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High Growing Economic

“Opportunity For entrepreneurs ” in India for 2010

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India will have a demand for 85-90 million
people across various sectors, and the
majority of the demand will come from high-
growth industries like IT, outsourcing, banking,
retail, telecommunication and healthcare.
18 Jan, 2009 -BCG
Facts
• Sustained high growth of GDP since 1991 of about 6% per
year has led to a fundamental transformation of Indian
economy. Some dimensions include:

– 12th largest in the world in 2008 (GDP of ~US$1.1
trillion) and poised to become the 4th largest in
absolute $$$ terms sometime by 2030

– About 300 million Indians pulled out of poverty line in
last 20 years, though over 300 million still await
their turn

– At about US$ 400 Billion in private consumer
consumption (retail spending), capable of
supporting many multi-billion $$ in revenue size
consumer product and services businesses

Facts
• Many growth drivers including:

– Favorable demographics, dropping dependency ratio,


and rapidly rising education levels

– Steady urbanization

– Very promising broad-basing of components of
overall gross domestic output, encouraging broad-
basing of geographic spread of economic activity,
and well-founded optimism on broad-basing of the
nature of jobs that match the current skill sets of
the population

Facts
• However, adequate reason to be very optimistic about
India’s near and long term future on account of:

– The arrival of a voting majority of youth (better
educated, more socially enlightened) when 2014
general elections are held (impact seen even in
2009)

– The resurgence of entrepreneurship in India – as the
current business leadership faces challenges, a
new generation of Indian entrepreneurs have
poised to come into the place (but in much larger
numbers)

– The rapidly improving access for India to global
intellectual and financial capital
THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING
TECHNOLOGY TO ENABLE INCLUSIVE GROWTH
Areas Potential of ICT solutions

50 % of Indians do not have access to


Healthcar primary healthcare – technology can
e provide it at half the cost

80 % of Indian households are unbanked –


Financial technology can enable access for 200
services million families

India faces a 3 - fold shortage in


Education teachers – technology can address this
through remote solutions

India suffers from a leakage of 40 - 50 %


Public in public food distribution - technology
services can ensure transparency

6
Source: Expert interviews; McKinsey analysis
Shortage of skill in Target Sectors
• The projected growth rates in industry and services sectors
are expected to generate 60 millions job opportunities
during 2006-12 and 156 million during 2006-16
• Media and Entertainment: The demand for animation
production services from India is growing. This has
opened up innumerable opportunities for students of
Design, Fine Arts and Mass Communication.
• Biotechnology sector: 80 % shortfall of doctorate and post
doctorate scientists.
• IT and BPO sector could employ 9 million persons directly
and indirectly by 2010
• Raising the rate of growth of manufacturing to 12 % could
create 1.6 to 2.9 million direct jobs annually, and another
2-3 times that number indirectly
• Retail Sector - demand of 3-5 lakh trained people in the
northern region alone by 2010. This sector would throw
Shortage of skill in Target Sectors
• Health sector: Shortage of 5 lakh doctors and 10 lakh
Nurses.
• IT sector : Shortage of 5 lakhs (half a million) engineers.
• Education sector: Faculty shortage of 25-40 percent.
• Banking and Finance sector: 50-80 percent personnel
shortage.
• Pharmacy sector: Severe shortage of top pharmacy
scientists as research expenditure by pharmacy
companies has quadrupled in the last 5 years. Thus there
is a shortage of middle-level and junior scientists too.
This has made salaries of top pharmacy scientists rise to
US levels.
• Project Management Services-this labor intensive sector will
grow with growth in corporate structure, infrastructure &
retail industry

India’s tremendous potential-
Demographic Dividend
• Working age population to comprise over 63 % of the
aggregate by 2016.
• India only large economy with declining age dependency
ratios till 2030.
• India’s total population in year 2004: 1,080 million, (672
million people in the age-group 15 to 64 years "working
age population”).
• A third of India’s population below 15 years of age and 20
% of the population in the 15-24 age groups.
• Projections indicate the emergence of a young Indian will
800 million in the productive age group by 2015; the
comparable no. of China is 600m
• In 2020, the average Indian will be only 29 years old,
compared with the average age of 37 years in China and
the US, 45 in west Europe and 48 in Japan.
• T h e ch a lle n g e s a re im m e n se a n d in o rd e r to a ch ie ve th e
g o a ls th e re h a s to b e substantial expansion of
quality technical / vocational education and
training for raising employability and
productivity .
• The skills provided have to be attuned to:
– New business requirements;
– Improving quality of education and trainings at all
levels; and
– Make technical/ vocational education system more
flexible and inclusive for sustainable growth.

2%
IT services: Anchor segment 3%
for the sector 4%
1%
35%
 Banking, Financial Services and Insurance
(BFSI) vertical continues to account for the
largest share of exports at 31 per cent
• Telecom vertical accounts for second-
largest share of the pie at 19 per cent
• Other verticals such as manufacturing, 33%
retail, media and healthcare are rapidly
gaining pace

19%
n BFSI n Hi-tech/Telecom n Manufacturing
n Retail n Media, Publishing and n Construction and
Entertainment Utilities
n Other
ICT sector opportunities and threats
Opportunities Threats
Short - Restructuring and Declines in R & D and innovation
medium - efficiencies Decreasing access to capital /
term ICT budgets hard to VC
compress IT budgets plunge all sectors /
Restructuring in other regions
sectors - more use of ICTs / Consumer ICT spending plummets
outsourcing Fall in demand from emerging
Public sector and emerging economies
economies continue to
invest
Longer - REconomic
& D and innovation
stimulus packages Dropping R & D / innovation
term priorities priorities
Growth in digital content Prolonged financing problems
Green IT , health & aging Slow development new business
drivers models
Consolidation / Slow supply of ICT professionals
globalisation of back - skills
office / information Business / consumer spending
management falls
Spending on ICT security up Prolonged infrastructure
L ong term stimulus packages underinvestment
Effects on low - cost locations
Scalability
  India’s young demographic profile and academic
infrastructure have potential to cater to the
growing demand for IT-ITeS
 
 An estimated additional demand for 0.8 million IT
and 1.4 million ITeS professionals by 2009-10

 India possesses an abundant talent pool, producing


6,75,000 technical graduates per annum, of which


4,00,000 are engineers
HealthCare
• India is mostly rural than urban
• healthcare in India at an average of a dismal 4 points on a scale
of 1-10
• pharmaceutical sector as a manufacturing hub has resulted in a
significant increase in foreign investment
• Healthcare is one of India’s largest sectors in terms of revenue
and employment
• Revenues from the healthcare sector account for 5.2 per cent of the
GDP, making it the third largest growth segment in India.
• By 2012, India’s healthcare sector is projected to grow to nearly
$40 billion. The private sector accounts for more than 80% of
total healthcare spending in India


Retail
• Retail is one of the largest industries in India, accounting
for over 10% of the Indian GDP, and more than 8 %
employment
• High growth trajectory with a projected $453 billion
potential by 2011
• Retailers are realizing that IT systems can enhance their
business with benefits like operations integration, real-
time data, inventory and merchandising management, and
reductions in processing and warehousing costs
• IT market opportunities in the Indian retail segment are
expected to grow at a CAGR of 44% from 2006 to 2010.
Retail
• The Indian retail market is expected to be about US $ 535 Billion
by 2013. With an anticipated US$ 30 Billion in fresh investments
over next 5 years, modern retail will show impressive CAGR >40%

Telecom
• The infusion of Product IT into the telecom revolution puts
us at the threshold of transition
• telecom players have proposed for deployment of mobile
broadband financed by private players, which would create
25 million jobs
• In emerging economies, a 10 percent increase in mobile
penetration boosts annual GDP growth by 1.2 percent
• India Telecom sector will create 150,000 jobs in 2009



IT Education
• The Indian IT education market has grown by 13% to reach Rs
3,827 crore in FY 09, up from Rs 3,393 crore in the previous
fiscal.
• The corporate training market also grew 11%, the reason could
be that demand for on-site deployment of certified training
resources far outweighs the number of layoffs.
• Nasscom predicts that by 2010, the Indian software industry
alone would require 2.3 mn professionals, and based on the
current supply there is likely to be a shortfall of half a
million.
• IT training came in FY 09 from the governments increasing
emphasis on training.
• Infrastructure management appeared to be the next growth
frontier for most training majors
• India is strongly positioned to capture up to $15 bn of the
global remote infrastructure management market over the next
four years
• As per Nasscom estimates, out of 5 lakh plus engineering
passouts a year, only 25% are considered employable owing to
Banking, Financial Services and
Insurance (BFSI)
• Banking is the most dominant sector of the financial system
in India.
• Banking, financial services and insurance (BFSI) comprise 38
per cent of the outsourcing industry in India (worth $47.8
billion in 2007).
• Outsourced services from the BFSI domain include customer
support, software and solutions required for core banking,
various banking processes like mortgage loan processing,
application processing, verifications, market analysis,
financial statement analysis etc.
• Size: Indian banking sector will grow at a healthy compound
annual growth rate (CAGR) of around 23.3 per cent till
2011.
• Outsourcing by the BFSI segment in India is expected to grow
at an annual rate of 30–35 per cent.

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