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Cover Story

Enter ‘Tactical’ Strategy
In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books
Issue Date - 17/02/2011
B&E: You say that strategic change is an incremental process. What is the process you follow for reviewing your strategy?
KG: We kick the strategic review process off every year starting October and it ends in January. We call it STRAP (Strategic Action Planning Process). In this process, we look at a 5 year horizon, prepare detailed 3 year business plans and every year; we prepare an annual budget, which is reviewed on a quarterly basis. That’s the rhythm of the business. Next year’s budgets have to be reviewed by March. Before that, you have to look at any possible changes, new investments, new focus areas, services, et al. We set sales targets, revenue productivity targets and margin targets, which will decide on the rest of the P&L. We do not set ourselves for M&As, since it is still a growth industry, and we still focus primarily on organic growth. We are diversified within our industry. Our industry is a trillion dollar industry, and our revenues are $6 billion, so we have a long way to go before we hit a ceiling.

B&E: Infosys has also consistently been measuring its positioning among business customers and also the general public in the US. How is the perception changing?
KG: We are a B2B company, and we sell especially to large businesses. So our primary focus towards branding, perception, et al is towards our client base, which is global 2000 companies. And if you take this universe, there may be 5-6 key decision makers, which means 10,000-12,000 people. Then we have say the academia, as they influence the students, and that is the base from which we recruit. Then we have the analyst community, business publications, et al. So we have a base of 20000 people that we target; we can name them and we have their e-mail IDs. Our goal is to influence them through direct marketing rather than using advertising. Then we do polls of our customers and some of their important people for their feedback on what they perceive, and that has evolved over the years. In fact every time the bar gets raised (from our side), the expectation goes up. Today, the expectation is that we will help clients on the business solutions side. If you look at reports from Gartner, Forrester, et al; in many of their reports, we fall in the leadership quadrant. General public surveys are more from the perspective of recruitment, being a good corporate citizen et al. But we really are not a CPG (Consumer Packaged Goods) brand.
B&E: Revenue per employee is a metric where IT companies are trying to break the linear relation. Where do you stand with respect to global benchmarks?
KG: Compared to global benchmarks, we will be significantly lower, since we do 70% of our work from within India. You have to compare apples to apples. Our rates on site and off shore are comparable to other companies; in fact they are slightly higher than our peers, since we are considered a premium player. Blended we will be lower than other global system integrators since we have a lot of work coming from India. We can of course move our services mix towards more of consulting, and that will improve our revenue per employee. We want to remain a full services company, to support our global clients; so we will have consulting to BPO and we want to balance our mix towards more more of consulting.

B&E: What are the critical lessons from Infosys when it comes to managing strategic shifts?
KG: Our philosophy is that you don’t make one big bet. You make several small bets, and you create multiple engines of growth. In the short term, the change looks small, but in the medium term, it becomes a significant change. If you look at where Infosys was five years back, to this present day, there is a tremendous difference. The second point is how do you make these shifts while maintaining your short term performance? Do you have to sacrifice your margins? The answer is no, if you make the changes when you are strong. The third aspect is the process itself. It is bottom up in our case. We take inputs from our clients, talk to as many employees as possible, we leverage technology to do strategy planning, et al.

People do not understand one thing about this industry. We are not moving out of software services or software, but we are still diversified businesses. We are diversified by industry, we are diversified by portfolio, we are diversified by geography and diversified by customer. In fact our business mantra is PSPD: Predictability, Sustainability, Profitability and Derisking. These are the four legs of the chair where we sit. We believe every business has to ultimately look at these four parameters.

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