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Cost Efficiency of Infosys
An important strategic capability in any organization is to ensure that it is successful in achieving
and continually improving cost efficiency. The resulting low cost would help an organization to
attain a competitive edge and this would be an important differentiating factor in todays
competitive IT industry. Cost efficiency is determined by a number of cost drivers as discussed
below.
Economies of Scale
When more units of a good or a service can be produced on a larger scale, yet with (on average)less input costs, economies of scale are said to be achieved. Alternatively, this means that as a
company grows and production units increase, a company will have a better chance to decrease
its costs.
For Infosys Economies of scale can be said to have been attained considering that the company
has offered its services to wide range of industry, which helps it to use it work force more
efficiently and also use the knowledge and experience gained in one industry project to be
successfully implemented in other industrys project. Thus owing to its diverse nature of services
provided to different industries, it can practice the concept of division of labor, which would lead
to Managerial Economies of scale. Being a global leader in IT consulting. With nearly 115,000employees, it operates from more than 50 offices and development centers around the world.
Some of the services offered by Infosys are:
Management Consulting Services Business Application Services Business IT Services
Economies of Scale Experience
Supply Cost Product/Product Design
Cost Efficiency
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Engineering Services BPO Services Cloud Mobility
Sustainability
Some of the industries served by Infosys are:
Aerospace & Defense Airlines Automotive Communication Services Consumer Packaged Goods Education Energy Financial Services Healthcare High-Tech Hospitality and Leisure Industrial Manufacturing Insurance Life Sciences Logistics and Distribution Media & Entertainment Publishing Resources Industries Retail Utilities
Supply Cost:
Considering Infosys being in service industry the most important for the company is to maintain
a pool of efficient and well trained employees. Thus for Infosys the most important cost is
incurred in maintaining work force. India has low labor costs. The workforce has relatively high
skills levels in Information Technology. Coupling these two elements together, it gives Infosys
the operational basis that offers low-cost based, highly skilled competitive advantage.
Infosys has also developed a well established offshore business model. It realized that an
essential component of its competitive advantage was itsa access to low cost engineering talent
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in India. It was disruptive to ship this talent across a long distance to perform work on site for a
short duration. Instead the company decided to make significant investment in infrastructure to
manage multiple projects from the country itself. Also it build on its brand to gain the credibility
of the clients. This offshore arrangement helped Infosys to reduce its cost and pass on the same
benefits to the customers.
Product(Service) Design/ Product (Service):
Infosys as a company invests heavily in research and development that help it to come up with
new services at a competitive pricing. Infosys Labs has been established as part of the company's
new strategic direction of 'Building Tomorrow's Enterprise'. Consisting of a dedicated research
and innovation facility, Infosys Labs builds on the successes of the award winning Software
Engineering and Technology Labs (SETLabs), and envisages a broader mandate. The 600-
member technology and domain-focused team focuses on driving innovation across trends
identified by the company to transform the businesses of our clients globally. These trends
include digital consumers, emerging economies, healthcare economy, sustainable tomorrow, new
commerce, smarter organizations, and pervasive computing. Working together with clients,
technology partners, universities and the larger innovation ecosystem, Infosys Labs focuses onsetting up joint innovation centers and developing solutions to complex business problems.
Infosys Labs is organized as a global network of research labs and innovation hubs.Infosys Labs
collaborates with leading national and international universities such as the University of
Southern California, University of Cambridge, Queensland University of Technology, University
of Illinois at Urbana Champaign, Indian Institute of Technology Bombay Monash Research
Academy, Purdue University,Indian Institute of Information Technology, Bangalore.
Infosys also had the SharePoint Server 2010based ICP environment which made it easier for
Infosys employees to share information and respond to customers needs more efficiently. These
sites were centrally managed, making the administration easier and maintenanc cheaper.
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Experience
Infosys has a programThe Global Talent Program , which is the largest sustained effort by any
company to recruit from campuses outside India and develop the skills of a global workforce
through training assignments in India. Thus the employees are well experienced and experts in
their field of work, thereby it gives Infosys an opportunity to reduce costs while initiating new
services for its clients, on additional training of employees.
Infosys has also developed a wide range of programs that foster an environment that provides the
best aspects of universities, but with professionalism that a work place demands. These programs
have kept the attrition rate below industry average at Infosys and save Infosys the cost of losing
their experienced employees.