3i Infotech: transformation from IT outsourcing to IT products

While most Indian software companies opt for the software services business, ICICI Infotech has diversified from a service business to a "solutions" business based on intellectual property.

by Christoph Loch and Yaozhong Wu
Last Updated: 23 Jul 2013

Having jump-started this strategic shift through a series of acquisitions in the wake of the recession that led to a collapse in IT services after 2001, it succeeded in building a presence both in the US and in emerging markets, paying attention to the special needs of firms in both markets. Authors Christoph Loch, professor of technology management, and PhD candidate Yaozhong Wu, explain the repositioning and restructuring of the high-tech company.

In 2001, as the Y2K-led IT boom faded, the Internet bubble burst and the 9-11 terrorist attack shook the world, Infotech's management team was prompted to adopt a new strategy. Its main thrust was to make the company truly global, escape its over-dependence on the US markets and find new opportunities in emerging markets, which were willing to buy software products but not necessarily services.

Capitalising on its affiliation with ICICI Bank, which had enabled the company to specialize in products from the banking and finance domain, it also took the strategic decision to use its expertise to add value to third-party products rather than develop new products from scratch.

ICICI Infotech acquired products mostly through the companies it took over. Products were identified that covered market segments that it wanted to tackle, evaluated against the competition and then modified to groom them for their target markets.

A year after the initiation of the strategy shift and the first acquisitions, ICICI Infotech found itself with a range of competitive software products and restructured itself into three business units: services, banking products and enterprise solutions (the latter comprising insurance and enterprise resource planning products).

By the end of 2004, business from the wider ICICI group was contributing a mere 25% of the overall revenue of ICICI Infotech. It was at this point that the company chose to rebrand itself as 3i Infotech (the three i's standing for innovation, insight and integrity). With a worldwide workforce of more than 2,000 people, it was now providing software solutions to over 500 companies on five continents.

The key to 3i Infotech's success was its ability to modify software products and package them into solutions that closely matched client needs in emerging markets. Market access and ongoing service were what differentiated the company from its major international competitors. However, the future harboured substantial risks -- would deep product innovation be required, and would the business model stand up to the firm's continued strong growth? 

INSEAD 2006

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