INDUSTRY ANALYSIS 2010
SWOT ANALYSIS FOR AN IT INDUSTRY:
Every industry or a company has to perform swot analysis before going to start its
operations to analyze the performance of a company or that particular industry. Every industry
will have its own strengths, weaknesses, opportunities and threats with related parameters. now
we will see the swot analysis for IT sector.
STRENGTHS:
Highly skilled human resource
Low wage structure
Quality of work
Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-
governance projects)
Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc.
Following Quality Standards such as ISO 9000, SEI CMM etc.
English-speaking professionals
Cost competitiveness
Quality telecommunications infrastructure
Indian time zone (24 x 7 services to the global customers). Time difference between India
and America is approximately 12 hours, which is beneficial for outsourcing of work.
Flexibility, adaptability and reliability in operations
Experience in working on large projects
OPPORTUNITIES
High quality IT education market
Increasing number of working age people
India 's well developed software infrastructure
Upcoming International Players in the market
Rapid proliferation of the Internet in the domestic and global markets
Shift in the global markets from legacy systems to more of web-based systems
INDUSTRY ANALYSIS 2010
Indian government’s thrust towards increased computerization of offices, banks
etc
IT enabled services in the country and across the globe is forecasted to explode
Instant development of world software industry
WEAKNESSES
Inadequate marketing skills
Absence of practical knowledge
Dearth of suitable candidates
Less Research and Development
Contribution of IT sector to India 's GDP is still rather small.
Employee salaries in IT sector are increasing tremendously. Low wages benefit will soon
come to an end.
Depending on software outsourcing and less domestic demand
Weakness of hardware industry
THREATS
Instability of political environments
Lack of data security systems
Countries like China and Philippines with qualified workforce making efforts to
overcome the English language barrier
IT development concentrated in a few cities only
INDUSTRY ANALYSIS 2010
MATRIX REPRESENTATION BASED ON PARAMETERS OF AN INDUSTRY:
Threats (T)
Confront Avoid
External
Environment
Exploration
Search
Opportunities (O)
(more for IT indust)
Strengths (S) Weaknesses (W)
Internal Environments
The Indian IT Industry has more strengths rather than weakness in the Internal
Environment. In an External Environment Software Industry have opportunities and Threats
almost equally. But due to of Internal Strengths and External Opportunities the Software Industry
is in Exploration. For any industry to sustain in market or to earn the profits it needs to analyze
all these parameters. when the strengths are more than weaknesses n opportunities are more than
threats then the industry can get better position in that particular segment.
INDUSTRY ANALYSIS 2010
QUALITATIVE AND QUANTITATIVE PARAMETERS:
Quantitative Factors
o Investment Appraisal
Payback period
NPV
ARR
o Break-Even Analysis
o Market Research
o Sales Forecasting
o Critical Path Analysis
o Decision Trees
Growth
Quality certification
How Quality Certification will affect Productivity and Growth
Reducing overall cost
Increasing revenues
Through higher rates or higher value projects
Bidding for new clients
Learning to bid accurately
Performance
We therefore use revenue per employee (productivity) as a measure of
Performance for Indian companies. Since organizations recruit their employees from the
same labor market, we assume that the average wage rate is approximately the same
across all organizations3. Software companies are located in big cities where the cost of
living is approximately the same.
QUALITY STANDARDS:
ISO
INDUSTRY ANALYSIS 2010
CMM.
Qualitative Factors
o SWOT
Strengths
Weaknesses
Opportunities
Threats
o HRM
Motivation
Morale
Recruitment and Retention
o PEST
Political
Economic
Social
Technological
Publicity and Public Image
Long term survival/development issues
IT services to customers
Stakeholder Analysis
o Employees
o Shareholders
o Managers
o Environment
INDUSTRY ANALYSIS 2010
o Local Community
o Suppliers
o Government
o Consumers
INDUSTRY ANALYSIS 2010
PORTER’S FIVE FORCES COMPETITIVE MODEL:
Barriers to Entry – HIGH
Absolute cost advantages
proprietary learning curve
access to inputs
government policy
Economies of scale
capital requirements
Brand identity
switching costs
Access to distribution
Expected Retaliation
Bargaining power of Intensity of Rivalry and Bargaining power of
Suppliers – LOW Competition - HIGH Buyers – HIGH
Supplier concentration Exit Barriers Bargaining Leverage
Importance of volume to Industry Concentration Buyer Volume
supplier Fixed costs/Value added Buyer Information
Differentiation of inputs Industry Growth Brand Identity
Impact of inputs on cost Intermittent Overcapacity Price Sensitivity
or differentiation Product Differences Threat of backward
integration
Switching costs of firms Switching costs
Product Differentiation
in the industry Brand Identity
Buyer concentration Vs
presence of substitute Diversity Of Rivals
Industry
inputs Corporate Stakes
Substitutes Available
threat of forward Buyers Incentives
integration
cost relative to total
purchases in industry Threat of Substitutes – LOW
Switching Costs
Buyer Inclination to
substitute
Price-Performance trade-
off of substitutes
