INTRODUCTION

INDUSTRY PROFILE:
Over the past decade, the Information Technology (IT) industry has become one of the fastest
growing industries in India because of which it has caught world attention. Indian IT-ITES
industry grew at a rate of 33 % in FY2008. India is now being identified as powerhouse for
incremental development of computer software. It has grown from USD 4 billion industry to
USD 58.8 billion industry in FY2008-09 employing over 2 million people. IT-BPO Industry
has become growth engine for the economy contributing substantially to increases in GDP,
urban employment and exports to achieve vision of 'young and resilient India'. Although
domestic market is growing in India but still the major propellers of growth are exports. The
key segments that have contributed significantly to industry's exports include-Software and
services (IT services) and IT enabled services. In the face of current recession though the
mood is that of cautious optimism but Industry is expected to witness sustainable growth over
period of two years. But at the same time while industry has significant headroom for
growth ,as the competition is increasing with China emerging as major threat ,all the
stakeholders of Indian IT industry must give concentrated efforts to ensure that India realizes
its potential and maintains its leadership position in future also.

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DEMAND OF IT SECTOR;

There has been spur in the demand of IT in India because of :

Breadth of service offerings- Indian players have focused their energy on building domain
competencies and expertise in order to ensure superior value addition to clients projects and
processes. Service offerings have evolved from low-end application development to high end
integrated IT solutions. Worldwide interest in business process re-engineering, the economic
imperatives in developed countries of outsourcing, cost efficient maintenance of existing
mainframe systems and continuous development of new software for PCs have played
significant roles.

Cost advantage: Improved cost of operations is the key factor for growth in outsourcing. It is
estimated that cost savings for the MNC's are around 20-40%of company's original costs.
Apart from lower administration and labour costs, central & state governments offer fiscal
and non-fiscal benefits to companies adding to further cost advantage.

Quality of processes-India is host to more than 55% of global SEI CMM Level 5firms and is
expected to host highest number of ISO certified companies.

Abundance of qualified software engineers- Indian software engineers have carved out a
name in world market for providing unbeatable competition of quality software at low cost.
With more than half the million population below 25 yrs India is positioned to meet the
swelling demand for IT-ITES professionals. Leading firms add more than 10000 new
employees per annum.

Government's timely national action plan for rapidly improving communication software.

Business infrastructure-Sectors like real estate, transportation (air and road connectivity) and
hospitality are actively supporting the burgeoning demand generated by IT-ITES sector.

SUPPLY OF IT SECTOR:

Employees /professionals-India's young demographic profile and academic infrastructure

have potential to cater to growing demand for IT/ITES. There is an estimated additional
demand for 0.8 million IT and 1.4 million ITeS professionals by 2010 and India possesses an
abundant talent pool, producing 675,000 technical graduates per annum, of which 400,000
are engineers.
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KEY PLAYERS OF IT SECTOR:

Tata Consultancy Services

Infosys Technologies Limited

Wipro Technologies Limited

SERVICES:

Indian IT industry has tapped mainly two service lines i.e. application development and
application outsourcing. But other service lines are:

Packaged Software Support and Installation

IT consulting

Network Infrastructure management

Systems Integration

IS outsourcing

IT training and education

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Hardware support and Installation

Network consulting and integration

ITES opportunities include:

HR services

customer care

payment services

content development

administration

finance

PRODUCTS:

India has been able to establish its strong credentials in the IT services arena, India has not
been able to make a dent in the software products market. India has only been able to capture
a meagre 0.2% of the US$ 180 billion market. A broader spectrum of opportunities is
however becoming available to Indian players in areas such as:

embedded Software;

development and delivery of specialized components;

tapping offshore product development opportunities;

product acquisition

Enhancement and developing shrink wrapped products.

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 COMPANY PROFILE

Infosys Limited is an Indian multinational information technology company that

provides business consulting, information technology and outsourcing services. The company
was founded in Pune and is headquartered in Bangalore. Infosys is the second-largest
Indian IT company, after Tata Consultancy Services, by 2020 revenue figures.

On 24 August 2021, Infosys became the fourth Indian company to reach US$100 billion
in market capitalization. It is one of the top Big Tech (India) companies

Established in 1981, Infosys is a NYSE listed global consulting and IT services company
with more than 322k employees. From a capital of US$250, we have grown to become a US$
18.55 billion (LTM Q3 FY24 revenues) company with a market capitalization of US$ 76.29
billion.

In our journey of over 40 years, we have catalyzed some of the major changes that have led
to India's emergence as the global destination for software services talent. We pioneered the
Global Delivery Model and became the first IT Company from India to be listed on
NASDAQ. Our employee stock options program created some of India's first salaried

millionaires.

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History

Infosys was founded by seven engineers in Pune, Maharashtra, India. Its initial capital was
$250. It was registered as Infosys Consultants Private Limited on 2 July 1981. In 1983, it
relocated to Bangalore, Karnataka.

The company changed its name to Infosys Technologies Private Limited in April 1992 and to
Infosys Technologies Limited when it became a public limited company in June 1992. It was
renamed Infosys Limited in June 2011.

An initial public offering (IPO) was floated in February 1993 with an offer price
of ₹95 (equivalent to ₹690 or US$8.60 in 2023) per share against a book value
of ₹20 (equivalent to ₹150 or US$1.80 in 2023) per share. The IPO was undersubscribed but
it was "bailed out" by US investment bank Morgan Stanley, which picked up a 13% equity
stake at the offer price. Its shares were listed in June 1993 with trading opening
at ₹145 (equivalent to ₹1,100 or US$13 in 2023) per share.

Infosys shares were listed on the Nasdaq stock exchange in 1999 as American depositary
receipts (ADR). It became the first Indian company to be listed on Nasdaq. The share price
surged to ₹8,100 (equivalent to ₹35,000 or US$440 in 2023) by 1999, making it the costliest
share on the market at the time. At that time, Infosys was among the 20 biggest companies by
market capitalization on the Nasdaq. The ADR listing was shifted from Nasdaq to NYSE
Euronext to give European investors better access to the company's shares.

In July 2010, then-British Prime Minister David Cameron visited Infosys HQ in Bangalore
and addressed Infosys employees.

In 2012, Infosys announced a new office in Milwaukee, Wisconsin, to serve Harley-

Davidson. Infosys hired 1,200 United States employees in 2011 and expanded the workforce
by 2,000 employees in 2012.

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In July 2014, Infosys started a product subsidiary called EdgeVerve Systems, focusing on
enterprise software products for business operations, customer service, procurement and
commerce network domains. In August 2015, assets from Finacle Global Banking Solutions
were transferred from Infosys, thus becoming part of the product company EdgeVerve
Systems' product portfolio.

In April 2018, Infosys announced expansion in Indianapolis, Indiana.

In April 2019, Infosys ranked number 3 on 2019 Forbes ‘world best regarded companies list
and It launches the Infosys live enterprise suite

Its annual revenue surpassed US$10 million in FY 1995, US$100 million in FY 1999, US$1
billion in FY 2004, and US$10 billion in FY 2017. Its most up to date report, as of Dec 2023,
shows US$18 billion.

Products and services.

Infosys provides software development, maintenance and independent validation services to
companies in finance, insurance, manufacturing and other domains.

Its key products and services are:

 NIA – Next Generation Integrated AI Platform (formerly known as Mana)

 Infosys Consulting – a global management consulting service
 Cloud-based enterprise transformation services
 Infosys Information Platform (IIP), an analytics platform
 EdgeVerve Systems, which includes Finacle, a global banking platform
 Panaya Cloud Suite
 Skava (now Infosys Equinox)
 Engineering Services
 Digital Marketing
 Blockchain

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Operations:

As on May 29, 2023, the Company is spread across 274 locations in 56 countries.

Employees:

Infosys had a total of 259,619 employees (generally known as "Infoscions") as of 2021, out
of which 38.6% were women. Out of its total workforce, 229,658 are software professionals
and remaining 13,796 work for support and sales. In 2016, 89% of its employees were based
in India.

During the financial year 2019, Infosys received 2,333,420 applications from prospective
employees, interviewed 180,225 candidates and had a gross addition of 94,324 employees, a
4% hiring rate. These numbers do not include its subsidiaries.

In its Q3FY22 results in January, Infosys has reported that attrition has risen to 25.5%, from
20.1% in the September quarter. It has announced a profit of Rs 5,809 crore for the third
quarter and said it is planning to hire 55,000 freshers for FY22 as part of its global graduate
hiring program.

Former CEOs of TCS:

Portrait Picture Name Period

Narayan Murthy 1981 to March 2002

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Nandan Nilekani March 2002 to April 2007

Kris Gopalakrishnan April 2007 to August 2011

S. D. Shibulal August 2011 to July 2014

Vishal Sikka August 2014 to August 2017

UB Pravin Rao (interim) August 2017 to December 2017[67]

Salil S. Parekh January 2018 onwards[70]

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Review of Literature:

Thomas L. Friedman, a Pulitzer Prize-winning journalist and author, has frequently

discussed the impact of globalization and technology on the business world. While he may
not have dedicated entire reviews to Infosys, his writings often touch on the broader context
of India's IT industry and its global significance. In his book "The World Is Flat," Friedman
explores the leveling effect of technology on the playing field for businesses worldwide. He
highlights how companies like Infosys, with their global reach and technological capabilities,
contribute to this flattening of the world

Peter Cappelli Cappelli's research often addresses issues related to workforce management,
employment practices, and the challenges facing organizations in the modern business
environment. His work can be particularly insightful for understanding trends and best
practices in human resources (HR) and organizational dynamics.

Mcguire et al. (1988) have proved that correlation of ROA, sales growth and asset growth
are positive and significant while other parameters are insignificant.

Venkatraman (1987) chose sales growth, net income growth and return on investment as
dimensions to measure business or economic.

Chandrasekaran's perspectives on the IT industry have encompassed a wide range of topics,

including technology trends, digital transformation, globalization, and the role of information
technology in driving business success

Whittington (1980) identified two principal uses of financial ratios: “the traditional,
normative use of the measurement of a firm’s ratio compared with a standard (usually an
industry norm), and the positive use in estimating empirical relationships, usually for
purposes of prediction.

Beaver (1966) conducted a study on ratio analysis and identified the origin of ratio analysis
to the early 1900, when the analysis was confined to the current ratio for the evaluation of
creditworthiness.

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 DATA ANALYSIS

PROFITABILITY RATIOS:

Profitability ratios are financial metrics that measure a company's ability to generate earnings
relative to its revenue, operating costs, balance sheet assets, or shareholders' equity over time

Operational definitions of the select financial ratios used in the study:

EARNINGS PER SHARE (EPS) = Earnings After Tax / Shares Outstanding x100

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Input Data for Profitability Ratios Analysis of INFOSYS:

Year sales Gross Earning Earning Total Operating Total

profit after tax per income profit assets
share margin(%)
2019- 907,910 217,56 166,390 39.2 941,050 23.9 910,240
2020 0

2020- 1,004,7 275,43 194,230 45.8 1,030,1 27.4 1,072,8

2021 20 0 90 80

2021- 1,216,41 314,91 221,460 52.8 1,239,3 25.8 1,166,7

2022 0 0 60 30

Analysed Profitability Ratios of Tata consultancy services

Year Earning Operating Gross Net Return Return

s per profit profit profit on on
share margin ratio margin Assets equity
(%) (%) ratio (%)
(%)
2019-20 39.2 23.9 23.9 18.3 18.5 25.5

2020-21 45.8 27.4 27.4 19.3 18.3 25.6

2021-22 52.8 25.8 25.8 18.2 19.2 29.6

Average 45.9 25.3 25.7 18.6 27.6 26.9

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1. GROSS PROFIT MARGIN:
FORMULA: Gross Profit Margin = Gross Profit / Net Sales
The gross profit margin ratio helps measure how much profit a company generates from its
sales of goods and services after deducting direct costs or the cost of goods sold. Also, a
higher gross profit is a positive indication that the company can cover operating expenses,
fixed costs, depreciation, etc., and generate net income for the company.

Chart Title
30

25

20

15

10

0
1 2 3 4

Year Gross profit ratio (%)

From the above graph we can see that in the year 2019-20 the Gross profitwas23.9,

In the year 2020-21 was27.4 and in the year 2021-22 it is 25.8.

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2. OPERATING PROFIT MARGIN:Operating Profit Margin helps measure the
company’s ability to maintain operating expenses to generate profit before interest expense
and tax deduction. In other words, the revenue that remains after costs is deducted from net
sales.

FORMULA: Operating Profit Margin Ratio = Operating Profit / Net Sales

Operating profit margin (%)

28

27

26
Operating profit margin
(%)
25

24

23

22
1 2 3

From the above graph we can see that in the year 2019-20 the Operating profit margin was
18.3, In the year 2020-21 was 19.3 and in the year 2021-22 it is 18.2

3. NET PROFIT MARGIN:The net profit margin measures the company’s overall
profitability from its sales after deducting all direct and indirect expenses. Also, it is the
percentage of revenue that remains after deducting all expenses, interest and taxes. A higher
net profit indicates that the company is operating well while managing its costs and pricing of
goods and services.

FROMULA:Net Profit Margin Ratio = Net Income / Net Sale.

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 Return on Assets (%)
19.2
19
18.8
18.6 Return on Assets (%)
18.4
18.2
18
17.8
1
2
3

From the above graph we can see that in the year 2019-20 the Net profit margin was 21.5, In
the year 2020-21 was 20.7 and in the year 2021-22 it is 19.8

4. RETURN ON ASSETS (ROA):ROA measures how well a company uses its assets
to generate profits. In other words, it focuses on how much profit it generates on every rupee
invested. Also, it measures the asset intensity of the company. Thus, a lower ROA indicates a
more assetintensive company. On the contrary, a higher ROA indicates more profitability
against the company’s number of assets to operate.

FORMULA: Return on Assets = Net Profit after Taxes / Total Assets x 100

Return on Assets (%)

19.4
19.2
19
18.8
Return on Assets (%)
18.6
18.4
18.2
18
17.8
1 2 3

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From the above graph we can see that in the year 2019-20 the Return on assets was 18.5, In
the year 2020-21 was 18.3 and in the year 2021-22 it is 19.2.

5. RETURN ON EQUITY (ROE):

Return on Equity is a two-part ratio in its derivation because it brings together the income
statement and the balance sheet, where net income or profit is compared to the shareholders’
equity. The number represents the total return on equity capital and shows the firm’s ability to
turn equity investments into profits.

FORMULA: Return on Equity = Net Income / Shareholder’s Equity

Chart Title
12

10

8
Series1
6

From the above graph we can see that in the year 2019-20 the Return on equity was 25.5 , In
the year 2020-21 was 25.6 and in the year 2021-22 it is 29.6.

6. EARNINGS PER SHARE (EPS):

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability. It is common for a company to report EPS that is adjusted for extraordinary
items and potential share dilution.

FORMULA: Earnings After Tax / Shares Outstanding x100 EPS

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 Earning per share

120

100

80

60

40

20

0
2019-2020 2020-2021 2021-2022

From the above graph we can see that in the year 2019-20 the Earning per share was 39.2 In
the year 2020-21 was 45.8 and in the year 2021-22 it is 52.8.

VISUALISED PROFITABILITY RATIOS OF Infosys 2019-22

Chart Title
60
50
40
30
20
10
0
re ) ) o s ty
ar (% (% ti et ui
Ye ha ra s
eq
r s gi
n tio n As
pe ar a gi on on
tr ar
gs tm ofi tm ur
n
tu
rn
in ofi r
et
ar
n
pr sp rofi R Re
E g os tp
tin Gr Ne
a
er
Op

Series1 Series2 Series3 Series4 Series5 Series6 Series7

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INTERPETATION:

i. From the above graph we can see that in the year 2019-20 the Gross profit was 18.3,
In the year 2020-21 was 19.3 and in the year 2021-22 it is 18.2.
ii. From the above graph we can see that in the year 2019-20 the Operating profit
margin was 23.9, In the year 2020-21 was 27.4 and in the year 2021-22 it is 25.8
iii. From the above graph we can see that in the year 2019-20 the Net profit margin was
18.3, In the year 2020-21 was 19.3 and in the year 2021-22 it is 18.2
iv. From the above graph we can see that in the year 2019-20 the Return on assets was
18.5, In the year 2020-21 was 18.3 and in the year 2021-22 it is 19.2.
v. From the above graph we can see that in the year 2019-20 the Earning per share was
39.2, In the year 2020-21 was 45.8 and in the year 2021-22 it is 52.8
vi. From the above graph we can see that in the year 2019-20 the Return on equity was
25.5 In the year 2020-21 was 25.6 and in the year 2021-22 it is 29.6.

FINDINGS:

Margin expansion: Infosys enjoyed a steady increase in gross profit margin over the three
years, indicating improved efficiency in converting revenue into gross profit.

Similar trend: Like the gross margin, operating margin have flucating it says there should
have better control over operating expenses.

Significant rise: ROE, which measures shareholder return on invested equity, witnessed a
stable growth, indicating effective capital allocation and shareholder value creation.

Gradual improvement: ROA, measuring the company's profitability relative to its total
assets, showed a steady upward trend, demonstrating efficient asset utilization.

Overall:

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Infosys displayed strong profitability during 2019-2022, reflected in rising margins, ROE,
and ROA.

Additionally:

Analyzing year-on-year changes in each ratio alongside industry benchmarks could provide
deeper insights into Infosys performance compared to competitors.

Examining profitability ratios in conjunction with other relevant financial metrics like
revenue growth and debt levels would offer a more holistic perspective.

CHALLENGES AND SUGGESTIONS:

Challenges facing Infosys :

Industry Competition:

Intense competition in the global IT services market from both traditional competitors and
new entrants can put pressure on pricing and margins.

Geopolitical Factors:

Geopolitical tensions, trade disputes, or changes in regulations in different regions can affect
the business environment and may impact global operations and trade.

Skills Gap: The rapid evolution of technology requires a constant update of employee
skillsets. Infosys needs to invest in reskilling and upskilling its workforce to adapt to
emerging technologies like AI, cloud, and automation.

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Global Economic Uncertainty:

Economic uncertainties and downturns in major markets, especially during events like the
global financial crisis or the COVID-19 pandemic, can impact client spending on IT services.

Technology Distruption; Rapid advancements in technology, such as artificial intelligence,

automation, and cloud computing, require continuous investment in upskilling employees and
adapting service offerings.

Suggestions for Infosys :

Investment in Emerging Technologies:

Continue investing in emerging technologies such as artificial intelligence, machine learning,

blockchain, and Internet of Things (IoT) to stay at the forefront of innovation and meet
evolving client demands.

Invest in Cybersecurity:

Enhance cybersecurity capabilities to address the growing concerns related to data security
and privacy. This includes proactive measures to protect client data and systems from cyber
threats.

Upskilling :: Develop and implement a robust global talent strategy to attract, retain, and
upskill a diverse and skilled workforce. Consider partnerships with educational institutions
and investments in employee training and development.

Partnerships and Collaborations:

Forge strategic partnerships and collaborations with other technology firms, startups, and
industry leaders to tap into new markets, share expertise, and foster innovation.

Investment in Sustainability:

Consider sustainability as a core business strategy, aligning operations with environmentally

friendly practices and social responsibility. This can enhance brand reputation and appeal to
socially conscious clients.

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REFFERENCES:

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