SWOT ANALYSISOpportunities? At a time of recession in the global economy, it may appear that some companies willreduce take up of services that Infosys offers. However, in tough times clients tend to focusupon cost reduction and outsourcing – with are strategies that Infosys offers. So hard timescould be profitable for Infosys.
? There is a new and emerging market in China as the country undergoes a hugeindustrial revolution.? The strategic alliance between Infosys and Schlumberger gives the IT company accessto lucrative business in the gas and oil industries.? There has been a trend over recent years for European and North American companies tobase some or all of their operation in India.
This is called an offshore service. Essentiallythere is a seamless link between domestic operations and services hosted in India.Examples include telecommunications companies such as British Telecom and banks suchas HSBC that have customer service and support centres based in India. Think about thetimes that you have made calls to a support line to find that the adviser is in Mumbai orBangalore and not in your home market.19 | PageThreats? India is not the only country that is undergoing rapid industrial expansion.Competitors may come from countries such as China or Korea where there arelarge pools of low-cost labor, and developing educational infrastructures such asuniversities and technology colleges.
? Customers may switch to other offshore service companies in other countries such asChina or Korea.? Other global players have realised that India has the benefit of low-cost, highly-skilled laborthat often speaks English and is culturally sensitive to Western practices. As with all global ITplayers, Infosys has to compete for skilled labor and this may have the effect of driving upwage levels, and making it more difficult to recruit and retain staff.Strengths? Since the company is based in India its competitive advantage is enhanced.
The Indianeconomy, despite weak economic indicators such as relatively high rates of inflation, haslow labor costs. The workforce has relatively high skills levels in Information Technology.Couple these two elements together and you have an operational basis that offers low-costbased, highly skilled competitive advantage. Trained Indian personnel often speak verygood English and are sensitive to Western culture, underpinned by India’s colonial past.? Infosys is in a strong financial position. The business turned over more than $4 billion in2008. This means that it has the capital to expand, and also the basis to leverage potentialinvestors.? The company has bases in 44 global development centres, most of which are located inIndia, although the company has offices in many developed and developing nations.
Thismeans not only that Infosys is becoming a global brand but also that it has the capability tosupport the global operations of multinational clients.Weaknesses? Infosys on occasion struggles in the US markets, and has particular problems in securingUnited States Federal Government contracts in North America. Since these contracts arehighly profitable and tend to run for long periods of time, Infosys is missing out onlucrative business.
Added to this is the fact that its competitors do well in terms of securingthe same Federal business (and one should also take into account that many of its20 | Pagecompetitors are domiciled in the US and there could be political pressure on the USGovernment to award contracts to domestic organizations).? Despite being a huge IT company in relation to its Indian competitors, Infosys is muchsmaller than its global competitors. As discussed above, Infosys generated $4 billion in2008, which is relatively low in comparison with large global competitors.TCSTata Consultancy Services (TCS) is the subsidiary of the reputed Tata Group. TCS is involved inproviding IT services, consultancy and business solutions. TCS has operations in Asia-Pacific, Africa,Middle East, Europe and Americas. TCS generated revenue of $ 16596 million in FY 2016, with agrowth of 14.
8% year-on- year.SWOT ANALYSISStrengths? Clients from diversified markets: TCS has clients from diversified industries such as Banking,financial services, retail, telecom and media and entertainment etc. Exposure to diversifiedbusiness industries dilutes business risks of overdependence on a single market or industry.? Geographic Footprint: TCS has strategically expanded to geographically diversified marketsthroughout the globe which includes North America, the UK, Middle East Europe, Africa andAsia-Pacific. Presence in geographically diversified markets reduces business risks andcreates a strong global image for TCS.? Strategically established partnership network: TCS has established the strong partnershipwith global companies around the world. It has partnered with some technology giants suchas Adobe, Amazon, Bosch, Dell and HP etc. These partnerships allow TCS to delivertechnologically sustainable and innovative business as well as strategic solutions.
WEAKNESSES? Legal battles: In 2014, TCS was involved in a legal battle against Epic Systems for allegedmisuse of Epic System’s confidential information. In 2016, TCS was found guilty and wasordered to pay damages worth $940 million. TCS has opposed the judgment and challengingit to the higher jurisdiction. Such incidents affect the image of the company.? Decline in performance by Diligent: Diligenta, a subsidiary of TCS has continuouslyperformed below par. The company is not expected to improve on performance soon andthus affects TCS’s bottom-line.
OPPURTUNITIES21 | Page? Digital transformational technologies: The world is going digital and hence businessdynamics are also changing to the digital economy. TCS has focused on digitally transformingitself and provide digital solutions. TCS should look ahead to spend more on digitaltransformation technologies.? Cloud-based solutions: With the advent of digital transforming technologies and fastinternet connectivity. The world is moving towards cloud based solutions and as a matter offact, the spending on cloud services is expected to grow at a CAGR of over 19% in the next 5years.
TCS has a solid infrastructure to provide cloud-based solutions and hence it is wellpoised to be benefitted with the demand created.? Machine-to- Machine (M2M) solutions: M2M solutions are those which allow wireless as wellas wired communications systems. There is a positive outlook for M2M solutions in thefuture and is expected to generate high revenues. TCS has a comprehensive suite of M2Mservices which will enable to take advantage of the demand for M2M solutions.THREATS? Immigration restrictions: With stricter immigration laws, increased H-1B visa fees andchanging political circumstances in the US, Indian IT companies are expected to suffer fromit as it will increase its costs and impact profitability and hence this is a threat to theindustry.? Intense competition: The IT industry is subjected to intense competition from companiessuch as Wipro, Infosys, Accenture, Capgemini