Implementation of a Strategic Plan at Infosys
Introduction
Infosys is one of the most prominent Information technology companies in the world. Founded in India in 1981 by a team of six colleagues, the company has played a major role in transforming global business of the IT companies. Infosys provided its information technology and call centre services to several companies located all across the world. In 2007 itself, more than 250 companies had executed their contracts with Infosys that exceeded $1 million, with 2 of those companies spending more than $100 million. Infosys had realised that its success depended on its ability to recruit, train and retain the technical and front end staff. Infosys employed more than 160,000 employees in India and abroad, and its attrition rate was above 13%. It was a challenging for Infosys to find the necessary number of qualified new employees. Also, about 80% of the company cost was spent on these employees. (Stanford. Infosys: Building a talent engine to sustain growth, p.3).
In order to achieve its goal of being the market leader in IT sector, the company’s business strategy was to attract and retain the right employees and the correct places and in the right quantity. Since, managing this talent was the biggest cost centre for the company, its overall human resource strategy was to recruit qualified talent and thereby generate a competent, socially conscious and happy team. An adaptive way of executing is strategy was necessary to achieve it.
The 7-S framework is an analytical tool that is often used for analysing an organisation’s strategy and the necessary action. It was developed by a team of people from McKinsey, Harvard Business School and Stanford Business School. According to this tool, an ideal organisation is the one that aligns itself with the business environment. An organisation is a complex system of interconnected parts, each of which contributes to its effectiveness. There are seven key elements in understanding this effectiveness: strategy, structure, systems, staffing, skills, style and shared values (Harvard Business School. Organisational alignment: The 7S Model. p.497-045)
Let us evaluate these elements with reference to Infosys.
Strategy: The strategy of Infosys was to recruit and retain the best employees at the right departments and in correct numbers. Each department at Infosys generated a ‘talent plan’ which included certain number of people to be promoted, hired and their skill assessments. These people had to be assigned to the right projects as per their skills. The company’s talent base was assessed each year with quarterly updates. The evaluation of existing employees was based on a ‘balanced scorecard’ (Stanford. Infosys: Building a talent engine to sustain growth, p.6).
Structure: The structure at Infosys was fairly simple and well defined. There was an entry level training program for new software engineers. These engineers were then given specific projects and they had to work under the supervision and guidance of their project managers. There were training programs for middle level and senior level employees too, and these were mandatory for promotions and appraisals. Infosys also placed importance to grooming the next generation of corporate leaders with their ‘three tier systems’ (Stanford. Infosys: Building a talent engine to sustain growth, p.10). Infosys also had a knowledge management system on its intranet, which could be accessed, modified and improved by any of its employees.
Systems: Infosys used an innovative ‘Global Delivery Management System (GDM)’ for offshoring its projects. The system was highly efficient and broke down pieces of work into smaller and logical components and then distributed these components to specific work locations. For their recruitment purpose, the company developed a system that measured workforce requirement with its revenue targets. It also had a ‘campus connect’ programme that was aimed to develop and improve the technical, communication and interpersonal skills of newly recruited graduates (Stanford. Infosys: Building a talent engine to sustain growth, p.2).
Staffing: Infosys believed in being an equal opportunity provider. It hired talent from engineering colleges located all across India. It also recruited from management schools and from other countries. All of its recruits were then trained in India on specific domains. Today, Infosys has more than 160000 employees worldwide.
Skills: This was the most important area for Infosys and it left no stone unturned in ensuring that its new and old employees were trained in the best technical and cross cultural skills. It conducted a 14-16 week entry level training for new recruits through a program that was called ‘Global business foundation school’ (Stanford. Infosys: Building a talent engine to sustain growth, p.9). Infosys also offered vide range of training opportunities to its middle and senior level staff.
Shared Values: As per Infosys (www.infosys.com), the company’s vision is to be powered by intellect and driven by values. The company’s values are referred to as ‘C-Life’, which stands for Customer delight, Leadership by example, Integrity, Fairness and Pursuit of excellence (Stanford. Infosys: Building a talent engine to sustain growth, p.3).
SWOT Analysis and barrier to Infosys’ Success
Strengths: The Company’s Global Delivery Management system that was used for offshoring had transformed the global business. Companies, who did business with Infosys, were very comfortable and confident with this system. By 2006, Infosys had built a worldwide network of call centres and it could work with clients from all across the world. The revenues of Infosys grew more than 20 times from 1990’s and about 98% of its business was repeat business. This proved that the clients were very happy with Infosys.
Weaknesses: The attrition issue was the biggest weakness of Infosys. The attrition at Infosys had been trending upwards and most of it occurred between employee’s first and second year with the company (Stanford. Infosys: Building a talent engine to sustain growth, p.14). One of the reasons for this was that these employees found better paying jobs and the second leading cause was higher education. Since the company had spent around 80% of its expenses in its employees, a high attrition rate was unfavourable and it reduced the company’s profitability. Also, a large part of its new recruits used to sit on benches waiting for projects; this could lead to frustration among the recruits. Even the compensation paid by Infosys was largely below the industry average.
Opportunities: The biggest opportunity for Infosys was to build a robust talent base, reduce attrition rate, improve its customer service at its call centres and make the most of its unique offshoring platform.
Threats: If the employee turnover rate would increase beyond current levels, it might spell trouble for the IT giant, as it would add up to the rising cost pressures and would impact the quality of projects in hand. This might create some tensions between Infosys and its clients who would be affected by this. These clients might be tempted to join hands with other IT company like Tata Consultancy Services or Cognizant, and this could badly affect the revenues and image of Infosys.
After we analyse the internal environment of Infosys, we find that the company’s attrition rate could be a barrier to the success of its proposed strategy. One of the ways in which the company can solve this issue is by improving the starting salaries of graduate engineers who join the company. Since most of the attrition was among those who had 0-2 years of experiences, better salaries would mean that their motivation remain intact and they would be encouraged to work towards achieving the organisation’s objectives.
Another way of retaining talent was by offering employees the option of going for part-time MBA programmes and organising other interactive training sessions.
Looking at the external factors, we see that the competition among IT companies was very intense. Tata Consultancy Service, which was behind Infosys at one point of time, is the biggest IT company in India and one of the biggest IT service providers in the world. Also, companies like Wipro and Cognizant gave tough competition to Infosys and many employees of Infosys were joining these firms for higher pay packages.
Since IT sector is one of the biggest job providers in India, it would be a challenge for Infosys to retain its talent. The company needs to be innovative and must think ‘out of the box’ to tackle this tricky situation. Infosys requires that its employees realise that apart from salary, they need to focus on enhancing their personal capability and marketability. They must have value which should be more than their market price. Tomorrow if the market crashes, people who saw value in them would hire them because they are better than what they are paid! (Stanford. Infosys: Building a talent engine to sustain growth, p.15)
The Market Segment that would be targeted through Infosys’ strategy
One has to remember that Infosys is an Information Technology services provider and caters to global clients such as Reebok and Nordstrom to name a few. Through its offshoring technique, it caters to companies of different sectors and sizes. For a service company, its front end employees are its face in front of the customer. These front end employees work in call centres that are located primarily in India but also all across the world. As per Mohandas Pai, the Human Resource Director of Infosys in 2007, “We are a talent driven company. Talent has to come back the next morning. If you don’t put people first, what is the point?”
This clearly shows that through its strategy of hiring and retaining the top talent, Infosys wanted to indirectly target its entire client portfolio as its people were its biggest assets. If these front end employees and engineers could not be retained, then the company might lose its clients and most importantly its brand value. Infosys was, therefore, targeting its own employees through this strategy.
Recommendations on marketing activities in line with the strategy
Some of the activities that would be most effective in marketing its strategy would be:
- Pre-service: Create a flawless work process. Working at customer locations could create several problems such as visa restrictions, travel costs, language barriers and time difference. Infosys must take advantage of their GDM system and must take gain maximum mileage from it. It must make regular changes in the system and improve its efficiency. It must increase the number of call centres in India, as India provides labour at a comparatively lesser rates than the U.S. or U.K. A flawless work process would encourage the company employees to give their 100% at work, which would result in high profitability.
- Point of Service: By giving adequate training to its call centre employees, software engineers and other front end sales people, Infosys can communicate easily and inexpensively with its clients and their customers all across the world. Training on specific domain would ensure that its employees are well equipped to handle their clients and excel at workplace.
- After Service activities: The company needs to give importance to its after service activities, that are related to performance at workplace, talent management, client satisfaction, number of man-hours put in different projects and employee efficiency. Infosys is heavily driven by metrics in all the areas of its functioning and its employee evaluation is based on a balance scorecard that measures and evaluates up to 32 items that are related to talent, competency development, leadership development, etc(Stanford. Infosys: Building a talent engine to sustain growth, p.06)
Culture and structure at Infosys in context to its strategy and recommendations
Culture is a property of an independently defined social unit, whose members share a significant amount of common experiences in successfully generating new ideas and addressing external and internal problem of the organisation (Harvard Business School. What is Organisation’s Culture? p.01)
Culture is dynamic and can change with new experiences. This change can either occur through a crisis or through an evolution by implementing a sound strategy.
According to the Company’s top management, Infosys believed in collective leadership with emphasis not on any single individual. The structure of the company was fairly simple, where the engineers worked under project managers, who in turn reported to general managers. The company was powered by intellect and driven by values and its values were recognised as “C-LIFE” which stood for:
- Customer delight and satisfaction.
- Leadership by example and merit.
- Integrity at workplace and transparency in its processes.
- Fairness in treating its employees and dealing with its clients and customers.
- Excellence in system processes and work.
In order to maintain its values and systems and execute its proposed strategy, Infosys must take following steps:
- Keep on improving its training programs and update its training material as per the current standards. It must provide training to its newly joined recruits on real life situations and how to effectively handle the clients.
- Importance must be given to cross cultural training and uniformity of processes.
- It must provide ethical training to its employees and they should know what the strategic goal of the company is.
- Finally, its leaders must lead by example. Importance must be given only to talent and hard work.
Let us now analyse the manner in which Infosys can effectively utilize its strategic resources to achieve its strategic goals.
- Finance: The Company had set up its first office in U.S in the 1980s, since then, it has been a long journey for the IT Company. Through its GDM model, its revenue jumped from $203million in 2000 to $3090 million in 2007. In 2007, its more than 70000 employees generated revenues to the tune of $3 billion, which included more than 25% net profit after deducting tax. This shows that the company’s finance were very strong and robust. The company can use this to its advantage by putting more resources and investments on its human resource initiatives. It can develop better HR strategies and provide greater incentives to its employees. Incentives can range from giving additional bonuses to organising rewards and recognition programs (Stanford. Infosys: Building a talent engine to sustain growth, p.08).
- Human Resources: Infosys needs a systematic training and development processes in order to hire new employees. It must update its training program (Global Business Foundation School) and include new training modules as per the recent trends. In 2007, Infosys training centre employed 220 faculty members (Stanford. Infosys: Building a talent engine to sustain growth, p.09) for its 70,000 employees. Today, Infosys has more than 160,000 employees and it must increase its faculty strength. The company must also offer different courses that pertain to technical education, client specific courses, and courses focused on soft skills. Promotions for existing employees are another aspect which needs attention because it makes them feel motivated and it also elevates the career aspirations of the employees.
The human resource department must create such a culture in the company in which a new employee can aspire to become a future leader. It needs to move its employees around different projects and industries to give them a broader perspective. By doing so, the employee would learn a new industry, will broaden his approach and elevate his ability to rise within the organisation.
- Facilities: With its call centres, offices and training centres located all across India and abroad, Infosys has some great facilities that can be utilised for the growth of its employees. It had also initiated a “Campus Connect” program that connected it to some of the best engineering colleges in India and abroad. It must organise more such programs and utilise its facilities to attract more talent into the software industry.
- Information Technology: The initial vision of the company was to serve global customers and provide IT solutions by doing work in India. This was different from the normal approach of sending Indian engineers abroad at client’s location because working at client’s location created several issues such as tough visa restrictions, time differences and huge expenses.
Infosys could apply its Global Delivery Model to any business function. It took advantage of the fact that there were large numbers of highly skilled and talented employees who were available to work from India, where salaries and expenses were significantly less than the western countries like U.S. Infosys would also perform the back office functions and would allow its clients to focus on other critical activities. In any project involving Infosys and a client, there might be a team from Infosys who would sit at a client location and do his necessary work which would be sent to another team of Infosys in India for coding purpose. This would then be sent to the U.S team next morning.
Therefore, by using IT, Infosys could satisfy not only its customers but also its employees, because their efforts would be appreciated and applauded even by the clients. It would also provide great opportunity to its employees to grow ahead in their careers and improve their value in the market.
How does the Strategic plan fit with Infosys’ mission and vision?
The mission statement of the company was “To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors, and society at large” (Stanford. Infosys: Building a talent engine to sustain growth, p.03). As discussed earlier, the values of the company were referred as “C-LIFE”, which stood for Customer delight, Leadership, Integrity, Fairness and Excellence. The vision of Infosys was defined as “To be globally respected co-operation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people” (Stanford. Infosys: Building a talent engine to sustain growth, p.03).
The mission and the vision of Infosys totally coincides with the proposed strategy of hiring and retaining new talent as the company wanted to proved best services by best people , and to do this they need to hire and retain the best! The slogan of the company rightly described the proposed strategy and its alignment with its mission and vision: “Infosys: Powered by Intellect, Driven by Values”.
If we speak of some specific strategies that can track the effectiveness of the strategic plan, we can infer the following:
- It must improve the work life balance of its employees by organizing of interactive functions, group lunches, picnics and competitions. Infosys must take part in surveys and try to analyse the impact and effectiveness of their strategic plan.
- It must encourage some of the employees to seek internal transfers and must create an internal market for talent. In this way, some of the employees who might not be satisfied with their projects and work can seek transfers and better opportunities internally. This would be a great way to further increase the efforts in pursuing the company’s strategic plans.
- The HR department could track the effectiveness of the changes by measuring the company’s attrition rate as compared to the previous year. If the rate had reduced, it could be inferred that it has succeeded in implementing its strategic plan. If the attrition rate had increased, then it would mean that the company needs to rethink its strategy and there is something fundamentally wrong with the way it functions.
For a company that is powered by intellect and driven by values, the proposed strategic plan could be a game changer. It can create a new chapter in the illustrious history of the IT major.
References
Organisational Alignment: The 7-S Model (1996) Harvard Business School. Print.
What is Organization’s Culture (2006). Harvard Business School. Print.
Kotler, Phillip. Keller Kevin L. Marketing Management 4th ed. Washington
