ITBD Indian IT Industry 2009 2010

8/8/2019 ITBD Indian IT Industry 2009 2010

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Indian IT Industry and BusinessIndian IT Industry and Business

Opportunities OverviewOpportunities Overview20102010

Presented By:Presented By:

Prof. Oscar J. DSouzaProf. Oscar J. DSouza


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Agenda AgendaKey StatisticsKey StatisticsTrends in Global IT SpendingTrends in Global IT Spending

Trends in Indian S/w and Services ExportsTrends in Indian S/w and Services ExportsSWOT A nalysisSWOT A nalysisGeographical MarketsGeographical Markets Vertical Markets Vertical Markets

Key Service LinesKey Service LinesBPOBPODomestic Hardware and Packa ged SoftwareDomestic Hardware and Packa ged SoftwareThe Road A headThe Road A head


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Strate gic Trends 2009Strate gic Trends 2009--20102010N A SSCOM target of $60 billion in ITN A SSCOM target of $60 billion in IT--BPOBPOexports,and $73exports,and $73--75 billion,in overall s/w and75 billion,in overall s/w andservices,by 2011services,by 2011India excellently positionedIndia excellently positionedUS,UK, dominant marketsUS,UK, dominant marketsOutsourcin gOutsourcin g--primary growth driverprimary growth driverIndiaIndia--destination of choicedestination of choiceStrate gic Outsourcin g primary growth en gineStrate gic Outsourcin g primary growth en gineDelivery Models matureDelivery Models matureMultiMulti--shore outsourcin g modelshore outsourcin g model--India leadsIndia leads


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Global Trends YE 2009 [2008]Global Trends YE 2009 [2008]

Global tech spendin g $1.5 trillion in YE 2009,[1.6 trillion]Global tech spendin g $1.5 trillion in YE 2009,[1.6 trillion]

to exceed $2 trillion by 2010.to exceed $2 trillion by 2010.IT spendin g decline of 3.3%[growth of 3.3%.]IT spendin g decline of 3.3%[growth of 3.3%.]BPOgrew at 2.4% [7.3%]BPOgrew at 2.4% [7.3%]ITIT--BPO services account for 701 billion [ 701 billion].BPO services account for 701 billion [ 701 billion].Global Sourcin g spends reach $92Global Sourcin g spends reach $92- -96 billion [$8996 billion [$89--9393billion], to reach $ 110billion], to reach $ 110--120 billion in 2010.120 billion in 2010.Engineerin g and R&D $1100 billion [1030 billion]Engineerin g and R&D $1100 billion [1030 billion]Increasin g maturity of customers and vendorsIncreasin g maturity of customers and vendorsGlobal sourcin g consistently outGlobal sourcin g consistently out- -pacin g IT Services.pacin g IT Services.Service providers pushin g for a total outsourcin g Service providers pushin g for a total outsourcin g solution.solution.


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Key Statistics for the Indian ITKey Statistics for the Indian IT

Industry 2009Industry 2009--2010 (20082010 (2008--2009)2009)Indian IT Market $ 73.1 billionIndian IT Market $ 73.1 billion[ $69.4 billion][ $69.4 billion]Growth of 5.4% [11.8%]Growth of 5.4% [11.8%]Share of GDP 6.1% [5.8%]Share of GDP 6.1% [5.8%]S/w and Services Exports: $ 49.7 billionS/w and Services Exports: $ 49.7 billion[$47.3 billion] , Growth of 5.5% [15.6%][$47.3 billion] , Growth of 5.5% [15.6%]Domestic IT Market INR 1088 billion [$24.3Domestic IT Market INR 1088 billion [$24.3billion], Growth of 8.5%[5.1%]billion], Growth of 8.5%[5.1%]


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Indian IT Software & ServicesIndian IT Software & Services

Exports 2009Exports 2009--2010 (20082010 (2008--2009)2009)Exports account for 68.5% [66%] of total revenuesExports account for 68.5% [66%] of total revenuesS/w and Services Exports: $49.7 billion[$47.3S/w and Services Exports: $49.7 billion[$47.3billion], Growth of 5.5% [15.6%]billion], Growth of 5.5% [15.6%]IT Services $ 27.3 billion [$25.8 billion],IT Services $ 27.3 billion [$25.8 billion],growth of 5.8% [16.4% ]growth of 5.8% [16.4% ]BPO fastest growing export se gment $12.4 billion,BPO fastest growing export se gment $12.4 billion,[$11.7 billion],growth of 5.9% [17.4% ][$11.7 billion],growth of 5.9% [17.4% ]Engg . Design and Product Development,Engg . Design and Product Development,$10 billion [$9.6billion], growth of 4.2% [15.7%]$10 billion [$9.6billion], growth of 4.2% [15.7%]


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Key Statistics for the Indian ITKey Statistics for the Indian IT

Industry 2009Industry 2009--2010 (20082010 (2008--2009)2009)Direct employment : 2.3 million (2.2million]Direct employment : 2.3 million (2.2million]

Indirect Employment : 8.2 million[8 million]Indirect Employment : 8.2 million[8 million]Increase in Employment 90,000 [226,000]Increase in Employment 90,000 [226,000]BFSI and HiBFSI and Hi--Tech/Telecom, Manufacturin g,Tech/Telecom, Manufacturin g,Retail, are the lar gest verticalsRetail, are the lar gest verticals


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Trends in Global IT SpendingTrends in Global IT Spending--

20092009

Increased focus on RoI.Increased focus on RoI.Increased offshore spendin gIncreased offshore spendin gStrate gic Outsourcin gStrate gic Outsourcin g

Delivery ModelsDelivery ModelsCentralized decision makin gCentralized decision makin gMultiMulti--shore outsourcin g modelshore outsourcin g model


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Global IT Spending CY 2009 [2008]Global IT Spending CY 2009 [2008]

IT Services : $589b [$591b]IT Services : $589b [$591b]BPO : $112b [$110b]BPO : $112b [$110b]Packa ged S/w : $307b [$304b]Packa ged S/w : $307b [$304b]

SubtotalSubtotal---------------------- : $1008b [$1005b]: $1008b [$1005b]Hardware : $550 b [$600b]Hardware : $550 b [$600b]

TotalTotal --------------------------------------$1558b [$1605]$1558b [$1605]


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Global IT Services Spendin g Global IT Services Spendin g

CY 2009 [2008]CY 2009 [2008]IT SERVICES $589 billion [$557 billion]IT SERVICES $589 billion [$557 billion]

IT Outsourcing $235 billion [ $211 billion ]IT Outsourcing $235 billion [ $211 billion ]

Project Based Systems $204 billion [$196 billion ]Project Based Systems $204 billion [$196 billion ]

Support & Training $150billion [$149 billion]Support & Training $150billion [$149 billion]


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CY 2009CY 2009--IT Outsourcing ServicesIT Outsourcing ServicesIT OUTSOURCINGIT OUTSOURCING

IS Outsourcin gIS Outsourcin gNetwork & desktop Outsourcin gNetwork & desktop Outsourcin g A pplication Mana gement A pplication Mana gement

Hosted A pplication Mana gementHosted A pplication Mana gementHosting infrastructure ServicesHosting infrastructure Services


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CY 2007CY 2007----Project based ServicesProject based ServicesIT OUTSOURCINGIT OUTSOURCING--ProjectProject--basedbased

ServicesServicesIT ConsultingIT ConsultingSystems Inte grationSystems Inte gration

Network Consultin g & IntegrationNetwork Consultin g & IntegrationCustom A pplication DevelopmentCustom A pplication DevelopmentRemote Infrastructure Mana gementRemote Infrastructure Mana gement


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CY 2009CY 2009-- Support & TrainingSupport & TrainingIT OUTSOURCINGIT OUTSOURCING--Support & TrainingSupport & Training

H/w deployment & SupportH/w deployment & SupportS/w deployment & SupportS/w deployment & SupportIT Education & TrainingIT Education & Training


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Increased focus on RoI (2000Increased focus on RoI (2000- -

2009)2009)US companies overspent by up to $250 billionUS companies overspent by up to $250 billionfrom 1994from 1994--2001.2001.

Maximization on RoI for existing investmentsMaximization on RoI for existing investmentsIT investments are increasin gly being linked withIT investments are increasin gly being linked withperformance parameters,likeperformance parameters,likeefficiency,profitability,market share andefficiency,profitability,market share and

customer satisfaction.customer satisfaction.Emphasis on Implementation and inte gration ofEmphasis on Implementation and inte gration ofexistin g applicationsexistin g applicationsFocus on Maintenance and A pplicationFocus on Maintenance and A pplication

enhancementenhancement


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Indias Value Proposition 2009Indias Value Proposition 2009A bundant and Growin g Talent Pool A bundant and Growin g Talent PoolCost A dvanta geCost A dvanta geEmphasis on Quality & Information SecurityEmphasis on Quality & Information SecurityRapid growth in key Business InfrastructureRapid growth in key Business InfrastructureEnabling Business Policy & RegulatoryEnabling Business Policy & Regulatory

EnvironmentEnvironmentEnhanced value deliveryEnhanced value delivery


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Indias Value Proposition 2009Indias Value Proposition 2009New ThemesNew Themes

DiversificationDiversificationSpecializationSpecializationTransformationTransformationInnovationInnovation

ICT for Inclusive GrowthICT for Inclusive Growth


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Strate gic Outsourcin g Strate gic Outsourcin g Focus on lon g term strate gic outsourcin gFocus on lon g term strate gic outsourcin gHigh value ordersHigh value orders Vendor Consolidation Vendor ConsolidationA BN A mro $1.9b to IBM,250m to TCS, Satyam A BN A mro $1.9b to IBM,250m to TCS, SatyamBharti A irtel $1 billion to IBMBharti A irtel $1 billion to IBM

BT $I billion to Tech MahindraBT $I billion to Tech MahindraBank of China $100 million to TCSBank of China $100 million to TCSGM $300 million to WiproGM $300 million to Wipro


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Delivery Models 2008Delivery Models 2008--20092009Software Exports delivery model is increasin glySoftware Exports delivery model is increasin glybiased in favour of Offshore developmentbiased in favour of Offshore development

70% Offshore, 30% Onsite.70% Offshore, 30% Onsite.In 2001 the ratio was 44:56.In 2001 the ratio was 44:56.Offshore billin g rates are 30%Offshore billin g rates are 30%--35% of Onsite35% of Onsitebilling rates,vary from $10billing rates,vary from $10--45 per hour45 per hourOffshore revenues are lower than onsiteOffshore revenues are lower than onsiterevenues for the same quantity of work revenues for the same quantity of work Profitability is hi gher for offshore work Profitability is hi gher for offshore work


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Centralized Decision Makin g Centralized Decision Makin g

(2000(2000--2009)2009)Decisions are bein g increasin gly made atDecisions are bein g increasin gly made atthe Senior mana gement level rather than atthe Senior mana gement level rather than atthe CFO/CEOthe CFO/CEOIncreased sales cycle timeIncreased sales cycle timeRoI to be provedRoI to be proved


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Trends in Indian S/W andTrends in Indian S/W and

Services Exports 2008Services Exports 2008--20092009Share in Global IT spendin gShare in Global IT spendin gGeographical SpreadGeographical SpreadShare of MNCsShare of MNCs Verticals VerticalsMoving up the Value ChainMoving up the Value Chain


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Share in Global IT Spendin gShare in Global IT Spendin g

20092009--20102010Increase in Global Market share from 1.0 % in 2004 toIncrease in Global Market share from 1.0 % in 2004 to2.1 %, in 20062.1 %, in 2006--2007,to 3.8% in 20072007,to 3.8% in 2007--2008 4.7% in 20092008 4.7% in 2009--20102010US A is Indias lar gest market with a share in IndiasUS A is Indias lar gest market with a share in Indiasexports of 62% [60%] .exports of 62% [60%] .UK is Indias second lar gest market with a share in IndiasUK is Indias second lar gest market with a share in Indiasexports of 18% [19%].exports of 18% [19%].

Heavy dependence on just two marketsHeavy dependence on just two markets- -in fact twoin fact twocountries,US A and UK.countries,US A and UK.Indias software exports to the US A and UK alone was 80%Indias software exports to the US A and UK alone was 80%[79% ][79% ]


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IT ExportsIT Exports Key Partners 2009Key Partners 2009--

2010 [20082010 [2008--2009] ($ billion)2009] ($ billion)US A 62% [60%]US A 62% [60%]

UK 18% [19%]UK 18% [19%]

Continental Europe 12% [13%]Continental Europe 12% [13%]

A P A C 8% [8%] A P A C 8% [8%]

RoW [2 %]RoW [2 %]


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Geographical SpreadGeographical SpreadThe traditional markets are the US A and UK The traditional markets are the US A and UK Diversification into other En glish speakin g Diversification into other En glish speakin g markets like A ustralia, A sia Pacific,Canadamarkets like A ustralia, A sia Pacific,CanadaDiversification into nonDiversification into non--English speakin g English speakin g countries like Germany,France,Japan,Italycountries like Germany,France,Japan,ItalyCultural and Langua ge challen gesCultural and Langua ge challen ges


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Verticals Strate g y for IT Software Verticals Strate g y for IT Software

Services and BPO 2009Services and BPO 2009--20102010Important verticals are : Bankin g,FinancialImportant verticals are : Bankin g,FinancialServices, Insurance(BFSI) $20.1 billionServices, Insurance(BFSI) $20.1 billion

HiHi--Tech/Telecom $10.1 billionTech/Telecom $10.1 billionManufacturin g $7.9 billionManufacturin g $7.9 billionRetail $4.7 billionRetail $4.7 billionHealthcare $2.1 billionHealthcare $2.1 billionOthers $4.9 billionOthers $4.9 billion


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Verticals Market Drivers for IT Software Verticals Market Drivers for IT Software

Services and BPOServices and BPOFinancial Services : Re gulatory,Security,CRM,Financial Services : Re gulatory,Security,CRM,Reduce Costs , Risk Mitigation ,Web supportReduce Costs , Risk Mitigation ,Web support

Telecom: IP services,W A P,SMS, A pplicationTelecom: IP services,W A P,SMS, A pplicationInte gration,,Billing,DW,CRMInte gration,,Billing,DW,CRMManufacturin g : ERP,SCM,CRM,PDM,BI,SMEManufacturin g : ERP,SCM,CRM,PDM,BI,SMERetailin g : ERP,SCM,CRM,BI,Retailin g : ERP,SCM,CRM,BI,Utilities : Billing,Load Balancing, A sset M gt.Utilities : Billing,Load Balancing, A sset M gt.Healthcare:Patient Record&M gt,Claims Mgt.Healthcare:Patient Record&M gt,Claims Mgt.Travel/Transportation/Lo gistics :Ba gg ageTravel/Transportation/Lo gistics :Ba gg ageHandling,Ticketing,Travel websites,Car goHandling,Ticketing,Travel websites,Car goSecurity,Warehousin gSecurity,Warehousin g

Government : OnGovernment : On--line bills payment,Passports,Landline bills payment,Passports,Land--


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Moving

up the Value ChainMoving

up the Value Chain

Over 80% of the IT services exports comes fromOver 80% of the IT services exports comes fromtwo service lines : Development and Maintenancetwo service lines : Development and Maintenance

of Customized software applicationsof Customized software applicationsThe two service lines account for less than 10% ofThe two service lines account for less than 10% ofthe global IT services spendin gthe global IT services spendin gOther major IT Service lines include: SystemsOther major IT Service lines include: SystemsInte gration(18%), Packaged Software installationInte gration(18%), Packaged Software installationand Support(13%),IT Outsourcing(18%) ofglobal ITand Support(13%),IT Outsourcing(18%) ofglobal ITspendin g.spendin g.


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SWOT A

nalysisSWOT A

nalysis-- IndiaIndia

Stren gths:Stren gths:World class provider of software and servicesWorld class provider of software and servicesReputed for Quality and prompt deliveryReputed for Quality and prompt deliveryExcellent project mana gement skillsExcellent project mana gement skillsLarge pool of talented professionalsLarge pool of talented professionals

Excellent value for money(Low Cost High Quality)Excellent value for money(Low Cost High Quality)Excellent track recordExcellent track recordStron g Governmental supportStron g Governmental support


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WeaknessesWeaknesses

Most Indian software companies are small in size whichMost Indian software companies are small in size whichrestricts their ability to obtain lar ge projectsrestricts their ability to obtain lar ge projects

Most large Indian software companies have beenMost large Indian software companies have beenassessed at the SEIassessed at the SEI- -CMM Levels 4 and 5,however theCMM Levels 4 and 5,however theability of the medium and small companies to deliverability of the medium and small companies to deliverconsistently is in doubt.consistently is in doubt.Focus has been mainly on only two Service lines.BarriersFocus has been mainly on only two Service lines.Barriersto going up the Value chain exist.to going up the Value chain exist.Focus has been on limited verticalsFocus has been on limited verticalsHeavy dependence on the US and UK marketsHeavy dependence on the US and UK marketsLack of Industry specific knowled geLack of Industry specific knowled ge


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OpportunitiesOpportunities

N A SSCOMN A SSCOM--McKinsey report forecasts Indian ITMcKinsey report forecasts Indian ITservices exports at $60billion,by 2010,from $12.2services exports at $60billion,by 2010,from $12.2

($9.8)billion in 2003($9.8)billion in 2003--2004.2004.Exponential growth in BPO projectsExponential growth in BPO projectsOther high value add service lines openin g Other high value add service lines openin g up,includin g software products developmentup,includin g software products development

New verticalsNew verticalsNew Geographical marketsNew Geographical marketsIncreased Domestic spendin gIncreased Domestic spendin g


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ThreatsThreats

Lack of Strategic Plannin gLack of Strategic Plannin gLack of reliable InfrastructureLack of reliable InfrastructureLangua ge and Cultural issuesLangua ge and Cultural issuesGrowth of competitive markets like ChinaGrowth of competitive markets like China

Government barriersGovernment barriers- - BPO tax ?BPO tax ?Lack of Brand imageLack of Brand imageIP and FraudIP and Fraud


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BPO DriversBPO Drivers

GlobalizationGlobalization

Economic LiberalizationEconomic LiberalizationUse of English as Business lan guageUse of English as Business lan guageDigitization of Business ProcessesDigitization of Business ProcessesTelecom liberalizationTelecom liberalizationSkills shorta ges in developed countriesSkills shorta ges in developed countriesLarge pool of professionals in IndiaLarge pool of professionals in IndiaLow Cost High QualityLow Cost High Quality

InnovationInnovation


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Benefits of BPOBenefits of BPO

Reduced Costs, More ValueReduced Costs, More ValueComparable or Improved Service LevelsComparable or Improved Service LevelsBetter time matchin gBetter time matchin gNew business opportunityNew business opportunity

Customer focus on core competenciesCustomer focus on core competenciesLarge talent poolLarge talent poolRightRight--shore modelshore model


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BPO Service TypesBPO Service Types

CRMCRM Voice based Voice based--Marketin g,call centres and onMarketin g,call centres and on- -line technicalline technical

support ( A mazon, Daksh)support ( A mazon, Daksh)BPOBPOBack officeBack office -- A ccountin g,Inventory mana gement,HR,Credit A ccountin g,Inventory mana gement,HR,Creditappraisals,Loan Processin g, A irline reservations andappraisals,Loan Processin g, A irline reservations and

Loyalty programs(GE and A merican Express)Loyalty programs(GE and A merican Express)Content developmentContent developmentEngineerin g services,computer assistedEngineerin g services,computer assisted A nimation,Geo graphic Information systems, A nimation,Geo graphic Information systems,

ee--learnin g(Pentafour,Bechtel)learnin g(Pentafour,Bechtel)


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Evolution of ITeSEvolution of ITeS--BPOBPO

Copyright 2003 neoI T | All Rights Reserved.

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The Evolution of Offshore ITES/BPOThe Evolution of Offshore ITES/BPO

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Time to Offshore Maturity of Business ProcessTime to Offshore Maturity of Business Process

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finance and accounting

complex banking transactions


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BPO Country specificBPO Country specificcapabilitiescapabilities

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FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY090.00%

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Total Export s&Dome s tic Dome s tic Mar ket BPO Expor t s

T-BPO Export s % of G DP

ITIT--BPO Industry in India US$ billionsBPO Industry in India US$ billions


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Domestic ITDomestic IT--BPO Market 2010[2009]BPO Market 2010[2009]

Domestic ITDomestic IT--BPO market INR 1088 billion[INR 1,113BPO market INR 1088 billion[INR 1,113billion], growth 8.5%[20%]billion], growth 8.5%[20%]Domestic H/w Revenues INR 426 billion [INR 413Domestic H/w Revenues INR 426 billion [INR 413billion], growth 3%.billion], growth 3%.IT Services INR 423billion [INR378 billion],growthIT Services INR 423billion [INR378 billion],growth12%.12%.S/w Products INR 131 billion [INR 123 billion],S/w Products INR 131 billion [INR 123 billion],growth 6%.growth 6%.BPO INR 108 billion [INR 89 billion] ,growth 22%BPO INR 108 billion [INR 89 billion] ,growth 22%


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The Road A headThe Road A head------20112011

Dramatic increase in offshore services byDramatic increase in offshore services byexistin g customersexistin g customers

New Customers will relocate work to IndiaNew Customers will relocate work to IndiaFurther penetration in existin g serviceFurther penetration in existin g servicelineslines

Penetration in New service linesPenetration in New service linesIT service exports slated to reach $60IT service exports slated to reach $60billion by 2011billion by 2011


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The Road A headThe Road A head------20202020

IT Services & BPO exports $175 billionIT Services & BPO exports $175 billion6% of GDP,28% of annual exports.6% of GDP,28% of annual exports.30 million urban employed30 million urban employed- -direct &direct &indirect (6million direct,24 million indirect]indirect (6million direct,24 million indirect]Gender EqualityGender Equality--Women 50% of workforceWomen 50% of workforce

Infrastructure development:8Infrastructure development:8- -10 satellite10 satellitetownships in Tier I,10townships in Tier I,10--15 in Tier II.15 in Tier II.Domestic Market $ 50 billionDomestic Market $ 50 billion

ITBD Indian IT Industry 2009 2010

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