Analysis of rapid growth in IT organizations

Abstract

In this report, we have attempted to analyze how organizations which are on a rapid growth path internalize and execute the rapid growth strategy. For our study, we have analyzed Virtusa which is a highly reputed mid-sized IT firm with offices in US, Europe, India and Sri Lanka. Virtusa was on a rapid growth path from 2000 to 2008. This rapid growth was fueled partly by the rapidly growing software services market and partly by certain strategic decisions that Virtusa took in this time period. We have identified 2 such strategic inflection points in Virtusa s history and analyzed those in terms of their execution and internalization by the organization. The first inflection point occurred in 2002 when Virtusa migrated from an Independent Software Vendor (ISV) mode to an Enterprise Solutions mode. Both of these modes of operation existed simultaneously in the organization between 2002 and 2005 and we have analyzed the creation of the Enterprise vertical and the organizational tensions during the phase of creation. The second inflection point occurred in 2005 when the company decided to verticalize in preparation for its Initial Public Offering (IPO) in 2007. We have analyzed how the decision to verticalize was communicated to the organization and how the change process was actually executed. We have also analyzed the takeaways from this case from a theoretical perspective, using the restructuring theory available to understand the applicability of restructuring theory to the actual facts of this case. Based on our analysis, we have created a set of recommendations for IT companies in the growth stage to help them plan for such restructuring exercises during a period of rapid growth.