INTRODUCTION:

I BACKGROUND:

Infosys was established by N. R Narayan Murthy and his team of 6 engineers in Pune, with an initial capital of US$250. It signed its first client, Data Basics Corporation in New York. In 1983, the corporate headquarters of Infosys were shifted to Bangalore.

It opened its first international office in Boston, US in 1983.In the year 1993, Infosys went public, acquired ISO 9001/Tick IT certification and introduced Employee Stock Options Program (ESOP). It’s first European office was set up in UK in 1994 where it set up e-Business practice.

In 1997, Infosys opened an office in Toronto, Canada. During the same year it launched the Infosys Business Consulting Services and opened offices in Germany, Sweden, Belgium, Australia and two development centres in the US.

Offices in France and Hong Kong, a global development centre in Canada and UK, and three development centres in the US were opened. In 2001, the revenue of Infosys touched US$400 million, it opened offices in UAE and Argentina, and a development centre in Japan.

Infosys opened new offices in Netherlands, Singapore and Switzerland, launched Progeon, offering business process outsourcing services. In 2003, it set up offices in China and Australia.

In 2006, N.R. Narayan Murthy retired from services and was appointed as Additional Director and still continues as Chairman and Chief Mentor of Infosys. In 2007, Kris Gopalakrishnan, COO, took over as CEO, Nandan Nilekani was appointed as Co-Chairman of the Board of Directors.

In 2011, N.R. Narayan Murthy handed over Chairmanship to K.V. Kamath, S.D. Shibulal (COO) took over as CEO and MD from Kris Gopalakrishnan.

In 2012, it was listed on the NYSE market, acquired Lodestone Holding AG, was listed among the world’s most innovative companies by Forbes and among top 25 performers in Caring for Climate Initiative.

In 2013, N.R. Narayan Murthy was appointed as Executive Chairman of the Board. In 2014, Dr. Vishal Sikka took over as the CEO and MD from S.D. Shibulal and the revenue crossed INR 50,000 crore. Salil Parekh was appointed as CEO and MD of the company, Pravin Rao was appointed as Interim Chief Executive Officer and Managing Director. (Infosys, About Us)

II COMPETITORS:

Table 2 (Control, Infosys)

S. No.	Competitors
1	Wipro
2	Cognizant
3	TCS
4	HCL Tech
5	Tech Mahindra
6	Oracle
7	L&T Infotech

The top competitors of Infosys in the IT sector are Wipro and Cognizant and the employee strength of Infosys is 2,00,364.

III MARKET GEOGRAPHY:

Table 3(Locations)

America	Asia Pacific	Europe	Middle East and Africa
Brazil	Australia	Belgium	Mauritius
Canada	China	Croatia	South Africa
Chile	Hong Kong	Denmark	United Arab Emirates
Mexico	India	Finland
Costa Rica	Japan	France
United States	Malaysia	Germany
	New Zealand	Ireland
	Philippines	Italy
	Singapore	Norway
	South Korea	Russia
	Taiwan	Spain
		Switzerland
		The Netherlands
		United Kingdom (UK)

Geographical Revenue Share:

Figure 1 (Statista, 2014)

The graph represents around 2/3^rd of Infosys’ revenue comes from North America.

North America and Europe the largest contributors in the company’s revenue respectively.

Being an Indian company, most of its revenue comes from North America, explains the difference in IT market across the world. Infosys has 2.6% of its total revenue coming from India.

IV MICHAEL PORTER 5 FORCES AND INFOSYS:

The model is based on the five identified forces that recognizes an industry’s strengths and weaknesses. (Investopedia, n.d.)

The five forces are:

1. Threat of New Entrants

2. Bargaining Power of Supplier

3. Bargaining Power of Buyers

4. Threat from Substitute Products

5. Rivalry among the existing Competitors

1. Threat of New Entrants to Infosys:

The new entrants in the market come with the lower price strategies and bringing innovative technology thus providing a new value proposition to the market. Infosys Ltd. has a threat from the new entrants. Currently, the software firms are investing a lot in the Research and Development. The smaller companies take decisions quickly which increases their scope in the OPD businesses. (Rediff, 2005)

2. Bargaining Power of Suppliers:

There are many suppliers for the Technical and System Software industry, but the dominant suppliers have the potential to decrease the profit margins of Infosys LTD. by negotiating a high price with the company that lowers the profitability of Infosys. The suppliers include the transport service providers, recruitment agencies, engineering colleges, office space suppliers. In India, the pressure from the suppliers is less as the bargaining power of the suppliers is not strong.

3. Bargaining Power of Buyers:

The bargaining power of buyers affect the profitability of the company as they want lesser prices that impact the companyin the long run. The strength of the buyers depends upon multiple factors such as the importance of an individual customer to the company, the cost which the buyer has to bear if it switches to a substitute etc. The bargaining power of the buyers is low when the services being provided can impact the strategies of the company such as ERP implementation but the buyers bargaining power increases when the organizations provide them the conventional IT work such as outsourcing customer support services. (Dakhole & Mane, 2017)

4. Threats of Substitute Products or Services:

The emerging technological sector in China and Philippines due to the low cost of raw material and the work force. Big organizations are maintaining their own IT departments and outsourcing low skilled jobs to the IT organizations. The organizations opt to purchase packages than the standalone application such as ERP Package. Software such as MS-Excel and MS-Access suit all business operations and need no expertise or expert programs for the organizations. (NITHYA & KOMALA, 2016)

5. Rivalry Among Existing Competitors:

Infosys faces a lot of rivalry in the System Software and Technical industry. The higher competition leads to the fall in the profitability. The competitors of Infosys are TCS, Wipro, HCL Tech, Tech Mahindra, Oracle etc. (Control, 2018)Cognizant and Wipro are the two most dominant competitors of Infosys. The financial results point to the revenue growth of the organization but Infosys profit is decreasing due to the increase in competition. (Campos, 2014)

V KEY STRATEGIES TO ENTER FOREIGN MARKET:

Infosys has changed its strategy from only consulting to sales which it identified was not being focused in the past. The company assigned every senior partner, 2 clients each. The strategy also involves understanding the rapid innovation and technology throughout the world and offer differentiated services. Infosys provides IT services during the time of global recession when all other companies stop their IT and ITES services. (Ganesha, 2019)

Following are the strategies to enter foreign market by Infosys:

Acquisition:

Infosys acquires companies to enter into different markets.

Acquired Organizations by Infosys (2003-18)

Table 1 (Acquisitions)

Acquired Organization	Announced Date	Price	Transaction Name
WONGDOODY	Apr 13, 2018	$ 75 Million	Wongdoody acquired by Infosys
Brilliant Basics	Aug 3, 2017	£ 7.5 Million	Brilliant Basics acquired by Infosys
Noah Consulting	Oct 19, 2015	$70 Million	Skytree acquired by Infosys
Skava	Apr 27, 2015	$120Million	Skava acquired by Infosys
Kallidus Technologies	Apr 24, 2015	$120Million	Kalidus Technologies acquired by Infosys
Panaya	Feb 16, 2015	$230Million	Panaya acquired by Infosys
Lodestone Holding	Sep 10, 2012	$349Million	Lodestone Holding acquired by Infosys
McCamish Systems LLC	Nov 13, 2009	$58Million	McCamish Systems LLC acquired by Infosys
Infosys Technologies (Australia) Pty. Ltd.	Dec 18, 2003	$22.9Million	Infosys Technologies acquired by Infosys

Global Alliance:

Infosys entered into global alliance with Schlumberger, the world’s largest company in terms of oilfield supplying technologyfor the exploration and information management in the oil and gas industry. The alliance enabled Infosys to provide business and technical solutions and improve the process of oil and gas companies. (Infosys, Alliances)

Joint Venture:

Infosys came in a joint venture with SaudiPrerogative Company to conduct IT services in the kingdom of Saudi Arabia. The company entered Saudi Arabia through this joint venture. (Manikantha, 2016)

Partners:

Becoming a partner with an organization is another strategy of Infosys to enter a new market. It partnered with FTS International which is the largest well completion company in North America. FTSI caters to the company which require solutions for customized hydraulic fracturing. Infosys after partnering with FTSI implemented SAP ECC suite that enabled the organisation to access the date at real time. (Infosys)

VI PROBLEMS FACED BY INFOSYS IN THE INTERNATIONAL MARKET:

Wage Inflation in India:

Low wages is a competitive advantage to the companies but presently, there has been a pressure to increase the wages of the employees. (Bhasin, 2018) The organization tackled the problem by giving a single digit hike of 5 – 9% to its employees and a double-digit hike for the top-level employees of Infosys. (Moharkan, 2017)

US H-1B Visa Issues:

The rejection of the work visa increases the cost and delay of the projects. Infosys sends its employees to various project locations for the completion of the work and is the top sponsor from India to send employees to the US. (Bhattacharya, 2017) This would impact largely on the IT Services and the margins they earn.

Following steps have been taken by the company to counter the problems:

1. Infosys has decided to apply for visas early.

2. Infosys has decided to hire more local talent to reduce cost and counter the strict immigration laws imposed by the US Government. (PTI, 2017)

3. The company is training students and teachers about the next generation technology.

4. An Approach to work more virtually by spreading digitization and cloud services.

Infosys has faced the same situation in Australia where the Australian Government has completed its work on the permanent and the temporary work visa programs. (Livemint, 2018)

VII FINANCING OF INFOSYS:

Financing is the process of providing funds for business activities, making purchases or investing. Financial institutions such as banks are in the business of providing capital to businesses, consumers and investors to help them achieve their goals. The use of financing is vital in any economic system, as it allows companies to purchase products out of their immediate reach.

Put differently, financing is a way to leverage the time value of money(TVM) to put future expected money flows to use for projects started today. Financing also takes advantage of the fact that some will have a surplus of money that they wish to put to work to generate returns, while others demand money to undertake investment expecting returns, creating a market for money.

Financin:

Infosys only raises funds by issuing shares and nothing through debt. Firms like Infosys in the technological industry like to be more inclined to low or even zero debt capital structure, because of the uncertainty over the future of a technology or an innovation.

Also, some entrepreneurs value their independence more than increasing profits. They do not want to be exposed to banks practice and share their profits with them.

Sometimes banks procedures classify some companies as high risk, so they avoid lending them money, or, demand outrageous conditions, despite positive financial results and history.

But it is also important to realize that tax shield is only one part of debt, there are a few trades off models that talk about the other negative effects of debt like risk shifting and underinvestment.

The company raises money in the following ways:

1. Promoter and Promoter group

2. Public

3. Share underlying DRS

4. Shares held by employee trust

5. Non-Promoter Non-Public

VIII DOMESTIC FINANCING OF INFOSYS:

Domestic Financing refers to raising funds from people and companies which lie within the geographical boundary of the country or in other words are the residents of the country in which the company is being placed. Domestic finance of Infosys includes:

Promoter and Promoter group:

A promoter is an individual or organization that helps raise money for some type of investment activity. Promoters may raise money for a company by offering investment vehicles other than traditional stocks and bonds, such as limited partnerships and direct investment activities. Often, promoters are paid in company stock or free entrance into the investing activity though a more standard fee for service structure may also be used to dictate the level of compensation.

In Infosys, there are 22 shareholders (individuals or Hindu Undivided Family) who have invested their money in Infosys which in total amounts to 28,17,02,889 shares of the company which amounts to a very big amount of capital for the company. The shares hold by Promoter and Promoter group are approximately 13% of the total number of shares of the company.

Public:

The amount raised from this option is basically the funds a company raises from the general public.

IX COMPOSITION OF DOMESTIC FINANCE RAISED BY INFOSYS:

Mutual Fund companies:

Mutual fund companies are basically the ones who take the investments from a large number of people and then after that after appointing a professional manager who can properly examine the market, combine all the funds received from investors and invest them in a company.

Mutual funds hold approximately 12% of the shares of the company which comprises of a very large amount because of the trust the other companies and banks have on Infosys on their operations and share prices due to their efficient performance.

Financial Institutions:

A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions, such as deposits, loans, investments and currency exchange.

The domestic Financial institutions/ banks includes investments from 22 different shareholders but in overall does not comprise of a very large number of shares as it only includes 0.1% of the total number of shares of the company.

Insurance Companies:

A company that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments is called an insurance company. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount.

The domestic financing of Infosys includes companies like ICICI Prudential and Life Insurance Corporation of India which approximately hold 11% of the total shares of the company in total.

The amount raised from the Insurance Companies hence also plays a very significant role.

Individuals with investment up to 2 lakhs or more then 2 lakhs:

This includes individuals of the country who apply their own knowledge for the purpose of share trading or investing their savings in a company so as to gain profit in the future.

This total comprises of approximately 10% shares of the company as collectively there are many investors who trust and invest in a company like Infosys as it is a company which is always expected to grow by the shareholders because of its evergreen nature of industry.

X FOREIGN FINANCING AND FINANCIAL ANALYSIS:

Foreign financing is the investment received from individuals or companies who are not a part of the country in which the company is based. The investment is majorly in the form of portfolio investment made by foreign investors so as to take the benefit of fluctuations in the share price of the company and also the fluctuations in the currency value in the world market.

This includes Overseas Depositories and foreign portfolio investors which in total comprise of 50% of the shares being raised by Infosys. The big investment from foreign individuals and companies is a result of the market capitalization and the market image of Infosys in the world market due to which the investors trust the company and find it profitable to invest their amount.

Debt Equity Ratio:

The company has a Debt Equity Ratio of 0 as the company does not raise any funds from Debts which is a great indication as in case of any problems the company will be able to take it money from its shareholders and there will be no chances of the company becoming Bankrupt being in a Debt Trap.

Dividend per share ratio:

The company has a Dividend per share ratio of 43.5:1 due to which investors are interested in a very large amount seeing such great returns in form of dividend.

Gross Profit Ratio:

The company has a gross profit ratio of approximately 26% which shows that the company is able to get profits in a very large amount and hence the company is expected grow more and not have such a situation where the company falls down and due to such circumstances, the value of their shares does too, due to which investors find it quite profitable.

Current and Quick Ratio:

The company has a current and quick ratio above 3 which is not a good indication as it shows that the company is not using its assets efficiently as the ideal current ratio is 2:1 and ideal quick ratio is 1:1 and a large difference between the ideal and actual ratios of the company shows that the company should invest more money and use their assets more and hence grow.

XI CURRENT GLOBAL POSITION OF THE COMPANY:

Infosys Ltd. is a consulting, technology and outsourcing company, which provides end-to-end business solutions thereby enabling clients to enhance business performance, delivered to customers globally operating in various industry segments. The company's industry segments are primarily financial services and insurance comprising enterprises providing banking, finance and insurance services, manufacturing, enterprises in the energy, utilities, communication and services and retail, consumer packaged goods, logistics and life sciences.

Talking about its current global position according to Forbes 2000 it is ranked number 653 out of 2000.

According to sales their rank is 927 as their sales amount to $ 10.94 billion

It is being ranked number 351 with a market cap of $38.3 billion

It is ranked 46 in Top Multinational Performers.

XII INTERNATIONAL SCENARIO IN THE SECTOR:

Infosys is the 6^th best company in the whole world in IT sector currently. Its product range includes systems integration, support services, project management and data management etc. Almost all the key sales of the company are done overseas with the USA being its major client base. BPO and professional consultancy are given to telecommunication, insurance, consumer goods, financial and retail services among others.

XIII GLOBAL COMPETITION:

Infosys has neck to neck competition across the whole world and specially with TCS being an Indian company. The companies are as follows:

IBM Global Services Company:

It is the most competent IT Company that has truly proven that it has the modest goals and achievements when it comes to making this planet smarter. The IT segment of IBM is present in over 170 countries, where it offers a comprehensive range of IT enterprise together with consulting services.

Its clients are majorly the public and commercial sectors. Two primary units are used to run the service operations of the company.

Accenture:

It is a global management consulting and professional services firm that provides strategy, consulting, digital, technology and operations services. A Fortune Global 500 company, it has been incorporated in Dublin, Ireland, since 1 September 2009. In 2017, the company reported net revenues of $34.9 billion, with more than 425,000 employees serving clients in more than 200 cities in 120 countries. In 2015, the company had about 150,000 employees in India about 48,000 in the US, and about 50,000 in the Philippines Accenture's current clients include 95 of the Fortune Global 100 and more than three-quarters of the Fortune Global 500.

Tata Consultancy Services Ltd.:

It is an Indian multinational information technology (IT) service, consulting company headquartered in Mumbai, Maharashtra.

It’s a company with a market cap of approximately 7.63 Trillion and is one of the most valuable IT services brands worldwide.

The company’s services include outsourcing, consulting, IT strategic consultation, new product development, and data centre management, cloud computing services, systems integration and engineering services.

Hewlett Packard Enterprise company:

Hewlett Packard Enterprise Company (commonly referred to as HPE) is an American multinational enterprise information technology company based in Palo Alto, founded on 1 November 2015 as part of splitting of the Hewlett- Packard company. HPE is a business-focused organization with two divisions: Enterprise Group, which works in servers, storage, networking, consulting and support, and Financial Services.

Its products and services include software, converged systems, storage, wired and wireless networking, servers and other services. All these are geared towards necessitating for the IT needs of large companies. HPE has a lot of specialization in technology infrastructure, no doubt how they are a strong competitor for Infosys.

XIV NEED FOR INTERNATIONAL BUSINESS FOR INFOSYS:

Diversification:

The company wanted to diversify the workers of the company due to which international business/globalization was very important. The main purpose of this is diversification of workers and top-level executives so that the company can easily expand by keeping people from different countries. Once people from different countries are diversified inside the organization they will themselves bring new ideas which can be used in their use of operation.

Sky is the limit for learningL:

It could have been something missing in Infosys in reality if they would have actually not undergone such International Trade Agreements and Globalization.

There was a lot for Infosys to learn and they knew if they had to earn more, they had to learn more and hence understand the international markets for international trade for Infosys.

Technological change:

Rapid and sustained technological change has reduced the cost of transmitting and communicating information – sometimes known as “the death of distance” – a key factor behind trade in knowledge products using web technology. Also, there are so many technological changes every day in the IT Sector Industry that they eventually had to undergo Globalization so as to remain in the market and be updated with the up to date technological changes in the world.

Response of USA:

Infosys did get a lot of return from USA and also investment in form of ADR (America Depository Receipt) in a very less period of time so their experiment did actually work to check whether it will work or not and they did and hence continued to make the world’s 6^th best company in the IT Sector.

XV CONCLUSION:

Infosys has shown a large growth in terms of revenue and key strategies they have adopted to expand into the foreign markets. Infosys understands the need for the International Business and the key strategies it needs to counter the policies imposed by the governments of the other countries. The finances of Infosys are secured and growing. The company has high cash balance and runs at 0 debts. The organization has categorized the investments into Mutual Funds, Insurance Companies, Financial Institutions and individual investors. The global competition of the company is very strict and the company needs to innovate constantly to stay in the market. The organization has acquired, joint ventured and partnered with big organizations in order to enter new markets. In India, Infosys has no risk from the buyer bargaining power, but the company has to beware of the new businesses coming in the IT sector industry bringing innovation and lower prices.

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Received on 27.12.2018 Modified on 14.01.2019

Asian Journal of Management. 2019; 10(2): 128-134.

DOI: 10.5958/2321-5763.2019.00021.0