Are services companies going insane?

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein, (attributed) US (German-born) physicist (1879 - 1955)

Source: Quotationspage.com
Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Inflection points of Services Companies.

1914

1926

1980

Adapted from an original illustration, F. Clark Howell, Early Man (New York: Time-Life Books, 1968), 41-45. Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Maybe were not going insane. Maybe we just need a new model.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Fourth inflection point of Services Companies.

1914

1926

1980

2004

Adapted from an original illustration, F. Clark Howell, Early Man (New York: Time-Life Books, 1968), 41-45. Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

The business world abuzz about Globalization, Global Talent, Flat World, China, India.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

What is the Flat World?

Opening of emerging economies

Structural shifts in global demographics

Traditional barriers diminished

Hierarchies less important

Ubiquitous access to technology Consumer comfort with technology

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Information asymmetries minimized

Big New Markets

GDP of emerging countries growing as a % of World GDP
5%
Country GDP as % of World GDP

Growing % of companies in Forbes Global 2000 from emerging economies

20%

4%
China
15%

14.9% 13.0%

3%

Eastern Europe

10%

2%
India

1%

5%

Russia

0%
94 95 96 97 98 99 00 01 02 03 19 19 19 19 19 19 20 20 20 20 20 04

0% 2005 2006

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Sources: UN World Investment Report 2005; Forbes Magazine 2005, 2006; Infosys analysis

Labor Force Necessity

Aging workforce in developed countries
70%
Working population as % of total population (ages 20-64)
China USA

Talent pool and customers

Annual Number of engineering graduates (thousands)
600

65%

400

200

60%

Germany India
50

China

India

US

55%

Median age of citizen/customer

42 40 30 20 36 32 25

50%

45%
1995 2000 2005 2010 2015 2020

10 0

Germany

US

China

India

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Sources: U.S. Census Bureau International Database (www.census.gov/www/idbpyr.html); McKinsey Global Institute; Infosys analysis

Connecting Technologies
Rapidly declining technology costs
20%

Developing countries catching up in technology usage Internet usage penetration

World ave.
2000 2005

10%

World ave.

0% Russia Brazil China India

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Sources: A.G. Edwards 2006; Infosys analysis

How to Win in a Flat World.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

How to win as a services company

SHIFT FROM
Dread the China Price Loyalty through good service

SHIFT TO
Be the China Price Loyalty through faster innovation

Spending money on information

Winning in the straightway

Making money from information

Winning in the turns

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Skeptics

vs.

Rebels

Consulting Profession
Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

He gets the Executive of the week parking spot.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Consulting profession as a case study.

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Old Model Management Consulting Firms Advisors Business Experts On-site - High Cost High Quality Ideas

New Model

Systems Integrators Do-ers IT Experts On-site - High Cost High Quality Project Mgmt.
Off-Shore Software Engineers Do-ers IT Experts Off-site - Low Cost High Quality Technology
Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

New Business Consulting Firm Advisors + Do-ers Business + IT experts On-site + Off-site High Quality Business Results Lower Cost

Infosys competing as a flat world leader.

24 months ago 25,000 25% $15B
Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.

Today 60,000 26%

$26B

Think Flat. Questions, please.

Stephen Pratt CEO & Managing Director Infosys Consulting, Inc. www.InfosysConsulting.com

MaryCarol_Gilreath@Infosys.com

Berkeley Innovator_20060208_vf_Pratt Copyright 2006 by Infosys Consulting, Inc.