Infosys Current Strategy
Strategy and performance relationship has been examined in many research works. The empirical studies have operationalized the linkages between the strategy and performance by using a variety of measures, also, they have incorporated strategic business models. Different strategies could be applied within the same organization, but the pure strategy is more likely to result in a superior performance. Although the contemporary research argues that the hybrid strategy which represents a combination of strategies is more competitive (Anwar & Hasnu, 2017). This report examines the effectiveness of the strategy used by Infosys company.
Infosys Technologies is an Indian IT service company that has been established in 1981 to serve clients in the developed countries depending on lesser-paid Indian engineers. The company grew and became one of the highly respected companies in the world. The company competes directly with the US-based companies (Achtmeyer, 2008). The following section discusses Infosys current strategy, the key challenges facing the company and the proposed new strategy to be implemented by the company.
Infosys company strategy
Infosys company has strategic aims represented in building a sustainable organization that remains relevant to the customer needs, at the same time it generates profits for its investors. The company applies the priorities of “new” and “renew” to its business. Its strategy has four aims according to Infosys (2015-16), represented in:
- To build lasting relationships with its clients through the delivery of different market offerings: Client engagement could be done through large transformative programs in traditional IT areas and new digital initiatives. The company offers the clients with multiple end to end services and it increases the number, size and nature of the projects. The company depends on its transformation service offering, called ‘Aikid?’, it could help its clients to address the key aspects of its business. The ‘Ai’ offering, is a result of the investments in creating intellectual property to enhance the productivity and deliver the next?generation technology to their customers. The ‘Ki’ offering, refers to the know?how of the landscapes of the client technology to enhance the improvements and transformation. The ‘D?’ offering, refers to solving the client’s significant problems in an innovative way and on time of occurrence.
- To deliver the solutions and services that leverage highly cost-effective business models: The Infosys strategy is to leverage its global service delivery to its clients effectively while optimizing the cost structure to enhance competitiveness.
- To enhance the operational processes for agility and cost efficiency: Infosys assesses its organizational structure periodically to align it with the organizational agility and strategic objectives. The cross-functional processes are continuously evaluated to offer the best practices to the company clients.
- To attract and retain motivated employees with diverse high-performance: Infosys attracts and retains the best talents to be able to meet the customers’ needs. The company’s performance management system is objective and offers rewards to the high-performance
The company strategy is built upon three pillars represented in mindful automation, innovation and education. These three pillars are the company drivers to achieve sustainability. The automation of business processes frees up spaces to be innovative for clients, communities and the planet. Continuous learning enabled the company to partner with the research centers and to create more innovative solutions (Infosys, 2016-17b) (Infosys, 2016-17a).
The Infosys company has designed the PSPD Model referring to predictability, sustainability, profitability and de-risking. This model helps in preventing employees’ fragmentation. Employees’ performance is screened, monitored and developed to create accountability (Sushil & Momaya, 2011). The company adopts the resilient business strategies, through the PSPD model. It helps the organization to manage complex problems and maintain planned growth. The medium-term planning projects a decline in the growth rate. It is dependent on the US economy. Infosys seeks to utilize this problem as an opportunity. Infosys aims to generate profits from non-US countries alongside with its de-risking strategy. This change in the strategy is likely to transform the software industry, the customer expectations could be affected and the business models will need to be modified (Infosys, 2002).
Key Challenges Facing Infosys
The Infosys strategic vision is to become a globally respected leader that provides business solutions. The company could achieve its vision by focusing on key strategies that protect it against risks in its business environment. The PSPD model enables the company to access the global pools of the best talents to deliver value to the targeted markets by using its leading technology. The company operates from different facilities across the globe to be able to provide its services around the clock through its global delivery model. Also, it markets its services in the large IT-intensive organizations in North America, Japan and Europe. It uses a hybrid strategy that focuses on both of the clients and service to avoid concentrating on only one of them. This mixed approach of strategy enables the company to satisfy the clients’ needs and expand its relationships with them and from the other side it integrates its services with the IT operations (Infosys, 2002).
The company strategy used to be the best fit for the company in the past years, but as the company seeks to diversify its revenue from non-US countries, it has to rethink about its current strategy especially that its projected profit growth is expected to decrease. The IT market has a dynamic nature that requires an ongoing adjustment in the organizational strategies. The strategy should be designed according to the current and future needs of the stakeholders. Infosys devotes special importance to the needs of its stakeholders that assisted in its success in the past years. The company makes environmental scanning annually to be aware of the environmental changes and to respond to them on a timely manner (Phartiyal & Koilparambil, 2017).
The company strategy aims to leverage the automation by using the software it produces. The global delivery model enables the solutions delivery worldwide in a cost-effective manner and optimizes the cost structure to maintain its competitiveness. This PSDP model enables the company to be highly responsive to the environmental changes in different countries. The company prefers to work in certain locations where it could find the best talent and where it could make the best economic performance with the least level of risk (Infosys, 2002; Achtmeyer, 2008). That is why it prefers to operate in the developed countries.
The key challenges that face Infosys could be represented in the slowing growth of the IT services sector. Although Infosys could establish a significant presence in different world markets and become among the handful companies dominating the IT service industry worldwide, it needs to effectively compete with the major six IT service companies that globally dominate the industry (Phartiyal & Koilparambil, 2017).
Proposed New Strategy by Infosys
The company’s future strategy should be aligned with the developments in the world countries. There are many opportunities in the software market that could be obtained by Infosys (Phartiyal & Koilparambil, 2017).
The new strategy depends on the agile digital, employees’ skills development, scaling up the company’s core competencies and focusing on localization in the foreign markets in which Infosys subsidiaries operate. The reason for choosing this strategy is that the current business environment requires a high response rate from the management and to make more necessary strategic changes than required in the past. As an IT company, it requires simultaneous change and stability to control uncertainty and avoid risk. This strategy is most promising, as Infosys has to solve different types of problems at the same time, represented in the engineering, entrepreneurial and administrative problems according to Miles and Snow (1978), as cited in Anwar & Hasnu (2017). The increasing dependence of the clients in the artificial intelligence leads it to become a core aspect of the business strategy of Infosys. The way the artificial intelligence leads the life requires continuous search and development from Infosys (Infosys, 2018). Based on the four pillars of the new strategy, the competency-based strategy that depends on realizing and sustaining the organizational core competencies could support Infosys future strategy (Goldman & Scott, 2016).
Conclusions
The company depends on its transformation service offering, called ‘Aikid?’, it could help its clients to address the key aspects of its business. The company strategy is built upon three pillars represented in mindful automation, innovation and education. The Infosys company has designed the PSPD Model referring to predictability, sustainability, profitability and de-risking. The company adopts the resilient business strategies, through the PSPD model. It helps the organization to manage complex problems and maintain planned growth. Infosys aims to generate profits from non-US countries alongside with its de-risking strategy. It uses a hybrid strategy that focuses on both of the clients and service to avoid concentrating on only one of them. The competency-based strategy that depends on realizing and sustaining the organizational core competencies could support Infosys future strategy.
References
Achtmeyer, W., 2008. Infosys: Maintaining an edge, USA: Center for Global Leadership.
Anwar, J. & Hasnu, S., 2017. Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies. Journal of Organizational Change Management, 30(7), pp. 1015-1029.
Anwar, J. & Hasnu, S., 2017. Strategy-performance relationships: A comparative analysis of pure, hybrid, and reactor strategies. Journal of Advances in Management Research, 14(4), pp. 446-465.
Goldman, E. & Scott, A., 2016. Competency models for assessing strategic thinking. Journal of Strategy and Management, 9(3), pp. 258-280.
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Infosys, 2016-17b. Sustainability report. [Online]
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Infosys, 2018. Leadership in the age of AI: Adapting, investing and reskilling to work alongside AI. [Online] Available at: https://www.infosys.com/age-of-ai/
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Phartiyal, S. & Koilparambil, A., 2017. Infosys’ new chairman to focus on CEO search, strategy. [Online]
Available at: https://www.reuters.com/article/us-infosys-board/infosys-new-chairman-to-focus-on-ceo-search-strategy-idUSKCN1B50FU
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Sushil, B. & Momaya, K., 2011. Drivers and enablers of corporate entrepreneurship. Journal of Management Development, 30(2), pp. 187-205.
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