Indian IT Outsourcing

1. INDIAN IT OUTSOURCING Debmalya Khan

2. AGENDA

Industry Overview

Outlook

Major Players

Rivalry among existing players

Company Overview

SWOT Analysis

Factor evaluation Matrix

Competitive Strategies in Economic Downturn

3. INDUSTRY OVERVIEW

Steadily growing industry

$150 million in 1991-92 to $5.7 billion in 1999-2000 ( $4 billion worth of software exports )

Annual growth rate of Software Exports - over 50 percent

Software exports to around 95 countries around the world

More than one third of the global Fortune 500 companies outsource requirements to India

Upcoming market openings for Indian IT industry

IT Services

Software products

IT- enables services

E-business

Source: Nasscom

4. OUTLOOK

If company guidance's are anything to go by, then the outlook for the industry seems bleak http://www.businessweek.com/globalbiz/content/jan2009/gb20090121_832742.htm

Collapse of the US car industry to impact TCS, Wipro and Infosys

During recessions, tech spending has historically fallen by more than the GDP

A McKinsey study indicates that IT spending has typically fallen by 5-7 times the GDP in the past recessions

The BFSI sector that pioneered the move offshore idea has been butchered and is expected to worsen

5. MAJOR PLAYERS

Infosys Technologies

Wipro Technologies

Tata Consultancy Services

IBM Global Services

HCL Info systems

Cognizant technology solutions

6. RIVALRY AMONGST EXISTING PLAYERS

Multiple players:

TCS

Accenture

Wipro

Infosys

Cognizant

HCL Tech

Patni . . . . The list is large

Competition is global in nature and stretches across boundaries and geographies

Replication of the Indian off shoring model by MNC IT majors

7. RIVALRY AMONGST EXISTING PLAYERS ( CONTD )

Until the recent crisis, the market as a whole was expanding

A growing market meant that there was enough and more for all the players in the market

The problem of stagnating markets

Implies that all the players need to gun it out amongst themselves to grow revenues

Rivalry expected amongst existing players to intensify

8. INFOSYS TECHNOLOGIES

Specializes in delivering technology enabled business

Started in 1981 with seven people and cash worth US $250

Business and technology consulting

Systems Integration

Application services

IT outsourcing

Business Process outsourcing

IT infrastructure services

9. INFOSYS TECHNOLOGIES ( CONTD )

Global presence with over 50 offices and development centers across the world

2008 turnover excess of $4 billion

SOURCE: www.infosys.com

10. SWOT ANALYSIS

Strengths :

Enhanced competitive edge Indian based operations

Low labor costs, high relative rates of inflation

Relatively high skill levels in IT

Extremely strong financial position enormous capital to expand

Global brand respected across the world

Positive Cash flows Supporting prospective global operations

Varied Domains of Businesses foray into products and services

11. SWOT ANALYSIS( CONTD )

Weaknesses

Occasionally falters to secure contracts in North America missing out on lucrative business

Small player as far as global players are concerned

Multi cultural environment

Business consulting practices dominated by major players like Accenture and IBM

12. SWOT ANALYSIS ( CONTD )

Opportunities

Lucrative expansion options in China

Alliance between Infosys and Schlumberger

European and North American companies to outsource a portion of BPO operations

Provides outsourcing and Cost reduction strategies help clients during global recession

13. SWOT ANALYSIS ( CONTD )

Threats

Move to offshore service companies in countries like China or Korea

Has to compete for skilled labor may affect wage levels and retaining staff

Competitors coming from China, Korea low cost labor and adaptive to western practices

14.

IFE Matrix indicates that India IT Inc. is strong and it has done well, so far, to overcome its weakness

INTERNAL FACTOR EVALUATION MATRIX

15.

EFE Matrix indicates that India IT Inc. is not responsive in exploiting opportunities and in mitigating the impact of threats

EXTERNAL FACTOR EVALUATION MATRIX

16. STRATEGIES IN DOWNTURN

Companies such as Infosys exhort employees to go on a 1-yr sabbatical work for an NGO http://www.business-standard.com/india/storypage.php?autono=340253

Cash rich firms such as TCS, Wipro and Infosys scouting around for dirt cheap acquisitions

Case in point

TCS $505M acquisition of Citigroups Indian back office operations in October 2008

Wipros acquisition of CITOS for $127M in December 2008 http://www.vccircle.com/500/news/wipro-acquires-citi-technology-services-for-127m

Slow down in wage hikes and a near recruitment freeze

17. REFERENCES

http://www.marketingteacher.com/SWOT/infosys_swot.htm

www.nasscom.org

www.infosys.com

www.bizzbuzz.wordpress.com

18. THANK YOU