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8/8/2019 IT AND ITES
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IT & ITES
IT AND ITESIT AND ITES
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IT & ITES
History Current Scenario
AgendaAgenda
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IT & ITES
IT and ITES industry has its roots in the mid-seventies
The market size was small with
export = $24 million in 1984
Liberalisation of the sector in 1990
IT revolution had its spin-offs on other sectors
Source: The Indian Renaissance
HistoryHistory
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IT BoomThe Y2K Scare Dot-com boom
Success of the Indian expatriates
HistoryHistory
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IT & ITES
IT IndustryIT Industry
.
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BPO accounts for little less than half of the
exports Emergence of domestic BPO is the key highlight for FY 2009 recording a growth of above 40 per cent in INR
terms. The growth is led by the BFSI, Telecom and Airline industries and a greater vendor focus withspecific service offering
Revenue generated from BPO is $73.1 billion
in 2008-2009
BPOBPO
Source : Nasscom
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Current ScenarioCurrent Scenario
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Contributes to 57% of the total software and services
exports
Domestic IT services spends grew at over 43 % in FY2009
IT ServicesIT Services
Source : Nasscom
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68 companies, 37 are private limitedcompanies
Export driven industry
Share in GDP increased from 1.2% in 1998 to6% in 2010
Share in global market increased from 3% in 2000-2001 to 6% in 2008-2009
Exports crossing $40.8 billion
Current ScenarioCurrent Scenario
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Out of the total revenue 61% is from the USbased clients and 78.8% from overallexports
Volume growth addition of 2.2% due to thestrengthening of the USD versus GBP, Euro
Seven Indian cities account for 95 per centof export revenues, focus on developing 43new locations to emerge as IT-BPO hubs
Current ScenarioCurrent Scenario
Source : Nasscom
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Current ScenarioCurrent Scenario
As we can see that the largest source of income for the industry is the Bankingand financial services sector which was severely affected during recession
Source: Department of Information Technology
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Employment growth at CAGR of 26%
Direct employment reached 2.2 million with1.7 million in exports segment
Current ScenarioCurrent Scenario
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Cost leadership has been the competitive edgeof the Indian software sector
Innovation
Breadth of service offering and innovation
Specialised manpower
A young demographic profile and over 3.5million graduates and postgraduates that areadded annually to the talent base
StrengthsStrengths
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Foreign Exchange Rate
Erosion of advantage of Labor Arbitrage
Incompetent infrastructure
Low focus on Research and Development
WeaknessWeakness
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Moving up value chain
Emerging technologies
Cloud Computing
Internet based computing
Customers rent third-party providers
services
OpportunitiesOpportunities
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Moving Up Value ChainMoving Up Value Chain
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IT & ITES
Rising Employee Costs
Foreign countries entering India
Other low cost countries developing skills
Deal sizes are getting smaller
ThreatsThreats
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55% market share of the global off-shore market
35% market share of the global ITES/BPO market
28% of IT and BPO talent among 28 low-cost countries
Regulatory environment
Knowledge of English
Time zone attractiveness
USA remains the dominant market, higher growth inEuropean/Asian market
Global ViewGlobal View
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Top-tier IT exporters are likely to continue theirgrowth momentum despite weak Europeaneconomies
Latest visa restrictions imposed by the UK and asharp depreciation in the pound and the euroagainst the dollar are less likely to have anymajor impact on the performance
The announcement of a major cut in the ITbudget by petroleum giant BP may have amarginal impact
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Effect of RecessionEffect of Recession
Steep Dip inprofits due toglobalslowdown
Recoveryintheeconomy
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Offers services, turnkey projects andproducts for the domestic and exportmarket
Second largest IT Company in India Market capitalization of 160,026.58 cr
Revenue for the year 2009-10 was Rs.
22742 cr compared to the previous yearsRs. 21693 cr an increase of 4.83%
InfosysInfosys
Source : Infosys web site
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IT & ITES
Offers application developmnent, testing,enterprise solutions, business & ITconsultancy
Largest IT Company in India
Market Capitalisation
Revenue for the year 2009-10 was Rs.7000.64 cr
Tata Consultancy ServicesTata Consultancy Services
Source : TCS web site
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Offers ADM, enterprise solutions, embeddedtechnology, product engineering andservices
4th largest company in the sector
Profit 542.73 cr
Patni ComputersPatni Computers
Source : Patni websit e
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IT & ITES
End of STP tax deduction benefits
US President Barack Obama Declares a Bill on TaxIncrease on Outsourcing
High attrition rate
SEZ
The dollar fluctuations
Factors affecting ITFactors affecting ITIndustryIndustry
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End of the STP tax deduction benefits10 years complete tax exemption on export
profits.
The finance act 2008 and 2009 extended the
tax holiday by 2 yearsBenefits on indirect tax Central excise dutyCustoms duty
Central sales tax
Tax holiday will be available only until thefiscal year 2011
Factors affecting ITFactors affecting ITIndustryIndustry
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Solutions for STP issue Shifting to SEZSEZ enjoy the tax waiver benefits for 15 years as
against only 10 years for STP
Further tax waiver for VATLST
Increasing sops to STPsNasscom has requested the government to
extend the sops for STPs
Factors affecting ITFactors affecting ITIndustryIndustry
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IT & ITES
US government has proposed to tax expenditureby US companies on availing services fromoutside the country from 2011
Benefits enjoyed due to outsourcing A service whose expenditure in US would cost
70-80$ can be outsourced and done in 10-15$
Also there was no tax on outsourcing money
Reason for the Bill
To generate employment in US
Factors affecting ITFactors affecting ITIndustryIndustry
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Affects of the Bill On IndiaIndia will loose a big share of outsourcing in com.
Many people will become job less
Worst effect that even recession had On USCompany costs will increase the services will
become costlier
Some companies will stop production or some
services
Factors affecting ITFactors affecting ITIndustryIndustry
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High attrition rate At least 60,000 of the 171,000 workforce
change jobs every year
About 80% of them look for better leaders
Attrition rates US 42%
Australia 29%
Europe 24%
India 18% Global Average 24%
Factors affecting ITFactors affecting ITIndustryIndustry
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IT & ITES
Use IT services to enable programs Provide Databases
Help maintain spreadsheets etc.
Enable managers to View CSR information
Improve decision making
Corporate SocialCorporate SocialResponsibiltiyResponsibiltiy
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Activities such as teaching rural women andtheir children computers, tree plantationdrives, trusts etc.
Examples:-o Infosys Foundation
o Wipro cares
o Accenture development partnerships
o
Tech Mahindra FoundationoTCS
Corporate SocialCorporate SocialResponsibiltiyResponsibiltiy
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IT & ITES
Services offered Business Process Outsourcing(BPO) Knowledge Process Outsourcing(KPO) Legal Process Outsourcing(LPO) Generation of Tier 1 and Tier 2 cities Innovation Infrasttucture
Future OutlookFuture Outlook
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BPO generated $ 14.8 billion revenues which is 20
% of the total of revenue of Indian IT Industry BPO Industry in India expected to grow at 20%
Expected to reach $ 181 billion worldwide by 2012
CAGR of 12 %
BPOBPO
Source: nasscom.com
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Greater skill, knowledge, education andexpertise to handle the process isrequired
KPO encompasses R&D, productdevelopment and legal e-discovery etc.
GenPact, Evalueserve, Ugam Solutions arethe top three companies in KPO
KPOKPO
IT & ITES
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IT industry needs the following infrastructureTelecom Power Roads and Transportation IT Parks
IT InfrastructureIT Infrastructure
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IT Industry has brought about a plethora ofprocess, price, management and innovation
ICICI Bank has changed the financial servicesindustry with Internet banking and electronic
payment systems
Mindtree Consulting- for KnowledgeManagement ecosystem a holistic taking intoview the entire lifecycle view of knowledge
including knowledge creation and innovation,collaboration and knowledge sharing, andreuse.
InnovationInnovation
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Union Budget 2010 failed meet expectations ofIT sector of India
FM failed to meet the extension of STPI(Software technology Park of India) in IT sector
Tax Rebate has not been mentioned in thebudget declaration and is expected to end onMarch 2011, the BPO are estimated to incurlosses in future years.
Allocation of Rs 1900 crore for UID (UniqueIdentity) project
Union budget 2010 for ITUnion budget 2010 for IT
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Cognizant registered a net profit of 22% inQ1 to $172.2 million and its revenueincreased by $145 million
BSE IT index rose higher by 178 points to
settle at 5,640.99 ; the best gainer in the13 sectoral indices.TCS jumped 4.54%to touch a year-high of Rs
871.
Wipro climbed 3.96% Infosys Technologies zoomed 2.99%whileHCL Technologies advanced 2.94%
Latest news and currentLatest news and currenthappeningshappenings
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Infosys to hire 36,000 employees in FY2010-11
TCS allotted the contract for providing totalsolution for the online voting during the
October 2010 municipal polls in Gujarat Wipro to develop crime and criminal
tracking network system (CCTNS) forHome Ministry
Latest news and currentLatest news and currenthappeningshappenings
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THANK YOUTHANK YOU