Friday, May 31, 2013

Infosys 3.0 - Will the strategy work?

Thinking of the strategy of the company I was working for and why I’m not there anymore, I believe there is a relation between the two. When I was seriously considering a grad program, the strategic decisions of my company and how it was implemented propelled my decision to quit and start studying again.
Infosys Limited is an IT service provider with a global reach and is majorly into business consulting and technology solutions. As a company, Infosys was always considered a conservative company and they have made very few mistakes in terms of strategic decisions till 2010. There were some policy screw-ups which can be attributed to all companies as such, but apart from that, they had been #2 in the Indian IT industry for quite a while and that is when they declared the new strategy for the coming years.
The IT industry is fast paced and unpredictable. So, it needs an iterative approach for strategy. The latest strategic decision, which Infosys dubs as Infosys 3.0 (the earlier strategic change was called Infosys 2.0) has been a far-cry from the usual conservative policies associated with the company. One of the biggest standpoints of the company now is that, they want to transform from a technology solutions provider to a business solutions provider. The current point of focus is on cloud computing, mobile technology and other such areas of current trends in the software industry. All this is being done in an effort to make the company more sustainable.  They also surprised everyone by announcing that they wouldn’t hesitate on a takeover of a company operating in the areas where Infosys wants to innovate. Apart from these, one of the major points of the new strategy was that, they would move towards being a product and platform company. This was a welcome change considering that not many in the sector are looking at this approach for now and this could very well be a distinctive advantage that Infosys holds over its competitors.
Although there were many aggressive statements and declarations, not much came into fruition. There are certain strategic mistakes, which might be a strategy in themselves. For example, they have still not come out of mind-set that they are a technology solutions provider and the product-platform strategy in spite of initially gaining the company a lot of customers, seems to be waning of. Being in the technology solutions framework has actually helped them in the markets as their revenue has not gone down greatly when compared to the expectations. Also, the idea of a new company which worked like a start-up with out of the box thinking employees never worked out, probably, there is work going on, not something I know of. The revenues had not met their own guidelines over the past few years, since the introduction of Infosys 3.0 and now, they have stopped giving a guideline (since it is not a market norm). This has caused many critics in the markets to question Infosys' strategies

From a company which was margin oriented, and whose founder N.R. Narayanamurthy once famously said “Margins are better than revenues”, to a company that has stopped giving guidelines, it shows a decline in terms of the markets. But will this strategy work over the long term or is it time for Infosys 4.0? Now, this is a question only time can answer.

1. Product and Platform Strategy
2. Infosys 3.0 unraveled
3. About Infosys

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