Upload
zinnov
View
115.105
Download
0
Embed Size (px)
Citation preview
WORKING SESSION:RECRUITMENT BEST PRACTICES
MAY 2014
Product Engineering Services TrendsQuarterly Analysis- Zinnov PoVApril 15-July 15
AUGUST 2015
R&D Globalisation and Outsourcing Summary – April 15-July 15
• Product Engineering Services (1.5% QoQ) had a slower growth rate compared to the IT services growth rate (3.5% QoQ)
• European Service providers growing faster than Large India Heritage IT service providers
• Niche service providers targeting inorganic route for horizontal diversification in IoT and Embedded space
A R&D SPEND ANALYSIS
• Overall R&D spend increased by 0.8%(QoQ) for the top 50 R&D Spenders
• R&D spend in Automotive and Healthcare is expected to grow whereas Telecom and Energy will see lesser R&D spend for next two quarters
• Semiconductor and Medical Devices verticals continue undergoing industry consolidation through M&As
• 50 + R&D captives were announced in the last quarter to be set up across the globe
• India continues to be most preferred globalization destination followed by Israel and USB R&D GLOBALIZATION
C PES MARKET
2
Key R&D Trends
AutomotiveDevelopment of Autonomous
Vehicles and Fuel Economy have been the prime focus
Telecommunications
ISVs
Healthcare
Energy
Rolling out 3G and 4G and companies invested more on
research for 5G
Large Greenfield projects put on hold amidst diving oil prices
The oil market indicates that prices could stay lower for longer, delivering a fresh blow to hard-hit energy
exploration-and-production companies.
Smaller deals and technology integration are rising among software enterprises
Integration of Technology and Medical Devices has revolutionized healthcare
Audi, Daimler and BMW are inviting other car companies to join their consortium to use “Here”,
the dominant supplier of digital maps for in-car navigation, and share the development costs and
benefitsGM, Honda cut cost of fuel cell stack by slashing the
size, and weight of the chemical processor that combines hydrogen and oxygen to make electricity
MDMs are working on building Smart mobile devices and applications, working in concert with cloud computing and big data analytics Quantified health data, Medical records on-the-go, On-call doctors via telehealth and 3-D printing have accelerated the functioning and diversification of the Healthcare Industry
Telecom Equipment Manufactures are investing more on key 5G technologies like Radio access
technology of air interface technologies5G research and trial investment is expected to
reach 5 BN by 2020
The ISV sector is trying to harness the power of connected technologies to drive digital businessService vendors may have to be content with smaller deals as large contracts seem to have vanished from the market place with customers expecting a prolonged recovery from the economic downturn
| Source: Zinnov research and quarterly reports |
3
-24 %Rise in R&D
spend*
R&D Spend Analysis: Healthcare vertical witnessed the maximum increase in the R&D spend
ISV Automotive Energy
Top Spenders
Top Outsource
rs
4.6 %Rise in R&D
spend*
8.7 %Rise in R&D
spend*
19.5 %Rise in R&D
spend*
Healthcare 1.9 %Rise in R&D
spend*
Telecom
Samsung 3.04 3.65
Intel 2.84 2.9
Microsoft 3.06 2.9
R&D growth
R&D growth
R&D growth
R&D growthCompany Company R&D
growthCompany CompanyCompany
CiscoAlcatel Lucent
British Telecom
MicrosoftAmazonPaypal
General MotorsJaguar & Landrover
Caterpillar
MedtronicGE Healthcare
Toshiba
AlstomParker
GE Energy
Cisco 1.1%Huawei NAEricsson 4.04%Alcatel lucent 5.3%Nokia Networks -2%
Amazon 9%Google 1.09%Microsoft 3.6%Oracle 4.3%Facebook 10%
Volkswagen NAToyota NADaimler 6.2%Honda 13.6%BMW 15.7%
Baxter 30%Medtronic 41%Boston Scientific 14.5%St. Jude 2.3%Thermo Fisher 5.4%
Shell 15.4%Schlumberger 4.4%Cummins -14%Petro China 72%Total -44%
0.8%R&D growth rate Of top 50 R&D Spenders
* Analysis of top 10 R&D spenders in each vertical| Source: Zinnov research and quarterly reports |
4
Key Mergers/Acquisitions: M&As drive consolidation in Telecom, Semiconductors and Oil and Gas verticals
Company Target Acquired Amount(USD Bn) Why
56The acquisition will drive investment in advanced broadband network, allow for wider deployment of new competitive facilities based WiFi networks in public places, and the footprint expansion of optical networks to serve the large marketplace
37 The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors
16.7 The acquisition will couple Intel’s leading-edge products and manufacturing process with Altera’s leading field-programmable gate array (FPGA) technology
15.8The complementary aspects of MarkWest`s, MPLX`s and MPC`s highly diverse asset base provide significant additional opportunities across multiple segments of the hydrocarbon value chain
13.8Pall is a complementary fit for Danaher, with Danaher’s management system and strong financial position with Pall's expertise, brand and channel strength in the field of filtration and separation science
13.4The acquisition will position the combined company as a leader in the musculoskeletal industry and is aligned with Zimmer's strategic framework, which focuses on growth, operational excellence and prudent capital allocation
5
Top R&D Spenders initiatives
R&D investment Q1
2015
Focus Areas
Details
| Source: Zinnov research and quarterly reports |
1.2.3.4.
5.
E-Commerce2 .75Bn
USDAmazon Is expanding and restructuring its R&D, With A Focus On Prime Air Drones And Speech Tech
Internet of Things2.99 Bn
USDIntel is looking to explore the IoT market and build products around the same. Over 70% of Intel India’s staff are into R&D
Toyota to restructure R&D organisation, plans to introduce advanced safety and lighting technologies in 2015Fuel Economy also a big focus in R&D spending
2.32 Bn USDSafety and Lighting
Technology
3.65 Bn USD
Samsung is spending a huge amount of money to beat its competitors to the ‘next big thing’Will continue to develop a grand mobility portfolio through IPs
Mobile and Internet of Things
Big Data and IT Security1.78 Bn
USDDaimler to ramp up R&D facility by employing 1700 more engineers in Mercedes-Benz Research and Development India (MBRDI), primarily in the space of big data and IT security solutions
6
Top R&D Spenders initiatives
R&D investment Q1
2015
Focus Areas
Details
6.7.8.9.
10.
Activities related to vehicle emissions control, improved fuel economy and the safety of drivers and passengers are the top focus.Also focus on improving digital communications systems for vehiclesApple is said to be working on something positively massive whose significance could dwarf the iPhone, the Apple Watch or any other major product Apple has released so farShell has recently developed a clear base oil derived from natural gas, a cleaner burning fossil fuelShell India Markets Pvt. Ltd. also announced the creation of an in-house Global Information Technology Centre in Bangalore
1.87 Bn USD
1.32 Bn USD
1.91 Bn USDNew and Innovative
Products
Clean and Renewable Energy
1.21 BnUSD
5G network and IoT1.54 Bn
USD
Cloud Computing and Big Data
Alternative Propulsion
Cisco stated that the IoT will most likely be the underlying fabric of 5GThe difference between wireless and wireline networks will to continue to blur, leading to more virtualisation and automation of the networkIBM has developed the “7 nm and beyond” silicon technology that will address serious physical challenges threatening current semiconductor scaling techniquesDevelopment of alternative technologies for post-silicon era chips
Asia North America Europe RoW
50%
10%
30%
10%
ISV Computer Peripherals Automotive Consumer Electronics Rest
28%
14% 12% 12%
34%
25+ R&D centres to be set up in Asia
ISV and Computer Peripherals account for ~40% of all new
captive setups
Globalization Trends: India continues to be the most preferred globalization destination
India 64%
36%
Vertical wise Split50+New R&D Captives to
be set up
Geographical Split
Rest
8
9
Ew Captive’s centers in India
Company Location Why
Perpetuuiti Chennai, IndiaThe facility will play a critical role in developing competitive products for the global marketplace, creating innovative technology solutions that are well aligned with the various advancements happening in the area of artificial intelligence and cognitive computing.
Brocade Bangalore, IndiaThe center will enable Brocade India to showcase proofs-of-concept and pilot projects for customers and partners while contributing to the development of next-generation, fabric-based and software networking solutions
Inspirata Bangalore, IndiaDevelopment centre aims to support all three of its business units, i.e. digital pathology work-flow solution, companion diagnostics and the cancer information data trust, and also will work on data mining, data analytics and predictive software algorithms.
HID Global Chennai, IndiaThe center will accelerate the development of new features and capabilities for Genuine HID products and reduce time to market for new products. It also features validation and verification service for all electronic and software products and services.
Danaher Bangalore, India Centre will concentrate on data analytics, internet-of-things and cloud computing. The unit will deliver high-end technology solutions for our global and local businesses.
TOTAL IT SERVICES REVENUES
PES GrowthYoY
PES GrowthQoQ
Large European Service
Providers
3.77%
1.98%
10% Overall PES Growth YoY
1.5 %
Overall PES RevenueGrowth QoQ
Large India Heritage IT
Service Providers
16%
0.39%
Niche PES Service
Providers
22.5%
3.8%
10% Overall Revenue Growth YoY
3.5% Overall Revenue Growth QoQ
PES REVENUES
Market Financial Analysis : Niche Product Engineering Services companies lead the PES market growth
Large Engineering Services companies (Primarily Onshore)
Product Engineering Services divisions of large IT service providers
Midsized PES companies focusing on few verticals
| Source: Zinnov research and quarterly reports | Based on Analysis of Listed Companies
10
Market Financial Analysis : EBITDAs and PAT stay healthy for Large IT services companies
| Source: Zinnov research and quarterly reports |Based on Analysis of Listed Companies 11
Niche service providers outpaced large IT India heritage SPs- PES division growth while Large Onshore based Service providers struggled for growth
Average EBITDA18% Average PAT14%EBIDTA average percentage PAT average percentage
Margins
19.914.1
21.5
16.313
8.6
Utilization of Service providers have improved
Utilization
79.4%
Company Target Why?With IGATE, CapGemini operations in North America have taken a new dimension and are now its largest market in revenuesThe combined operations in India reached the size to compete at par with the world leaders in our industry
The acquisition of Skava is part of Infosys' strategy to help clients bring new digital experiences to their customers through IP-led technology offerings, new automation tools and unparalleled skill and expertise in these new emerging areas
The acquisition will enhance EPAM’s ability to provide digital consulting, architecture and content solutions to customers in North AmericaGlobant acquisition will reinforce its capabilities in User Experience, Design and Technology. Globant expands its delivery capabilities for the first time out of the Americas by acquiring a company with operations in India
Acquisition of SiConTech will enable Altran to accompany strategic American clients operating in semi-conductors and embedded software.
Mindtree's acquisition of Bluefin will strengthen presence in the European market, and also allow Mindtree bid for transformation deals.
Acquisition will help Wipro to evolve its go-to-market digital offerings. Designit's capabilities in strategic design, user experience and interaction design will complement Wipro Digital's capabilities
Mergers and Acquisitions: Aggressive M&A continues to drive the industry forward
| Source: Zinnov research and analysis
Insights
1
2
3
Mid Sized PES companies are exploring PE investments to help them scale
Global Players are exploring India based delivery approach through acquisition of niche service providers with an offshore presence.
12
Service providers are extensively investing in digital services companies across the entire value chain to offer comprehensive suite of offerings to their customers
Bangalore 69 "Prathiba Complex", 4th 'A' Cross, Koramangala 5th Block,Bangalore-560 095. Phone: +91-80-41127925/6
SingaporeLevel 42, Suntec Tower Three8 Temasek BoulevardSingapore 038988Phone:+65 6829 2123
Texas21, Waterway AveSuite 300 The WoodlandsTX-77380 USAPhone:+1-281-362-2773
BeijingMeilifang Tower 4, Entrance 4, 10/F #1003,11 Beiyuan Shuangying Road,Chaoyang District, BeijingChina 100012
Thank You
Gurgaon Office:First Floor,Plot no. 131, Sector 44, Gurgaon-122002,Phone: +91 124 4420100
California Office3080 Olcott Street Suite A125, Santa Clara, CA 95054 Phone: +408-716-8432
13