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Indian IT-BPO Industry: Driving India’s
Socio Economic Transformation
Rama Vedashree
Indian IT-BPO Industry – Young Industry
inventing, reinventing, transforming in a short span
Business
needs
Scalability
Lower operating
costs
Discrete Processes End-to-end
Development
Access to new
capabilities
Accelerate time
to market
Legacy migration
Y2 K deadlines
Mid 2000 to
present
Domain
expertise
End to end
services
Access to
R&D
capabilities
Value creation
IT-BPO
Product
and
Service
Offerings
Data Entry
Customer support
Software
development and
support
Application
development and
maintenance
Transaction
Processing of
non-core
activities
Y2K contracts
Application
development
and
maintenance
IT support
Integration
projects
New service
lines such as
KPO, LPO
Large scale
application
development and
maintenance
IT strategy and
consulting
High-end
services such as
analytics
Engineering
design services
Product
innovation
End to end
product
development
Business
transformation
and re-
engineering
Going
Forward… Early 2000s Late 90s Late 80’s-Mid 90s
S
cale
an
d c
om
ple
xit
y
Creation of a “Unique” Industry – Putting
India on the World Map!
Emerging as global multinationals
70 countries, >200 cities, ~560 delivery centers; 10 companies listed on overseas stock
exchanges; ~400 Fortune 500 customers
Participating in local ecosystem development
–~3-5% Foreign nationals employed
GIC- Largest network in the world
Global hub for ER&D
>750+ GICS; employing over 20% of the manpower
Generation of high quality employment and infrastructure
• Governance and quality- 35% of all CMMI 5 registered companies; highest proportion in S&P
ESG index
• Investments in employees and facilities- 200 mn sq feet of office space
Attracting investments
Accounts for ~7% of India’s total FDI in the last 12 years
~$ 12bn invested by PE/VC in the last 12 years
Global presence through cross border acquisitions
~200 cross-border acquisitions over FY08-10
Indian IT-BPO
industry: Leader in
Global Sourcing services
Lasting, Sustainable and Phenomenal
contribution over the last decade
Contributing to India’s economy
Empowering the diverse human assets
Putting India on the Global map
Socially responsible and inclusive
Driving Balanced Regional Development
Creating Innovation Platform
Multi-fold
impact on the
Indian
Economy
Catalysing India’s transformation to a
services-based economy
0%
10%
20%
30%
40%
50%
FY02 FY05 FY09 FY12Trade, Hotels,Transport & CommIT-BPOCommunity,Social & Personal ServicesFinancing, Insurance, Real Estate & Business Services
• Contributes to ~12% of
India’s service sector
revenues
• Unique “service led”
export oriented model
Indian IT-BPO Industry’s contribution to GDP
• By 2020, expected
to account for
–~10% of India's GDP
–14% of total
services sector
revenues
FY1998 FY2012
1.2%
7.5%
Sector-wise contribution to GDP
Contributes 13% to India’s total exports
Modified India’s export mix from traditional
commodities to services
Grown twice as fast as the total Indian
exports over the past decade*
67.1
4.1
68.7
FY00 FY12
Exp
orts (
US
D b
illi
on
)
Total Indian Exports Indian IT-BPO Exports
~8x
FY00 FY12
others
Manufacturing
Petroleum Products
Primary
IT-BPO
~17x
$524 bn
167.2
186.2
45.6
55.6 $67 bn
Expected to account for 18-20% of total India’s exports in 2020
*Includes invisibles, Primary – includes agriculture and mining
Others includes invisibles other than IT-BPO
524
68.7
10X increase in direct employment;4X increase
in the share of organized private sector
284
2,770
FY00 FY12
Dir
ect e
mp
loy
ee
s (
'00
0)
5%6%
8%10%
13%15%
18%20%
21% 21%
2000-01 2002-03 2004-05 2006-07 2008-09
Contribution of IT-BPO industry to organised private sector employment
Direct employment of ~2.8 million; Indirect employment ~9 million
>45% of total incremental urban employment in the last decade
~10x
By 2020 - Direct employment of 10 million; Indirect employment of 20 million
Employment opportunities for diverse
sections of the society
Livelihood for
Economically
backward
Empowering the
youth
Bridging the
gender divide
Employment
beyond
Urban areas
Employing the
Differently abled
~5% of the IT-BPO workforce from
economically backward sections
~74% of employees are less than 30 years
old;
~35% are less than 25 years of age
~31-35% women employees; account for 45% of
new intake
~26% of the female employees are chief wage
earners
~20% of the female employees are at
managerial level or above
~58% of the IT-BPO workforce is from tier
2/3 cities
~ 56% employees are chief bread earners
~60% of companies provide employment to
differently abled people
•Changing aspirations of
India’s youth
•Created high paying jobs
•Setting new standards of
work environment
•Emerging as a “Skill Factory”
By 2020
5 mn women
employees
4 mn direct
employees from
tier 2/3 locations
*NASSCOM Evalueserve survey findings, 7500 participants pan India
Significant downstream impact - employees
spent ~INR 76,000 crores
INR 3,700 crores
INR 7,400 crores
INR 7000 crores
INR 6,000 crores
INR 4,600 crores
~8% of the
revenues of
the
Entertainment
industry
~2.5% of the
Healthcare
sector
revenues
~7% of the
Hotel and
Restaurant
industry
revenues
Direct Contribution of
IT-BPO Employee
Spending on other Sectors
~3.5% of the
consumption
in the Textile
sector
Accounts for
around 3% of
the revenues in
the telecom
industry
~4% of the
consumption of
the Consumer
Durables sector
Actual value
spent in FY09 INR 4,600 crores
Fuelling India’s Growth - ~INR 15000 crores
direct taxes paid in FY09
Direct Tax Contribution by IT-BPO Companies
Tax Benefits to Industry
INR
15,000
crores
By 2020: Direct tax contribution of companies ~ Rs38000 crores; Direct tax
contribution of employees ~ Rs13500 crores
Led transformation in Tier 1 locations
Contribution
to State
GDP
Employment
Generated
Enhancing
the
Education
system
• Tier 1 locations generating 92.4% of industry revenues
– Constitute 14% of total GDP from Tier 1 states; As a result,
these states together contribute 34% of national GDP
• Direct employment in Tier 1 locations - 1.9 million
• Indirect employment in Tier 1 locations - 7.3 million
• ~ 2X growth during FY05-09 in number of engineering
colleges and technical graduates in tier 1 locations
–58% of the total engineering colleges in FY09
–62% of the total intake of technical graduates in FY09
• Creation of office space- 180 million sq feet
• 77% of the operational STPI units in tier 1 cities
• 70% of operational SEZ’s in tier 1 cities
Creation of
Infrastructure
By 2020: 325mn sq ft of additional office space creation; 4.1 mn incremental direct
jobs
Reaching out to Tier 2/3 locations;
changing the landscape
• Accounts for 7% of industry revenues; Constitute 4.5% of
total GDP from Tier 2/3 states
• 49 delivery centers opened in tier 2/3 cities as opposed to 25
in tier 1 over the last one year
• Accounts for 10% of total direct employment
–Direct employment in tier 2/3 locations- 1.7 lakh
–Direct dependents supported- 4X
• 1.7X growth during FY05-09 in number of engineering
colleges and technical graduates
–Number of engineering colleges- 985
• Creation of office space- 20 million sq feet
• 23% of the operational STPI units in tier 2 and tier 3 cities
• Almost 40% of notified IT SEZ’s and 30% of operational IT
• SEZ’s in tier 2/3 cities
Contribution
to State
GDP
Employment
Generated
Enhancing
the
Education
system
Creation of
Infrastructure
By 2020: 300mn sq ft of additional office space creation; 3.8 mn incremental direct
jobs
Started to impact the rural areas
• > 6,000 directly
employed at about
70-90 rural BPO
centers
• Direct: Indirect
employment ratio
1:1.4
• Development of
infrastructure,
internet connectivity
Creating Employment
and infrastructure
• Infusing ~INR 25
million per month into
rural communities
• Rural BPO employee
earns ~ INR 5000
every month
Creating Wealth and
Improving Living
Standards
• Training in language,
technical and soft
skills
• Better standard of
living
• Job security
Career and Personal
Development
• Majority is women
workforce - 66% of
the workforce;
• Existence of all-
women BPOs
Empowering Women
Rationale: Domestic market; local language; untapped talent; lower attrition
By 2020, 2 lakhs jobs to
be created in rural areas
Focusing on R&D and Boosting Innovation
Growing R&D spend Strengthening role in
IP creation
Developing software
products
Attracting global
technology players
Average R&D
spend 0.5–1% of
revenues; 2.5-5% of
profits
Patents in the
Computer/Electronic
s segment increased
30X over 2006–11
Software products
revenues more than
tripled over FY06–11
• Number of offshore
development centers
(ODCs) in 2011 is 3x-
4x of ODCs in 2006
Breakdown of R&D costs
Spearheaded India’s thrust on innovation –
30X increase in patents
Innovation driving
additional GDP
contribution of
~2% by 2020
Innovation identificatio
n & developme
nt, 61%
Process improveme
nt & reengineeri
ng, 38%
Other costs, 1%
Key initiatives driving innovation include setting up R&D centers, conducting trainings, events
and workshops around innovation, and collaborating with academic institutions
Social
Development
• Improved access to and delivery of
services in healthcare, education and
banking.
• Bridging the technological divide by
developing products and services for
rural and disadvantaged sections
• E-governance solutions
• ~63% of the companies proactively undertake
CSR activities
o ~50% companies focusing their CSR
initiatives toward education
o ~30% companies focusing on environment
o ~28% companies focusing at increasing
health awareness
Socially responsible corporations
Driven by companies, employees and personal philanthropy
By 2020, this industry can become a strategic growth
engine for India
IT/BPO industry size
US$ billion
101
360-375
2020
potential1
2012
4x
*Innovation driven growth scenario
Areas Contribution by 2020
Economy ~10% of annual GDP
18-20% of annual exports
Employment 30 million employment opportunities (direct
and indirect)
Job creation in rural and non-metro areas -
20-fold increase in the number of employees
operating from tier 2/3 locations
Increased diversity (women are 50% of the
total workforce)
Significant global career opportunities due to
location-independent models
Balanced
Regional Growth
8-10 satellite townships around Tier-I cities
10-15 Tier-II cities with upgraded basic and
business infrastructure
Reduced fiscal
burden
ICT can provide solutions at a fraction of the
cost of traditional solutions
Globally reputed
innovative
solutions
Innovation driving additional GDP
contribution of ~2%
Thank You