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About NASSCOM
NASSCOM is… Strategy
• Premier trade body and the •
Partner with the Central and State
chamber of commerce of the Indian Governments in formulating IT
IT-ITES industry policies and legislation
• Global trade body with over 900 • Partner with global stakeholders for
members, of which nearly ~200 are promoting the industry in global
global companies from the US, UK, markets
EU, Japan and China • Strive for a thought leadership
Objective position and deliver world-class
research and strategic inputs for the
industry and its stakeholders.
• Encourage members to uphold world
class quality standards
• Primary objective – to act as a • Strive to uphold Intellectual Property
catalyst for the growth of the Indian Rights of its members
IT-ITES industry.
• Strengthen the brand equity of India
• Facilitation of trade and business in as a premier global sourcing
software and services destination
• Encouragement and advancement • Expand the quantity and quality of
of research the talent pool in India
• Propagation of education and • Continuous engagement with all
employment member companies and stakeholders
• Providing compelling business to devise strategies to achieve
benefits to global economies by shared aspirations for the industry
sion: Toglobal
establish
sourcingIndia as the 21st century’s
and software
the country powerhouse
d position the country as the global sourcing hub for software and servic
Discussion Outline
The Emerging
Landscape of
Global Services
Evolution of
Indian IT-ITES
Q&A
Discussion Outline
The Emerging
Landscape of
Global Services
Evolution of
Indian IT-ITES
Q&A
Global sourcing of services is not just a
passing fad…
In 2003, 300 of the Fortune 500 employed offshore
resources…
2003
Have nots Have
40% 60%
33% increase in
offshore penetration
year over year
2004
Have nots Have
20% 80%
…in 2004, this figure is expected to have risen to 400 Source: Gartner
…but a business imperative
800 70
Total Offshore IT Services Revenue
700 60 Total Offshore BPO Services
Revenue
600
50
500
40
400 India Offshore IT Services Revenue
30
300 India Offshore BPO Revenue
20
200
100 10
0 0
2004 2005 2006 2007 2008 2009
Engineering/ Design
Services Payment Processing
System Integration &
Consulting CRM
Tech Support
15 45%
12.2
27% 29%
10 25% 25% 30%
14%
13% 5.13
5 3.27 15%
1.85
0.32 0.79 11%
0 0%
Mexico Philippines China Eastern Others Canada India
Europe
2002 2005 2008 CAGR
Source: neoIT
…as well as offshore BPO
$B % (CAGR)
25 90%
Total Market Size ($ B)
77%
2002 8.1 19.8 75%
20
2005 19.8
2008 42.2 60%
15
44% 45%
40% 45%
10 8.7
38% 29% 30%
4.9
5
3.1 3.1 15%
1.8
0.8 13%
0 0%
Mexico China Philippines Central & Others Canada India
Eastern
Europe
2002 2005 2008 CAGR
Source: neoIT
Discussion Outline
The Emerging
Landscape of
Global Services
Evolution of
Indian IT-ITES
Q&A
Indian IT-ITES – the eye of the storm, is
witnessing
unabated growth…
1,800 5%
USD billion 4.1%
INR billion • Indian IT-ITES has grown
Share in India's GDP 3.5%
at a CAGR of 28% over
3.2%
2.7%
2.9%
1,275.8
FY 1998-2005
1,200 3%
Source: NASSCOM
IT Services &
Software
Hardware
0%
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05E
Source: NASSCOM
Transformational BPO
Design & Integration
Product Development & Testing Remote Infrastructure
Management
Customer Contact
Research and Analytics
Customer Contact / Hardware Full Process Outsourcing
BPO & Installation Support Problem Solving/Decision Making
Value
Rules-based Processing
Out-Tasking Maintenance
Application Technical Support
Support Transactional Data Entry
Data Entry
Strategic Impact
Cost
Cost Control
Control Focus
Focus on
on Core
Core Competence
Competence Business
Business Transformation
IT
BPO Mutual Gains Re-invest Mutual Gains
Source: neoIT
Indian vendors are expanding their
addressable market…
Remote Remote management of services such as helpdesk services,
Infrastructure server management, data centre management, network
Management management, asset management, desk-side support, IT
security services, maintenance services and applications
operations.
IT Consulting IS strategy, IT architecture assessment and planning,
operational analysis, technical system and network
designing, product / solution specific consulting
Knowledge Financial services: Equity research analyst support,
Process valuations, financial modeling and analytics, buy/ sell-side
Outsourcing research, sector and specific stock tracking. Actuarial
analytics, credit risk analytics and modeling. Fund
management and administration.
Professional services: Accounting, tax and audit support,
legal and litigation support, business / corporate and market
research
Others: Contract research in pharmaceuticals and
biotechnology, animation and graphics for the entertainment
sector
Case Example: Remote Infrastructure
Management
…and unlocking the potential in high-
end, specialized areas
Daimler Chrysler Has had an R&D facility in India since 1996 that undertakes
software development for its super luxury cars, encryption,
image/signal processing, telematics; engineering services-
finite element modeling, CAD/CAM and PDM
Back Office
Processing
Data Entry /
Transcriptio
n BFSI ICT Auto Healthcare Others
Indian Indian
best-of- best-of-
breed Outsource breed
Outsource
vendor to Global vendor
to Global
brand
brand
• Engineering services
• Remote infrastructure
management
MNC Captive Units Indian BPO 3PSPs
• IT consulting
• Research & Analytics /
Emerging KPO
Service Lines • Animation
…addressing the specific needs of
different client groups
India Business Models
Strategic Alliance/Joint
Captive Models Outsource Model
Venture Models
USD / FTE / Year Value Share Value Share On US Cost base Transaction Processing 25%-40%
Personnel Costs 42,927 73.3% 6,348 48.4% 85% Accounting / Contact Center Services 30%-40%
IT/ Telecom Costs 2,400 4.1% 3,770 28.7% -57% IT Services 25%-50%
Office Facility Costs 3,700 6.3% 1,991 15.2% 46% Finance / Insurance 40%-60%
Other G&A Expenses 9,571 16.3% 1012.5 7.7% 89% Digital Content 30%-50%
Total Cost 58,598 100% 13,121 100% 78% Software/ ERP / Analytics 40%-60%
The above figures are indicative and the actual costs – savings could vary by process; further the cost advantage may be partially offset by travel, transitioning and
non-process communication costs
…access to a large, highly qualified
pool of talent,
Indian Demographic Profile Undergraduate engineering degrees
Over 60 292,000 granted in 2003
7.0% 100% > 1 billion
years
195,354
1,200 '000s
1,045
• Favourable demographic profile 1,000
842
• High annual graduate turnout 800
670
• Attractive employment prospects – 600 522
beyond monetary compensation 430
400
284
200 160
the sector 0
1990-91 1996-97 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 E
Source: NASSCOM
…a high degree of quality orientation...
Source: NASSCOM
Data Privacy and Protection Laws in • Though India does not have
India an independent data
protection act – the existing
Copyright Yes
legal framework matched with
their independent contracts
Patent Product Patents 2005
provide adequate safeguards
to companies offshoring to
Data protection Comprehensive India
Framework 2004
• Further, Indian authorities are
Vertical Specific Laws No committed to further
strengthening the existing
Digital Signatures Yes frameworks to keep them
current and relevant
Hacking Yes
Privacy Yes
…and elaborate security practices
8
• Domestic revenues of Indian IT-
6 10.2 ITES valued at over USD 10bn
8.2
5.7
4
5.9 6.3
• CAGR of 19.2 percent over FY
2 4.3 2000-05
0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05E
• Electronics consumption in India
estimated at $9.7 billion in 2005
Source: NASSCOM
• Still very low compared to other
nations (China is at USD 150bn
Total Indian Electronics Market Consumption and the US is at USD 450bn)
EDP Consumer
• MNCs currently account for
26% 25% leading shares in most segments
Office Equip
– especially in hardware
1%
Medical &
Industrial
3% Telecom Components
22%
7% Control & Instr Radio Comm
7% 9%
The Emerging
Landscape of
Global Services
Evolution of
Indian IT-ITES
Q&A