10048 Srikiran C. Rai SIP Report

A Study on Managed ServicesIndustry in India based on secondary data

Report

By

Srikiran C. Rai (Roll No. 10048)

Work carried out at Feedback Business Consulting Services Pvt. Ltd.

Submitted in partial fulfillment of the requirement of Summer Internship Programme

Under the Supervision of Mr. Jayanta K. Das

Manager, Feedback Business Consulting Services Pvt. Ltd. Bangalore

SDM Institute for Management DevelopmentMysore, India

June 2011

List of abbreviations

Abbrevation Expansion

MS Managed Service

MSP Managed Service Provider

UC Unified communication

MNO Managed network operations

CN Carrier network

IPT IP telephony

VC Video conferencing

HSUC Hosted services for unified communication

CCS Contact centers solutions

IMS Infrastructure management services

DCS Data center switches

NMA Network management and automation

TP Telepresence

V2N Virtualization (Cloud Services)

UCSS Unified communication security solutions

TMDS Threat migration and data security

Bn Billion

Mn Million

Feedback Business Consulting Services Page 2

List of Figures

Figure 1: Screenshot of competitor analysis excel.....................................................................................16Figure 2: Managed Services Industry-breakup by services........................................................................17Figure 3: Indian Managed Services Industry size and growth trend..........................................................18Figure 4: Growth of India's share in APAC MSP market.............................................................................19Figure 5: IT industry break-up....................................................................................................................22Figure 6: Education industry breakup........................................................................................................23Figure 7: BFSI industry break-up by services.............................................................................................24Figure 8: Banking Sector overview............................................................................................................25Figure 9: Banking sector statistics..............................................................................................................25Figure 10: NBFCs breakup by type.............................................................................................................26Figure 11: Financial Services in India and major stats................................................................................26Figure 12: Insurance sector statistics and data..........................................................................................27Figure 13: Insurance sector growth and size.............................................................................................27Figure 14: Banking Sector growth drivers..................................................................................................28Figure 15: Healthcare sector breakup.......................................................................................................29Figure 16: Pharma industry structure........................................................................................................30Figure 17: Bulk and formulation goods breakup........................................................................................30Figure 18: Pharma production centers in India.........................................................................................31Figure 19: Logistics industry breakup by service........................................................................................32Figure 20: Overview of Manufacturing sector...........................................................................................34Figure 21: Activities outsourced in BPO.....................................................................................................35Figure 22: Headquarters of major MSPs....................................................................................................36


Table of ContentsList of abbreviations....................................................................................................................................2

List of Figures...............................................................................................................................................3

Table of Contents........................................................................................................................................4

Acknowledgement.......................................................................................................................................6

CERTIFICATE BY THE ORGANIZATIONAL GUIDE...........................................................................7

CERTIFICATE BY THE FACULTY GUIDE, SDM INSTITUTE FOR MANAGEMENT DEVELOPEMNT, MYSORE.....................................................................................................................8

Executive Summary.....................................................................................................................................9

Brief on Managed Services........................................................................................................................10

Problem Definition....................................................................................................................................11

Approach to the secondary research.....................................................................................................11

Research Design........................................................................................................................................11

Information needs.................................................................................................................................12

Research Objectives..............................................................................................................................12

Data Collection from secondary sources...................................................................................................13

Market overview...................................................................................................................................13

Market estimates...................................................................................................................................18

Global Managed Services Scenario........................................................................................................19

Unified Communications (UC) – an emerging field in Managed Services..............................................20

Key Customer Segments being looked at in India..................................................................................21

IT Sector Profile.....................................................................................................................................21

Overview...........................................................................................................................................21

Industry Structure..............................................................................................................................22

Education Industry profile.....................................................................................................................23

Overview...........................................................................................................................................23

Industry structure..............................................................................................................................23

BFSI Industry Profile..............................................................................................................................24

Overview...........................................................................................................................................24


Growth Drivers..................................................................................................................................28

Future Outlook..................................................................................................................................28


Healthcare Industry...............................................................................................................................28

Overview...........................................................................................................................................28

Infrastructure....................................................................................................................................28

Growth Drivers..................................................................................................................................29

Pharma sector.......................................................................................................................................29

Overview...........................................................................................................................................29


Geographical distribution of the production centers – Pharma........................................................31

Logistics industry...................................................................................................................................32

Industry Structure..............................................................................................................................32

Manufacturing Sector............................................................................................................................33

Overview...........................................................................................................................................33

BPO Sector.............................................................................................................................................34

Overview...........................................................................................................................................34

Activities outsourced.........................................................................................................................35

Geographical spread of the major Managed Service Providers in India................................................36

Growth Drivers of the Managed Services industry................................................................................37

Future outlook for the Managed Services industry...............................................................................38

Inferences from the secondary research...................................................................................................38

Limitations.................................................................................................................................................38

Conclusion.................................................................................................................................................39

References.................................................................................................................................................40


Acknowledgement

I take this opportunity to express my profound gratitude and deep regards to my guide Prof. Govinda Sharma for his exemplary guidance, monitoring and constant encouragement throughout the course of this project. The blessing, help and guidance given by them time to time shall carry me a long way in my journey of life.

Sincere appreciation is extended to Mrs. I.V. Rajashree and Mr. Jayanta K. Das, Feedback Busniess Consulting Services Pvt. Ltd. for their immense help during the course of this work. In those moments, when things used to turn dark, their presence had a soothing effect.

I am grateful to the SDMIMD Library staff for providing me with the timely help in search of the references for this thesis.

My several well-wishers helped me directly or indirectly; I virtually fall short of words to express my gratefulness to them. Therefore I am leaving this acknowledgement incomplete in their reminiscence.

Srikiran C. Rai


SDM-IMD SIP 2011

CERTIFICATE BY THE ORGANIZATIONAL GUIDE

This is to certify that Mr. Srikiran C. Rai, currently pursuing Post Graduate Diploma in

Management at SDM Institute for Management Development, Mysore has satisfactorily

completed Summer Internship project titled

A Study

“A Study on Managed Services Industry in India” between 1st April to 31st May, 2011

Signature: Date:

Name: Place:

Designation:

Name of the Organisation and Address:

Feedback Business Consulting Services Pvt. Ltd.


5th Floor,Oxford Towers,139 Old Airport Road,Bangalore – 560008Tel: +91 80-25201399 Tel: +91 80-40623800

Organisational Stamp

CERTIFICATE BY THE FACULTY GUIDE, SDM INSTITUTE FOR MANAGEMENT DEVELOPEMNT, MYSORE

This is to certify that Roll No. 10048, Mr. Srikiran C. Rai of PGDM Batch 2010-12 has satisfactorily completed Summer Internship Project Titled

“A study on Managed Services in India based on secondary data”

at Feedback Business Consulting Services Pvt. Ltd.Located at Bangalore from 1 April 2011 to 31 May 2011to partially fulfill the requirements of the PGDM program under my guidance.

Signature: Date:

Name: Prof. N. R. Govinda Sharma

Designation: Professor

SDM Institute for Management Development, Mysore


Executive Summary

Dissertation Title: A study on Managed Services Industry in India based on secondary data.

Supervisor: Mr. Jayanta K. Das

Designation: Team Manager

Email: [email protected]

Name of student: Srikiran C. Rai

Roll No: 10048

This project report gives an account of the Managed Services Industry in India, with an intention to gauge the end-user perception of managed services to be used by a major MNC and a leading player in the voice based services to expand its operations.

From the secondary research carried out it is evident that the Managed Services sector is fragmented and there a lot of players providing different services. The industry can be termed as high growth given its 22.8% growth rate and the market large considering it is already a $2.78 billion industry.

The major industry sectors that were needed by the client and profiled in this report are:

IT Education BFSI Hospital Pharma Logistics Manufacturing BPO Hospitality


As I was working as a Management Trainee and was fully involved in all the confidential research work carried out by my team, I am unable to present any primary research findings on the above research.

Signature of Student Signature of the supervisor

Srikiran C. Rai Mr. Jayanta K. Das, Manager,

Feedback Business Consulting Services Pvt. Ltd.Date:08/05/2000 Bangalore

Brief on Managed Services

Managed Services is the practice of transferring day-to-day related management responsibility as a strategic method for improved, effective and efficient operations. This is when all aspects of your network or storage i.e. routers, firewalls, upgrades, maintenance, data centers etc are outsourced or managed by a third party. It is actually a combination of both hardware and IT based services. A major MNC (Company X) in the telecom services arena, due to their strong presence there, is looking to enter the voice and data based Managed Services market in India.

A managed service provider (MSP) provides delivery and management of network-based services, applications, and equipment to enterprises, residences, or other service providers. Managed service providers can be hosting companies or access providers that offer services that can include fully outsourced network management arrangements, including advanced features like IP telephony, messaging and call center, virtual private network (VPNs), managed firewalls, and monitoring/reporting of network servers. Most of these services can be performed from outside a company's internal network with a special emphasis placed on integration and certification of Internet security for applications and content. MSPs serve as outsourcing agents for companies, especially other service providers like ISPs, that don't have the resources to constantly upgrade or maintain faster and faster computer networks.

The key value proposition for Managed Services is to deliver 'predictable services at a predictable cost' with continuous improvements and proactive value addition. The key benefit to customer is that it has to pay less for the same quality of service or gets a higher quality of service for the same price over successive years.


Problem Definition

A major international player in the telecom and voice based services sector, Company X with a strong presence in India is contemplating expanding its services to cover both voice and data based services. Currently the market is highly fragmented and the industry is still in its nascent stage with most companies opening up to the concept of Managed Services only recently. The industry can be termed as high growth given its 22.8% growth rate and the market large considering it is already a $2.78 billion industry. So it wishes to evaluate the Managed Services (MS) market scenario in India and expand its operations in India based on the recommendations.

Approach to the secondary research

The first task is to list out all the possible secondary sources which could give valuable information on Managed Services and the industry segments catered to by MS. There could not have been a single information source. In fact, the secondary data collected was a mixture data from different sources as depicted below


Research DesignThe type of research design is a mixture of both exploratory research and descriptive research.

Information needs1. Managed Services – competitor list2. Managed Services – industry breakup and classification3. Overview of the sector and the growth statistics4. Names of key MSPs in India and the services they provide5. Global and Indian headquarters of the major MSPs in India6. Major customer segments and the analysis of each sector

The sample size chosen was XX1

The sampling technique chosen was convenience sampling.

The industry sectors in question and the respondents were from:

1 The numbers/figures are not indicated to guard client confidentiality. However, care has been taken to consider a good enough sample size to ensure adequacy of data and the necessary confidence levels


1. BFSI (x) respondents2. Transportation (x) respondents3. Healthcare (x) respondents4. Pharmaceuticals (x) respondents5. Hospitality (x) respondents6. Manufacturing (x) respondents7. Logistics (x) respondents8. BPO (x) respondents9. IT (x) respondents10. Education (x) respondents

The respondents were distributed over the following cities in India in order to get a pan-India picture:

1. Bangalore (x) respondents2. Chennai (x) respondents3. Delhi (x) respondents4. Gurgaon (x) respondents5. Mumbai (x) respondents6. Ahmedabad (x) respondents7. Hyderabad (x) respondents

Research ObjectivesThe specific research objectives were:

1. To gauge the belief about outsourcing of companies in various sectors mentioned above2. To know the awareness level of the market for Managed Services3. To know their current arrangements with Managed Service providers and their usage habits4. To know the problem areas faced by the companies with Managed Services.5. To know their opinion about the concept of Asset Financing.6. To gauge their perception of Managed Service providers in the country7. To estimate the price willingness and inclination to go for a Managed Service Provider akin to

the client in the future.8. To know the factors that will drive such an adoption of an MSP by the company.


Data Collection from secondary sources

Market overview

The very first task was to collect information about the major players in the managed services industry, as any sector profiling begins. By doing this, you get a picture of the structure of the industry you’re dealing with. You can get an idea about whether the industry is organized or unorganized. This information also leads to find the market breakup by size and revenue.

The information needed in this case was major players in the Managed Services sector. The client on behalf of whom this project was being carried out was an Indian firm so the players in question were major Indian players or MNCs with presence in India. It was required to look at those players whose services were more oriented towards voice and data based services like VOIP, video conferencing, unified communications, etc.

From the research, the various managed service providers which emerged in various sectors were:


BFSI Transportation Healthcare Pharma HospitalityWipro IBM (IT Hardware) Avaya India IBM IBM (IT Hardware)

IBM (IT Hardware) Datacraft Wipro Accenture Infosys

SunGard Infosys IBM (IT Hardware) Genpact Alcatel Lucent

Datacraft HCL Technologies Infosys Avaya India Cognizant

Infosys Alcatel Lucent HCL Technologies Cisco Systems D-Link

HCL Technologies CapGemini Alcatel Lucent IBM (IT Hardware) Avaya India

CapGemini SAP India SAP India SunGard Wipro

Fiserv India NCS India EMC Corp HCL Technologies

EMC Corp Mahindra Satyam NCS India Alcatel Lucent

Cognizant Accenture Mahindra Satyam Acer India

Juniper Mphasis Cognizant NCS India

D-Link Genpact Accenture Mahindra Satyam

Mphasis Patni Computers Juniper Accenture

Genpact Nokia-Siemens D-Link Juniper

Patni Computers Emasters Net Private Ltd Mphasis

L&T Infotech Genpact

Mahindra Satyam L&T Infotech

Accenture

Avaya India

SAP India

NCS India

Manufacturing Logistics BPO Education PublicWipro HCL Technologies Wipro Acer-India NCS India

Cisco Systems NCS India IBM (Global Processes)

NCS India Mphasis

IBM (IT Hardware)

Cognizant SunGard Mahindra Satyam L&T InfotechDatacraft Accenture Datacraft Accenture Cisco SystemsInfosys Mphasis Infosys Juniper SunGard

HCL Technologies Genpact HCL Technologies Avaya India ENPLAlcatel Lucent Patni Computers CapGemini Cisco Systems Nokia-Siemens

CapGemini Fiserv India IBM (IT Hardware)

HCL TechnologiesAcer India Cognizant SunGard Alcatel Lucent

SAP India Juniper HCL Technologies Mahindra SatyamEMC Corp Mphasis Alcatel Lucent Accenture

NCS India Genpact DatacraftMahindra Satyam Patni Computers CapGemini

Cognizant Mahindra Satyam EMC CorpD-Link Accenture


Mphasis Avaya IndiaGenpact SAP India

Patni Computers NCS IndiaL&T Infotech

After a few modifications, the final list of players which I compiled was the following.

CiscoAlcatel-LucentWiproAvayaMicrosoftNEC IndiaIBM3i InfotechD-LinkAspect Communications

PolycomTieto IndiaBell IndiaAmicus ITSAccentureJuniperHCLDatacraftMicroland

Table 1: Major players in the Indian Managed Services universe

After that an excel sheet with various heads was prepared to give an exploratory idea about the Managed Services industry. The excel consisted of various heads like Name of the company, primary and secondary focus of services (data/voice), services provided, headquarters – global &India operations, key segments that they cater to. A screenshot of that excel is shown below

Figure 1: Screenshot of competitor analysis excel

Apart from that, in the profiling job, I was asked to prepare a slide in the managed services indicating the break-up of the industry with respect to the services. Based on my secondary research, I concluded that the managed services industry was broken into three major parts:


1. Managed IT Services2. Managed Print Services3. Managed Security Services

Figure 2: Managed Services Industry-breakup by services

The services that we were focusing on were the ones on the right hand side of the flow diagram.

Apart from that I prepared a list of services that were used in the various segments in India. The source of the data was mostly company websites.

Auxiliary information about the above companies like their India headquarters and other offices, the services that they provide, the industry sectors that they cater to, etc was compiled in an excel and submitted.


Managed Service Providers

Managed Voice & Data Service

ProvidersIP Virtual Private Network (VPN)

Setup & Maintenance – (Data & Voice)IP Telephony –

(Voice)Metro-Ethernet –

(Data & Voice)Data Centre Management–

(Data)Application Maintenance & Support– (Data)

Site-to-Site VPN (Voice & Data)Access VPN (Data)Multiservice VPN (AVI & Data)

VOIP (Voice over Internet Protocol)Virtual Leased Line

Customer Feedback

Management Service – (Data &

Voice)Infrastructure

Management – HardwareInternet Service

Provider – Data & VoiceVideo

Conferencing – Data & Voice

Email managementStreaming MediaFile Sharing

UpdatesBug Fixes

Help Desk Services

UX Management

Online Meetings

Managed Security Service Providers

(MSSP)

Managed Print Service Providers

(MPSP)Remote perimeter

ManagementVulnerability

Management & TestingExternal

Environment Compliance monitoring24/7/365

monitoringFirewall

ManagementIntrusion Detection

Content filtering

Managing Device FleetsOriginal Equipment

Manufacturers’

(OEM) services Systems

IntegratorCopier and

Print Equipment

resellersSupplies based

providers

Installation & upgrade of all security systems offsiteOutside Looking inInside looking aroundPenetration Testing

Change Management

Firewall UpgradesLog MonitoringNetwork Intrusion Detection Systems (NIDS)Host Intrusion Detection System (HIDS)Anti-virus Program Deployment, Maintenance Spam Filters

Market estimatesFor the purpose of profiling the sector, I needed to collect information on the industry size and growth over the years.

The data is summarized in the following graph in the next page:

Figure 3: Indian Managed Services Industry size and growth trend

The salient features of the Indian Managed Services market have known to be these.

Managed services in India is estimated at USD 1.6 billion in 2009 and is estimated to top USD 3.8 billion in 2013.

Banking, Financial Services and Insurance (BFSI) organizations remain the largest contributors to the managed services market with a share of 28.2%, followed by the manufacturing and government verticals.

The total Indian Managed Services market in 2007 was estimated to be USD 1.2 billion with Managed Network Services accounting for the biggest share of the pie followed by Managed Desktop Services.

Managed Services market represented 20% of the total India domestic IT Services market in 2007 (USD 5 billion revenues)

In the recent past, businesses are leveraging IT managed services providers for everyday tasks (PC and server maintenance, network maintenance, and managed application services) rather than complete IT team outsourcing.

As per the recent Springboard report, Wipro has the highest market share in managed services in India.

Mid-market enterprises are opting for Managed Services model for its value to customers that MSPs add.

According to a study by Forrester Research, the addressable Managed Services market in India will be USD 8.27 bn.

Global Managed Services Scenario

Global market for managed services was estimated USD 41 bn in 2009 and it is estimated to deliver revenues of approximately USD 66 bn by 2012 – According to a study carried out by Ovum Consulting Group.

IP VPN services are the largest global managed services market, with revenues totaling USD 17 bn in 2008.


USD bn

Analysts say VPN services to remain the most widely deployed managed service in 2012, also VoIP will experience the fastest growth over the next four years with a 39% CAGR.

According to International Data Corporation, the UC market in EMEA was worth USD 8 bn in 2010 and will grow to USD 16.6 bn by 2014.

A poll conducted earlier last year by CompTIA showed that nearly one-third of 322 organizations surveyed planned to make new investments or increase spending on managed security services.

Managed services companies will become increasingly specialized as an influx of newcomers to the market forces existing players to solidify their niches.

The same study by Ovum Consulting says North America will overtake Europe as the largest overall market for managed services by 2010, and Asia-Pacific managed services market will see 27% CAGR, driven mostly by growth in India and China.

From the demand side, Indian companies are increasingly adopting the hybrid model (a combination of remote or offsite and onsite delivery models) compared to past trend of seeking a full suite of services through multiple service providers/vendors thereby increasing complexity instead of reducing it.

Indian Managed services will grow at CAGR of 25% to 27% in the next 3 to 4 years.

1.17

5.3

APAC Industry Size 2007 (bn USD)

IndiaRest

2.78

7.47

APAC Industry Size 2010 (bn USD)

IndiaRest

Figure 4: Growth of India's share in APAC MSP market

Unified Communications (UC) – an emerging field in Managed Services

Unified communications (UC) is the integration of real-time communication services such as instant messaging (chat), presence information, telephony (including IP telephony), video conferencing, data sharing (including web connected electronic whiteboards aka IWB's or Interactive White Boards), call control and speech recognition with non-real-time communication services such as unified messaging (integrated voicemail, e-mail, SMS and fax). UC is not a single product, but a set of products that provides a consistent unified user interface and user experience across multiple devices and media types.


Currently India leads the SAARC region’s UC market in terms of total spending and overall awareness – F&S 2010*

Datamonitor’s report on unified communications in India - financial services led the UC market with a share of 10.7%

The maximum revenue for the UC market was generated by IP and hybrid PBX technology with a 32.3% share

Messaging, tele-collaboration, mobile convergence, call control, and switch integration are gaining popularity as UC

Online and telephony presence is also a recent phenomenon representing the fulcrum of UC These would also include messaging, email, voice and unified messaging, conferencing,

collaboration, mobility and a unified client. All these elements were present earlier in isolation, and there is a scope for business process

integration rather than being used in isolation.

Key Customer Segments being looked at in India IT Education BFSI Healthcare Pharma Logistics Manufacturing BPO


IT Sector Profile

OverviewThe total revenue of the Indian IT industry is estimated to be USD 88.1 billion in FY 2011 and the industry growth rate has been 27% CAGR from 2008 to 2010.

It employs nearly 2.5 million directly, while indirect job creation is estimated at 8.3 million during FY 2011.

The major companies in the sector when it comes to different segments of company size, are:

Large: TCS, Wipro, Infosys, HP, Cognizant, HCL, Cisco, Tech Mahindra, Patni Computers, etc. Medium: Compuage Infocom, Datacraft India, Iris, Infotech Enterprise, Educomp Solutions etc. Small: Omnotech, Progressive, Infotec, Frontier, Euronet India, etc.

Industry Structure

Figure 5: IT industry break-up

The two heads under which the IT industry can be classified are: by type of service and the type of players. The details of each classification are given in the above diagram.


IT/ITES Industry

IT Service Hardware

Software (includes both

engineering and R&D)

IT Enables ServicesInformation

Management

services

Application

Services (Packaged)

Service-Oriented

Architecture

Testing, System

Integration, etc.

Research &

Development

Software

Engineering

Software

packages/products

Software Solutions

Desktops

Notebook

Other hardware

products

Business Process

Outsourcing

Knowledge Process

Outsourcing

Legal Process

Outsourcing

Others (GPO, EPO,

Design

Outsourcing, etc)

IT/ITES industry: Classification by

playersLarge Medium Small

Companies with gross revenue of over INR 200 crore

Companies with gross revenues of between INR 50 - 200 crore

Companies with gross revenue of less than INR 50 crore

Education Industry profile

OverviewIndia's total education market size is about 18 billion Euros in 2010. The higher education sector, is valued at close to 10.5 billion Euro. India is planning for more investment on education sector [Rs 520.6 billion (Euro 8.08 billion)] in this financial year. India's burgeoning education market is expected to reach a staggering 35 billion Euro by 2015, with the CAGR at 15%. The higher education market alone would grow to over 21 billion Euro in the next five years.

Industry structure

Figure 6: Education industry breakup

The education system is divided into two major parts when it comes regulations


Indian Education System

Formal Education System Informal Education System

Schools (K12) Higher Education Pre-School Coaching Classes

Vocational Training

Multimedia in

Schools and

Colleges

Books

Formal Education System Informal Education System

Under the purview of the Ministry of Human Resource Development.

No central governing body for K12; Ruled by state boards/ICSE/ CBSE/ International Boards.

Institutions in the formal education space must operate as not-for-profit institutes set up under a Trust/ Society.

Informal Education System is free from any regulations.

Not governed by any regulatory body.

BFSI Industry Profile

OverviewThe Indian BFSI ecosystem is structured, mature, and adequately regulated to sustain structural challenges of the growing economy.

Industry structure

Figure 7: BFSI industry break-up by services


Banking, Financial Services & Insurance- BFSI

Banking Financial Services Insurance

Stock Exchanges

Mutual Funds

Brokerage Houses

Investment Banking

PE & VC Funds

Commercial Banks

Cooperative Banks

Non BankingFinancial

Institutions

Life

Non- Life

HealthAccident

Motor VehicleMarine

FireIndustrial etc.

Reserve Bank of IndiaSecurities & Exchange Board of India

Insurance RegulatoryDevelopment Authority

Regulatory Bodies

The industry is highly competitive and resurgent. Given below are a few important facts about the sector under various heads.

Figure 8: Banking Sector overview

The size and growth of the Indian Banking Sector is given below. The recession of 2008 has resulted in the a marginal slowdown, but there are signs of recuperation.

Figure 9: Banking sector statistics

Now we look at the individual sectors of NBFCs, Financial services and Insurance

A non-banking company carrying business of financial institution will be an NBFC.

Activities included in the definition of an NBFC are:

Financing, whether by giving loans, advances or otherwise Acquisition of shares, stocks or securities Hire purchase Insurance – excluded by notification


Banking

Public SectorBanks -27

Foreign Banks -28

Co-op Sector Banks- 2800+

Private SectorBanks -22

50000+

10000+

300+

15000+

12000+

15000+

7000+

3000+

USD 515 bn

USD 140 bn

USD 39 bn

USD 4 bn

Branches

ATM NetworkFunds under

Management (FY08)

Banking Industry: Growth through key parameters (USD billion)

Management of chits, kuries, etc

There are a few subcategories in the NBFC sector

Figure 10: NBFCs breakup by type

Under the financial services sector, there are three major types of services as shown below. The specific details of the sectors are given below.


NBFCs

Asset Finance Companies (AFCs)

LoanCompany (LC)

Investment Company (IC)

Financing of physical assets

supporting productive/ economic activity

Acquisition of

securities

Providing finance by making

loans or advancesHDFC, LIC Housing, Reliance Capital, Sundaram

Finance, Mahindra Finance, Cholamandalam DBS, Bajaj Auto Finance

Principal

Business

Major compani

es

Figure 11: Financial Services in India and major stats

The insurance sector is a sub section of the BFSI sector and majorly divided into two major parts – Life Insurance and General Insurance


Financial Services

Stock Exchanges

Brokerage HousesMutual Funds

National,

Regional

Public,

Private

Proprietor,

Partnership,

Corporate & FIs

20+ 40+ 8500+

BSE, NSE, OTC Ahmedabad, Bangalore, Calcutta, MCX, etc

UTI, Canara Robeco, LIC Mutual, SBI, Reliance,

ICICIC PrulifeThey offer trading

platform for listed companies

• Also supports derivatives trading

Open and close ended,

balanced & growth fund, tax saving, sector specific

schemes

Agents for trading

(online/offline)• Online trading

& offlinetrading

Distributor, Private Banking

Channel, Direct corporate, Employees,independent Financial

Advisors

Online

ClassificationNo. of

companies

Major players

Products &

ServicesDistribut

ionchannel

Figure 12: Insurance sector statistics and data

The growth and size statistics for the Indian insurance sector are

Figure 13: Insurance sector growth and size


Insurance

Life Insurance General Insurance

23 (1 public sector and 22 private)

24 (6 public sector and 18 private)LIC, ICICI

Prudential, Bajaj Allianz, SBI Life

Oriental, New India Assurance, Bajaj Allianz, ICICI Lombard• >5,000

(Private)• >2,500 (LIC)

• >2000 (Private & Public)Unit Linked Plan, Endowment, Term, Pension, etc

Medical insurance, Motor, Asset, Travel, Corporate, etc

Agents, Brokers, Corporate Agency, Kiosk, Banc assurance, etc

Agents, Brokers, Corporate Agency, etc• Regulated by Insurance Act 1938 and Insurance Regulatory And Development Authority Act 1999• Sector opened for private players in 2000• FDI for a foreign player is limited to 26% in insurance sector

No. of Companie

sMajor

PlayersNo. of

BranchesType of

productsDistributi

on ChannelsGovernme

nt Regulatio

n

Insurance Industry: Growth in total insurance premium (USD billion)

Growth Drivers

Innovation

Appeal &need

Technology

Enablers ofSolutions

Reach

The Indiachallenge

Banks

CapitalProtection

Financial Services

Higher creditplay

Insurance

Long termlending

Figure 14: Banking Sector growth drivers

Future Outlook India is expected to be the 3rd largest financial services hub in the world by 2040 The BFSI sector will focus on deployment of IT solutions for rural connectivity to increase its

presence in rural and semi-urban areas. The BFSI IT Services market in India is expected to grow from $1.6 billion in 2009 to $2.7 billion

in 2013, growing at a CAGR of 14.2 percent, according to Springboard Research report

Healthcare Industry

OverviewHospital market in India is currently estimated at USD 35.8 billion. Hospital industry in India is extremely fragmented due to the large number of nursing homes and small- to mid-sized hospitals. Industry is dominated by the private sector with 78% market share.

Infrastructure 18,000+ hospitals 9,976 are government hospitals with 500,000+ beds 757,377 Registered doctors, 78,000+ Dental doctors, 720,000+ AYUSH doctors with 1,370,000+

General nurses 289 medical colleges


Figure 15: Healthcare sector breakup

Growth Drivers The healthcare delivery market in India is at a nascent stage with high demand and growth

potential, driven by a surge in the number of treatments and the rise in cost per treatment. Tax holiday for next five years for setting up new hospitals in Tier II and Tier III cities.

Pharma sector

OverviewIndian Pharmaceutical Industry is valued at approximately USD 21 bn in FY 10, third largest in world in terms of volume and ranks 13th in terms of value. India accounts for 9.7% of the Asia-Pacific pharmaceuticals market in value terms. It is one of the key employing segments with about 4.2 million employment opportunities from more than 20,000 registered units.


Hospitals

Large Medium Small

By sizeSuper specialty

Others

SingleMultiBy

Specialty

Teaching Non teaching

Government

PrivateChain

Stand alone

IndustryOthers

By ownership

By Education institution

ESI, Railway, Defense

Poly clinics

Healthcare centers

Govt. Hospitals Pvt. Hospitals Specialty hospitalsHigh-end

diagnostic hospitals

Total number of hospitals – 7,000+100+ bedsCater to Lower middle class & above

Total number of hospitals – 10,000+Cater to middle class and above

Total number of hospitals – 40Cater to upper middle class and corporate

Total number of hospitals – 1200Cater to upper middle class and corporate

Industry structure

Figure 16: Pharma industry structure

Revenue growth has been solid over the years as shown in this graph

Figure 17: Bulk and formulation goods breakup


Pharma

Bulk drugFormulationsNo. of

Companies

1500+

4000+

Revenue Split

(FY10) 29% 71%Growth

Rate (FY05-10)

17% 10%

Bulk & Formulation - Revenue over the years

USD bn

Geographical distribution of the production centers – Pharma

Figure 18: Pharma production centers in India


Bulk drugs Formulations

Parenterals

RatlamIndore

Madhya Pradesh

Kerala

Mohali

Punjab

KandlaAhmedabadVadodaraKandiValsadVapiAnkleshwar

Gujarat

MumbaiThaneNashikAurangabad

Maharashtra

VernaMargao

Goa

BangaloreMysore

Karnataka

Poonor

Chennai

Tamil Nadu

HyderabadVishakhapatnamKazipally

Andhra Pradesh

BaddiBarodwala

Himachal Pradesh

West and South are major producing centers

Logistics industry

Industry Structure

Figure 19: Logistics industry breakup by service

The break-up of subsectors were given below

The third party logistics sector was subdivided as

The warehouses are divided as


Logistics Industry

(USD 62,975

mn)Freight

Forwarders

(USD 3,765 mn)

Transportation(USD

55,971 mn)

Warehousing

Industry(USD 908

mn)

Express &CourierIndustry

(USD 2,458 mn)

3PL Service

Providers(USD 972

mn)

Government Private

Road Freight(USD

39,182mn)

Air Freight(USD

1,307mn)

Sea Freight(USD

4,067mn)

Rail Freight(USD

8,464mn) ICD/CPS

(USD 1,442 mn)

Integrated logistics service

providers

National freight forwarding

agents

Regional freight forwarding

agents

Freight forwarders

Integrated Services

Express Logistics

Transporters/ value added

services

3PL

The transportation sector is divided into

Manufacturing Sector

Overview India’s GDP of USD1.43 trillion makes it the 11th largest economy in the world and 4th largest in

terms of purchasing power parity One of the fastest growing economies in the world – growing at over 8 % p.a. for last 3 years Industrial sector makes 18% to the total GDP India is ranked 2nd in terms of manufacturing competence

Manufacturing Sector contributes to

43% of FDI Investment 17% of India GDP 53% of Indian Exports

India is the world’s 2nd largest small car market. India is one of the only three countries that make its own Supercomputers, one of the six countries that launch its own satellites. India is the world’s largest producer of milk, 2nd largest producer of food including fruits & Vegetables. 100 of the Fortune 500 have R & D facilities in India. India is the second largest group of software developers after the U.S.


Company ownedand private

standalone

Warehouses

Warehouses owned/

managed by logistic

companies

Governmentwarehouses

Warehouses

Road Freight

SeaFreight

AirFreight

Transportation

Rail Freight

Figure 20: Overview of Manufacturing sector

BPO Sector

Overview Indian BPO Industry currently generates USD 14.1 billion revenue. Indian BPO industry employs approx 700,000 professionals across 25 countries. BPO revenues contributes about 1% to the India’s GDP and 4% to India’s exports. India is the world's largest offshore outsourcing center. Accounts for 40% of the overall BPO offshore market.

The industry has a lot of potential. The Indian BPO has the potential to generate USD 50 billion revenue by 2012. It provides employment opportunities for approx 2 million professionals in India alone. The BPOs can contribute up to 2.5% to the country’s global GDP by 2012.


India is stable democracy with Strong macro-economic fundamentals

The BPO migration to India is getting replicated in the manufacturing sector

FDI inflow into India grown from USD 3.4 bn in 2001 to USD 24 bn in 2008

Indian Manufacturingcompetitively

positioned for a high growth rate era

Indian manufacturing sector is

expected to grow at 12 % to

14% over the next decade

Indian economy

expected toGrow at 8%

to10% over

thenext decade

The quality of Indian work force

is one of India’s key competitive advantage

India is ranked

49 in the latest

GCI 1 indexahead of

two BRIC 2

economies

1 Global Competitiveness Index

2 Brazil, Russia, India, China

Source: National Manufacturing Competitiveness Council

Activities outsourced

Figure 21: Activities outsourced in BPO


Activities Outsourced

Activities by Function

Sales & MarketingCRM

Loyalty ProgramsSurveys

Account ManagementF&A

General AccountingAccounts Payable & ReceivableRegulatory ComplianceTax & Audit

HRRecruitment

PayrollTax ESOPs etc.

Activities by service

Voice-based ServicesInbound Calls

Outbound CallsNon-voice basedData ProcessingData Analysis

Data ManagementData Entry

Scanning and DigitizationData PreparationData Validation

AnalyticsDomain Specific Services

Geographical spread of the major Managed Service Providers in India

Figure 22: Headquarters of major MSPs


Bangalore

Gurgaon

Mumbai

Kolkata

Chennai

Secundarabad

Bhopal

HyderabadPune

New Delhi

Head Office

Branches

Ahmedabad Indore

Jaipur

Cochin Coimbatore

Chandigarh

Growth Drivers of the Managed Services industry

Intense competition as a result of globalizationo UC has been growing steadily due to the fact that workforce has become immensely

globalized and organizations are fighting inter-continental operational efficiency battles. This creates a need for employee collaboration, productivity and customer service. The need for staying connected across locations, time zones and integrating various mediums of communications like voice, data, Telepresence, IM, email, video, etc. will help UC to have a rapid growth.

The lack of in-house skilled IT personnel Management of application becoming increasingly complex as well as mission critical for success Increasing network and infrastructure complexity

o With the expansion of operations and the subsequent expansion of the network of employees, communication and collaboration becomes a necessity

Shrinking IT budgetso New cost cutting services which facilitate collaboration like UC are the need of the hour.

Need of optimum usage of existing network and infrastructure New operators are trying to establish their networks in the near future Operators are trying to maintain pan-India networks with optimal quality, bandwidth, capacity,

and availability Operators are opting for transformations of their networks, making their networks future-ready The need to innovate and find competitive differentiators Availability of specialists with technology and domain expertise in managed services space Managed services provides great flexibility to manage the cyclicality of businesses New opportunities in business created by technology advancement

o Over the long term, opportunities exist to design entirely news business and approaches using mobility, such as virtual manufacturing, virtual meetings, virtual logistics, or new modes of operations such as office-less business.


Future outlook for the Managed Services industry

By 2014, the UC market in India will approximately be USD 840 mn In India, connecting from a PSTN network to that of an IP network is not been implemented yet.

This could be one of the initiatives towards improving the scope of UC in India. Spectrum allocation of 3.5G or 4G will also see many more deployments of UC across

organizations

Inferences from the secondary researchManaged Services Industry seems to be a burgeoning sector in the Indian economy. With robust growth figures and a positive future outlook, it will probably alter the future of functional strategy of organizations.

LimitationsDue to confidentiality of data accumulated and the sensitivity of the information, I am unable to present neither the names of the companies involved in the study, nor the results which can be considered vital to the plans of the client. Moreover, the data and names which have been presented or mentioned in the report are changed due to confidentiality requirements.


ConclusionDuring the internship, the focus was on understanding how to conduct a market research in a professional way. The area that I worked on during my stint at Feedback Business Consulting Services Pvt. Ltd. was Managed Services along with carrying out secondary research in numerous other areas.

The secondary research showed that Managed Services is still a nascent industry in India but it sure has great growth prospects. The primary research indicated that the services are quite pervasive and companies are just beginning to realize the profits and cost savings that they bring along with them. Even the industry sectors which have been considered for the secondary research were burgeoning sectors and were indeed prospective clients for company X.

The subsequent primary research information has not been published in this report due to confidentiality reasons.


References

Market Research: An Applied Orientation, 6th Edition by Naresh Malhotra State of the art Marketing Research 2nd edition by Blankenship, Breen and Dutka Marketing Research – A South Asian Perspective by Churchill, Iacobucci & Israel Voice & Data Magazine Communications Today International Data Corporation (IDC) – Research Report on Managed Print Services Forrester Research Reports Feedback BOK Netscribes Market research reports CRISIL Assocham India Research Papers IBEF website RBI website National Skill Development Corporation(NSDC) knowledge bank IRDA website Cygnus research report Ernst & Young Research Reports iMaCS Analysis NASSCOM website www.hcl.in www.cisco.com http://en.wikipedia.org/wiki/Managed_services http://en.wikipedia.org/wiki/Unified_communications


http://en.wikipedia.org/wiki/Unified_communications

http://en.wikipedia.org/wiki/Managed_services

http://www.cisco.com/

http://www.hcl.in/

Documents

10048 Srikiran C. Rai SIP Report