Application of Institutional Theory In Indian IT Industry

1. ANALYSIS OF THE STRATEGY –
STRUCTURE – PERFORMANCE OF THE
INDIAN IT INDUSTRY USING THE
INSTITUTIONAL THEORY
PRESENTED BY GROUP 2
ANKITA BAHETI
RAVI RANJAN KISHORE
SALANA LAVANYA
SUDHEER TATIKONDA

2. IT industry in India
Before 1980s
Software exports started in
1974
Software Export Scheme
High import duty
Presence of few players
1980-90
New Computer Policy
Lower import duties
Growth in exports
1990-2000
Offshore provisioning of
services
Many players
Setting up of Software
Technology Parks of India
Post 2000
High demand for IT
professionals
Strong global delivery model
Large sized contracts
Issues of Y2K, dot.com
The contribution of the IT sector to Indian GDP rose to
approximately 8 percent in FY13 compared to 1.2 percent in FY98
Out of the total market 70 percent of the revenue in FY14 was
obtained from exports
US has been the biggest importer of Indian IT exports, accounting
for 60 percent of Indian IT exports
Market Size of IT Industry In India
(in USD Bn)
Exports Domestic
8.3 10.2 13.2 16.5 23.1 21.9 10
29 32 32 32
13.4 18.2 24.1 31.3 40.9 47.5 50 59 69 76 86
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

3. Top players in India
Company Name Market Share ( In %) Employees Global Spread
TCS 10.7 2.5 Lakhs 47 countries
Wipro 7.2 1.3 lakhs 54 Countries
Cognizant 6.8 1.8 Lakhs 29 countries
Infosys 6.3 1.4 Lakhs 68 countries
HCL Tech 4.2 0.85 lakhs 18 Countries
The top five firms contribute around 35 percent of the total revenue, indicating
the market is fairly competitive
The number of global delivery centers of IT firms in India reached
580, spreading across75 countries as of 2012.

4. Evolution of Top players
TCS
•It was founded in 1968
•Its early contracts were punching card
service to its sister company TISCO.
•Its first project was with Central Bank of
India,
• In 1979, it delivered an electronic
depository and trading system to a
Swiss Company
•1981,it established of Tata Research
Development and Design Center
•2004, it went into public
•Its headquarters are in Mumbai, India
Infosys
• It was founded in 1981
•Its first Client was Data Basics New York
•1987, It established its first International
Office in Boston
•In 2004, its-revenues reached $1 Bn
•1993, it went into public
•Its headquarters are in Banglore, India
Wipro Technologies
•The company was incorporated in 1945
as Western India Products Limited
•It was started as small consumer
products business
•In 1980, Wipro employed IT Services
•Wipro BPO was founded in 2002
•68% of its revenue are from IT sector
•It is Headquartered in Banglore, India
HCL
•It was Founded in 1976
•It was one of India’s original IT garage
startups
•HCL Enterprise comprises of two
companies- HCL Technologies and HCL
Infosystems
•HCL is the fourth largest IT company in
India and is ranked 48 in the global list
of IT service providers
•It is headquartered in Noida, India

5. The Institutional Theory
INSTITUTIONS
ROUTINES
HABITS
 Examines the structure of organizations through the lens of
“rationalized myths”, accepted ceremoniously in order for the
organization to gain or maintain legitimacy in the institutional
environment.
 Makes the assumption of Bounded Rationality. Rational
decisions of the actors are bounded by the “reality” of the
normative and/or regulative environment.
Organizations will take on structures that are
isomorphic with the institutional environment
in which the organization exists and that
doing so confers legitimacy, resources and a
survival advantage to these organizations.
.
Adoption of
structural
characteristics
which may not be
efficient
.
External measures
dictate value of
these structures
.
Conformation
reduces
Uncertainty and
ensures Survival

6. Coercive
Normative
Mimetic
Isomorphism
Legitimacy
Survival
SOCIAL PRESSURES
ECONOMIC
VIEWPOINT
Frequency
based
Trait
based
Outcome
based
UNCERTAINTY
BENCHMARKING

7. Key Gaps and Criticisms
 There is little evidence supporting the constraints of legitimacy - it is the middle-status
players who feel the need to act legitimately. High-status players have the
reputational capital to deviate from the norm, and low-status players have to do
whatever it takes to survive, whether legitimate or not.
 Overlooking the problem of appropriately measuring institutions - institutional
research should only value instances of significant, profound, field-level change,
and not merely incremental changes.
 Institutional theory has tended to focus on the effects of institutionalization rather
than on the process through which organizations become institutionalized. This has
resulted in a view of organizations merely as “black boxes” with nothing of value
inside.

8. Top 10 Trends in IT during 2007-2013
Distributed co-creation moves into the mainstream
Making the network the organization
Collaboration at scale
The growing ‘Internet of Things
Experimentation and big data
Wiring for a sustainable world
Imagining anything as a service
The age of the multisided business model
Innovating from the bottom of the pyramid
Producing public good on the grid

9. Company response to trend
TCS Infosys Wipro HCL
Distributed co-creation
moves into
the mainstream
Co-creation Model
with Clients
TCS Co-Innovation
Network (COINTM)
Eco-system
partnerships
Making the network
the organization
GNDM
Offshore-onsite
Global Delivery
Model
Global Delivery
Model
Global Delivery Model
Collaboration at
scale
iON – a fully
integrated IT-as-a-
Service (ITaaS) model
TCS’ tool brand
MasterCraft
‘eTransform’: an
analytics-led toolset
cloud based
service delivery
platform
Driving
Certainty &
Efficiency
through hyper
automation
Cross-Functional
Services like ITIL
(Information
Technology
Infrastructure Library)
and MTaaS™
(Management Tools-as-
a-Service)

10. Company response to trend
TCS Infosys Wipro HCL
The growing
‘Internet of
Things
production
automation and
high performance
computing
Connected vehicle
solutions.
HCLT ERS offers end-to-
end engineering
services and solutions
in hardware,
embedded,
mechanical and
software product
engineering
Experimentation
and big data
mobile
applications and
consumer
analytics on top of
core applications
Edge suite of products
and platforms.
‘Walletedge’
Mobility
Solutions
analytics
and big
data
Enterprise Mobility
Services. iEM (mobile
energy mgmt. app)
Wiring for a
sustainable
world
environmentally
profitable solutions
(intelligent buildings &
green product lifecycle
management programs

11. Company response to trend
TCS Infosys Wipro HCL
Imagining anything as
a service
significantly invested in
digital technologies
outsourcing shifted to
cloud
Integrated Cloud
Services
Cloud
Computing
Services
The age of the
multisided business
model
technology solutions in
digital technologies like
mobile and social
media.
Innovating from the
bottom of the
pyramid
GNDM Entering into
emerging markets
Expansion to emerging
markets
Producing public good
on the grid
‘Clin e2e’ and ‘Med
Mantra’
DCAS contract for state of
art health and human
service solution

12. 2013-14 and the Future Outlook
New Geographical Markets – BRIC provides USD 380-420bn
opportunity by 2020
Country IT Spend India’s Penetration Key Segments
Canada USD63 billion ~1.5 per cent Cyber Security, Healthcare IT
Europe USD230 billion <1.5 per cent It Sourcing, BPM, CAD
Japan USD235 billion <1 percent CRM, ERP, SI
Spain USD26 billion <1.5 per cent IT Sourcing, SI
Brazil USD47 billion ~2 per cent Artificial Intelligence, R&D
China USD105 billion <1 per cent Software Outsourcing , R&D
 Emergence of Tier
II and Tier III Cities
as Centres of IT
Excellence – 43
new cities with an
expected 28%
reduction in cost
1000
0
Growth Trend of Traditional
Industries – expected to
average 15%
BFSI Telecom Manufacturing
FY10 FY13E FY15F
50
0
Growth Trend of Emerging
Verticals
Education Healthcare Retail
FY10 FY13E Series 3
SMAC FUTURE GROWTH
60%
40%
20%
0%
Social
Media
Big
Data
Cloud
Enterprise
Mobility
-200 0 200 400 600 800 1000

13. Company Response to Trend
TCS Infosys Wipro HCL
The growing
‘Internet of
Things
production
automation and
high performance
computing
Connected vehicle
solutions.
HCLT ERS offers end-to-
end engineering
services and solutions
in hardware,
embedded,
mechanical and
software product
engineering
Experimentation
and big data
mobile
applications and
consumer
analytics on top of
core applications
Edge suite of products
and platforms.
‘Walletedge’
Mobility
Solutions
analytics
and big
data
Enterprise Mobility
Services. iEM (mobile
energy mgmt. app)
Wiring for a
sustainable
world
environmentally
profitable solutions
(intelligent buildings &
green product lifecycle
management programs

14. Conclusion
 IT industry is very volatile due to rapid technology changes. Also it is not shielded by geographic
boundaries as around 80% revenue comes from abroad.
 Revenues of IT industry is mostly dominated by top 5-6 firms commanding around 45% of
revenue. Hence we have chosen top 4 firms for our analysis
 The analysis is carried out based on the response of the companies to external stimulus of
changing trend in the IT industry
 The analysis suggests that though the responses are not exactly replicating, the deviations are
minute proving the institutional theory.
 For e.g. the potential of co-creation is realised by TCS and Wipro whereas Infosys was the lead taker in
“The internet of things”

15. Thank You