its configurations. It can reduce post processor
development time up to 30-40% depending on the application and can be used
for NC applications, which are not fully supported by third party NC post builders.
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Ansoff’ s Matrix:
Recommendation: As most large clients in Europe are cutting costs, Tcs needs to
be more aggressive on cost and quality front.
New Product: Tcs SmartBox, Jointly developed by TCS and A*STAR Singapore
Institute of Manufacturing Technology (SIMTech), it is a futuristic industrial
controller that brings high-level control closer to the actual production process.
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Recommendation: Concentrate on building expertise in these domains by
strategic acquisitions.
DIVERSIFICATION:
New product: Tcs SmartBox, Jointly developed by TCS and A*STAR Singapore
Institute of Manufacturing Technology (SIMTech), it is a futuristic industrial
controller that brings high-level control closer to the actual production process.
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Conclusions:
Predicting what will come in an industry that evolves on an almost daily basis is a
thankless and almost futile task. Things change at such a rapid rate, and many of
the technologies are so fluid, that a shift in direction can occur in weeks rather
than months. If we think that today's Internet and e-commerce opportunities are
technically advanced, we have not seen anything yet. Not only will the existing
uses of the Internet get more and more advanced, but new ways will be found to
exploit the opportunities it provides. The delivery of these services will not just be
dependant on new formats and programming, but also on the mediums that
deliver them. For this to happen, certain changes will need to take place, not just
technological, but legal as well. Protection of consumers needs to be examined, as
well as considerations such as copyright protection and piracy prevention. As well
as using conventional methods to connect to the Internet, wireless access will
also become a common approach. Although we already have wireless data
devices, the wireless computing industry is still in its relative infancy. With
wireless transmission speed developing at a rapid rate, coupled with the
availability of wireless data services, this is one area of technology that is sure to
become a big mover. Even now, hand-held computers or Personal Digital
Assistants are becoming commonplace.
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Bibliography & References
1. Magazines
a. Computer World
b. Dataquest
c. PC Quest
d. Computronics
2. Internet
a. www.infosys.com
b. www.tcs.com
c. www.oracle.com
d. www.businessballs.com
e. www.marketingprofs.com
f. www.nasscom.org
3. News Paper
a. Economic Times
b. Mint
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