SWOT Analysis of Company X

Strength:

The company has a strong footing in business consulting, financial services, banking and insurance domain. The team of technologist and business analyst giving strength to complete bigger and challenging projects. This is a big competitive advantage Company X has among its peer companies.

The company has no debt and it keeps top management away from managing external liabilities. They are always concentrating on the expansion strategy and business growth. $500m revenue with 6000 employees is the sign of growth. Revenue per employee is much better than any other company in IT industry.

Company X is operating from 16 countries which enable it to have a strategic presence to spread the wings across the globe. The company has open and similar work culture at all location which gives comfort for sharing thoughts and ideas to everyone.

Weakness:

A lot of improvement required in the quality process followed by the company. Processes are not well established and also quality metrics are not correctly captured. It is deteriorating influence on companies success. The quality standard should be achieved and it is always value addition to the customers.

People remember more about bad situation of IT industry during recession period and more about Company X's lay-off. It has given sever dent in hiring. Many talented professionals are not keen to join even if the company is doing very well and pay handsome salary. Hiring and lay-off policy can be better balanced.

The company has very few big and long contractual accounts. Margins are always high on big accounts.

Opportunities:

Company X has established the FinLab recently at two locations where the client can get the benefits of companies digital R&D investment. This innovation hub can attract the existing customer as well as prospective customers to get the feel of new digital technology. It creates opportunities to get new engagements and new clients.

Initiated innovation on blockchain technology (Digital Services) with the deep understanding of client's business challenges. Financial services are redefining the existing infrastructure as this sector is experiencing significant activities from back-end clearing and settlement. Several financial institutions are looking to create their own blockchain.

The company has acquired 4 companies in a year to expand financial services in UK and Europe region. Export revenue from the UK contributes 17% in Indian IT industry. As per economist, UK and Europe will observe marginal hike in the economy in 2017-18, this is an opportunity to get good business from this region. All the four companies have a good customer base and also growing this sector. Company X is having an opportunity to get the competitive advantage for faster ROI.

Threats:

Many companies like Infosys, TCS, Wipro, HCL are venturing into new high-value Digital Services like blockchain to get maximum benefit from this trend. These are the big player and may create big threats for investment done by Company X on Digital Services. Company X must have some unique offering in terms of services and billing rate.

Company X doesn't have data for proving continuous improvement in the quality of deliverable and to show in maturity in development processes. Even though the company has good expertize on domains and technical knowledge, the possibility of getting continuous business from most of the client is less. there is very few account of the long-term relationship.

The company has acquired 4 IT services firm in a row and may be running short of relatively low reserve funds. Indian IT industry gets 39% revenue from USA accounts and off course Company X is also getting the majority of business from the USA. If the policy of new President Mr. Trump negatively impacts on off-shoring business, Company X may struggle to increase the reserve funds.

Acquiring multiple companies in a year may become an opportunity for the competitor to plot strategy to steal the existing customer and the market share. After M&A announcement, everyone knows that most of expert and senior of the company would be busy in making it successful. Also, another possibility is that the existing customer may not be happy with M&A and may get fear of losing your concentration and focus on their work. They may think to switch the vendor.

As per HBR report, 70%-90% M&A falls in the challenge at the time of merging. Integrating two companies is a lot of work and sometimes professionals involved in this activity, are overloaded. A small mistake may cause blame game in the management team and deteriorate healthy work environment. Making the culture homogeneous between two companies, retaining talents, maintaining the growth path of employees is another threat to dent the margins.

Company X's most of the business is from BFSI vertical. If world face slowdown in the financial sector, the company may get big hit on revenue and growth.

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