Infosys SWOT & PESTLE Analysis

Strength

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Weakness

1. Largely dependent on services Though Infosys has started to focus on platforms and products business, services segment still contribute close to 94 percent of its revenues. Also Application Development and Maintenance (ADM) contribute a major portion of services. The product segment is not well established which has a huge potential to be untapped both in the local and in the international markets and brings licensing revenues.

2. Huge dependency on North America and Europe: Infosys generates around 84% of its revenue from North America and Europe with 62% and 22% of FY16 revenues from North America and Europe respectively. The high dependency on only two markets can have the long-term implication. The African and Asia market is growing rapidly, and company should focus on these markets to have a diverse source of revenue.

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Opportunity

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Threat

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Political

1. Impact of Brexit in the UK and European markets: United Kingdom voted in a historic referendum for leaving the EU in 2016, termed as Brexit which resulted in shockwaves across the globe. Infosys generated over 22% of its FY16 revenue from Europe and Brexit has brought uncertainty in the political and business environment impacting the IT business. The new policies in these countries will significantly affect the revenue and cost of operation of Infosys. Brexit has also raised the economic volatility which has resulted in the overall increase in cost and decrease in revenue due to fluctuation in exchange rates.

2. Implementation of stringent visa policies by various governments: The changes in visa policies will have a major impact on IT service providers whose business model dependent on outsourcing. The changes H1B visa policy has already affected the IT industry. The major employee force of Infosys comes from countries such as India and Philippines because the cost of labor in these countries is low compared to the US, which resulted in a low cost of the project. But with visa constraints, the cost of the IT projects is going to increase. UK has also announced visas to be linked with compensation while Australia and Singapore have also proposed changes in their work visa structures. These policies have been influenced by political and populism factors and will impact player such as Infosys.

Economic

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Social

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Technological

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Legal

1. Strong ethics and legal culture within the organization: Infosys has long promoted and stood tall for ethics and legal activities. The company is said to have a strong ethical base. The sexual harassment case and Phaneesh Murthy being asked to leave Infosys is also a great example to prove the importance Infosys gives to its policies and a proof to the fact that it practices and hence preaches them.

Environmental

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