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Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
The Next Leg Up: Managing Scalability, Culture and Growth
Nandan M NilekaniManaging Director, President and Chief Operating Officer
Infosys Technologies Limited
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Revenues grew by over 500% and Net profits by over 600% in four years
Infosys has grown significantly in the past ..
0
200
400
600
800
1000
1200
1400
1600
Rs
. C
r.
1997 139 37
1998 258 60
1999 509 135
2000 882 294
YTD FY 2001 1339 447.13
Operating Revenues Profit after tax
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
The profile of business is also changing…
Newer technologies have contributed to a greater proportion of revenues
Complexity of projects has increased
Customers have increased from 19 (1995) to 250 (December 2000)
Per capita revenue has grown from $42,000 (1997) to $89,600 (December 2000)
Spread of business and operations have widened
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
throwing up a few challenges…
Bureaucracy affecting responsiveness to market
Dilution of work culture
Impact on quality, productivity and customer satisfaction
Attracting and retaining talent
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
making it imperative to…
Scale-up capacity
Maintain agility even while growing rapidly
Create leaders at all levels
Relentlessly pursue operational excellence
Accumulate and enrich intellectual capital
Strengthen organizational planning activities
Manage risks proactively
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Growth
Organic Growth
Inorganic Growth
Key Drivers
Increasing No. of
Employees
Customers – Increased
No., Size and
Diversity
Large No. of projects
Broader Service Portfolio
Acquisitions &
Investments
Infrastructure Requirements
Diverse Employees
Key Dimensions
Opportunities Threats
Leveraging Visibility
Leveraging Capabilities
Bureaucracy
Loss of agility
Expectations
Employee Morale
Key Implications
Scaling Up Alignment
Ensuring Excellence
Key ChallengesOrganizational
response
The key aspects of growth are…
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing growth implies managing…
Scalability challenges- Workforce
- Infrastructure
- Processes
- Technology
Risk
Customer expectations
Investor expectations
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Workforce
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
AcquiringTalent
Employer of Choice
ScalabilityInnovative
Expansion of Pool
Scalability challenges - workforce
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Employer of choice:
The Business Today-Hewitt Study, to find out which companies have really charged the 'emotional and intellectual energy' of their managerial employees, rates Infosys as the Best Employer of India in a survey of a hundred and fifty five companies
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Expanding our pool:
Focus on learnability
Shift gear - engineers with 1-3 years of non-software experience willing to switch to s/w development
Alternate pools - CAs and MBAs
Domain experts in areas like finance, insurance, telecommunications, CRM etc
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Scaling up:
Moving closer to the talent pool- Local DCs
- Global PDCs
Quarterly testing model ( 10,000 candidates tested on the same day across 10 locations )
Increased efficiency through systems
Distributed recruitment model
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
EnhancingRetention
Learning Value Add
FinancialValue AddEmotionalValue Add
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
“Learning value add” implies:
Multiple assignments in different technologies
Continuous learning
Global clientele
Gaining domain expertise
Empowerment and decision making
Continuous performance feedback
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
“Emotional value add” is achieved by:
Creating a campus like atmosphere
Providing opportunities for individual talent demonstration
Organizing inter DC meets
Skip level meetings
Top management 1 on 1
“Voice-of-the-youth” programme
An atmosphere of care
Scalability challenges - workforce
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
“Financial value add” implies:
Competitive compensation
Asset creation
Wealth creation
Scalability challenges - workforce
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Enhancing management depth Broad-basing the board to attract high quality multi-faceted
managerial talent- Induction of four non-executive directors in fiscal 1998, one non-
executive director in fiscal 1999 and three non-executive directors in fiscal 2001
- Induction of three employee directors in fiscal 2001
Empowering and preparing employees to take decisions for managing growth- Induction of managers younger than 30 years of age in the
Management Council - “Voice of the Youth”
Deepening the management levels- Project managers empowered to take operational level decisions
over budgets
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Infrastructure
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - infrastructure
Adequate physical infrastructure capacity to support the growth in personnel- Existing capacity: 10,300 seats (1.55 million sq. feet)
Building ahead of requirement- Building capacity for 8,500 seats (1.43 million sq. feet)- Acquired land in Bangalore (100 acres) and Hyderabad (30
acres) to construct new software development campuses
Significant training capacity created - 1200 people in Bangalore and 700 more in other locations
Telecommunication links being substantially enhanced from ~15 mbps to ~27 mbps
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - infrastructure
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - infrastructure
Scaling up to projected manpower levels:- India- Overseas- Telecommuting
Non campus options- Leasing/renting out office space where required- Increasing the capacity of the existing buildings at
various campus
De-centralization- Decentralized execution model
Benchmarking
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Processes
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - processes
Create, maintain and enhance processes- Improve quality and productivity
Benchmark against best-in-class processes
Reduce project risk: schedule, cost, functionality and quality
Provide assurance to management
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - processes
Deployment across the globe, with diverse nature of projects
Alignment across functions
Forecasting and servicing at the point of need
Measuring and improving performance across functions
Managing growth with minimum overheads
Effectively utilizing technologies
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - processes
Strategy for managing delivery challenges
Knowledge management initiative
Develop new mechanisms
Automate and enhance - IPM on the Extranet
New QA model
Quality focus during trainings
Reward and recognition
Multi-lingual QS and trainers
Outsourcing
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Technology
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - technology
Rapid business process changes
Rapid changes in technology
Emergence of technology intensive business models
Business process standardization and integration across organizations
Reduced time-to-market for new services, products
“Today’s business problem is actually a business-IT problem”
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Pre
sen
ce a
cro
ss v
ario
us
po
ints
in
th
e t
ech
no
log
y cu
rve
Comfort
Challenge
Emerging Growth Mature Declining
Market Maturity Stage
Web-Enabled Mobile Phones
Wireless LANs
PCs
PDAs
Voice Recognition
Notebooks
XML
Browser-as-
platform
JAVA
ERP
ClientServer
Partner with enterprises to leverage technology for business advantage
Partner with technology leaders in product development
Scalability challenges - technology
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - technology
Managing technology challenges:
Build a vision of tomorrow's technology, business
Harness specialist knowledge
Innovate, incubate and disseminate software engineering, technology practices and domain expertise
Build knowledge assets and reuse across projects
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
AgentTechnologies
Object/ComponentTechnologies
eBusinessTechnologies
Mobile CommerceTechnologies
Security
Architectures
UtilitiesCash Mgmt
BankingLoyalty
Retail and Distribution
CommoditiesRisk Mgmt
ManufacturingSupply Chain
Securities Insurance
SETLabs
DCG
Scalability challenges - technology
PerformanceEngineering
SoftwareMethodologies
Focus areas
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Scalability challenges - technology
ResearchPublications
ConceptApplication
Methodology
ReferenceImplementations
Patterns andFrameworks
Domain specificTrends
I.T & TechTrends
Research and learning output
PackageAnalysis
BusinessModels
Kn
ow
led
ge
Ma n
a gem
e nt
Infr
astr
uc t
ur e
PUProjects
Sales andMarketing
Customers
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Risk
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing risk
Business portfolio
Monitoring concentration of services, clients, vertical domains, geography and technology
Legal and statutory
Internal processes
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing risk – business portfolio
Business risks- Careful choice of startup clients based on analysis
of business plan, promoter’s track record, quality of VC backing, etc
Project execution risks- Iterative solution delivery methodology and use of
SEI CMM 5 processes
Legal risks- In-depth analysis of legal issues relating to
contracts, to protect Infosys’ interests
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing risks – monitoring concentration
Monitoring concentration of revenues from:- Service offerings
- Vertical domains
- Technology
- Geography
No client to account for > 10% of revenues- Wide base of clients serviced
- Monitoring revenues from start-up clients
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing risks – legal and statutory
Contractual liabilities- Review and documentation process
- Adequate insurance cover
Statutory compliance- Internal legal team
- Periodic monitoring of compliance across geographical jurisdictions
- Compliance officer
- Advice of legal counsel, if required
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing risks – internal processes
Project execution- Risk management guidelines for identification and mitigation
of risks- Body of knowledge - dissemination of methodologies- Encouraging a culture of knowledge sharing
Disaster prevention and recovery- Adherence to ISO9001 and SEI CMM 5 standards ensures that
Infosys has a robust disaster prevention system
Technological obsolescence- Evaluated on an ongoing basis- Continual investment in emerging technology infrastructure
Internal control systems- Well defined roles and responsibilities of operating managers- Clearly documented authorization policies
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Customers
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing customer expectations
Objective “Customer-first” is seen as a ethos
and a strategic advantage for Infosys in the global market place
Coverage through programs for: Developers Project leaders Project Managers and above
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing customer expectations
“Customer delight” programme
To strengthen and widen customer oriented awareness in Infosys
To provide a forum for sharing and learning from past experiences of customer interface
Activities
Sharing of success stories
Interaction with customers and receiving feedback
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing customer expectations
Key account management
Improving our ability to acquire, retain and grow large accounts
Developing a differentiated management approach for three types of accounts:
Large
Potentially large by next financial year
Plateau but with potential to be large by next financial year
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Investors
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing investor expectations
Announcing financial results within a reasonable time of the close of the financial period- Reducing investor uncertainty
Recasting financial statements in accordance with internationally accepted accounting principles like US GAAP
Clear and concise discussion and analysis of business condition and results of operations
Inform shareholders of material changes in the company or its operating environment which could have a impact on its functioning and profitability including state of preparedness for the future
Treating all our investors fairly without discrimination:- Avoiding selective disclosures
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Managing investor relations
The Infosys example:
Timely reporting
Leveraging the power of the internet
Web-casts
Analysts
Investor services
Innovations in financial reporting http://www.infy.com/investor-relations/
Goldman Sachs IT Services and Software SymposiumMarch 14-16, 2001 © 2001, Infosys Technologies Ltd.
Thank [email protected]