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Global Computer Related Services: An Industry Perspective
Global Computer Related Services: An Industry Perspective
An Industry Perspective
WTO Cross-Border Supply Symposium Santosh
Head, Talent Engagement & Development, Europe Sept 28, 2005
The agenda
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2 3
Industry Snapshot
Wipro Advantage
Wipro confidential
Indias Emergence as IT Sourcing Hub Key Drivers Highly Talented Labor Pool Cost Arbitrage Leapfrog increases in Telecom reliability in 90s Quality Advantage Faster Time to Market 24 Hour Service Window Enables customers internal work-force to focus on core & strategy
Systems Integration
ERP Services
BPO
Independent Testing
Infrastructure Management
Consulting
Services from India touch all three aspects of IT software, hardware & network
Wipro confidential
Translating into >30% Growth for Indian Industry; .. & Corresponding Cost Savings for Customers
$ Bn
Europe, 22.6% Japan, 3.0% Africa, 0.6%
15
25
20
17.2
Americas, 69.4%
Others, 4.4%
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4 2.6
NonOffshore, 96.6
Philippines, 8%
India, 72%
Even at 72% Share of total offshore spend, India accounts for less than 6% of Global IT Spend
we continue to expect a robust demand backdrop for offshore services over the next two years which should drive sustained growth of at least 25%-30%. In our opinion, the predominant factor driving growth is the continued adoption of the offshore model, which by our estimates continues to be low. From a client IT budget perspective, our estimates suggest that that the offshore model has penetrated less than 10% of Global 500 (G-500) IT budgets for core application maintenance and development work.
Goldman Sachs, September 2005
Leveraging Offshore Model = Delivering Greater Shareholder Value through Smart Sourcing
Wipro confidential
The agenda
1
2 3
Industry Snapshot
Wipro Advantage
Wipro confidential
Wipro Today
Our history a track record of success
Incorporated in 1945; 60 years track record of growth & profitability IPO in 1946; Listed at NYSE [WIT] in 2000 Entered IT business in 1980s; IT Services business launched in 1991
Compounded Growth Rate- First 59 Years: Revenues: 21%, Net Income: 31%, M-Cap: 24%
IT Services Foot-Print
421
430
Clients
217
226
288
339
10
13
19
29
42
42
(thousan ds)
Revenues
384
2000-01
475
2001-02
625
2002-03
934
1354
CAGR of 42% in last 5 years (millions USD) Part of NYSEs TMT (TechnologyMedia-Telecom) Index, NSE Nifty Index and BSE Sensex
1595*
Sustained growth
2003-04
2004-05
2005-06
Ranked leader by IDC, MetaGroup, Forrester 2004 Awarded the highest rating in Stakeholder Value Creation & Corporate Governance by ICRA, Wipro confidential an Associate of Moodys Investor Services
13.5
CAGR 21%
CAGR 31%
Q1 2005-06 $398.5 M
CAGR 42%
21
6.5
5.2
CAGR 23% CAGR 64% 3.6 CAGR 64% 3.6 CAGR 52%
0.3
0.3
Infrastructure Outsourcing 8%
Source: Mckinsey-NASSCOM Study, NASSCOM, Company estimate ( all figures in USD B) Percentages below the pie chart represent Wipros distribution of Revenues for the Quarter ended June 2005
Wipro confidential
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Total Manpower in IT Services Additional Manpower Required in IT Services Supply of IT Engineering Degree Graduates Manpower Excess Supply of IT Engineering Graduates (Degree & Diploma) Manpower Excess Total Supply Non IT + Graduates Entering IT Manpower Excess 416 56 71 15 115 59 67 126 490 74 81 7 127 53 74 127 588 98 95 -3 141 43 70 113 697 109 100 -9 165 56 70 126 839 142 111 -31 181 39 70 109 1010 171 117 -54 193 22 70 92 1215 205 123 -82 203 -2 70 68 1462 247 129 -118 213 -34 70 36
One of the top 3 leading recruiters in India Hired over 15000 employees in last one year Has a career portal with active applicants of over 300,000. Recruits from over 160 leading engineering and management colleges. One of the most preferred employers for the top class talent in India.
Track applicant
Screen / manage
Evaluation Offer
0.8%
Retain
Wipro confidential
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1st company
People
4,000+ employees trained in Six Sigma methodologies 204 certified black belts and 10 master black belts Over 700 PMI certified consultants, highest in India
Pr oc es s
Six Sigm a
All fresh recruits undergo a 3 day Veloci-Q training 33% business parameters for the Wipro CEO relate to quality
no ch Te g lo y
Worlds first SEI CMM/CMMI Level 5 IT services company (1998-2002) BS7799 ISO 9000
Wipro clients see additional application maintenance productivity of 10% to 15% from added familiarity with systems; another 10% to 15% raise in productivity after applying Wipro's CMM-based methodology and consolidating redundant programs applications; and yet another 3% to 30% productivity improvement thanks to process automation and tools Forrester 11
Wipro confidential
An increasing number of offshore players are building greater presence in the United States. Examples include Wipro, with its acquisition of the consulting company formerly known as NerveWire
- US customer experiences and best practices when going offshore, IDC, May 2004
Wipro's most recent annual results provide further validation that upscale/upstream services provided by "offshore" firms are now mature
- No Longer Off-Broadway: Offshore Moving to Center Stage, META Group, May 2004
Wipro confidential
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The agenda
1
2 3
Industry Snapshot
Wipro Advantage
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India continues to rank as the preferred destination Likely to benefit disproportionately from Offshoring Drive
India - the Preferred Offshore Destination
Vendor Sophistication (Number, Quality)
India
Philippines
Total India
2004
17.2 12.6 1.9
39.6
2008
48.0 20.9
94.0
Canada China
5.0 6.4
People Sophistication
(Number, Cost, Language Skills)
Ireland
Israel Singapore
2.6
Cost
Mexico Hungary
4.7
1.1 10.0
China Russia
Quality of Supply
(Resource Availability, CMM Level, Cultural Fit)
Source: McKinsey-NASSCOM study
Source: Nasscom
Wipro confidential
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Wipro confidential
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Wipro confidential
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Business model related Expanding the breadth of service offering Managing scale without diluting quality & delivery excellence Expanding geographies & adapting to local language and cultures
Financial Adverse currency fluctuations Managing wage inflation M&A and their impact on financials
Wipro confidential
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Conclusion
Offshore Model is a Great Opportunity for Developed nations to achieve Highest Quality services at reasonable prices Visa & Immigration, Taxation, Protectionist Law and Uniformity in Qualification are some of the key challenges still faced by a service provider like us A uniform GATS framework and commitment will provide the right impetus to the growth of Cross-Border IT Services
Wipro confidential
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Q&A
Our promise
With utmost respect to Human Values, we promise to serve our customers with Integrity, through Innovative, Value for Money solutions, by Applying Thought, day after day
Information contained and transmitted by this presentation is proprietary to Wipro Limited and is intended for use only by the individual or entity to which it is addressed, and contains information that is privileged, confidential or exempt from disclosure under applicable law. Wipro confidential
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