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FORECASTING
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DEMAND FORECASTINGDemand forecastingis the activity of estimating the quantity of a product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as calculated guesses, and quantitative methods, such as the use of historical sales data or current data from test markets. Demand forecasting may be used in makingpricingdecisions, in assessing future capacity requirements, or in making decisions on whether to enter anew market.Demand forecasting can be categorized on basis of: 1) The level of forecasting firm, industry and economy.Here we are doing the firm level of forecasting2) Time Period short run and long runHere we are doing the forecasting for short run3) Nature of Goods capital and consumer goodsThe firm is dealing in solutions to software problems.Demand Forecasting can be done by two methods:
1) Qualitative Method It includes various methods like Consumers opinion survey, Sales force composites, Experts opinion method, Market simulation and Test marketing.2) Quantitative Method It includes methods like Trend projection, Arima test, Econometric method and Regression analysis.Different services offered by the company have different demand in the different markets. For that we need to have the data of revenue for the various geographical locations(markets). We are taking the company as a whole and will see the effect on Revenue with time with the help of Regression Analysis.Linear regressionis an approach to modelling the relationship between a scalar variableYand one or more variables denotedX. In linear regression,dataare modelled using linear functions, and unknown modelparametersareestimatedfrom the data. Such models are calledlinear models. Single variable linear regressionYear = x where x = 1, 2, 3,...., 10Demand = yD = y + e Where D is actual demande= D yTo find out whether this is the line of best fitted to be sure that this sum of squares is a min.Determination of the regression lineIn general formy = a + bxWhere y is dependent variable, and x is independent data variable.When a and b specified this line will be specified.So the company which we took is Infosys and we have identified for major markets in which the demand could be forecasted.
DEMAND FORECASTING OF US :The strongest growth outlook for U.S. demand for information and communication technology since the 2008 financial crisis is likely to help Narayana Murthy reviveInfosysLtd (INFY.NS), the Indian IT giant he founded, but the updraft will also boost its faster-growing rivals
YearRevenues forcast Actual revenuepercentage
20077591.9313578323.31763.3
200810314.5919515.7662
200913037.2506413709.97663.2
201015759.9102914964.23665.8
201118482.5699317958.15365.3
201221205.2295721556.02663.9
201323927.8892124291.90460.2
201426650.5488662.453581
201529373.208562.353051
201632095.8681462.269823
201734818.5277962.199783
201837541.1874362.140027
Graphical representation showing the trend of Demad in US in upcoming years.
DEMAND FORECASTING OF EUROPE :The company sees challenges in the global economic situation and thats resulting in slower IT spends by large corporations, Chief Executive Officer S.D. Shibulal said in the statement. Clients inEuropeare also cancelling the orders so overall the demand forecast is not that bright .
YearRevenues forcastedActual revenuepercentage
20073212.9919643471.33626.4
20084148.19454312.78828.1
20095083.3970365726.95226.4
20106018.5995715230.6623
20116953.8021075912.71521.5
20127889.0046437387.74621.9
20138824.2071791008825
20149759.40971422.8704514
201510694.6122522.7023787
201611629.8147922.5632315
201712565.0173222.4461343
201813500.2198622.3462306
Though the market is not very strong as of US but one fourth of the total revenue come from Europe.
DEMAND FORECASTING OF INDIA:Infosys Ltd, has signed a deal with India Post to manage its rural operations platform, months after it signed a separate deal with the state-run postal network that was the biggest financial services contract ever for an Indian information technology (IT) services company.The project is estimated to be about 700 crore.
YearRevenues forcastedActual revenuepercentage
200774.08560714210.3841.6
2008205.6017857199.5241.3
2009337.1179643282.0091.3
2010468.6341429272.9041.2
2011600.1503214605.0222.2
2012731.6665742.1482.2
2013863.1826786968.4482.4
2014994.69885711.6699746
20151126.2150361.7119245
20161257.7312141.7466241
20171389.2473931.7758035
20181520.7635711.8006829
When it comes to market of India, IT sector is still a niche market and not many projects come from India but said that it is also a strong market.
DEMAND FORECASTING OF REST OF THE WORLD:
INFOSYS needs to enhance its footsteps in other countries .There are many countries like China, South Africa, Brazil, Japan, Russia where there are opportunities.
YearRevenues forcastedActual revenuepercentage
2007746.31251143.9638.7
20081392.2555711319.9288.6
20092038.1986431974.0639.1
20102684.1417142274.210
20113330.0847863025.1111
20123976.0278574048.0812
20134621.9709295003.64812.4
20145267.9148.844166942
20155913.8570718.989470561
20166559.8001439.109660961
20177205.7432149.210730853
20187851.6862869.296906734
Infosys share in rest of the World is only 8.1%.
Demand forecasting can give a firm a clear Idea about the future projections and help the firm in making decisions and to strategise accordingly. All top firms evaluate and take help of demand forecasting in their important decisions.