It & Ites: November 2010

IT & ITeS
November 2010
IT & ITeS
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
2
ADVANTAGE INDIA IT & ITeS November 2010
Advantage India
It is forecasted that India BPO exports segment would employ 768,000 knowledge professionals in 20092010 and added 30,000 jobs alone in 20092010. Indian knowledge services export revenue grew at a CAGR of 19.4 per cent between 200607 and 2009 2010 to US$1 billion. Growing BPO/KPO industry
Cost advantage
The cost of an engineer in India is around 20 to 40 per cent of the cost in the EU. General, administrative and selling costs in India amount to around 80 per cent of the costs in the EU. Indias average offshore billing rates, at US$ 20 to US$ 35 per hour, are around 50 to 70 per cent lower than those in the EU.
Quality/ maturity of processes
Advantage India
Ease of scalability

More than 85 global SEICMM level 5 firms have a presence in India. India has the largest number of quality certifications among in the world.
An enabling business policy and regulatory environment
In 20092010, 0.37 million technology graduates and postgraduates (in fields such as Computer Science, Electronics and Telecom) qualified in India. More than 50,000 MBAs graduate every year. It is estimated that Indias IT industry has added 90,000 employees in 20092010.
The sector was deregulated in the 1990s to allow private-sector participation. 100 per cent FDI is allowed through the automatic route.
Sources: Department of Information Technology 200809 annual report; The IT-BPO Sector in India - Strategic Review 2010, Executive Summary, NASSCOM website, www.nasscom.org, 19 November 2010; Ernst & Young research.
IT & ITeS
November 2010
Contents
Advantage India
Market overview
4
MARKET OVERVIEW IT & ITeS November 2010
Market overview (1/2)
Total revenues in Indias IT industry touched US$ 73.1 billion in 20092010 compared with US$ 70.5 billion in 200809, growing at 3.7 per cent. The contribution of the IT industry to Indias GDP has grown from 1.2 per cent in 199798 to 6.1 per cent in 20092010. The software and service sector posted revenues (excluding hardware) of US$ 63.7 billion in 2009 2010. Of this, IT services accounted for 57 per cent, business process outsourcing (BPO) accounted for 23 per cent and engineering services/product development accounted for the remaining 20 per cent.
IT revenue in 20092010 (US$ billion)

60 50 50 40 30 20 23
10 0 Exports Domestic
Source: The IT-BPO Sector in India - Strategic Review 2010, Executive Summary, NASSCOM website, www.nasscom.org, 5 August 2010.
Market overview (2/2)
The countrys IT/ITeS exports have grown at a compound annual growth rate (CAGR) of 23.1 per cent between 200506 and 20092010. The industry added 90,000 new jobs in the 20092010, taking the total number of employees to 2.3 million. It also generated around 8.2 million indirect jobs.
Revenue segmentation in 20092010

IT Services 13%
ITeS-BPO 17% 50% Software products and engineering services 20% Hardware
Sources: The IT-BPO Sector in India - Strategic Review 2010, Executive Summary, NASSCOM website, www.nasscom.org, 5 August 2010; Department of Information Technology 20092010 annual report.
IT services segment
IT services exports (US$ billion)
30 25 20 15 10 5 0 2006-07 2007-08 2008-09 2009-10E 17.1 1.7 6 9.4 22.2 1.8 8.8 10.4 25.8 2 27.3 2.1
IT services exports by service line (per cent)

Application development IS outsourcing 1.10.5 1.2 2.8 3.0 5.9 6.8 Application management 10.9 37.4 Software testing Software deploy and support SI IT consulting
11.2
11.6
13.3
14
Project oriented
Outsoursing
Support and Training
14.2
15.9
Network consulting and integration IT education and training Hardware deplot and support
Others
The Indian IT services exports is estimated to grow by 5.8 per cent to reach US$ 27.3 billion in 2009 10E. The IT services segment comprises of project oriented, outsourcing, and support and training. In 200809, the project oriented segment comprised 51% of the exports followed by outsourcing (41%) and support and training (8%). Application development, infrastructure (IS) outsourcing, and application management are estimated to account for more than 65 per cent of the IT services exports.
Source: NASSCOM Strategic Review 2010 The ITBPO sector in India
ITeS segment (1/2)
Indias ITeS exports have grown to US$ 12.4 billion in 20092010 from US$ 11.7 billion in 200809, a growth of more than 5.9 per cent. ITeS is the fastest-growing segment across the IT services and software segments and accounts for 20 per cent of the countrys IT industry (including hardware).
US$ billion
ITeS sector revenues

14 12 10 8 6 4 2 0 200405 200506 200607 200708 200809 20092010 Domestic market Exports 0.5 0.9 1.1 4.6 6.3 8.4 10.93 11.7 12.4
1.6
1.9
2.3
Source: Department of Information Technology 20092010 annual report.
ITeS segment (2/2)
The industry has graduated to providing a high proportion of voice-based services as well as a range of back-office processing services. The sectors scope of services has expanded in the last three to four years to include increasingly complex processes involving rule-based decisionmaking and research services.
Global BPO revenues by segments, 2009 (per cent)
6 16
Customer management Finance and accounting 52 Human resource administration Training
23 Procurement
Sources: The IT-BPO Sector in India - Strategic Review 2010
Computer hardware (1/2)
Computer-hardware production grew at 7 per cent in 20092010.

20092010E
Indian computer production

3.0 2.8 3.3 2.7 2.3 1.8 0.0 1.0 2.0 US$ bn
Desktop PC sales (including notebooks) increased to 3.71 million units in the first half of 20092010. Sales of notebooks and netbooks grew by 43 per cent y-o-y to 1.1 million between April and September 2010 while the sale of desktops have declined by 11% over the same period of last year.
200809 200708 200607 200506 200405
CAGR 10.4 per cent

3.0 4.0
10
Computer hardware (2/2)

PC sales crossed 7.3 million units in 20092010. Exports registered a CAGR of 8.3 per cent between 200405 and 200809.
200809 200708 200607 200506 200405 0.00
Indian computer exports
0.34 0.21 0.31 0.21 0.25 0.10 0.20 US$ bn 0.30 CAGR 8.3 per cent
0.40
11
Growth drivers (1/4)

Increased global technology-related expenditure
Global technology expenditure

2 1.54 US$ trillion 1.5
Worldwide technology products and related services declined at 2.9 per cent to around US$ 1.5 trillion in 2009. Global expenditure on software products grew by 1 per cent and reached US$ 307 billion in 2009. Worldwide BPO spending grew by 2 per cent in 2009. IT services constitute the largest segment of Indias worldwide spend on technology products and related services. The global IT sourcing market has grown threefold between 2004 and 2008.
0 2008 2009
Sources: The IT-BPO Sector in India - Strategic Review 2009: Executive summary, NASSCOM website, www.nasscom.org, accessed 20 September 2009; The IT-BPO Sector in India - Strategic Review 2010: Executive summary, NASSCOM website, www.nasscom.org, accessed 19 November 2010.
12

Global technology-related spending

Government and healthcare verticals witnessed growth in technology spending. Large-scale recruitment and variable pricing in service sector businesses.
Global spending on IT services, 2009 (per cent) Global spending on the BPO sector, 2009 (per cent)
16 42.1 North America
18 North America 19.4 62.5
EMEA
APAC 41.8
EMEA
APAC
Sources: The IT-BPO Sector in India - Strategic Review 2010 EMEA Europe Middle East and Africa APAC Asia Pacific
13

Global spending on IT/ITeS in 2009 Segment IT services BPO Package software Hardware Growth y-o-y (per cent) -0.3 1.8 1.0 -8.3 Aggregate (US$ billion) 589 112 307 550
Sources: The IT-BPO Sector in India - Strategic Review 2010
14

Global IT vendors increasing their India presence
Emergence of Indian IT multinationals
Global vendors such as Accenture, HP, HP Enterprise Services, IBM and Cap Gemini are eyeing India to expand their offshore delivery capability either organically or inorganically. They aim to grow onshore service providers who can deliver seamless hybrid onshore-offshore services at low costs.
Indian IT companies seek to expand their global footprint through the Global Delivery Model (GDM) to seamlessly service their clients needs worldwide. Indian firms are gradually gaining a global foothold, with giants such as TCS, Wipro and Infosys expanding their overseas presence, particularly in Asia and Europe. Increased M&A activity needs to be driven by the requirement for global service delivery capabilities, while mitigating the risks and timeline issues involved in expanding to new geographies.
These vendors have a large number of India-based employees Accenture (40,000+), IBM (1,30,000+), HP Enterprise Services (15,000+) and Cap Gemini (26,000+).
Source: News publications
15
Industry structure (1/2)

Leading Indian IT/ITeS firms by revenue (20092010) TCS Tech Mahindra Limited
Infosys Technologies Limited

Wipro Technologies Limited Mahindra Satyam Computer Services Limited HCL Technologies Limited
Patni Computer Systems Limited

Oracle Financial (I-Flex Solutions Ltd) Mphasis Larsen & Toubro Infotech Limited
16
Industry structure (2/2)

Revenue

Key characteristics business model Large-cap companies are mainly concentrated on application development and maintenance, package implementation, BPO and consulting. Such companies are well-positioned to bag large IT contracts with scalable capabilities. They have strong delivery capabilities across multiple verticals. Low client concentration characterises such companies. Such companies compete with global IT vendors such as Accenture, IBM, HP Enterprise Services and Cap Gemini. Mid-cap companies are mainly concentrated on specific domain capabilities. Scale and margin pressures characterise such companies. They are facing increasing competition from small- and large-cap players Such companies are focused on developing capabilities around a specific domain and aspiring to be leaders in the domain Scale and growth pressures as well as limited growth in niche areas are typical of such companies. High client concentration characterises such companies. They are facing increasing competition from large-cap/middle-cap players entering niche areas.
Large cap
Revenue > US$ 250 million
Mid cap
US$ 50250 million
Small cap
Focused on key niche areas of operations
Source: News publications
17
Key players Indian

TCS
Wipro Technologies Ltd
Infosys Technologies Ltd
Aditya Birla Minacs
The company recorded revenues of US$ 6.34 billion in 20092010, compared with US$ 6.02 billion in 200809. Profitability (operating margin) for 20092010 amounted to 26 per cent. TCS has a workforce of more than 140,619 professionals in 20092010, with 12 per cent growth in 200809; the company has an employee base of 126,150. TCS has a strong foothold in the Indian market; its global presence can be primarily attributed to acquisitions and the expansion of business verticals.
Wipro Technologies recorded revenues worth US$ 6.03 billion in 20092010, a 6 per cent growth over revenues in 2008 09. Profitability (operating margins) for 20092010 amounted to 19 per cent of the companys revenues. The companys workforce exceeded 108,071 professionals in 20092010, with more than 10 per cent growth in 200809; employee base of 97,810. Acquired six companies and formed joint ventures (JVs) with two, increasing its offshore delivery centres and expanding its service offerings.
Revenues of US$ 4.80 billion in 20092010, recording 9 per cent growth over revenues of US$ 4.4 billion in 2008 09. Profitability (operating margin) for 20092010 30 per cent of revenues.
The company had a workforce of more than 14,724 employees in 20092010. The company is spread across 27 global delivery centres. The company recorded revenues of US$ 306.1 million in 20092010 registering a decline of 13% y-o-y.
Workforce of more than 1,13,796 professionals registering growth of more than 8 per cent in 200809; the company has an employee base of 1,04,900.
Management selected the organic route to develop the companys overseas operations.
Sources: TCS 200910 annual report; Wipro Technologies 200910 annual report; Infosys 200910 annual report; Aditya Birla Minacs 200910 annual report
18
Key players international (1/3)

HP
Oracle
Cognizant
Microsoft
HP is one of the largest IT firms in the world; it was founded in 1939 and ranked ninth in the 2009 Fortune 500 ratings. The companys revenues amounted to US$ 126 billion in 2009. With a workforce of more than 304,000 employees, HP operates from more than 170 countries. The company focuses on establishing presence in class-C and class-D cities by launching mobile vans and linking them with channel networks. HPs strong focus area is R&D, with more than US$ 3.5 billion dedicated to developing new technology.
Oracle is one of the largest software business companies in the world; it has been operating for more than 30 years in 145 countries worldwide. The company recorded revenues of US$ 26.8 billion in 2009.
Cognizant is a leading provider of IT, consulting and IT infrastructure management. The company was founded in 1994 as a captive arm of Dun & Bradstreet; its revenues for 2009 were estimated at more US$ 3.27 billion. Cognizant adopts a client-centric market approach, with major service offerings for various sectors, especially health care. It has a workforce of more than 95,600 employees in more than 50 delivery centres. The company ranked seventh on Forbes list of the 25 fastestgrowing technology companies worldwide.
Microsoft is the worlds leading developer of software products and services. The company operates in five business segments clients (Windows & Windows Live), Server and Tools, Online Services Division, Microsoft Business Division, and the Entertainment And Devices Division. Microsoft recorded revenues of more than US$ 62 billion in 2009 2010. The company has more than 89,000 employees worldwide.
Sources: HP 2009 annual report and website; Oracle 2009 annual report and website; Cognizant 2009 annual report and website; Microsoft 2009 annual report and website
19

WNS
Accenture
Cisco
Flextronics
A leading global BPO company, WNS has more than 215 global clients, ranging from multinational banks and consumer electronics firms to oil and gas companies. NASSCOM has ranked WNS as the secondlargest BPO company in India.
Accenture is a leading global management consulting, technology services and outsourcing company with extensive industry knowledge. The company has a workforce of approximately 204,000 professionals serving clients in more than 120 countries.
Founded in 1968, Cisco is one of the largest chipmaking companies in the world. Known for its rich R&D, Cisco has invested more than US$ 5.2 billion in internal innovation, which has accounted13.2 per cent of net sales in 20092010. The company recorded revenues of more than US$ 40 billion worldwide in 200809. Ciscos workforce amounts to more than 70,000 employees worldwide.
Flextronics is a leading provider of electronics manufacturing services (EMS) with strong focus on delivering complete design, engineering and manufacturing services. The company operates from 30 countries, although it is primarily present in the AsiaPacific region. Flextronics employs more than 165,000 people worldwide. The company recorded revenues worth US$ 24 million in 20092010.
The company recorded more than US$ 582 million in revenues in 20092010.
The company generated net revenues of US$ 21.55 billion in 20092010.
Sources: WNS 2009 annual report and website; Accenture 2009 annual report and website; Cisco 2009 annual report and website; Flextronics 2009 annual report and website
20

Dell
Lenovo
Dell is a US-based IT multinational that develops, sells and supports computers and related products and services. Dell employs approximately 96,000 people worldwide and has the worlds third-largest market share in the personal computers segment. The company registered revenues of US$ 52.9 billion in 20092010 worldwide.
A China-based technology firm, Lenovo develops and manufactures computers, laptops and other IT management software. The company has global revenues of US$ 16.6 billion in 20092010. The company has more than 22,200 employees worldwide.
Sources: Dell 2009 annual report and website; Lenovo 2009 annual report and website
21
IT & ITeS
November 2010
Contents
Advantage India
Market overview
22
INDUSTRY INFRASTRUCTURE IT & ITeS November 2010
Industry infrastructure
Infrastructure
Scalability
The industry has infrastructure support in the form of dedicated, cost-effective, quality real estate in the form of Software Technology Parks of India (STPIs) and special economic zones (SEZs). The availability of STPI infrastructure across the country is reflective of government support to the sector. High-quality telecom infrastructure is available, with the cost of connectivity reducing rapidly and service levels improving significantly. Real estate, air and road connectivity, as well as hospitality are registering impressive growth and providing a supportive business environment to the IT sector. Infrastructure availability is set to complement industry growth, with the Government of India (GoI) working towards capacity building.
Indias young demographic profile and academic infrastructure are strengthening the countrys potential to cater to the growing demand for IT/ITeS. It is estimated that the country will witness additional demand for 0.4 million IT and 1.4 million ITeS professionals in 20092010. India has an abundant talent pool suited to this industry, producing In 0.37 million technology graduates and post-graduates (in fields such as Computer Science, Electronics and Telecom) in 20092010. Industry stakeholders, including individual firms and associations, are undertaking initiatives to address issues relating to talent enhancement. Some such initiatives include:
The national rollout of skill certification through NASSCOM Assessment of Competence (NAC). The establishment of finishing schools in association with the Ministry of HRD to supplement graduate education.
Source: "IT industry may create 40k jobs this fiscal: Nasscom, The Economic Times website, www.economictimes.indiatimes.com, accessed 20 September 2009.
23
Industry infrastructure SEZs

Location Andhra Pradesh (Hyderabad)
Delhi-NCR West Bengal
No of SEZs 59
Major players HP, Amazon, Verizon, Convergys, EXL, Infosys, TCS,WIPRO Cognizant, Convergys, EXL, KPIT, Msource, Siemens, Accenture Infosys, Wipro, Accenture, Cognizant Infosys, Wipro, TCS, HP, Siemens, Compaq
Maharashtra (Mumbai, Pune) Tamil Nadu (Chennai)
51 38 37 28 19 15
Ahmedabad
Pune, Mumbai Hyderabad Bengaluru, Mysore
Karnataka (Bengaluru, Mysore)
Delhi and NCR (Gurgaon, Noida)

West Bengal (Kolkata) Gujarat (Ahmedabad)
IBM, Genpact, Oracle, Am Ex, Convergys HP

IBM, Cognizant, TCS, Infosys, Wipro TCS, Infosys, Wipro
Chennai
Source: Ernst & Young analysis
24
Industry infrastructure emerging IT/ITeS destinations

Expanding to tier-II and tier-III cities
The Indian IT/ITeS industry is primarily concentrated in seven clusters Bengaluru, Delhi-NCR, Hyderabad, Chennai, Pune, Mumbai and Kolkata. Most IT companies initiated their operations in India in tier-I cities and have subsequently expanded their operations to tier-II cities. The emergence of tier-III cities such as Chandigarh and Mysore has played a key role in the expansion of the ITeS-BPO segment. Tier-II and tier-III cities are gaining in importance in the IT/ITeS industry, since they offer substantial savings in administration, maintenance, real estate and infrastructure costs and human resource availability.
Chandigarh
Jaipur Ahmedabad
Vadodara Surat Nagpur Bhubaneshwar
Visakhapatnam Mangalore Mysore Coimbatore KOCHI Madurai Thiruvananthapuram
25
IT & ITeS
November 2010
Contents
Advantage India
Market overview
26
INVESTMENTS IT & ITeS November 2010
Investments (1/3)
Indias technology sector witnessed M&A deals worth US$ 1.7 billion* in 20092010.
The countrys IT-BPO sector has consistently attracted the highest share of private equity (PE) and venture capital (VC) investments in the country.
Cumulative FDI inflow into the computer software and hardware sector have been estimated at US$ 10,406 million between April 2000 and September 2010. The technology sector saw FDI inflow of US$ 1,410 million in 200708, US$ 1,677 million in 200809 and US$ 919 million in 20092010.
* Complete data for all deal values is not available. Sources: Private Equity Deals 2008-2009, Asian Venture Capital Journal, Transactions, Bloomberg, accessed 4 December 2009; Mergers and Acquisitions 20092010, Thomson One Banker; Fact Sheet On Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion website, www.dipp.nic.in, accessed 19 November 2010
27
Investments (2/3)
Technology sector M&A deal volume and value
5000 200 2000 80
Technology sector PE deal volume and value

1,609
1500 1000 500 0 200607 200708 PE deal value 200809 PE deal count
Value (US$ million)
4000 3000 2000 1000 0 200607
Value (US$ million)
2,903
159 2,886
3,393
150 100
57 55 55 744 488
Count (No)
60 40 20 0
Count (No)
97
102
50 0 200708 200809
M&A deal value
M&A deal count
Sources: Private Equity Deals 2008-2009, Asian Venture Capital Journal, Transactions, Bloomberg, accessed 4 December 2009; Mergers and Acquisitions 20092010, Thomson One Banker; Fact Sheet On Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion website, www.dipp.nic.in, accessed 19 November 2010
28
Investments (3/3)
Target SKR BPO Services Pvt Ltd Jubilant Software Service Pvt Ltd Quick Heal Technologies Pvt Ltd Lycos Inc Tech Mahindra Ltd DecisionOne Inc Fortify Infrastructure Services Inc IndigoTX Software Pvt Ltd Tech Mahindra Ltd Spheris India Pvt Ltd OLR Barclays PLC Anant Raj Industries Ltd Sequoia Capital India Advisors Pvt Ltd Ybrant Digital Ltd Life Insurance Corp of India (LIC) Glodyne Technoserve Ltd MphasiS Ltd Polaris Software Lab Ltd AT&T Inc CBaySystems Holdings Ltd HCL Technologies Ltd Acquirer Value in US$ million 17.34 12.87 36.00 125.78 104.00 34.57 116.33 -
Source: Mergers and Acquisitions 20092010, Thomson One Banker
29
IT & ITeS
November 2010
Contents
Advantage India
Market overview
Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations
30
POLICY AND REGULATORY FRAMEWORK IT & ITeS November 2010
Policy and regulatory framework (1/3)

Establishment of a nodal agency STPI
The GoI established STPI in 1991 to provide: Fiscal benefits such as tax holidays to attract investment into the industry

Basic infrastructure Single-window clearance for setting up export-oriented units (EOUs) Virtual model allowing firms to avail of benefits without restrictions on locations
Progressive policy reform (fiscal/trade/other)

No FDI restrictions The introduction of fiscal reforms (international taxation, overseas investment, etc.) to facilitate ease of international transactions
31

Telecom sector deregulation

The sector was deregulated in the 1990s to allow private-sector participation. Regulatory reforms were introduced to allow the adoption of new technologies. Deregulation enabled the benefits of free market competition, improved service quality and declining tariffs.
Information Technology Act, 2000
The act granted hierarchy of infrastructure that comprised a controller for certifying authorities, adjudicating officers and a cyber appellate tribunal. The Information Technology (Amendment) Act, 2008 upgraded the existing legal framework to instill confidence in users and investors in the area of IT and added provisions to the existing Information Technology Act, 2000 to deal with new forms of cyber crime.
32

Special incentive package to set up semiconductor fabrication unit in 2007
The scheme encourages FDI investment in the hardware production segment and provides coherent policy structure to attract capital through focus policies. The scheme provides a capital subsidy of 25 per cent for 10 years to set up fabrication facilities and other high-end manufacturing units outside SEZs, and 20 per cent in SEZs, with exemption from countervailing duty (CVD) of 16 per cent on capital goods. The package proposes a minimum investment of US$ 200 million for semiconductor manufacturing (wafer fabs) plants and US$ 100 million for ancillary plants. The scheme emphasises on wafer fabrication and ancillary manufacturing plants.
33
IT & ITeS
November 2010
Contents
Advantage India
Market overview
34
OPPORTUNITIES IT & ITeS November 2010
Opportunities (1/4)
India is poised to become the hub for engineering process outsourcing (EPO), with its market size estimated to touch US$ 30 billion annually by 2015, attracting 25 per cent of the US$ 70billion global EPO industry. The countrys range of services includes engineering and designing solutions across diverse industry verticals such as telecommunications, automotive, construction, aerospace, utilities and industrial design. The labour cost arbitrage in this sector is around 60 per cent of that in the US. Bechtel, General Motors, Ford, John Deere, Caterpillar, Silicon Automation Systems and John Brown Engineering are among the global leaders that have established their engineering services divisions in India.
Knowledge process outsourcing (KPO)
Legal process outsourcing (LPO)
Engineering services outsourcing
ITeS
Engineering services outsourcing
Source: Global Offshore Outsourcing Summit, EY-IACC, 2006
35
Opportunities (2/4)
The KPO industry is now growing rapidly, with several companies establishing third-party operations for functions such as data analytics and data modelling. According to CRISIL, Indias KPO export market constitutes around 8 per cent of the countrys ITeS revenues and employs nearly 3 per cent of its workforce. Growth drivers include the high productivity of Indias human resources and outsourcing of knowledge processes by SMEs. Outsourcing of legal and intellectual property research is presently at an early stage of development in the country. However, this space holds tremendous growth potential. India offers impressive opportunities to scale up, with a large pool of legal professionals (with more than 1million lawyers and 70,000 law graduates qualifying every year) and significant cost arbitrage. In addition, Indian lawyers bill at one-tenth of their counterparts in the US (US$ 40 to US$ 60 per hour in India, compared with US$ 350 per hour in the US). The country is set to achieve significant growth with a rise from its current share of 3 to 4 per cent to 67 per cent in the global LPO market by 2010.
KPO a growth driver for the ITeS sector
LPO
Firms such as SDD Global Solutions, JuriMatrix, Integreon, Pangea3 and RR Donnelly are establishing operations in the country, with increasing VC investment to tap into its market potential.
36
Opportunities (3/4)
Increased government spending across the globe
The GoI is implementing e-governance initiatives and increasing its IT spend/outlay with an allocation of more than US$ 400 million for the Unique Identification Authority of India (UIDAI) in 201011. Governments across the world are increasing their IT spending on infrastructure and security. Business process management (BPM), data management, on-demand ERP, virtualisation and enterprise managed services are other fields of IT witnessing expenditure.
It has been estimated that the overall size of the domestic market grew has grown by 20 per cent in 200809 to reach US$ 24.3 billion by 2010. Domestic IT BPO spending grew by 40 per cent in 200809. The demand for domestic BPO services is increasing rapidly, with niche verticals such as healthcare and retail fast gaining traction, apart from the traditional verticals of banking, financial services and manufacturing.
Growth in domestic market
37
Opportunities (4/4)
The off-shoring market constitutes a small part of outsourcing market. Indian IT-BPO revenues may rise to US$ 225 billion by 2020 from US$ 73.1 billion in 20092010.
Potential for increase in offshoring
Banking, financial services and insurance, retail, healthcare, and government offer significant opportunities.
Growth opportunities reside in the US and emerging economies such as the Asia-Pacific region.
38
IT & ITeS
November 2010
Contents
Advantage India
Market overview
39
INDUSTRY ASSOCIATIONS IT & ITeS November 2010
Industry associations
National Association of Software and Services Companies (NASSCOM)
Address: International Youth Centre Teen Murti Marg, Chanakyapuri, New Delhi 110 021 Phone: 91 11 2301 0199 Fax: 91 11 2301 5452 E-mail: info@nasscom.in
40
NOTE IT & ITeS
November 2010
Note
Wherever applicable, numbers in the report have been rounded off to the nearest whole number. Conversion rate used: US$ 1= INR 48
41
IT & ITeS
November 2010
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Ernst & Young Pvt Ltd to prepare this presentation and the same has been prepared by Ernst & Young in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Ernst & Young and IBEFs knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Ernst & Young and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Ernst & Young nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
42

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IT & ITeS

ADVANTAGE INDIA IT & ITeS November 2010

Quality/ maturity of processes

An enabling business policy and regulatory environment

MARKET OVERVIEW IT & ITeS November 2010

Market overview (1/2)

IT revenue in 20092010 (US$ billion)

MARKET OVERVIEW IT & ITeS November 2010

Market overview (2/2)

Revenue segmentation in 20092010

MARKET OVERVIEW IT & ITeS November 2010

IT services exports by service line (per cent)

Support and Training

MARKET OVERVIEW IT & ITeS November 2010

ITeS segment (1/2)

ITeS sector revenues

Source: Department of Information Technology 20092010 annual report.

MARKET OVERVIEW IT & ITeS November 2010

ITeS segment (2/2)

Global BPO revenues by segments, 2009 (per cent)

Customer management Finance and accounting 52 Human resource administration Training

Sources: The IT-BPO Sector in India - Strategic Review 2010

MARKET OVERVIEW IT & ITeS November 2010

Computer hardware (1/2)

Computer-hardware production grew at 7 per cent in 20092010.

Indian computer production

200809 200708 200607 200506 200405

CAGR 10.4 per cent

Source: Department of Information Technology 20092010 annual report.

MARKET OVERVIEW IT & ITeS November 2010

Computer hardware (2/2)

Indian computer exports

Source: Department of Information Technology 20092010 annual report.

MARKET OVERVIEW IT & ITeS November 2010

Growth drivers (1/4)

Global technology expenditure

MARKET OVERVIEW IT & ITeS November 2010

Growth drivers (2/4)

16 42.1 North America

18 North America 19.4 62.5

MARKET OVERVIEW IT & ITeS November 2010

Growth drivers (3/4)

Sources: The IT-BPO Sector in India - Strategic Review 2010

MARKET OVERVIEW IT & ITeS November 2010

Growth drivers (4/4)

Emergence of Indian IT multinationals

MARKET OVERVIEW IT & ITeS November 2010

Industry structure (1/2)

Infosys Technologies Limited

Patni Computer Systems Limited

MARKET OVERVIEW IT & ITeS November 2010

Industry structure (2/2)

Revenue > US$ 250 million

US$ 50250 million

Focused on key niche areas of operations

Source: News publications

MARKET OVERVIEW IT & ITeS November 2010

Key players Indian

Wipro Technologies Ltd

Infosys Technologies Ltd

Aditya Birla Minacs

MARKET OVERVIEW IT & ITeS November 2010