The Next Leg Up: Managing
Scalability, Culture and Growth
Nandan M Nilekani
Managing Director, President and Chief Operating Officer
Infosys Technologies Limited
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Infosys has grown significantly in the past ..
1600
1400
Rs. Cr.
1200
1000
800
600
400
200
0
O p eratin g R ev en u es
P ro fit after tax
1997
139
37
1998
258
60
1999
509
135
2000
882
294
1339
447.13
Y T D F Y 2001
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Revenues grew by
over 500% and
Net profits by over
600% in four years
© 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 Symposium
March 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 Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
The key aspects of growth are…
Key Drivers
Organic
Growth
Key Dimensions
Inorganic
Growth
Increasing
No. of
Employees
Diverse
Employees
Growth
Customers
– Increased
No., Size
and
Diversity
Large No. of
projects
Broader
Service
Portfolio
Acquisitions
&
Investments
Infrastructure
Requirements
Key Implications
Opportunities
Threats
Leveraging
Visibility
Bureaucracy
Leveraging
Capabilities
Loss of agility
Key Challenges
Expectations
Employee
Morale
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Scaling Up
Alignment
Organizational
response
Ensuring Excellence
© 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Workforce
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Employer of
Choice
Acquiring
Talent
Innovative
Expansion of
Pool
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Scalability
© 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Expanding our pool:
 Focus on learnability
 Shift gear - engineers with 1-3 years of nonsoftware 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 Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
Learning
Value Add
Enhancing
Retention
Emotional
Value Add
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Financial
Value Add
© 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
“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
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - workforce
“Financial value add” implies:
 Competitive compensation
 Asset creation
 Wealth creation
Goldman Sachs IT Services and Software Symposium
March 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 nonexecutive 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Infrastructure
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - infrastructure
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Processes
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 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 Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Technology
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Presence across various points in the technology curve
Scalability challenges - technology
Browser
-asplatform
Voice
Recognition
Wireless
LANs
Web-Enabled
Mobile Phones
PCs
Comfort
Partner with
technology leaders
in product
Challenge
development
ERP
Notebooks
Client
Server
JAVA
PDAs
Partner with enterprises
to leverage technology
for business advantage
XML
Growth
Mature
Emerging
Market Maturity Stage
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Declining
© 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Scalability challenges - technology
Cash Mgmt
Banking
Utilities
Focus areas
Retail and
Distribution
Manufacturing
Supply Chain
Object/Component
Technologies
Performance
Engineering
Commodities
Risk Mgmt
Securities
Agent
Technologies
Software
Methodologies
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
Loyalty
DCG
Insurance
eBusiness
Technologies
Mobile Commerce
Technologies
Architectures
SETLabs
Security
© 2001, Infosys Technologies Ltd.
Scalability challenges - technology
Sales and
Marketing
PU
Projects
Domain specific
Trends
Methodology
Research
Publications
Patterns and
Frameworks
Concept
Application
Customers
I.T & Tech
Trends
Business
Models
Package
Analysis
Reference
Implementations
Research and learning output
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Risk
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 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 Symposium
March 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 Symposium
March 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 Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Customers
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 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 Symposium
March 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 Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.
Investors
Goldman Sachs IT Services and Software Symposium
March 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 Symposium
March 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
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
http://www.infy.com/investor-relations/
© 2001, Infosys Technologies Ltd.
Thank you
Nandan_MN@infy.com
Goldman Sachs IT Services and Software Symposium
March 14-16, 2001
© 2001, Infosys Technologies Ltd.