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Despite challenges in the global market, Indian IT-BPM industry sustained its growth trajectory and is expected to clock export revenues of USD 75.8 bn with a Y-o-Y growth rate of 10.2 per cent. Domestic market also witnessed Y-o-Y growth rate of 14.1 per cent taking the domestic revenues to INR 1,047 bn. The Indian IT-BPM sector continues to be one of the largest employers in the country directly employing nearly 3 million professionals, adding over 180,000 employees. FY2013 can be characterized as the year of rapid transition and transformation leading the industry into expanding into newer verticals and geographies, attracting new customer segments, and transforming from technology partners to strategic business partners. Europe despite the economic crisis, demonstrated higher acceptance of global sourcing with markets such as Germany or France increasing outsourcing as a way to keep their costs under control and gain greater flexibility in light of the increasingly volatile markets in the euro zone and beyond. At the same time, the industry explored increasing opportunities in Asia, Africa and Latin America. Customer centricity was the key focus as the industry expanded its global delivery model accounting for 580 global centers across 75 countries. While the first USD 100 billion landmark can be attributed to the cost and quality advantage, the next USD 100 billion will be a combination of higher-value services and increasing non-linear growth. To sustain this growth, Indian IT-BPM industry is focusing on greater efficiencies, verticalized structures, geographical presence, IP based solutions, domain and increased collaboration across all stakeholders.
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Indian IT-BPM Industry – FY2013
Performance Review, FY2014 Outlook
Mumbai, 12th February 2013
AGENDA
Where is the global economy heading
How is the Indian IT-BPM Industry evolving
Which are the new growth markets/ emerging verticals
The year that went by, and the year ahead
What challenges lie before us
AGENDA
2
Source: NASSCOM
Global sourcing continues to outperform
IT-BPM spend
Worldwide IT-BPM Spend
USD billion
1,311
748
269
156
627
1,350-1,400
797
278
164
648
ER&D
Hardware
Packaged Software
Business ProcessManagement
IT Services
2012
2011
USD 1.9
trillion*
* 2012
70-72
44-46
2011 2012
IT Sourcing Business Process Sourcing
Global Sourcing Market size
USD billion
~9%
114-118
124-130
76-80
48-50
• Global IT- BPM market recorded growth of 4.8 per cent in 2012
• APAC recorded highest growth of 6 per cent, ~1.6X Global IT-
BPM spend; driven by BPM services (~9 per cent)
• Global sourcing continues to outpace global technology and
services spend; growing ~2X as fast as global IT spend
• Cost remains a key driver of outsourcing; along with simplification
and standardisation
Source: Everest, Forrester, Gartner, IDC
GLOBAL IT-BPM SPEND & SOURCING
3
GDP Share
Contribution to India’s GDP grew ~3X in the last 10 years
Source: NASSCOM * funded startups
IT-BPM: Highest impact sector for India
Total exports share
IT-BPM exports share grew > 5X in the last 10 years
Direct Employment
One of largest organized private sector employers in India
Global Sourcing Share
India’s share of the global sourcing market
Domestic Market Growth
Outperforms exports-fastest growing IT market in the world
Start-up companies
Vibrant start-up community grew ~3X over the last 5 years
IT-BPM FACTS
4
~24%
~8%
3 mn
>52%
14.1%
450+*
IT-BPM Industry – resilient, growing, evolving
64.0 76.3
87.7 95.0
10.2
12.2
13.2 13.0
FY2010 FY2011 FY2012 FY2013E
Hardware Services
100.9 108
88.1
74.2
E: Estimate
Source: NASSCOM
IT-BPM revenue break-up
USD billion
IT-BPM REVENUES
• Growth figures reflect variable impact of
currency
• Highest value add sector for India – 60-70 per
cent
• Exports mainstay of the industry - >70 per cent
• Indian IT-BPM exports offsets 50% of India’s oil
imports
• IT services today is a USD 50+ billion dollar
industry
• BPM is a USD 20 billion segment
• ER&D and products segment closing in on the
USD 20 billion mark too
H/W Growth
in INR= 8.5%
5
IT-BPM exports logs double digit growth in
FY2013
IT-BPM Export revenues*
(USD billion)
39.9 43.9
15.9 17.8
13.0 14.1
FY2012 FY2013E
IT Services BPM S/W prod and Engg
68.8 75.8
• Industry growth in constant currency
terms meets NASSCOM guidance
• Exports: Y-o-Y growth 10.2 per cent, over
2X greater in INR terms
• Segments: IT service growth at ~10 per
cent; BPM growth faster at 12.2 per cent
• Business Drivers for the year-
• New verticals and geographies
• SMAC based services
• Transformation and innovation
• Restructured business models
• Growth Service lines: RIM, software
testing, knowledge services and F&A
services
FY2013E Y-o-Y Growth
INR 21.4%
Constant USD 10.9%
USD 10.2%
IT-BPM EXPORTS
6 * Excluding Hardware E: Estimate
Source: NASSCOM
Domestic market outperforms exports at 14.1
per cent
589 674
148
167 180
205
FY2012 FY2013E
IT Services BPM S/W products
918
1,047 14.1%
IT-BPM Domestic revenues*
(INR billion)
Source: NASSCOM * Excluding Hardware
• Meets NASSCOM guidance
• Domestic: Y-o-Y growth 14.1 per cent, fastest
growing IT market in the world
• Segments: IT services fastest growth 14.5 per
cent, BPM grew at 12.7 per cent
• Services: Managed services, unified
communications, collaborative applications,
integration of core enterprise applications
• Key Enablers:
• Mobile apps, cloud environment ,SMB out reach
• Government accelerating economic reforms,
• IT seen as a critical enabler for inclusive growth
and transformation
• Internet and Ecommerce companies driving
adoption
IT-BPM DOMESTIC
7
INR/USD rate used for calc
Q4FY13- 53.5
FY13E-54.2
Industry continues to be a net hirer- Adding
188,300 jobs in FY2013
• Industry employs ~3 million professionals
directly, and ~9.5 million indirectly
• Employee growth supplemented by non
linear model
• Over > 100,000 foreign nationals employed
by the industry
• ~30 per cent (800,000+) women employees
• World’s largest talent pool: ~ 4.7 million
graduates and post graduates
• Faster role progression and development,
structured training programs
• Sustained investment in structured training
programs, in-house universities and
affiliations with academia
Source: NASSCOM
Direct Employment (‘000)*
7%
* Excluding Hardware ** includes IT services, ER&D and Products *** includes S/w products
1,296 1,407
879 917
601 640
FY2012 FY2013E
IT exports** BPM exports IT-BPM Domestic***
2,776 2,964
IT-BPM KNOWLEDGEBASE
8
Industry unique differentiator- business,
service and delivery model evolution
M&A for domain and skill
End to End delivery
Moving up
the Value
Chain
Pricing models – Outcome
based
Products, Platforms,
Software assets, Solution
Accelerators Initiate Non
Linear Play
Future-ready workforce
Tier 2/3 movement
Changing employee mix Extend
Cost
Advantage
Source: NASSCOM
460 580
FY2009 FY2012
Number of global centers
8.6%
Employee Revenue
12.8%
CAGR 2008-13E
1.4 3.3
2009 2012
M&A deal value, USD bn
100
121
FY2008 FY2013E
Rev/employee (Indexed
to FY08=100)
FY2008 FY2012
Tier-II/III: Share in
employees
9-10%
11-12%
FY2009 FY2012
Domain Specialists as a
% of total employees
Integrating SMAC
Transformation
9
10% 12%
Operational metrics driving flexibility for
clients and efficiency for providers
CAPACITY UTILISATION*
73.9%
71.8% 72.4%
2010 2011 2012
18% 15%
13%
2010 2011 2012
ATTRITION (IT SERVICES)
ONSITE EFFORT FIXED PRICE CONTRACTS
(% of revenue)
44.7% 45.0%
46.6%
2010 2011 2012
SG&A (% of revenue)
14.1%
14.0%
13.8%
2010 2011 2012
26.1% 26.2%
25.2%
2010 2011 2012
*: Excluding trainees
Source: NASSCOM
INDICATIVE
Note: Data of top 4 companies as of December ending
EF
FIC
IEN
CY
F
LE
XIB
ILIT
Y
Utilization levels increasing
Attrition remained lower; employee
investments are paying off
SG&A lower due to operational
efficiency
Firms re-engineering, adopting
innovative operating models
Offshore higher than onsite
10
India a preferred destination: Five pronged
value proposition
INDIA VALUE PROP
Source: NASSCOM
SCALE & MATURITY
- 25+ years of outsourcing
- 5000+ companies, 750+ MNCs
- 580 ODCs in 75 countries
UNLIMITED TALENT
- Annual tech talent output :1ibllion
- Established training engine: 2-3%
- Industry revenues spent on training
COMPETITIVE
-60-70% more cost efficient than source countries
-15-20% lower than next lowest offshoring destination
CUSTOMER CENTRIC
- 30-32% revenues from verticalised BPM services
- Domain experts:12% Consultative selling
STRONG ECOSYSTEM
- Largest no delivery locations: 50
- Training & certification
- Secure environment
11
Global tech spend set to improve – grow over
5 per cent in 2013
Worldwide IT-BPM services spending growth
3.3%
4.2% 4.6%
4.9% 5.3% 5.4%
2012 2013E 2014P
IT BPM
GLOBAL IT-BPM OUTLOOK
• Global IT-BPM spend expected to be on the
surge; growth of over 5 per cent in 2013 to
touch USD 2 trillion
• Rate of introduction of disruptive technologies
will continue to be faster; SMAC technologies
– over USD 1 trillion by 2020
• IT shifting from traditional process automation
to strategic BI, collaboration, customer facing
technologies
• Future of industry is beyond just services -- a
complete blend of services, products,
solutions and platforms
• Expanding focus on unsung markets – APAC,
SMBs, domestic - the next big spenders
12 Source: Forrester, Gartner, IDC, NASSCOM
FY2014: Optimistic outlook, industry
expected to add USD 12-15 billion IT-BPM Export revenues*
Growth of 12-14%
E: Estimate, P: Projected Source: NASSCOM
IT-BPM Domestic revenues*
Growth of 13-15%
* Excluding Hardware
69 76 85-87
FY2012 FY2013E FY2014P
918 1,047
FY2012 FY2013E FY2014P
1,180-1,200
USD billion
INR billion
INDIAN IT-BPM OUTLOOK
• Indian IT-BPM industry transitioning from
enterprise services to a enterprising solutions
• Outsourcing models changing- – driven by
new technologies, reinvented business
models, new buyer segments and solutions for
emerging markets
• Technology changes – cloud, mobility,
analytics, social media creating new
opportunities
• New vertical, customer and geographic
markets will continue to gain importance
• Focus on greater efficiencies and flexibilities –
reengineer internally; diversify; non-linearity;
transforming customer business
• Internet and mobile expansion will encourage
entrepreneurship in products and content
13
14 12-Feb-13
‘Imagineering the Future’ Journey to the next 100 billion
• 21st edition
• 3 power packed days
• 120+ speakers
• 50+ sessions
• 1400+ delegates
• 35+ country representations
• Thought Leadership
• Future of Technology
• Customer Speak
• Emerging Markets
• India opportunity
• Reinvented business models
Future of Technology and Leadership Keynotes
Imagineering: Seeding the field of the Future! Mike Walsh
Consumerism: Responsible businesses focus on needs not wants
Stephen Lu University of Southern California
Leading in Uncertain Times Ram Charan, Business Advisor & Author
Transactional to transformational: Co-relating business to hidden intelligence Manoj Singh, Deloitte
Playing to Win: How Strategy really works Roger Martin Rotman School
Customer Speak
Karenann Terrell Wal-Mart
Shohreh Abedi Farmers Insurance
Adriana Karaboutis Dell Darryl West
Lloyds
Christoph Baeck Hilti
Sanjay Mirchandani EMC
Aditya Ghosh, IndiGo
Roger Gurnani Verizon
Sue McKinney Pitney Bowes
Creative Keynotes
Reinvention of Self: The Real Comeback! Amitabh Bachchan
Storytelling: Transforming through tales! Devdutt Pattanaik, Chief Belief Officer, Future Group
Valedictory Session Rahul Dravid
Emotional intelligence & bottomline Dr Travis Bradberry, Emotional Intelligence Expert
18 12-Feb-13
Various formats…
Analysts corner: interactive session to discuss changes in the sourcing sector
• Vendor consolidation & strategic partnerships - through the customers’ eyes - Chris Andrews, Forrester
• Generation Y: New Users, New Expectations, New Challenges - Frank Ridder, Gartner
• Transformation agendas & how they are driving two different market segments - Peter Bendor Samuel, Everest
• The Changing Dynamics of the G2000 - Paul Reynolds, ISG
• [R]evolution - Six trends that will drive business transformation and competitive advantage in 2013 - Ben Towbridge, Alsbridge
• Theme: Global IT Outsourcing Market Forecast: 2012-2016 - Rachael Stormonth, NelsonHall
Country sessions
• Analyzing Japan Conundrum: Is there an IT market Master Class workshops
• Outside In: Customer centricity
• Build a "Lean" Robot!
19 12-Feb-13
Global Participation
Delegates from across 35+ countries
• Americas - US, Canada, Colombia
• Europe - Belgium, France, Germany, Netherlands, Sweden, UK
• APAC & Middle East - Australia, New Zealand, China, Japan, Hong Kong, Malaysia,Philippines, Sri Lanka, Singapore, Pakistan, Bangladesh
• Africa - South Africa, Kenya, Nigeria
Executive Presence
20 12-Feb-13
• Anand Sharma, Hon’ble Union Minister of Commerce and Industry
• Prithviraj Chavan, Hon’ble Chief Minister of Maharashtra • Sachin Pilot, Hon’ble Minister for Corporate Affairs • Milind Deora, Hon’ble Minister for Communications and IT • Jack Markell, Governor, Delaware US • Takeshi Yagi, Ambassador of Japan to India • Nandan Nilekani, Chairman, UIDAI
21 12-Feb-13
Structured Networking
NILF
NASSCOM Connect
Enables delegates to connect and set
up meetings
Peer-to-Peer networking at
focused sessions
Country Delegations – partnership opportunity
The social platform
Entertainment evening, Awards night and more
Social Media groups – Twitter,
Facebook, Slideshare, You
tube
Questions