Infosys Technology Consulting

Infosys Consulting In 2006: Leading the Next Generation Of business and Information Technology Consulting

In 2006 Infosys technology concluded another year of impressive growth in the IT consulting sector. Infosys consulting (ICI), the parent company, would like to leverage this growth and enter the highly competitive business-consulting sector, which has been traditionally dominated by large legacy players such as IBM and Accenture. Infosys consulting will need to adapt their business model significantly in order to cross-sell and gain market share from a more brand sensitive and lucrative segment of the consulting business.

Business consulting and IT consulting may fall under the same general consulting category, but they are very different in nature.

The IT consulting sector is a segment that is driven to low cost due to the high buyer and low supplier power as a result of the commoditized technology and the many resources that are available at a low cost.

In contrast the Business consulting sector is characterized by less buyer power and more supplier power due to the higher skillset required for consultants which are in lower supply.  Despite having a healthy number of players, brand plays a large part and there is a relatively high switching cost for clients.

In the computer and consulting world, International Business Machines (IBM) is by far the market leader with an approximate $91 billion in total sales at the end of 2005.  After IBM, the market consists of 3 medium sized players (approximately $8-20 billion in total sales).  Followed by a number of smaller players; Infosys Technologies Ltd is one of these players, with totals sales of $1.6 billion at the end of 2005.

At the end of 2005, Infosys Technologies had an approximate 0,4% market share in the Computer and Internet Consulting Market. Using their Global Delivery Model (GDM), which involved a 1-1-3 model and a 24 hour project work day, Infosys was able to differentiate themselves and grow very aggressively within the IT consulting sector despite the low supplier power.  However going forward, Infosys would like to extend the GDM to the business consulting segment to take advantage of the higher value, higher margin, and higher supplier power sector.  Infosys management believe that they will have a competitive advantage with GDM as the legacy consulting firms such as IBM and Accenture will not be able to replicate or compete with the lower cost model.

To further examine Infosys’ market position, 3 frameworks were used: CAGE (distance), SWOT and AAA.

Distance between countries can create barriers, risks and costs. Implementation business model like GDM can be influenced in different ways. First of all the geographic distance between markets is the first thing that we think about, but culture, economics, and administration are important topic too.

Cultural topic of the framework has strength about the language, Indians speaks English. However we realized there are different social norms because different cultures and might be manage given that it is off-site.

About administrative topic there are no mayor issues political or bureaucratically to highlight after analysis. Nevertheless Infosys has an advantage about Geographic distance given that they can work remotely and pass on work to a location that can continue the work.

Given the economic distance is concluded that there is a competitive advantage in labor terms, since labor in India is cheaper and good quality in the IT market, generating a good source of human resources compared to competitors.