PESTEL Analysis of Infosys
Infosys is a global leader in providing “next generation” IT solutions to its clients. It was established in 1981 and has grown from strength to strength to hit US$ 6.04 average annual earnings. The company operates in various companies around the world, with 64 offices and 63 centers of development. It has over 130,000 employees and thrives in nurturing strategic long-tem links with its customers. In this essay, we look at some of the external factors, which affect the performance of Infosys.
Political Factors: Infosys enjoys political goodwill in India coupled with a stable government in office even though there are fears of having a hung parliament in the country. Because of good political relationships, state-owned firms are contracting IT firms to undertake various projects. The flip side of political relationships regard the U.S market, where the government does not allow tax benefits to firms that outsource IT work. This means that America encourages its companies to promote local IT providers, making it hard for Infosys to breakthrough the rich market.
Economic: Economic factors also affect the performance of Infosys. For example, the company enjoys huge demand domestically. In addition, a lot of local market growth has been projected. Experts argue that Domestic market is likely to grow by 20% to hit a value of USD 20 billion. Moreover, there has been a drop in real estate prices, and falling rental expenditure because of recession and lays offs. However, the impact of these has not been severe.
Social factors: Infosys enjoys the massive usage of English by Indians. For example, the country has accepted English Medium as a medium of education. Therefore, India has a large population of its population speaking English. With its high population, all educational institutions in India offer IT training with a high working age population.
Technological factors: India’s communication industry is a force to reckon in its business market. Indians enjoy the lowest call rates with more than 500 million subscribers. Moreover, India has the second largest telephone network after China, with a Tele-density of 19.86%. Other enterprise telephone services like Wi-max, VPN and 3G are likely to grow tremendously. India further enjoys a well-built network undersea optical cable. Thus, it has strong internet connection.
Legal Factors: There are flexible IT requirements when setting up IT companies. This means you can set up an IT firm with at least 10 hectares coverage and enjoy a host of tax benefits and fiscal advantages. Additionally, there is no legal requirement on the bonds, which employees are supposed to work. India has also strengthened its IT Act to ensure that it has a sound environment that promotes growth of the industry. This is important for Infosys’ expansion and success in delivering IT solutions to its ever-growing clientele worldwide.
Environmental Factors: Companies in India work towards keeping the environment safe. Thus, IT firms need policies that guide exploitation of resources and protection of the environment from industrial wastes. For example, companies are focusing on reducing emission of carbon products, proper utilization of energy and efficient consumption of water.
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Online sources:
http://www.slideshare.net/NiteshSinghPatel/pest-it-32360882
http://www.scribd.com/doc/14226359/Infosys-strategic-analysis