Large Enterprises : Transforming India's Digital Future

Large Enterprises : Transforming India's Digital Future

1

Large Enterprises contribute significantly to the business ecosystem in India

2

Note: All figures and data pertains to FY17 | 1denotes enterprises operating in India with HQ in India / outside India, and having a headcount of 1,000+ employees. The list includes private, PSUs/Government undertakings | 2Large Enterprises listed on Bombay Stock Exchange (BSE)/National Stock Exchange (NSE) | 3Talent pool includes total number of employees working full-time/part-time/casual with an enterprise | (USD 1 = INR 65 approx.)Source: VCSData, Zinnov Analysis of 1100+ Public Listed Indian Enterprises by Revenues in FY13-17

Snapshot of Large Enterprises in India

Large Enterprises1 in India

Public Listed Large Enterprises2 in India

3.2-3.4k

1.1-1.3k

~40%USD 1.75Tn

Market Capitalization (BSE)

Total revenues generated compared to India’s GDP

~6Mn

Total Talent pool3

employed

Contribution of Public

Listed Large Enterprises

Consistent performance has led to a growth in Billion Dollar Enterprises over the years

Source: Zinnov Analysis of top 1100+ Public Listed Indian Enterprises by Revenues in FY13-173

Regional Distribution of Public-listed Large Enterprise by Headquarters

Note: Manufacturing includes Automotive, Industrial products, Chemicals, Metals, Electricals and Electronics, Textiles etc. | Others includes Media & Entertainment (2.4%), Telecom (1.5%), Mining & Trading (1.1%) and Education & Publishing (0.8%) | (USD 1 = INR 65 approx.)

Region LE HQRevenue

contribution in FY17

Key Verticals

West 46% 51%

North 24% 29%

South 22% 15%

East 8% 5%

40.1% 13.0% 11.0% 8.5% 6.9% 6.3% 4.9% 3.5% 5.8%

Manufacturing Real Estate & Construction Retail / CPG

BFSI Healthcare Energy & Utilities

IT/ITeS Transport & Hospitality Others

Vertical-wise Distribution of Public-listed Large Enterprises

5% Revenue Growth

2.5% Profit Growth

114 119 129 128 141

FY13 FY14 FY15 FY16 FY17

# of Billion Dollar Public-listed Enterprises (by Revenue)Performance of Public-listed Large Enterprises during FY’13-17

141 ‘Billion Dollar’ firms reflect the overall state of Large Enterprises

Source: Zinnov Analysis of 141 Billion Dollar Public-Listed Indian Enterprises4

MajorOwnership

67%Private sector

33%Government

sector

10Industry vertical

spread

9Conglomerates

75%of Total Revenues of Large Enterprises*

65%of total talent pool in

Large Enterprises*

60%of total Market

Capitalization of Large Enterprises*

Note: *denotes the Public-listed Large Enterprises

2

2

2

6

5

9

12

8

27

33

2

2

1

2

3

7

6

1

1

2

2

1

2

1

1

1

USD 1 to 5Bn USD 5 to 10Bn USD 10 to 25Bn USD 25 to 50Bn USD 50+Bn

Billion Dollar Enterprises in Mfg, BFSI and Energy & Utilities are the largest contributors to revenue and talent pool

Source: Zinnov Analysis of 141 Billion Dollar Public-Listed Indian Enterprises for FY’175

41

37

16

14

10

6

6

5

4

2

Revenue-wise Split~Talent pool

(Mn)

0.62

0.10

1.17

0.11

0.31

0.17

0.36

0.97

0.05

0.03

#

Manufacturing

BFSI

Energy & Utilities

Retail / CPG

Real Estate & Construction

Mining & Trading

Healthcare

IT/ITeS

Telecom

Transport & Hospitality

Verticals~Revenue(USD Bn)

161.0

9.3

172.8

25.8

37.2

201.0

15.8

38.5

17.4

6.4

Note: Talent pool includes total number of employees working full-time/part-time/casual with an enterprise

106 23 7 4 1

However, Transport & Hospitality followed by IT/ITeS, Healthcare and Retail, lead in the growth metrics


Average Revenue / Enterprise(Bubble size)

Industry-wise Productivity(Bubble color) Low HighMedium


Telecom

BFSI

Retail / CPG

Healthcare

IT/ITeS

Mining & Trading

Energy & Utilities

Manufacturing


0

Revenue Growth during FY’13-17 (%)

Profit Growth

during FY’13-17 (%)

(+)

(-)

(+)

Sluggish

Strivers

Nimble

Note: Revenue and Profit Growth pertains to the period FY’13-17 | Productivity is calculated as Industry revenues divided by total talent pool employed within industry

Low

High

Medium

A triple play of opportunities exists for the Large Enterprises to capitalize upon

Source: News reports, TradingEconomics, Ministry of Commerce, GoI, Nielsen Consumer Confidence Index 2017, #BCG’s Centre for Customer Insight report 20177

Note: *Nielsen Consumer Confidence Index measures the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of online consumers around the world

(Beneficiary verticals)

Government Policies

Consumer Growth

International Expansion

(Telecom, IT/ITeS) (Manufacturing) (Transport & Hospitality, Real Estate & Construction)

Other Initiatives (illustrative)• UDAN scheme for regional

connectivity (Transport & Hospitality)• Banking reforms (BFSI)• Price-capping of essential drugs

(Healthcare)

12% y-o-y growth in consumer expenditure,

India to be 3rd largest

consumer market by 2025 #

India ranks 1st globally in

Consumer Confidence Index*

2nd largest population in the

world with over 60% of them in working age bracket

(Real Estate & Construction, Telecom,

Manufacturing)

Favourable Trade Conditions

• India has signed Free Trade Agreements (FTA) and Bilateral Investment Treaties (BIT) allowing trade and investment with 70+ nations

Rising Export Hub

• India’s exports in FY17 doubled to ~$275Bn within the last decade

• Key exports: Petroleum products, engineering goods, pharmaceutical products, gems & jewellery

• International business contributes 65% to Gitanjali’s and 70% to Sun Pharma’s revenues

• Jaguar Land Rover contributes prominently to Tata Motor’sprofits

• ONGC acquired 15% stake in Russian oil field Vankor for$1Bn (2016) to secure energy interests of the nation

Growth, Profitability & Diversification

However, Competition poses a distinct challenge in Indian scenario compared to developed economies

8Source: News reports, Technology blogs, Zinnov Analysis

Lack of Skilled Workforce

Managing Omnichannel

presence

Rising input costs

Customer acquisition

Legislative & environmental barriers

Operational Challenges

Retail/CPG

Telecom, Media & Entertainment


BFSI

IT/ITeS

SaaS enterprise offerings

Tackling Disruptions

E-commerce disruption

OTT applications

e-wallets & digital banks

Alternate to conventional means

• From fast-growing domestic enteprises

• From leading MNC enterprises

Competition

Intrinsic Hurdles

• Regulations - e.g. Dodd Frank Act of 2010, Repealing of Obamacare

• Stagnating Consumption – Flat / Declining growth of population affecting conventional consumption

• Dormant Innovation – Declining new product portfolios/patents

• Geo-political Uncertainty- Affects long-term decision making

India

USA

Enterprises tackling

challenges

Infrastructure

Upgradation

New

Business Models

Technology

AdoptionPeople

Operational

Efficiencies

To overcome the challenges, Large Enterprises are taking a five prongedapproach..

9

1

2

3

4

5

Hiring Key Talent with Niche Capabilities

Streamlining Business Processes, Improving Communication and

Collaboration

Moving from Legacy to Modern Infrastructure

Driving Innovation in Business through Technology

Diversifying Business Operations to Generate

Additional Revenues

..to get transformed as a modern digital enterprise

10

NEW AGE ENTERPRISE DIGITAL BUSINESS MODELS

DIGITAL BUSINESS OUTCOMES

Personized Experience

New Revenue Streams

Business EfficiencyEmpowered Workforce

Business Security & Customer Privacy

Internet of Things

Artificial Intelligence

Robotic Automation

Blockchain AR/VRNear Zero Interfaces

3D PrintingDIGITAL TECHNOLOGY FOUNDATION

MODERN INFRASTRUCTURE

Cloud Centric Infrastructure

Data LakesSecurity Infrastructure

(MDM, End Point Encryption)

High Performance Compute Architecture

Software Defined Infrastructures

Software Led Platformization Data EcosystemCo-Innovation With

Customer

DIGITAL WORKLOADS & RELEVANT STAKEHOLDERS

Customer Experience

Operational Excellence

Workforce Engagement

Risk Management & Security

New Digital Products and

Services

CMO | CDO | CAIOCInO | CTO | CDO |

CAIO

COO | CIO | BU | CDO

COO | CHRO | BU CRO | CIO

141 Billion Dollar Large Enterprises will spend over USD 360 Mn by 2020 towards Enterprise Digital Transformation (EDT)

11

FY17 FY20 (E)Rest of IT Digital Tech Enablement Enterprise Digital Transformation

➢ Enterprise digital transformation

spending forms ~11% of the

overall digital spends currently, rest being constituted by investments towards digital enablement

➢ BFSI, IT/ITeS, Manufacturing and Retail/CPG, Energy & Utilities verticals in India will constitute nearly

90% of the overall spends for EDT

by 2020

Source: Zinnov Analysis of 141 Billion Dollar Public-Listed Indian Enterprises

Enterprise Digital Transformation

Spending

Enterprise Digital Transformation

Spending

Indian Billion Dollar Enterprise Digital Transformation Spending (USD Bn) and Growth (CAGR %)

9.6 10.2

0.951.440.12

0.36

Note: ‘Enterprise Digital Transformation’ - finding newer possibilities to maximize the customer experiences and operational efficiencies. It includes UI/UX Designing, Predictive Analytics, Connected systems, AI, RPA, IoT etc. | ‘DigitalTech Enablement’ - overhauling of the existing IT infrastructure to enable digital use cases and execute data driven business processes. It includes Service Oriented Architecture, Big data Infrastructure, Analytics platforms, APIs, DataLakes etc. | ‘Rest of IT’ - creating infrastructure to manage, provide access to information and run business applications. It includes Operating systems, Hardware & Software support, Business Process Outsourcing (BPO), Cloudinfrastructure, Social media applications, BI and analytics applications, Sensors and Beacons, Identity Management etc.

Allahabad Bank

Andhra Bank

Axis Bank

Bajaj Finance

Bank of Baroda

Bank of India

Bank of Maharashtra

Canara Bank

Central Bank of IndiaCorporation Bank

Dena Bank

DHFL

Federal Bank

HDFC Bank

HDFC LIMITED

ICICI Bank

IDBI Bank

IDFC Bank

Indiabulls Housing Finance

Indian Bank

Indian Overseas Bank

IndusInd Bank

J&K Bank

Kotak Mahindra Bank

LIC Housing

Oriental Bank of Commerce

Punjab & Sind Bank

Punjab National Bank

Shriram Transport Finance

South Indian Bank

SBI

Syndicate Bank

UCO Bank

Union Bank of India

United Bank of India

Vijaya Bank

Yes Bank

Adani Power

BPCL

CESC

Chennai Petroleum

GAIL

HPCL

IOCL

Mangalore Refinery

NHPC

NTPC

ONGC

Oil India

Powergrid Corp

Suzlon Energy

Tata PowerTorrent Power

Aurobindo Pharma

Cipla

Dr. Reddy's

Glenmark Pharma

Lupin

Sun Pharma

HCL

Infosys

TCS

Tech Mahindra

Wipro

ABB India Limited

Alok Industries

Apollo Tyres

Ashok LeylandAsian Paints

Bajaj Auto

BEL

BHEL

Bhushan Steel BoschCentury Textiles

Chambal Fertilizers

Coromandel Intl.

Eicher Motors

Exide IndustriesGrasim Industries

Havells IndiaHero Motocorp

Hindalco

Hindustan Zinc

Jindal Stainless (Hisar)

Jindal Stainless

Jindal Steel & Power

JK Tyres

JSW Steel

L&T

M&M

Maruti Suzuki

Motherson Sumi

MRF

NALCO

National Fertilizers Ltd.

NLC India

Rashtriya Chemicals

Reliance Industries

Shree Renuka Sugars

Siemens Ltd.

SAIL

Tata Chemicals

Tata Motors

Tata Steel

TVS Motors

UPL Ltd.

Videocon Industries

Adani Enterprises

Coal India

MMTC

NMDC

Vedanta Ltd.

ACC Ltd.

Ambuja Cements

Gammon India

Jaiprakash Assoc.

KEC Intl.

NCC Ltd.

Reliance Infrastructure

Shree Cements

Ultratech Cement

Aditya Birla FashionBritannia Industries

Future Retail

Gitanjali Gems

HUL

ITC

Nestle India

PC Jewellers

Redington India

Ruchi Soya Industries

Titan

United Breweries

United Spirits

Bharti Airtel

Bharti Infratel

Idea Cellular

Reliance Commn

Interglobe Aviation

Jet Airways

Nearly 20% of the Billion Dollar Enterprises are the Early Adopters and are well underway in their digital transformation journey


Capability (Advanced Technology*, Digital Talent, Digital Partnership, M&A and Investments)

Scal

abili

ty(R

even

ue

Gro

wth

, Pro

fit

Gro

wth

an

d P

rod

uct

ivit

y)

Early Adopters

Beginners

Followers

Verticals

BFSI

Healthcare

Manufacturing


Telecom

Energy & Utilities

IT/ITeS

Mining & Trading

Retail/CPG


*Advanced Technologies include Artificial Intelligence, Internet of Things and Robotic Process Automation

Around 40% of Billion Dollar Enterprises have invested in AI, Automation and IoT currently

13

50%

46%

40%

22%

17%

Advanced Technologies Adoption by Industry Verticals

Source: Zinnov Analysis of 141 Billion Dollar Public-Listed Indian Enterprises

19%

AI

Automation

IoT


Energy & Utilities


IT/ITeS

Telecom

BFSI

Retail/CPG

Manufacturing

Mining & Trading

Healthcare

Advanced Technologies Focus of Large Enterprises

Global technology firms are facilitating the enterprises in their transformation journey

Global Technology Players (Illustrative)

Digital SolutionsInvestments in

StartupsKey Digital

Talent HiredCoE on

Advanced TechFocus on ISV partnerships

Partnership with Service Provider

Co-innovation with Customers

Amazon Web Services

Cisco

Google

HP

IBM

Microsoft

Oracle

SAP

iBoT platform with Azure IoT serviceshelped United Spirits keep a track of itsVisicoolers and enhance customerexperience

Launched ‘Pointnext’, its digitaltransformation services arm, to helpcustomers in adoption of newtechnologies

S/4 HANA was adopted by Hero FutureEnergy (part of Hero Group) for end-to-end business process integration andbringing in financial and operationalefficiencies

Setting up of Internet of Things (IoE)Innovation Centre in Visakhapatnamand Technology Center of Excellenceand Research Lab at Tirupati

Source: News reports, Technology blogs, Company press releases, Zinnov Analysis14Low High

@Zinnov

Thank You!

Texas21, Waterway AveSuite 300The WoodlandsTX-77380 USAPhone:+1-281-362-2773

Bangalore 69 "Prathiba Complex",4th 'A' Cross, Koramangala 5th Block,Bangalore-560 095.Phone: +91-80-41127925/6

Gurgaon Office:First Floor,Plot no. 131, Sector 44,Gurgaon-122002,Phone: +91 124 4420100

California Office3080 Olcott StreetSuite A125,Santa Clara, CA 95054Phone: +408-716-8432

[email protected]