This is a report on the potential growth/decline of INFOSYS during the period of 2012-2015 based on an analysis considering several microeconomics parameters.

1. MICRO-ECONOMICS RESEARCH: INDIVIDUAL REPORT MBA-2012 | LT-1A
COMPANY INFORMATION [99 words]
INFOSYS is a Bangalore-based Information Technology MNC which started the IT revolution in
India that transformed Bangalore into the “Silicon Valley of India”. INFOSYS is a household name in India
that is highly respected by employees and the general public for its strong value system as a
corporation. In the 5.5 years I worked at Infosys since graduation I grew from an entry-level position to
that of Technology-Lead. Promoted twice in my career, I lastly served as Technology-Lead for 6 months.
INFOSYS TECHNOLOGIES LTD.
Corporate Headquarters
Electronics City, Hosur Road,
Bangalore– 560100, INDIA
Phone: +91-80-2852-0261
Email: askus@infosys.com
Web: www.infosys.com
NATURE OF BUSINESS [250 words]
INFOSYS defines, designs and delivers technology-enabled business solutions for Global 2000
companies and operates in 64 countries across the world. INFOSYS has developed a conglomerate
integration instead of vertical integration. For the first 25 years of its operations INFOSYS experienced
increasing returns to scale where adding head-count delivered consistently increasing margins. But as
the industry matured and competition increased there was a trending towards constant returns to scale.
Post 2005 INFOSYS leadership made a strategic decision to return to an increasing return to scale where
the growth rate of revenues and margins are not limited by the growth rate of input factors like human
capital or number of client acquisitions. Technology-based automation of different aspects of IT
solutions development and maintenance has helped INFOSYS battle diminishing return to scale. Starting
with 7 founders and $250 in 1981, the current size of over 140,000+ employees and $6.6 Billion
revenues demonstrates the huge upward shift in its total output over the 30 years of its existence.
Due to the persisting global economic slowdown, INFOSYS will experience a slight downward
shift in its total product output as will the entire IT-industry. Recessionary symptoms like decreasing
billing rates, reducing contract sizes and high inflation in India impact the INFOSYS financials adversely.
Also, to pacify anti-offshoring sentiments in the Western Hemisphere, Infosys will be forced to hire more
professionals and managers from the developed countries like US, UK, Europe, etc. which pushes the
total output curve downward proportionate to the length of the recession.
ANALYZING THE PRODUCT MARKET [497 words]
INFOSYS was the pioneer of the Global Delivery Model (GDM) which became a disruptive force
in the industry and gave birth to the phenomenon of offshore technological outsourcing. The GDM is
based on the principle of taking production to the location where the best talent is available, where it
makes the best economic sense. Since INFOSYS did not patent or copyright this novel concept, this
potential Monopoly Market morphed into a Monopolistic Competition. A key marketing strategy of
INFOSYS was to not enter the product development space where it would end up as a competitor to its
own clients and potential targets. This strategy served Infosys to increase its client base unhindered
across industry segments and geographies over the initial period of 25 years. Historically, as expectable
in a monopolistic market, INFOSYS has played on its superior quality of deliverables to establish itself as
AUTHOR: MADHURANATH RAMACHANDRA

2. MICRO-ECONOMICS RESEARCH: INDIVIDUAL REPORT MBA-2012 | LT-1A
a premium price IT solutions player. Further, INFOSYS developed its own custom Value Articulation
Frameworks to communicate clearly the marginal value delivered to its customers that justified its
premium pricing and also as a marketable USP v/s the competition. Marketing and business
development in each country are led by resident senior Business Development Managers who establish
leads to new clients and nurture existing client relationships to help in client retention. Additionally,
INFOSYS has practiced inclusive growth by offering ESOPS and creating many millionaires amongst its
employees. This values based-branding creates trust in the minds of various business stakeholders.
INFOSYS is the second largest IT major in India by revenues and size. TCS, Cognizant, Wipro,
Mahindra Satyam, etc. are some of the Indian competitors of INFOSYS whereas Accenture, IBM,
Capgemini, etc. are the major international competitors of INFOSYS in the software services sector.
Apart from these, thousands of other small and medium software companies compete with INFOSYS in
different segments for micro chunks of the market. Businesses across industry segments are always
under pressure to increase their productivity by IT enabling the various internal functions and external
supply chains. What the industrial revolution did to businesses in the 18th and 19th century, the IT and
telecom revolution did to businesses in the end of 20th century – improved efficiencies of production.
Thus, an inordinate price-inelastic demand for IT solutions was fostered across geographies which
counter-balanced the monopolistic market condition. As a consequence of the aforementioned
conditions, INFOSYS established itself as a price maker in the market and held the mantle of industry
leadership in terms of strategy, size, positioning, and corporate social responsibility. Though absolute
financial numbers place it in the second position in India, when it comes to brand recognition or awards
and recognition, it is superior to all its Indian competitors. It has been awarded repeatedly by the MAKE,
TIMES, FORBES, Economic Times, and even other industrial bodies. But the most valued of all is the
numerous appreciations and preferred partner statuses offered by client companies of world repute
across industries and locations. EXHIBIT-1 shows growth comparison of Total Profit and Total Revenues.
ANALYZING THE FACTOR MARKET [496 words]
INFOSYS is a “knowledge enterprise” which relies primarily on its human capital to deliver quality
services to customers. As such, we can conclude that labour is the Factor Market most critical for its
increased productivity and leadership. INFOSYS has always had the best employee training and
leadership fostering programs in the industry. It has invested heavily in state-of-the-art training facilities
where 14,000 employees can be trained simultaneously. It has also established the Infosys Leadership
Institute (ILI) which is focused on breeding the next 3-tiers of leadership. This is comparable with the
efforts of world leaders like GE and IBM in leadership development. It was for these reasons that Boston
Consulting Group named INFOSYS among the Top-10 Value Creators Technology Companies where it
specifically cited that INFOSYS is among the few companies which align their talent for global advantage.
It also places heavy thrust on the leadership vision and talent management. INFOSYS has already
launched an initiative in 2010 which is called the Talent 3.0 that is aimed at revolutionizing the way
talent is spotted, recruited and retained in the company with ample opportunities for utilizing their full
capabilities on the job. Such initiatives and investments in infrastructure and capital spending on talent
management will place INFOSYS in a leadership position in the long run. In the short run of 3 years i.e.
2012–2015 it will still be struggling with the industry specific problems of high talent attrition, increased
talent acquisition costs and loss of knowledge capital due to high human capital turnover.
AUTHOR: MADHURANATH RAMACHANDRA

3. MICRO-ECONOMICS RESEARCH: INDIVIDUAL REPORT MBA-2012 | LT-1A
Overall INFOSYS has been very effective in anticipating the macro-economic shifts in the global
business environment and in formulating strategies to manage the effects of the same. So I don’t think it
will be caught in a Prisoner’s Dilemma till 2015. During my career at INFOSYS I noted several instances
where INFOSYS managed to steer clear of the potential risks by strategizing in advance. A most
noteworthy example is the early anticipation of anti-offshoring sentiment and the financial recession of
USA. As far back as 2005, INFOSYS announced a strategic goal to change its revenues composition across
geographies from 75%-US | 25%-ROW to 50%-US | 50%-ROW to de-risk its operations and margins.
Marketing focus was shifted to the EMEA geographies where the Euro and Oil prices were more
probable to appreciate or at least remain stable over the subsequent years. This strategy paid off
handsomely, as, by 2008, INFOSYS revenue composition was around 57%-US & 43%-Non-US. This
shielded INFOSYS revenues and margins from the actual Wall Street collapse which was triggered-off by
the Sub-prime Mortgage crisis. In another related strategy, INFOSYS continued to invest heavily in
building up its human capital pool by recruiting thousands even through the recessionary period. This
helped the company to be better prepared than its competitors when the recessionary clouds lifted and
there was an increased IT spending by businesses across the world. Thus, I feel confident about the
growth and sustenance of INFOSYS in the long run.
[1342 words overall]
EXHIBIT-1
₹ Millions Profit v/s Income trends of INFOSYS
₹200,000
₹180,000
₹160,000
₹156,480
₹140,000
₹131,490
₹120,000
₹100,000
INCOME
₹90,280
₹80,000 PROFIT
₹68,600
₹60,000
₹47,610
₹40,000
₹36,230
₹26,040
₹20,000
₹-
0 2 4 6 8 10 12 14
AUTHOR: MADHURANATH RAMACHANDRA