NASSCOM
Industry Development
Enabling Environment Global Trade Development Sustainability
Policy advocacy, Market development, International partnership, International and bilateral engagements CSR initiatives, Gender inclusivity, Driving Inclusive Growth, Green IT initiatives
India Innovation Fund
14-Feb-11
A unique industry
A truly global industry Mission critical in nature Ever changing technology environment Entirely people and skill based industry Young industry average age 27 years Products and services are not defined, but are constantly evolving Adhering to global policies and laws
Contributing to economy
Contributing to 9% of Indias incremental GDP; 26% of Indias exports and 11% of services revenues
Employment generation
Direct employment of 2.5 mn and indirect employment of 8 mn professionals
Global leader
Leader in the global sourcing landscape
Business transformation
Indian IT-BPO Industry catalysing business transformation for global clients
14-Feb-11
BPO
Indian Providers
Foreign Captives
Foreign Providers
55% of total global sourcing market IT-BPO exports by Geography, FY2010 IT-BPO exports by Vertical, FY2010 Foreign providers over 30% of the total market Services delivered from 50+ locations and 20+ villages (Rural BPO) Transformation, new business models, driving
SMB revenues
Greater Diversification
14-Feb-11
Business needs
Late 90s
Early 2000s
Going Forward
6
Industry establishing a viable hub and spoke model, thus emerging as multinationals with global delivery (nos) 2008 2009 2010 E capabilities
Countries of Operations Operating Centers
Strategic Benefit: Nearshore centre for European and UK clients; low corporate tax
~52 ~400
~60 ~460
~66 ~520
Not exhaustive
Strategic Benefit: Similar time zones as that of the US hence a good location for servicing US clients
Strategic Benefit: Low cost human resource, language and cultural capabilities facilitate dealings in South East Asia and Japan
Mexico
Egypt
Strategic Benefit: Strong government support; skilled workforce with multi-lingual capabilities; good location for servicing European and Middle East clients
China
Philippines
Strategic Benefit: Availability of skilled workforce proficient in English; low operating costs
Strategic Benefit: Similar time zones as that of the US enable Indian companies to offer 24hours support to US clients
Chile
India multipliers Future ready; staying ahead of the curve; enhanced value proposition
New Business Models
INDICATIVE
1 risk sharing
Shift towards managed services model, From FTE based to outcome based;
5 Global Delivery 6
Globally dispersed footprints, blurred corporate boundaries and decoupled value chains Customer intimacy, geo political diversity
7 8
INDICATIVE
YoY Growth of Business Development
3 4
Talent reengineering
5 6
7 8
Reduction in expenses even as business development increases Increase fresher hiring, expansion to Tier II/III locations
Business transformation has become a core theme for all segments within the industry
Integrate technology capabilities to eliminate work STP (Straight through processing) Value added reporting / analytics Business assurance
Transformation
Eliminate Work
Do it differently
Role reengineering Shop floor automation Process & org restructuring Inter & Intra industry best practices
Efficiency
Do it better
Functions
Products
Business
Case example IT services: Offering value through consulting, technical and functional expertise
Client: A semiconductor company formed by combining two global semiconductor giants looking at integrating the parents IT infrastructure to ensure alignment of business and IT, cost savings and simplifying the IT environment.
Solution Robust program management process
o to manage entire application portfolio o to control internal resources for maximum impact
Defined the IT architecture and IT strategy bringing in process excellence. Defined, implemented and supported the entire IT organization.
Benefits Shortened month-end and yearend closing process Improved visibility and automation Independence from parent, bringing synergy and reducing hidden costs 247 support for critical business applications with 90% offshore leverage End-to-end service and created assets for each service Knowledge repository creation and maintenance Process improvements to check and validate business reports from applications Cost savings on IT spend
11
14-Feb-11
Branch opening cycle time -20% reduction in cycle time, revenue addition-$21 Mn
-$21 Mn reduction in net market risk, unmatched bond trades reduced to 10% from 22%
Banking operations -Efficiency up by 30%, 12% additional space creation, improved workflow and layouts Improved customer experience - C-SAT score up by 40 bps
Value
$6.5 Million
2006 - 2009
14-Feb-11
12
Case example RIM: Business model shift Shift to utility model payShift towards managed services model per-use, cloud
2008
2010
2006
Shift towards assetlight models shortterm deals Shared services model gains popularity Vendor shares resources with client as required Emergence of managed services model Managed services increasing in popularity SLA driven, requires maturity and understanding from both client and vendor Risk and reward sharing model
2004
Asset-heavy models (IBM, HP, Cisco, etc.) Dedicated/captive model Time and material Staff augmentation
Movement to asset-light models to cloud Shared/managed services models offer lower costs and added flexibility Fixed-priced/output-based models preferred by large companies
14-Feb-11
13
Case example Engineering services: Enabled an European customer to deliver an instrument cluster for an American OEM
Customer: A large Automotive Tier -1 supplier based in Europe
Business Objective The American OEM wanted the instrument cluster delivered by the Tier 1 supplier in less than 24 months The customer neither had the capacity nor was its current architecture suitable for the intended cluster HMI software Project Details Indian SI deployed 35 engineers within two weeks and developed the production intent software from scratch in a period of 16 months Indian SI followed the agile methodology for faster development Indian SI provided launch support to the Tier-1 for the OEM program
14-Feb-11
Results Achieved
Business Benefits: Time to market reduced by 33% Significant cost advantage by leveraging an Indian SI as a strategic partner Success factors/ USP : Deep knowledge of instrument cluster domain and HMI architecture Competence in agile methodology of software development Efficient project management skills
OEM Original Equipment Manufacturer SI System Integrator
Future outlook for the industry a redefined market with tremendous potential
1 (BRIC, Japan, Germany) and service lines (process transformation for
productivity improvement)
Demographic shifts will fuel the growth of new sectors (healthcare), markets
Global Megatrends
Social, environmental and technology trends will create hitherto unseen 2 opportunities (e.g., climate change, servicing SMBs) and risks (automation of core service lines) that could endanger up to a third of todays market The addressable market for global sourcing will triple in size from USD 500 billion today to USD 1.5-1.6 trillion in 2020. 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments
3 A Redefined Market 4
5 Industry Outlook 6
The exports component of the Indian industry is expected to expand threefold and reach USD 175 billion in revenues by 2020. The domestic component will grow to USD 50 billion, equal to todays exports revenues.
14-Feb-11
15
In summary
The Indian IT-BPO industry has moved beyond cost efficiencies to being a transformation partner
Given the maturity, process excellence and value add India continues to be the trusted destination Opportunities in the new decade will be different from the past and will require the industry to focus more on innovation and new models of growth New level of partnerships to get built on trust o Leveraging resources beyond contractual new markets, new products, new models, demand value-add o Partner for supply chain of global talent with specialized technical skills
o Build opportunities in the fast-growing Indian market
Technology and business services will play transformation role for countries and businesses
14-Feb-11 16
Thank You