The Next Leg Up: Managing Scalability, Culture and Growth

Nandan M NilekaniManaging Director, President and Chief Operating Officer

Infosys Technologies Limited

Revenues grew by over 500% and Net profits by over 600% in four years

Infosys has grown significantly in the past ..

1997 139 37

1998 258 60

1999 509 135

2000 882 294

YTD FY 2001 1339 447.13

Operating Revenues Profit after tax

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

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

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

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…

Managing growth implies managing…

Scalability challenges- Workforce

- Infrastructure

- Processes

- Technology

Customer expectations

Investor expectations

Workforce

AcquiringTalent

Employer of Choice

ScalabilityInnovative

Expansion of Pool

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

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

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

EnhancingRetention

Learning Value Add

FinancialValue AddEmotionalValue Add

“Learning value add” implies:

Multiple assignments in different technologies

Continuous learning

Global clientele

Gaining domain expertise

Empowerment and decision making

Continuous performance feedback

“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

“Financial value add” implies:

Competitive compensation

Asset creation

Wealth creation

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

Infrastructure

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

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

Processes

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

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

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

Technology

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”

Comfort

Challenge

Emerging Growth Mature Declining

Market Maturity Stage

Web-Enabled Mobile Phones

Wireless LANs

Voice Recognition

Notebooks

Browser-as-

platform

ClientServer

Partner with enterprises to leverage technology for business advantage

Partner with technology leaders in product development

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

AgentTechnologies

Object/ComponentTechnologies

eBusinessTechnologies

Mobile CommerceTechnologies

Security

Architectures

UtilitiesCash Mgmt

BankingLoyalty

Retail and Distribution

CommoditiesRisk Mgmt

ManufacturingSupply Chain

Securities Insurance

SETLabs

PerformanceEngineering

SoftwareMethodologies

Focus areas

ResearchPublications

ConceptApplication

Methodology

ReferenceImplementations

Patterns andFrameworks

Domain specificTrends

I.T & TechTrends

Research and learning output

PackageAnalysis

BusinessModels

PUProjects

Sales andMarketing

Customers

Managing risk

Business portfolio

Monitoring concentration of services, clients, vertical domains, geography and technology

Legal and statutory

Internal processes

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

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

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

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

Customers

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

“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

Key account management

Improving our ability to acquire, retain and grow large accounts

Developing a differentiated management approach for three types of accounts:

Potentially large by next financial year

Plateau but with potential to be large by next financial year

Investors

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

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/

Thank youNandan_MN@infy.com

The Next Leg Up: Managing Scalability, Culture and Growth

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