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Change Management Services Some clients spent money on IT system design as well as hardware and software specification.

Multiple service providers provided different parts of these services. However when it came time to develop and implement the software,there were instances when the client organization discontinued further investment for fear that the implementation. If Infosys were involved in all the stages, it could assure the client organization that it would also help in managing the transition by providing consulting and hand-holding services for effective change management.

Share of Wallet According to Jim, Large Fortune 500 companies have a typical IT spend of over 1 billion US $ per year. Of this, Infosys may currently be getting a modest share of about US $ 25 milion. The rest would be awarded to many similar It services providers. In order to get a larger share of IT spend of the client firm, Infosys should improve its ability to enter the deal much earlier in the value chain than it is presently doing. It should be able to influence the direction of the solution rather than just provide IT solutions for a business solution conceived and developed by other consulting firms. At the same time there are several elements of the It spend such as managing the It workforce of the client company,etc., which may account for large spending by the client. On a case-to-case basis,Infosys has to assess if it would like to get into offering such services. Moreover,there is an inextricable connection between moving up the value chain and growth of existing businesses. Getting in at the beginning of a projec T will ensure continued growth of new application business as well as the maintenance business. Getting in eary will also provide an effective barrier for entry of others into subsequent phases of the project lifecycle.

Infosys New Offerings Apart from current strengths of the company, Infosys seeks to continuously add new services. Uma briefed the group that these originate from several sources such as its R&D group, opportunities identified by alliance partners (such as Microsoft) and new service requirements originating from the clients. Recognizing the need to move up the value chain, Infosys had recently created a business consulting group manned by over 150 professionals with strong consultancy background in industry verticals such as insurance, banking and manufacturing.

Competitive Environment While there is no doubt that India has become a key destination for IT outsourcing there could be serious price wars in the traditional IT services. The entry of many US-based companies, who had earlier been offering high-end IT consulting, into the traditional It services, by seting up large-scale software development centers in India, could create significant changes in the existing IT scene in country. Some of these companies have announced their intention to setup large-scale operations in India to provide offshore IT services to the Fortune 500 companies. Some of them had already commenced their Indian operations. Many Business ProceSS Outsourcing (BPO) outfits headquartered in the USA were actively establishing large operations in India. Infosys had also set up a sister company,Progeon,to offer BPO services as well. With regard to global IT giants setting up software delivery facilities in India, some Infosys managers felt that while this was a significant on-going trend, it may not pose a major threat for Infosys: Through good and troubled times, Infosys has earned a reputation of being people-oriented in its approach to managing people. This aspect is very important for Indian software professionals. Infosy understands the Indian psyche. For high-end business, Infosys has to reckon with competitors both from India( such as WIPRO and Tata Consulting Services) and US( such as IBM Global,Accenture and Eds). Infosys has cretain intrinsic strengths such as strong talent management, high quality executing, perfected global delivery model, strong customer relationships, ethical and valuebased approach to business and a lean oreganization. The global majors have readymade solutions sets, deep high-level relationships with clients, consulting mind-sets and a track record of offering end-to-end services for their clients. In order to be more cost-competitive, global majors have embarked on several measures such as investment in offshore facilities including in India; reducing layers of fat thereby shifting the center of gravity lower down the organization; relocation of resources; investment in processes; addressing organizational issues; and billing rate reduction. In order to be able to offer high-end solutions, Infosys had initiated several steps. These include: on-site investment on people; end-to-end solutions and offering full-line of solutions; brand building; education and training; on-site hiring and creating a consulting mind-set across the organization. The move to high-end consulting had additional significant positive fallout for Infosys. Conturies such as China, which were trying to strongly enter into IT services, emulating the Indian success storx, were unlikely to be a threat to Infosys in these high-end services. Instead, China and Japan offer significant opportunities as large markets and Infosy could offer its services to these countries from a Chinese software delivery center, once its plans to set-up such a center materialize in the near future.

Customer Perceptions Gautham informed the group that Infosys had developed a very rigorous customer feedback process through annual customer satisfaction surveys using a third party market research agency. This survey showed customer disposition to Infosys and has four essential components, viz., overall satisfaction indeks, value for money(return to investment),loyalty and willingness of the customer to refer Infosys to other clients to Infosys. These surveys are conducted for existing customers of Infosys, which typically may also be using or may have used in the past , other It services providers, These surveys reveal that Infosys stands out well among its competitors. These surveys also highlight areas of improvement. One of the strengths of Infosys has been its ability to speedly implement improvement suggestions it receives from its clients, throught these annual survevs. During the last few years , the surveys have showns that over eighty- five percent of its clients are more than satisfied with Infosys services. Moreover on all parameters, Infosys exceeded or equaled best-in-class companies. One of the challenges for Infosys is to recognie that since the environment is very dynamic, clinet requiroments are not static. The basis on wich clients evaluate its IT service provider constantly evolves. For instance, during the doctom era, time to market was critical for customer firms. At the time, software that was even 70 % functional was acceptable. Wit the changed business environment, while time to market is still important, it is no longer the most vital criteria for evaluation of an IT service provider. Prem pointed out that one of the key challenges for Infosys it grows in number of people , is to eontinually find ways of retaining its old magic. The company manifested this attribute in great measure when it was much smaller and younger. This is what made the company so special to its customers in the past. Avoiding becoming bureaucratic as the cmpany grows, ensuring the right values are passed on the new ganeration of Infoscions and not neglecting to take care of its smaller clients in its quest for larger clients, are some of the other challenges that the company will have to face over the coming years.

Coming Out of the Commoditization Spiral According to Jim, ` One of the important drivers to move up to the vale chain is that IT services especially at the lower-end, are getting commoditized. Large fixed price projects are less and less and less comon. One visible trend is that some clients companies give out IT work in small pieces. Such clients prefer to award these kinds of jobs to the companies like Infosys, with whom they have a strong on-going relationship. Such individual pieces of work are issued through work orders, rather than going through the elaborate route of request for proposals calling for quoatations,evaluating the bids,etc. Reflecting on Infosysy philosophy, Naresh has this to say: We believe in co-existence with our competitors, fair business practices, non- threatening business philosophy and management practices based on strong values and ethics. At Infosys, we believe that if we have to succeed our clients must succeed. Clients firms consist of people. Hence people on our clients firms, including the CIO and members of the CIOs team should also succeed.

Global Trends in IT Industry over the Next Several Years Brian presented the group with a deatailed exposition of the global IT trends iver the next several years. These forecasts are summarized in Exhibits -4 and 5. Exhibit-6 provides important factors in the evaluation and selection of IT service providers. Exhibit-7 gives details on the most important dealmakers in the final decision to use an IT service provider. US accounts for the largest share of IT spend(about 50% of worldwide IT spend). The breakup of market forecasts, service offerings- wise is given in Exhibits-8 and 9. The break-up of market forecasts vertical markets-wise are given in Exibit-10.