Gurgaon: The Promise of a Global Business Destination

19th May 2010

Discussion Agenda

• Indian IT-BPO sector: Brief profile

•Gurgaon:

• Profile of a Business Center

•As an IT-BPO Destination

•Gurgaon: Location Assessment

FY09 FY10E

47.5 50.1

21.9 23.0

Domestic Exports

69.4 73.1

FY09 FY10E

958 993

738 768

500 525

2,200 2,290

Direct Employment (‘000)

• India continues to take centre stage with 51% of total sourcing market

• IT-BPO export grew an average 6 per cent driven by increased revenues from outsourcing segment; in BPO, vertical services accounted for 18 per cent revenues, indicating shift to vertical specific platforms

• Revenues from domestic market grew nearly 7 per cent driven by 60+ large transformational deals in Telecom, Retail, BFSI, E-governance

• BPO continues to be the fastest growing segment at 25%; IT services grew by 6%

• Industry directly employs nearly 2.3 mn professionals

The industry has had a significant impact on the Indian economy:

• Accounted for 30 per cent of incremental exports from India during FY05-09

• Provides employment to ~8 million people in ancillary industries

• Balanced regional growth with expansion into tier 2/3 cities

• 60% IT-BPO companies employ differently-abled people

Despite the economic slowdown, India’s IT-BPO sector displayed resilience to grow by 5.5 per cent

IT-BPO revenues (USD billion)

IT exps

BPO exps

Dom. mkt

Source: NASSCOM

Gurgaon – an outsourcing & offshoring hubEconomic & Business environment

• Improvement in infrastructure and the connectivity to Delhi makes Gurgaon as one of the most prominent outsourcing and offshoring hubs in South Asia.

• Outsourcing boom has led to a rapid growth in employment prospects and local wages, leading to a mushrooming of shopping malls, swank restaurants and entertainment facilities in NCR

• The distribution of outsourcing companies is skewed towards BPO services although there are many IT firms in the location

• Telecommunication, Real estate, automobiles, retail and banking are other major industries.

• Gurgaon contributes over 50% of Haryana's income tax revenues along with Faridabad

• Several MNCs - Coca-Cola, PepsiCo, Reckitt Benckiser, Motorola, GE Capital Services, Ericsson, Hughes Software Systems, Nestle India, Gillette India, along with a few Indian companies such as Apollo Tyres - have shifted to Gurgaon over the last decade

Perspective on location Demographics

• Gurgaon has a small population with a large proportion of the working age population employed in the IT-BPO industry

• There has been significant influx from other location in India of working population employed in the IT-BPO industry

• Literacy (~75%) is higher than the national average

Snapshot

Population (2009) ~600,0001

% Working population (15-59) 51.37%

Average Household Income (2004-05) 261,274

• 3rd highest per capita income in India after Chandigarh and Mumbai.

• Best city in India to “work and live” according to a 2009 Business Today survey 1IBEF, Source: ATK–NASSCOM Study

Share of Gurgaon in the Indian IT-BPO exports FY09*

100%= USD 47.1 billion

~4.8

~3.4

~1.3-1.4

Gurgaon – Total employment in FY09 in the IT-BPO exports industry (in lakhs)

Direct Indirect Employment

Total Employment

* NASSCOM estimates

5.8%

94.2%

Gurgaon Rest of India

One of the leading IT- BPO destinations in India accounting for over 5 per cent of the total exports

Gurgaon: An attractive BPO destination….

Language Proficiency: • Proficiency in English language is good indicating suitability for

international voice and non-voice related BPO services. Hindi being the predominant local language, high potential for domestic BPO services.

Domain Expertise• Strong in voice based contact centres, telemarketing, collections,

airline and financial services. Ample supply of professionals and domain experts from other industries prevalent in the NCR like Banking, Telecom, Real estate, Manufacturing, Retail, Government

Talent• Large pool of qualified candidates is available due to inbound

migration and high outurn of students. Around 13,000 engineers graduate per annum from the NCR region and around 78,000 graduate per annuam from NCR adding to the employable pool.

Infrastructure• Over 32 IT SEZs covering more than 1,300 hectares are in the

pipeline• Proximity to Delhi airport with excellent air connectivity to

metros and other Indian location• Work on Delhi Metro Rail stretch to Gurgaon has started and

will be completed by 2010

Source: NASSCOM, News articles

Connectivity•Telecom connectivity excellent with multiple vendors providing services

INDICATIVE

INDIAN

MNC

Total Number of Companies: ~ 400• An attractive destination for companies

across a range of areas i.e. traditional areas (eg core sectors such as automotive) to high-end IT development including niche areas.

• Most of the top 20 IT-BPO companies have centers in Gurgaon with MNCs forming a major portion

• Services provided range from voice-based services to high-end knowledge services

• Adequate English skills, together with a large technically proficient student outturn, results in good opportunity for international voice and non-voice BPO services

• Many of the MNC captives have setup their office in Gurgaon

• Large scale ramp up for companies relatively easy for firms as a large pool of qualified candidates are available due to inbound migration from other cities of NCR and north India

TYPE PLAYERS KEY HIGHLIGHTS

INDICATIVE

Source: NASSCOM

….and a hub for most major Indian and MNC IT companies

Assessment Parameters Gurgaon Mumbai Noida Delhi Bangalore

Government Support * 4.9 5.2 4.9 3.8 4.6

Business Environment 6.4 8.1 5.5 5.6 7.9

Skill Set Assessment-IT 5.6 7.8 5.9 6.4 8.0

Skill Set Assessment-BPO 6.2 8.1 6.0 7.1 7.2

Infrastructure 6.7 8.0 6.6 7.5 7.6

Social and Living Env. 4.3 6.1 4.2 5.1 5.4

Location Attractiveness-IT 5.7 7.3 5.7 6.1 7.1 Location Attractiveness-BPO

6.0 7.4 5.7 6.3 6.8

Cost Advantage** (20)% -5% 2% (30%) 14%

High LowCost of Operations

• An attractive destination for various industries – Automotive & ancillary, Garment Manufacturing, IT-BPO, Real Estate

• The Government of Haryana considers IT-BPO a thrust sector going forward and is actively encouraging the growth of the sector in the state.

• Access to connectivity infrastructure in Delhi wherein local, national and international connectivity improvements are underway a major incentive for companies to set shop in Gurgaon

• Given the diverse sector opportunities, ability to draw manpower is good especially when coupled with the influx from other locations across India

*Government support for the State/UT in which the location is present** Estimated difference in cost of operations between the above location and the average cost of operations across all the leader locations. A negative number indicates a cost higher than the average cost across the Leader locations

Lo

cati

on

A

ttra

ctiv

enes

s

Low

High`

Needs development support

Mature Attractive

‘Explore focused operations’

Source: NASSCOM-ATK: Location Roadmap for IT-BPO Growth 2008;NASSCOM

Delhi

Noida

Favourable business environment and infrastructure adding to the city’s attractiveness

BangaloreGurgaon

Mumbai

Infrastructure facilities on par with other Leader locations…….

Hyderabad Mumbai Delhi Gurgaon Chennai Bengaluru Kolkata

Local Connectivity1

National Connectivity2

International Connectivity3

Space4

Power5

Telecom6

Hotels7

Excellent Good Average Poor

Source: NASSCOM-ATK: Location Roadmap for IT-BPO Growth 2008;NASSCOM

…….and a healthy cost of living and educational facilities

Educational Facilities8

Medical Facilities9

Recreational Facilities10

Social Infrastructure11

Security & Hygiene12

Cost of Living13

Hyderabad Mumbai Delhi Gurgaon Chennai Bengaluru Kolkata

Source: NASSCOM-ATK: Location Roadmap for IT-BPO Growth 2008;NASSCOM

Excellent Good Average Poor

Concerns/Challenges faced

•High attrition at all levels driven by compensation based poaching• Inefficient public transport system• Increase in congestion over the last 2-3 years• Infrastructure improvement•Power and water shortage•Cost of operations very high compared to other locations • Increasing criminal activities• Inadequate International level higher education facilities

12Apr 11, 2023

An Introduction to NRC - Gurgaon

• Formed in Dec ‘08 to address on local issues faced by the member companies operating out of Gurgaon – think global, act local.

• Chaired by Mr Pavan Vaish of IBM Daksh and Co Chaired by Mr Subinder Khurana of Cognizant.

• Council members are from the senior management team of NASSCOM Member Companies from Gurgaon.

• Some of the prominent member companies who are part of the council (indicative list only) – IBM Daksh, Cognizant, Microsoft, Genpact, MakeMyTrip, Quatrro, Convergys, Dell, Serco, Wipro, Parsec, Annik Systems & Interglobe Technologies.

• Structured through Special interest Groups (Infrastructure & HR) and the CEO Gurgaon Forum.

13Apr 11, 2023

The Regional Council Meetings

• The Regional Council meetings are held periodically (once in a quarter or so) to update the members on the progress made by the Special Interest Groups or SIGs.

• For the period Dec ‘08 – May ‘10, six such meetings have been held.

• The first meeting was held on 12th Dec ‘08, chaired by Mr Pavan Vaish of IBM Daksh. The members deliberated on some of the areas which needed to be addressed with immediate effect.

• With recession looming large, the primary concern was “EMPLOYEES” – on morale building, retention, rightsizing, productivity, compensation and a host of other issues.

• The other pressing need was effective traffic management. Traffic snarls is a major deterrent in Gurgaon, and needed to be addressed immediately.

• This has been an effective platform to get a collective buy-in from the CXO community in order to drive the initiatives.

14Apr 11, 2023

Special Interest Group - Infrastructure

• A common platform for Admin & Infra Heads to share best practices.

• Main area of concern – unruly traffic causing regular traffic jams.

• Improve on the road condition, removal of illegal hoardings, landscaping, addressing parking related issues etc

• Security.

• Driven by Mr Subinder Khurana of Cognizant

• 14 such meetings have been held during the period.

15Apr 11, 2023

Initiatives undertaken by CyberCity Welfare Society

• CyberCity Welfare Society (CWS) is a nonprofit industry associationsupported by NASSCOM and several large domestic & multinational companies operating in Sector 25A, Gurgaon.

• Working in collaboration with authorities of Govt of India & Govt of Haryana to improve quality of life & highlight issues like encroachments, traffic management, security & environment through Public-Private Initiative (PPI) & partnership, in consonance with the views and directions of the Hon'bleChief Minister, Sh. Bhupinder Singh Hooda.

• Engaging with Distt Administration (DC, Police, HUDA, Municipal Corporation & Horticulture Department), NHAI, DLF and HSIDC.

• Improve on the road condition, removal of illegal hoardings, landscaping, addressing parking related issues etc

16Apr 11, 2023

Initiatives by CWS – Contd.

• Illegal hoardings & Encroachment- with notification and support, the government authorities led by the Municipal Commissioner Mr. R. K. Khullar, IAS, were able to do away with the illegal hoardings resulting in a changed landscape of Cyber City Gurgaon.

• Traffic Management engaged with an external agency (Holistic) and placed trained traffic marshals at

key locations in the area.

Have cleared gridlocks, illegal parking, and wrong-side traffic during peak hours.

Have also formed an Industry-Administration-DLF joint working group to improve traffic flow. A team led by Mr Gunit Ahluwalia, VP Quality at Genpact, along with personnel from Genpact and Cognizant have taken the lead in applying Six Sigma methodology. This working group includes members from DLF (Mr. Arun Anand, Exec Director, and team); and the government (Mr. RK Khullar, IAS and Mr. Alok Mittal, IPS and team). This group presented their initial findings during our last member meeting and was appreciated by all the participants.

17Apr 11, 2023

Initiatives by CWS

• Security: The security of employees & residents of Cyber City has been a great concern for society. A working group consisting of Mr Sanjit Bal (Convergys), Mr Brian Connor (Chief Security Officer, Genpact), DLF, and Shri Alok Mittal, IPS (Jt. Commissioner of Police) has started working on improving security processes for all the buildings of the Cyber City area.

• Improvement in Infrastructure: The society has been a guiding and dynamic force in improving the infrastructure of Cyber City. With the help of DLF, they have been able to make U turns, signages, speed breakers, pedestrian crossings and a six lane arterial road (under construction). The traffic situation will drastically improve on construction of arterial road. 

• Shuttle Services from Metro Stations: The society has initiated a pilot project to start bus shuttle services from metro stations. Besides reducing the traffic of cabs & personal vehicles, it will also reduce noise & air pollution.

18Apr 11, 2023

Special Interest Group - HR

• Being driven by Mr D P Singh, Director HR , IBM Daksh

• Last year being the year of slowdown, the focus was always on HR – how to retain the best talent, motivate the workforce, compensation benchmarks, handling attrition , overtime, holiday on election days, were some of the primary concerns of business leaders.

• Necessitated the need to form a group which would share best practices and provide a sounding board to the members.

• Meetings are held once a quarter and is an opportunity for HR leaders to connect and find out how their counterparts are dealing with HR related issues in difficult times

19Apr 11, 2023

CEO Forum Gurgaon

• Held once a quarter and attended by the CXO community of member companies based out of Noida.

• It is usually a one speaker format where we invite a speaker to address the participants on a topic of immediate relevance.

• Due to the slowdown last year, topics focussed on cost optimisation, productivity and leadership.

Date Speaker Topic Venue

15th Nov’08 Mr Som Mittal, President NASSCOM

Update on the IT Industry – Challenges & The Way Forward

Sapient

9th Feb ‘09 Mr Pramod Bhasin, Genpact

Calling Leadership to the core –handling crisis

IBM Daksh

22nd April ‘09

Mr Gagandeep Puri, KPMG

Managing Fraud Risks during Turbulent Times

Cognizant

16th July ‘09 Mr Kiran Karnik, Immediate Past President, NASSCOM

Driving Inclusive Growth Genpact

27th Nov ‘09 Mr Arjun Malhotra, Headstrong

On L U V recovery – shape of the curve

Microsoft

Members of NRC - Gurgaon

• Pavan Vaish, Chief Executive Officer, IBM Daksh – Chair, NRC – Gurgaon

• Subinder Khurana – VP Cognizant, Co- Chair, NRC – Gurgaon

• Anju Talwar, Sr Vice President, Genpact

• Deep Kalra, Founder & CEO, MakeMyTrip

• Mr Rahul Sehgal, Chief Executive Officer, Annik Systems

• Mr Karan Bajwa, General Manager – Public Sector, Microsoft

• Mr Sanjit Bal, Director – Business Development & Govt Relations, Convergys

• Capt Rakesh Sharma, Vice President, Quatrro

• Vipul Doshi, Chief Executive Officer, Interglobe Technologies

SIG’s which are making progress

INFRA & TRANSPORT

HR

SIG’s Initiatives during the year

•Traffic Management•Engaging with the Government•Removing Illegal Hoardings & Encroachments

•Security•Landscaping & beautification

• Group set up to share best practices and discuss issues related to attrition, motivate the workforce during difficult times, compensation benchmarks and other HR related issues

NASSCOM 2009 – 2010 prioritiesWhat does Industry, Academia & Government need to work on

to make Gurgaon an even more attractive destination for IT / BPO

• A culture of volunteerism amidst busy lives

• SIG’s for HR, Infrastructure, Women in Technology

• Monthly, quarterly, annual events for & by these groups

• Add Membership

2 Build a IT / BPO Community 1 Position Gurgaon 3 Engage with potential workforce

• Law & Order

• Concerns over safety – especially of women employees – is a major challenge for companies

• Traffic Management

4 Safety & Infrastructure• Engage actively with community at large

• Involvement of local community in programs done by IT Industry

• Donation of computers to schools, etc

5

• A significant contributor to Haryana’s economy

• IT / ITeS

• MNC Captives

• Software services

• Industry engagement for building an employable workforce

• Skill development

• Engaging with prospective employees

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