Infosys Technologies Limited: Type Traded As
Infosys Technologies Limited: Type Traded As
Infosys Technologies Limited: Type Traded As
Type Public
Founder [[Nitin ]]
S. Gopalakrishnan
S. D. Shibulal
K. Dinesh
Ashok Arora
Headquarters Electronic City, Bengaluru, Karnataka, India
Area served Worldwide
Key people Vishal Sikka (CEO & MD)
Services IT, business consulting and outsourcing services
The Company complements its service offerings with specialist support for clients using its
domain competency group that has expertise in areas, such as securities, insurance,
telecommunication, banking and cash management, supply chain management,
manufacturing, retail and distribution, energy and utilities, healthcare, and travel and tourism.
It also uses its software engineering group and technology lab to create customized solutions
for its clients. In addition, it continually evaluates and trains its professionals in new
technologies and methodologies.
HISTORY
Established in 1981, Infosys is a NASDAQ listed global consulting and IT services company
with more than 105,000 employees. From a capital of US$ 250, we have grown to become a
US$ 4 billion company with a market capitalization of approximately US$ 27 billion. In our
journey of over 28 years, we have catalyzed some of the major changes that have led to
India's emergence as the global destination for software services talent. We pioneered the
Global Delivery Model and became the first IT Company from India to be listed on
NASDAQ. Our employee stock options program created some of India's first salaried
millionaires.
The company opened its first international office in USA in 1987. It became a public limited
company in 1992 and offered its IPO in three of the nine Indian exchanges in 1993. It
received its ISO 2001 certification in 1993 and opened other development centers in India in
1995.
By 1995 the firm was worth $200 million, had 900 employees and annual revenue of $20
million. It opened its first European office in United Kingdom in 1996. Infosys established its
headquarters in Bangalore as there the workforces were not required to be unionized, benefits
to the workforce were relatively a minor cost, and there was a huge potential for profit.
The late 1990s was a time for exponential growth and the main reason for this was its
offshore software development model. By 2000 its market capitalization was more than $20
billion.
In 2003 it established subsidiaries in China and Australia. In 2004 it crossed $1 billion in
revenue. In 2006 its revenue crossed $2 billion and it completed 25 years.
CORE SERVICES
The Company provides customized software solutions for its clients. Infosys
creates new applications and enhances the functionality of its clients' existing
software applications. The Company's projects vary in size and duration.
Infosys provides maintenance services for its clients' large software systems that cover a
range of technologies and businesses, and are typically critical to a client's business. The
Company focuses on long-term functionality, stability and preventive maintenance to avoid
problems that typically arise from incomplete or short-term solutions. While Infosys performs
most of the maintenance work at its global development centers using secure and redundant
communication links to its client's systems, it also maintain a team at the client's facility to
coordinate certain key interface and support functions
Software Re-engineering
The Company's software re-engineering services assist its clients in converting their existing
IT systems to newer technologies and platforms developed by third-party vendors. Infosys'
re-engineering services include Web-enabling its clients' existing legacy systems, database
migration, implementing product upgrades, and platform migrations, such as mainframe to
client-server and client-server to Internet platforms.
For each particular client, Infosys focuses on developing a framework for ongoing
testing in order to seek continuous improvement in the predictability of its client's
Finical, the universal banking solution from Infosys, helps banks by enabling
them to shift their strategic and operational priorities. It maximizes their
opportunities for growth ,while minimizing the risks that come with large-scale
business transformation
Finical currently powers 91 banks across 54 countries, helping them serve over
100 million customers, 150 million accounts, 80,000users and supporting over 36
million peak banking transactions per day spread across multiple installation
REVENUE SEGMENTS
Geography
management
Total
Service Offering
2016 2015 2014 2013 2012
and insurance
service
KEY PEOPLE
Nilekani, Nandan M. 52 1987 Co-Chairman of the Board Trade
Activity
Murthy, N. R. 60 1981 Non-Executive Chairman of the Trade
Activity
Shibulal, S. D. 52 1997 Chief Operating Officer, Director Trade
Activity
Parvatheesam, K. -- 2006 Secretary, Compliance Officer Trade
Activity
Pai, T. V. Mohandas 48 1994 Director and Head - Trade
Director
Krishnaswamy, Dinesh 52 1996 Head - Communication Design Trade
1. More keen on large deals. The margin dilution from large deals has been a point of concern
in the past at Infosys. However, while the initial margin profile can be extremely wavy, it is
possible to improve margins later in the life of the contract through reduced G&A overheads.
Infosys, in its recent analyst meet, mentioned that a dedicated team was now working on
large deals. We expect greater focus ahead in this area.
2. Increased focus on solution based offerings in both IT services and BPO. Infosys has
developed ~50 solution based offerings in the IT services space and believes that some of
these can help break the linearity between revenue and manpower growth in the business. In
BPO as well, its first platform based BPO offering is likely to be launched soon.
3. Willingness to explore new deal structures. The market was surprised when Infosys paid an
upfront $28m for the $250m/7-year Phillips BPO deal. While TCS had made such a payment
in the case of Pearl BPO earlier, Infosys willingness to do so was certainly a shift from the
past.
Company Strategy for future
Expand geographically
Most of the companies rapidly cutting their losses by employing massive retrenchment drive,
firing thousands of employees or offering them early separation schemes. However, despite
the massive economic turmoil across the globe, there are still some companies that are
looking to hire skilled candidates. One of these companies is Infosys. The company intends to
stick to its plan of hiring 25,000 people this fiscal year.
Infosys is trying to acquire a few companies in Mexico and Brazil to expand its delivery
capabilities. The company's first centre will be operational in Brazil in next three to four
months. Infosys has currently employed about 250 people in Mexico and hence feels the need
to have local facility to attract local business. "We are looking for some very targeted
acquisition with specific criteria," said Dheeshjith V G, Head, New Markets and services,
INFOSYS
Infosys had started focusing on Mexican market in last six to seven months.
According to Dheeshjith there has been increase in the business from local clients and some
companies are looking to outsource large deals. Around 20-25 percent of the total business in
Infosys' Mexico subsidiary comes from multinational companies that have operations in
Mexico while the rest of the business comes from clients in North America. That is the reason
why Infosys is stressing on local deals to attract local customers.
DATA ANALYSIS
Total Liabilities
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Total Liabilities
70,000.00
Mar '16
60,000.00
Mar '15
50,000.00
Mar '14
40,000.00
Mar '13
30,000.00
Mar '12
20,000.00
10,000.00
0.00
Total Liabilities
Interpretation:
This chart shows that deferred liabilities are continuously decreasing in all the five years as
comparative to the base year 2016 which is a good sign for a business as this is a liability
which may or may not be realized during any given year. Thus companys risk is reducing
every year by year. But it has slightly increased in year 2015 as comparative t year 2014 but
if we see it in comparison of base year it shows a huge decrease. Overall deferred tax liability
chart shows a improving condition of the company
Net Block
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Net Block
9,000.00
8,000.00 Mar '16
7,000.00 Mar '15
6,000.00
Mar '14
5,000.00
4,000.00 Mar '13
3,000.00 Mar '12
2,000.00
1,000.00
0.00
Net Block
Interpretation:
Gross block is the sum total of all assets of the company valued at their cost of
acquisition. ... Net block is the gross block less accumulated depreciation on assets.Net
block is actually what the asset are worth to the company.
Investments
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Investments
12,000.00
10,000.00 Mar '16
Mar '15
8,000.00
Mar '14
6,000.00 Mar '13
4,000.00 Mar '12
2,000.00
0.00
Investments
Interpretation:
The above chart shows that the investments of the company remain same in all the five years.
There is no change in the investments of the company.
Net Current Assets
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12
Interpretation:
This chart shows that there is a continuous increase in the net current assets except year 2012
as in that year there is a huge decrease in net current assets of the company as comparative to
the base year 2013. The assets of a business that can be applied to its operation is called net
current assets. As the chart shows the increase in net current assets of the company it is good
for the company as company is having the money to carry its operations. But year 2012
shows huge decrease thus the position of company is not satisfactory in year 2012 as it
doesnt have the enough sources to run its operations.
Total Assets
Total Total Total Total Total
Assets Assets Assets Assets Assets
57,157.00 48,068.00 42,092.00 36,059.00 29,757.00
Total Assets
70,000.00
Mar '16
60,000.00
Mar '15
50,000.00
Mar '14
40,000.00
Mar '13
30,000.00
Mar '12
20,000.00
10,000.00
0.00
Total Assets
Interpretation:
This chart shows that there is a continuous increase in the total current assets, loans and
advances as comparative to the base year 2012. Current asset is an indication to an outside
creditor, whether the company has got the ability to meet its immediate payment obligation or
not. Thus increasing current asset indicates the corporate poor inventory management and
inability to recover its due
LATEST DEVELOPMENTS
Infy can overcome this risk by growing up the value chain so that it can afford to
increase its billing rates and still add value to its customers .Second thing it can do
is to move their operations to second level cities in India that have low cost of
living and where wage pressure is less. One of the good steps Infy has taken to
this regard was by opening its Bhubaneswar center. Its cost of living is way less
computer was one of the first big IT companies to open its office.
Infy should grow its client base in India and China where the impact of foreign
exchange is negligent. TCS is a good example with this regard. Its 2006 revenues
had 12.5% revenues generated from India. This is around $300 mn. With the
present Indian IT market valued at $5bn (obtained from TCS's 2006 annual report)
and expected to grow at 11%, Infy has scope of getting a good market share.
Rise in Infrastructure costs.
Infy's 2006 capital expenses was $246mn compared to that of $185mn in 2005. This
is an increase of over 30%. In order to continue this pace the company needs to invest
a large amount of capital in building new facilities. With recent surge in real estate
prices in India, Infy would face challenges in controlling its capital expenditures
The present Reserve Bank of India guidelines state that in ceratin cases Indian
companies have to take the central bank's permission to acquire a foreign company.
One way is to employ local talent. Another way can be employing virtual classroom
techniques by which a person sitting in India can get US experience that he would
Accenture are doing a great job in this front and are not so much dependent on wok
Most Indian IT companies are enjoying a tax holiday which exempts them from taxes
on exports performed from designated export promotion zones. This helps Indian IT
companies to reduce their tax rate .But this benefit is only applicable till fiscal 2009.
After that the Indian IT companies would be taxed the same way as other Indian
companies
SWOT ANALYSIS
STRENGTHS
The company bring together expertise in consulting, IT services and business process
outsourcing to create solutions that allow clients to increase their customer loyalty through
faster innovation, restructure their cost base, and help them achieve greater success through
shifting business cycles. Expertise helps our clients improve their own efficiencies, create
better value for their end customers and become more competitive. Theyre able to capture a
Highly evolved Global Delivery Model represents a key competitive advantage. Over the past
decade, they have developed our onsite and offshore execution capabilities to deliver high
quality and scalable services. In doing so, Infosys have made substantial investments in
processes, infrastructure and systems, and have refined our Global Delivery Model to
effectively integrate onsite and offshore technology services. The Global Delivery Model
provides clients with seamless, high quality solutions in reduced time frames enabling them
consistent and accurate delivery of superior quality solutions to maintain a high level of client
satisfaction.
Infosys has among the best talent in the Indian technology services industry and are
Ability to scale:
Infosys have successfully managed their growth by investing in infrastructure and by rapidly
development centers.
Innovation and leadership:
A pioneer in the technology services industry. We are one of the first Indian companies to
achieve a number of significant milestones, which has enhanced our reputation in the
marketplace.
WEAKNESSES
Revenues and expenses are difficult to predict and can vary significantly from period to
period, which could cause share Price to decline 26 May not be able to sustain our previous
profit margins or levels of profitability. The economic environment, pricing pressure and
rising wages in India and overseas could negatively impact revenues and operating results.
Revenues are highly dependent on clients primarily located in the United States and Europe,
affect the economic health of the United States, Europe or these industries may affect our
business. Any inability to manage growth could disrupt our business and reduce our
profitability may face difficulties in providing end-to-end business solutions for our clients,
which could lead to clients discontinuing their work. Revenues are highly dependent upon a
small number of clients, and the loss of any one of our major clients could significantly
Failure to complete fixed-price, fixed-time frame contracts within budget and on time may
negatively affect our profitability client contracts can typically be terminated without cause
and with little or no notice or penalty, which could negatively impact our revenues and
profitability
The engagements with customers are singular in nature and do not necessarily provide for
subsequent engagements
OPPORTUNITIES
Huge untapped potential for in the global market as IT will become the need of almost every
industry
The IT industry can be the reason for India being a global leader of tomorrow
THREATS
Legislation in certain of the countries, in which Infosys operates, including the United
States and the United Kingdom, may restrict companies in those countries from outsourcing
work overseas
Intense competition in the market for technology services could affect cost advantages, which
could reduce the share of business from clients and decrease the companys revenues
Our client contracts are often conditioned upon our performance, which, if unsatisfactory,
Some of our long-term client contracts contain benchmarking provisions which, if triggered,
could result in lower future revenues and profitability under the contract.
GOALS
INITIAL GOALS
They started off with one client and right from the beginning understood the concept of an
offshore delivery model. Conceptually, they tried to leverage globalization for customized
software development - producing where it is most cost-effective, and selling where it is most
profitable, all without being constrained by national boundaries. Infosys believed that the
key to success is to ensure that it executes our engagements well every time. We have based
our whole operation on a foundation of strong value systems. We were careful never to
AREA OF GOVERNANCE
To define and implement a training module and create awareness about sustainability
PRODUCT RESPONSIBILITY
Sustain customer satisfaction in the annual customer survey Status- It was achieved; the
Status- This was partially achieved by reducing the per capita electricity consumption to
10%.
ENVIRONMENT
HUMAN RIGHTS
Create a framework for employees, suppliers and vendors to be educated on human rights.
Status- Below target- developed a basic training module on human rights which will be
implemented in 2010.
EMPLOYEE ENGAGEMENT
STRATEGIC LEVEL
OPERATIONAL LEVEL
Websites:
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