Infosys Consulting in 2006 : <br />Leading the Next Generation of Business <br />and Information Technology Consulting<br />
IT Service Industry : Overview<br /><ul><li>On-shore incumbents are still larger: IBM, Accenture
Off-shore players growing : TCS, Wipro, Infosys Technology
47% Annual growth (2003 vs. 2004)
Still 0.8% market share</li></ul>CAGR 7%<br />Fragmented market<br />
IT Service Industry : Transformation<br />Change in Customer Needs<br />Change in Offerings<br /><ul><li>Invest in new tec...
Traditional enterprise application packages
Homogeneous infrastructure
More demanding in ROI
Get more out of tech investment
Rapid adaption /modification
Specific point solutions
Off-shore IT services
SOA (Service-oriented Architecture) & Web services
Applications as services</li></li></ul><li>Strong Growth in Employees<br />Increase in number of Active Clients<br />Excep...
Adjudged “India’s Best Managed Company” in a study conducted by Business Today and A.T. Kearney
Forbes: “Infosys is a role model for companies everywhere in financial transparency.”
“Dream company to work for” in India and amongst the “100 best places to work for in IT” in the US
Amongst the first companies in  world to be certified at CMMI Level 5
BusinessWeek: Amongst the top 3 IT Services companies in the world
Wired rated Infosys among its top 40 companies that have reshaped the global economy. </li></li></ul><li>Applying GDM+ acr...
Infosys is a global leader in Consulting and IT Services<br />Recognition<br />Achievements:<br /><ul><li>USD 4bill. + glo...
~ 32 billion USD market cap (NASDAQ:INFY)
Over 30% annual growth for the last 6 years
Global workforce of 100.000+
More than 450 clients, mostly Fortune 2000 companies
7 of the largest world companies are Infosys customers
Over 87% of projects on-time on-budget
More than 90% recurring customers
Global leader in quality practices CMM5, 6-Sigma, Malcolm Baldridge</li></ul>Líder en Tecnología Bancaria<br />Empresa mej...
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Ba401Infosys Consulting In 2006

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Ba401Infosys Consulting In 2006

  1. 1. Infosys Consulting in 2006 : <br />Leading the Next Generation of Business <br />and Information Technology Consulting<br />
  2. 2. IT Service Industry : Overview<br /><ul><li>On-shore incumbents are still larger: IBM, Accenture
  3. 3. Off-shore players growing : TCS, Wipro, Infosys Technology
  4. 4. 47% Annual growth (2003 vs. 2004)
  5. 5. Still 0.8% market share</li></ul>CAGR 7%<br />Fragmented market<br />
  6. 6. IT Service Industry : Transformation<br />Change in Customer Needs<br />Change in Offerings<br /><ul><li>Invest in new technologies on faith and without strong links to ROI measurements (Over-purchase!)
  7. 7. Traditional enterprise application packages
  8. 8. Homogeneous infrastructure
  9. 9. More demanding in ROI
  10. 10. Get more out of tech investment
  11. 11. Rapid adaption /modification
  12. 12. Specific point solutions
  13. 13. Off-shore IT services
  14. 14. SOA (Service-oriented Architecture) & Web services
  15. 15. Applications as services</li></li></ul><li>Strong Growth in Employees<br />Increase in number of Active Clients<br />Exceptional Financial Performance<br />Revenue ($M)<br />Employees<br />Active Clients<br />Infosys today is a global leader in the “next generation” of IT and Consulting<br /><ul><li>Named India’s Most Respected Company in the Businessworld 2006 survey for the fourth consecutive time
  16. 16. Adjudged “India’s Best Managed Company” in a study conducted by Business Today and A.T. Kearney
  17. 17. Forbes: “Infosys is a role model for companies everywhere in financial transparency.”
  18. 18. “Dream company to work for” in India and amongst the “100 best places to work for in IT” in the US
  19. 19. Amongst the first companies in world to be certified at CMMI Level 5
  20. 20. BusinessWeek: Amongst the top 3 IT Services companies in the world
  21. 21. Wired rated Infosys among its top 40 companies that have reshaped the global economy. </li></li></ul><li>Applying GDM+ across the services spectrum<br />Management Consulting<br />New services* as % of revenue<br />2006<br />41.1%<br />Business Process Management<br />IT Outsourcing<br />Systems Integration<br />37.7%<br />35.4%<br />29.6%<br />2001<br />24.9%<br />Technology Consulting<br />Technology-enabled BPR<br />22.8%<br />Enterprise Solutions<br />1996<br />Application Development and Maintenance<br />Software Re-engineering<br />1981<br />People<br />Organization<br />Infrastructure<br />Process<br />Quality<br />* New services is defined as services other than Application Development, Maintenance, Re-engineering and Products<br />Infosys Global Delivery Model<br />June 10, 2006<br />© Infosys Technologies Limited 2005-06<br />
  22. 22. Infosys is a global leader in Consulting and IT Services<br />Recognition<br />Achievements:<br /><ul><li>USD 4bill. + global revenues (2008)Europe represents over 25% of this figure
  23. 23. ~ 32 billion USD market cap (NASDAQ:INFY)
  24. 24. Over 30% annual growth for the last 6 years
  25. 25. Global workforce of 100.000+
  26. 26. More than 450 clients, mostly Fortune 2000 companies
  27. 27. 7 of the largest world companies are Infosys customers
  28. 28. Over 87% of projects on-time on-budget
  29. 29. More than 90% recurring customers
  30. 30. Global leader in quality practices CMM5, 6-Sigma, Malcolm Baldridge</li></ul>Líder en Tecnología Bancaria<br />Empresa mejor gestionada<br />Mejor empleador, <br />Mejor universidad corporativa<br />Mejor gobierno corporativo<br />
  31. 31. KEY FIGURES<br />Infosys is a global leader in Consulting and IT Services<br />REVENUES FROM FINANCIAL SERVICES ($ M)<br /><ul><li>More than 154 active clients (en su mayoría Global Fortune 2000)
  32. 32. More than 13.000 employees in 31 development centres around the world
  33. 33. 6 of the 7 largest US banks
  34. 34. 4 of the 5 largest European banks
  35. 35. 3 of the 4 largest Australian banks</li></ul>CAGR aprox. 40%<br />Other Segments<br />37.8%<br />37%<br />Banking and Capital Markets<br />
  36. 36. Infosys Technologies – Company Background<br /><ul><li>Started in 1981 for $225
  37. 37. Built up in 1980s and 90s through customized software solutions, developed in offshore (Indian) development centers
  38. 38. Also develops and markets software products
  39. 39. Flagship product is ‘Finacle’, a modular banking solution for retail, corporate and banks
  40. 40. Grew mostly through new business contracts, acquisition of smaller IT service providers, and alliances with larger companies. </li></li></ul><li>Infosys Technologies – Business Model<br />Global Delivery Model<br />Definition<br />Vehicles<br />Customer Value<br />38 global development centers<br /><ul><li>20 in India
  41. 41. 18 in the US, the UK, Australia, Canada, China, Mauritius and Czech Republic.</li></ul>Lower Cost<br />Faster Implementation<br />Lower Risk<br />Measurable <br />“The process of breaking projects down into their logical components and then distributing those components to locations (onsite, nearshore, or offshore) where they can be delivered at maximum value.”<br />1<br />2<br />3<br />4<br />Innovation<br /> to Meet New <br />Customer <br />Needs <br />Modular Global Sourcing<br />Framework<br />
  42. 42. Infosys Technologies – Business Performance<br />CAGR 45%/30%<br />CAGR 43%<br />EBITDA Margin %<br />
  43. 43. Infosys Technologies – Business Performance<br />Revenue by Industry<br />Revenue by Geographic Market<br />
  44. 44. Infosys Technologies – What are the Competitive Advantages?<br />India<br />Infosys Technologies<br />Abundant supply of low-cost scientists and engineers<br />Excellent training program<br />Cost & quality advantage coming from GDM and low-cost labor<br />Brand/reputation<br />Global Delivery Model<br /><ul><li>Global development centers
  45. 45. Right Talents</li></ul>Customer relationship<br />Open/transparent & performance-driven culture<br />Flat organizational structure<br />Domain knowledge<br />Right reward system (stocks, career visions)<br />
  46. 46. Infosys Technologies – Sustainable? : vs. Current Competitors<br />On-shore Incumbents<br />Other Off-shore Players<br /><ul><li>Trying to adapt GDM while maintaining their existing business model & organizational structure
  47. 47. Adding more off-shore workforce through M&A or expansion
  48. 48. However…
  49. 49. Can NOT completely migrate to GDM because…
  50. 50. It can jeopardize existing businesses
  51. 51. There is fundamental organizational difference (i.e. Hierarchic vs. Flat) which would make it hard to attract right talents for GDM</li></li></ul><li>Infosys Technologies – Sustainable? : vs. Current Competitors<br />On-shore Incumbents<br />Other Off-shore Players<br /><ul><li>Still behind Infosys in terms of operational excellence because…
  52. 52. Infosys’s core competency is ‘People’ and supporting system to attract/keep talents
  53. 53. Intangible assets and congruence of the whole system are hard to copy (e.g. Culture, HR, reputation)
  54. 54. Already offering the same services by copying the tangible part of business model
  55. 55. 24/7 services
  56. 56. Global offices
  57. 57. Competing for the same talents
  58. 58. However…</li></li></ul><li>Infosys Technologies – Sustainable? : vs. Current Competitors<br />On-shore Incumbents<br />Other Off-shore Players<br />Performance Comparison<br />USD (Mil)<br />
  59. 59. Infosys Technologies – Sustainable? : vs. Potential Competitors<br />They are disruptive not only to incumbents but to off-shore players<br />Infosys’s competitive advantages no longer sustainable<br />SaaS<br /><ul><li>Significantly easier & faster implementation
  60. 60. Very low up-front capital investment
  61. 61. No need to have expensive IT service providers
  62. 62. Very low entry barrier
  63. 63. Force incumbents to change product & pricing
  64. 64. User-focused, not buyer-focused : self-service IT
  65. 65. Very cheap or free funded by Ad model</li></ul>Web 2.0<br />
  66. 66. Infosys Technologies – SWOT Analysis<br />Strengths<br />Weaknesses<br /><ul><li>Operational excellence to deliver GDM
  67. 67. Capability to attract & keep talents
  68. 68. Strong financial
  69. 69. Strong relationship with Large Corporations
  70. 70. Over-reliance on US economy
  71. 71. Limited position in value chain (i.e. No presence or relationship with consulting business) </li></ul>M<br />L<br />H<br />M<br />Significance of Impact<br />L<br />M<br />High<br />H<br />Medium<br />M<br />H<br /><ul><li>More cost/speed conscious customers
  72. 72. Market growth
  73. 73. Higher awareness on off-shore model
  74. 74. Wage inflation due to competition on talents (15+% / year)
  75. 75. Newer disruptive business models (i.e. web services, web 2.0)</li></ul>H<br />Low<br />L<br />M<br />H<br />M<br />Opportunities<br />Threats<br />
  76. 76. IT Consulting Market Context & Structure<br /><ul><li>Subset of overall IT services market
  77. 77. Projected single-digit growth of 5%
  78. 78. Largely fragmented market with 2 key segments:
  79. 79. On-shore consulting and IT services players (Accenture, IBM, Capgemini, EDS)
  80. 80. Off-shore IT services players </li></ul>(Wipro and TCS)<br /><ul><li>Largest shares held by Accenture and IBM </li></li></ul><li>Infosys Consulting – Company Background<br /><ul><li>Started in April 2004 with initial investment of $20M
  81. 81. Chose a wholly-owned subsidiary model
  82. 82. Led by former leadership of Deloitte Consulting India
  83. 83. Focused on the Global Delivery Model (GDM) and more cost-competitive consulting rates
  84. 84. Integrating the business consulting and technology implementation lifecycles
  85. 85. Engagements sourced from parent company and existing client base of Infosys Technologies </li></li></ul><li>Infosys Consulting – Company Organization<br /><ul><li>Building a Unique Culture
  86. 86. Recruiting the Right People
  87. 87. Creating a Differentiated Approach
  88. 88. Rewarding Employees</li></li></ul><li>Infosys Consulting – Business Model<br />“1-1-3” Model<br />Definition<br />Vehicles<br />Customer Value<br /><ul><li> On-shore management consulting talent
  89. 89. On-shore liasons
  90. 90. Off-shore resources</li></ul>Lower blended rates<br />Faster Implementation<br />Integration<br />“Integrate the business consulting and technology implementation lifecycle. ‘1-1-3’ model gives one client one ICI resource onsite, one Infosys Tech resource onsite, and 3 Infosys Tech resources offshore.”<br />1<br />2<br />3<br />“1-1-3”combined with GDM<br />
  91. 91. Infosys Consulting – What are the Competitive Advantages?<br />Access to Infosys Technologies clients<br />Large supply of low-cost IT/process resources<br />Strong operational skills<br />Cost & speed advantage coming from “1-1-3” and GDM model <br />“1-1-3” Model<br /><ul><li>Blend on/off shore
  92. 92. Cost efficient</li></ul>Unique, <br />blended model<br />Easier to integrate offshore with onshore<br />
  93. 93. Infosys Consulting – ICI vs. Current Competitors<br />On-shore Incumbents<br />Other Consulting Players<br /><ul><li>Trying to adapt GDM while maintaining their existing business model & organizational structure
  94. 94. Adding more off-shore workforce through M&A or expansion
  95. 95. However…
  96. 96. Can NOT completely migrate to GDM/”1-1-3” because…
  97. 97. It can jeopardize existing businesses
  98. 98. May be brand equity erosion</li></li></ul><li>ICI Experiencing Revenue Growth<br /><ul><li> High double-digit year on year revenue growth
  99. 99. Approximately 2/3rds of revenue from the United States
  100. 100. Key industries: Retail, Transportation, High Tech, Banking, Energy/Utilities
  101. 101. Reflects steady growth in number of clients:
  102. 102. 25 clients in FY05
  103. 103. 54 clients in FY06
  104. 104. 89 clients in FY07</li></li></ul><li>But Increasingly Dim Profitability Results<br /><ul><li> Infosys still deems Infosys Consulting to be in “investment phase.”
  105. 105. Potential causes:
  106. 106. cheaper blended rates
  107. 107. expensive on-shore resources
  108. 108. Learning curve in managing consulting business economics </li></li></ul><li>Infosys Consulting vs. Current CompetitorsOperational Scale & Performance<br />On-shore Incumbents<br />Still a marginal player vis.a.vis<br />consulting units of both the <br />on-shore as well as off-shore<br />majors. <br />Other Off-shore Players<br />
  109. 109. Infosys Consulting – SWOT Analysis<br />Strengths<br />Weaknesses<br /><ul><li>Unique blended model
  110. 110. Access to Infosys clients
  111. 111. Strong in operations
  112. 112. Low brand equity
  113. 113. Inexperience with consulting relationships
  114. 114. Challenge attracting top consulting talent</li></ul>H<br />M<br />H<br />M<br />Significance of Impact<br />M<br />M<br />High<br />H<br />Medium<br />M<br />M<br /><ul><li>More cost/speed conscious customers
  115. 115. Market growth
  116. 116. Open up new segment of market
  117. 117. Easy replicability of model
  118. 118. Increasing IBM/ACN presence in India
  119. 119. Culture clash with Infosys Technologies</li></ul>H<br />Low<br />L<br />M<br />M<br />M<br />H<br />Opportunities<br />Threats<br />
  120. 120. Infosys Consulting: Cost or Profit Center?<br />What is ICI’s place in the Infosys Technologies Portfolio? <br />Key Challenges<br /><ul><li>Approaching profitability or break even
  121. 121. Collaborating effectively with Infosys Technologies
  122. 122. Impending replication of ICI business model by others
  123. 123. Find firm, differentiated place in industry value chain</li></ul>Needed Responses<br /><ul><li>Revisiting pricing and/or cost structure
  124. 124. Integrate client management with Infosys Technologies
  125. 125. Use ICI to monitor client trends & the “next big thing.”
  126. 126. Capitalize Infosys “flat world” aura to achieve positioning </li></li></ul><li>Moving forward… : Infosys’ Strategy<br />Infosys should leverage ICI , <br />To strengthen its position in current market, and <br />To prepare for further industry transformation<br />ICI<br />Infosys Technologies<br />More Value from Existing Customer Base<br /><ul><li>Stronger relationship through involving higher-level decision making
  127. 127. Provide more agile and customized solutions
  128. 128. More wallet share from current customers
  129. 129. Integration rather than expansion
  130. 130. Antenna to sense changes in the market
  131. 131. Influence customers’ strategic moves
  132. 132. Relationship building with emerging players
  133. 133. Acquire them as customers or partners
  134. 134. Develop capabilities to offer right services/products in the long-term</li></ul>Strategic Alliance with Emerging Competitors<br />
  135. 135. Thank YouQ&A<br />

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