Indian IT Industry Vast Growth Potential

March 2005

Indian IT IndustryVast Growth Potential

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

India - An Introduction

Population

States/UTs

Geographical Area

Languages recognised

Business language

Per Capita Income**

GDP**

Over 1 bn

35

3.3 mn sq kms

22

English

US$ 534

US$ 650 bn**(at factor cost & at current prices)

1USD=43.54 INR (as on July 4, 2005)

Source:CSO Statistics

March 2005

India - Fast pace Growth

Largest democracy

4th largest economy by PPP index

6th largest energy consumer

ForEx reserves skyrocket from USD 42 bn (2001) to

USD 133 bn (2005)

GDP growth to continue between 6-8%

3rd largest economy by 2050: Goldman Sachs

Leading in IT & BPO

Oil & Gas and Biotechnology sunrise industries

March 2005

India - Leading the world

Hero Honda - largest manufacturer of motorcycles

Moser Baer - among the top three media manufacturers

in the world

Pharmaceutical Industry - 4th largest in world

Walmart, GAP, Hilfiger sources more than

USD 1bn worth apparel from India

100 Fortune 500 have set R&D facilities in India

including GE, Delphi, Eli Lilly, HP, Heinz and Daimler

Chrysler

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Huge and Growing IT Market

Size (2002-03) US$ 24 billionGrowth rate 28%

Share of IT and BPO 1.4% of GDP2008 projection 7%

Exports projected (2003-04) US$ 12 billionto grow at 26-28%

CAGR (since 1999) 46%

Employment Over 650,000(Second largest employer in IT services sector)

March 2005

Future Growth Potential

By 2008

17 million people available

USD 35 billion domestic software market

March 2005

Growth in Domestic Outsourcing

257560

9001,340

2,300

3,800

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04

(USD Million)

Alignment to domain knowledge needs

March 2005

Moving up the Value Chain

1960 Client / Server InternetMainframe

Facilities managementUnix-based coding Maintenance

Migration & Re-engineering

Package Implementation

Application development

Web Enabling legacy

Consulting

Maintenance

Package ImplementationE-business applications

Embedded software

Network Management

Network Security

Aligned to technology needs

March 2005

Growth of the Offshore Model

0

20

40

60

80

100

1991-92 2001-02 2002-03

Onsite Services Offshore Development

% of software export

Alignment to business needs

March 2005

Potential Domestic Hardware Market 2010

US$ 44 billion

By Value Addition

37.4

21.8

8.3

6.9

10.2

6.6

5.4

6.9

-

10

20

30

40

50

Finished Product

Product Manufactured from sub-assembly

Sub-assembly manufacture from components

US

$ B

illio

n

Locally Manufactured Imports Value Addition

By Product Segment

20.1

13.4

6.7

4.0

IT Hardware.Telecom

Consumer ElectronicsOthers

Total Market: USD 44 Billion

March 2005

Potential Hardware Exports

Exports by Value Chain

11

2

7

5

OEM + ODMProducts

Design ServicesComponents

Exports manufacture by Value addition

Local Imports Value Addition

Products & Assemblies

13.0

7.1

2.9

4.5

3.2

1.4

1.1

0

2

4

6

8

10

12

14

US

$ B

illio

n

Total Exports: USD 25 BillionProducts & Assembly manufacture from sub-assembly

Sub- assembly manufacture from components

USD 25 billion

March 2005

Focus Areas

Utilities

Transportation

Healthcare

Financial Services

Telecom Equipment

Manufacturing Industries

Targeting new verticals

Beyond traditional sectors

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Indian Players

TCS Wold leading IT consulting services andbusiness process outsourcing company

Infosys Provides consulting and IT services to clients globally as partners

Wipro Serves over 300 global leaders and is world’s first PCMM, CMMi and CMM Level 5 company

March 2005

MNC Presence

MNCs contribution

to export revenues

from IT services

23.5%

March 2005

MNC presence in India

ServicesIBM, USA

Kelton Graphics Inc., USA

Intergraph Corp., USA

Capricorn Systems Inc., USA

Microsoft, USAProducts

Oracle Inc., USA

SUN Micro System Inc, USA

IBM, USA

NOVELL, USA

Dun & BradStreet., USA

Deneb Robotics., USA

Manhattan Associates., USA

March 2005

MNC presence in India

IT InfrastructureHewlett Packard, USA

CISCO, USASUN Micro System Inc, USA

IBM, USA

Silicon Graphics Inc., USA

Siemens Nixdorf., Germany

Hughes Network Systems., USA

Fujitsu, Japan

Bull, France

Alcatel, France

Embedded systems

Cadence Design Systems Inc., USA Texas Instruments Inc., USA

Motorola Inc., USA

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Invest in India

Skills

Quality

Domain

Policy

Infrastructure

Risk

March 2005

Invest in India

1,858

1,1051,054

965

548393

263 17236 22 17 8 7

0200400600800

1,0001,2001,4001,6001,8002,000

1

JapanIndiaSouth KoreaSingaporeAustraliaChinaHong KongTaiwanMalaysiaSri LankaNew ZealandPhilippinesThailand

Source: NASSCOM

India attracts second highest privateequity investment in Asia

March 2005

Invest in India

Package Software Implementation

System Integration

R& D Engineering

Network Management

Advancing on the value chain

March 2005

Partner with India

Venture funding activities to increase 9 folds by 2007-08

2001 - 02 USD 1,100 million

2007 - 08 USD 10,000 million

Venture funding activities

March 2005

Export from India

20%

80%

HardwareSupport andInstallationPackaged S/Wsupport andImplementation

Product Services

March 2005

7%3%

90%

IS Consulting

System Integration

CustomerApplications

Professional Services

Export from India

March 2005

Export from India

46% 54%

Applicationmanagement

Network anddesktopoutsourcing

Outsourcing Services

March 2005

IT Outsourcing - Expanding Opportunities

Software development outsourcing

Product development outsourcing

March 2005

Destination India

73%

4% 4% 4% 2% 2% 2%

20%

0%

25%

50%

75%

Offshoring of outsourcing

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

The India Advantage

Quality manpower

Pro active policy framework

Specialised organisations and facilities

State-of-the-art infrastructure

High quality services

March 2005

Vendor sophistication: Number of vendors, vendor quality

Hum

an S

ophi

stic

atio

n: N

umbe

r of

wor

kers

, lab

our c

ost,

wor

ker s

kill

leve

l

India

Indonesia

China

PhilippinesIreland

Germany

UK

USA

Singapore

France

Low

High

High

Skill surplus End-user countries Regional Hubs

The Intellectual Advantage

India is today a mature region for IT offshore work

March 2005

The Knowledge Advantage

56000

160000

284000

430114

522250

650000

0

100000

200000

300000

400000

500000

600000

700000

1990-1991

1996-1997

1999-2000

2000-2001

2001-2002

2002-2002

Knowledge Professionals Strength

Large pool of highly talented software professionals

Highly qualified pool of IT professionals

March 2005

The Cost Advantage

2.45.88 6.4 6.5 7.2 7.2 8

8.9

25 28

6

0

5

10

15

20

25

30

Average wage / year (in thousand US dollars)

Source: NASSCOM

Costs for offshore work 30-50% lower than in US/Europe

March 2005

The Infrastructure Advantage Standardisation Testing and Quality Certification (STQC) programme

Software Technology Parks

One-stop solution to all quality requirements of electronics industry

Exemptionfrom local

duties and taxes

No corporate

income tax up to

March 2010

Up to100% foreign equity

permitted

Singlewindow

governmentclearance

Single point custombonding

and export

certification

March 2005

The Policy Advantage

IT Act 2000

EOU status extended to hardware

manufacturing units

USD 2580 mn to be spent on e-Governance

initiatives

Priority sector status given by banks

Export processing zones established

487 information communication centres

Evolving regulatory regime

March 2005

IT Industry

India - An Overview

Market and Growth Potential

Players

Opportunities

Why India?

Contact in India

March 2005

Contact in India

National Association of Software and Service Companies (NASSCOM)

International Youth CentreTeen Murti MargChanakyapuriNew Delhi - 110021

Tel 91 11 23010199Fax 91 11 23015452 Email [email protected]

March 2005

Contact in India

MAIT

4th Floor, PHD HouseOpp. Asian Games VillageNew Delhi 110 016

Tel 26855487/26866976/26866976Fax 26851321Email [email protected]

March 2005

Contact in India

Confederation of Indian Industry (CII)

249-F, Sector 18, Udyog Vihar Phase IVGurgaon 122015

Tel 0091 124 5014060-67Fax 0091 124 5014080/5013874E mail [email protected]