Opportunities for Indian I

8/7/2019 Opportunities for Indian I

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Opportunities for Indian I.T.Opportunities for Indian I.T.

industry beyond U.S. marketsindustry beyond U.S. markets

Presented by:

Shashwat Sharma

93048



Problem StatementProblem Statement

y The strong dependence of Indian IT

industry on US market is an issue of

major concern.

y Competition from other emerging

economies.

y The project aims to find out the potentialareas where Indian IT players can expand

their market.



Objectives of studyObjectives of study

Part 1:

Doing Industry Analysis of Indian IT services industry andidentifying problems.

Part 2:Identifying and analysing opportunities in domestic market.

Part 3:

Identification of Potential geographies for Market Expansion.

SWOT analysis of identified geographiesRecommendations for devising entry strategies.



Research designResearch design

Secondary sources involves:

y Reports, journals and articles from all the majorIT associations throughout the world.

y Information from Web-sites of companies

y Directors Report of various companies in thesector

Primary sources involve:

y Personal interview with key executives in ITcompanies.



RespondentsRespondents

y Mr. Tarun Chanana (Sr. Consultant, Amdocs)

y Mr. Narayanan Ganeshan (IT Head, Asia Pacific Region,Metso)

y Ms. Neha Verma (Lead BD Manager, Gvt. Accounts, HCL

Commnet)y Mr. Raghav Aggarwal (Business Analyst, Infosys)

y Mr. Harish Menon (VP Sales, Futuresoft Solutions)

y Mr. Manjit Samrah (Sr Associate Consultant, Infosys)

y

Mr. Tarun Gurnani (Functional Consultant, Wipro Infotech)y Mr Shashank Garg (Project Manager, TCS)

y Ms. Priya Jaiswal (Business Manager, QAI Global)

y Mr Sagar Jain (Team Lead, Tech Mahindra)



QuestionnaireQuestionnairey Ques 1: Do you think Indian IT industry is too much

dependent on US clients? What in your opinion areimplications?

y Ques 2: What are the major challenges that Indian IT

industry is facing nowadays?

y Ques 3: Is domestic market, including government sector,lucrative enough to sustain the IT industry?

y Ques 4: What are the emerging markets, in your opinion, thatcan be targeted to lower the dependencies on the US?

y Ques 5: How easy or difficult is to work in these countriesor work with the clients from these countries?



Industry AnalysisIndustry Analysis



IntroductionIntroduction

y A high percentage of economic growth in

India can be attributed to IT and ITES.

y Global IT services industry $300 bn.*

y India·s share $50 bn.* (about 16%)

y More than 100 of Fortune 500 companies

outsourced to India.

y Grown over 300% over last 10 years.

Source: IDC figures FY2010



The genesisThe genesis

y Foundation laid in late 80·s.

y A combination of resource endowments,encouragement from govt and great timing.

y IT revolution in developed countries.y Shortage of skilled manpower.

y A substantial number of Indians working in USfirms at high positions struck a chord with Indian

suppliers.y Low investment and government

encouragement New start-ups.



Characteristics of Indian IT industryCharacteristics of Indian IT industry

y Export oriented (90% exports)

y Export market for customization and

consultancy while domestic for s/w

packages and ready-made products.

y Export market for low-level design,

coding and testing. Wider range of

services for domestic. Eg. BSE and Railwayreservation by CMC.



(1981-2010)



Challenges for Indian IT industryChallenges for Indian IT industryy Sustainability of high growth rate of software exports in

future.

y Shortage of skilled labour. (75% engineers unemployable:Nasscom Report)

y Low diffusion of information technology in the domesticmarket

y Computer hardware industry could not keep pace with thesoftware industry.

y Rupee Appreciation and US Economic Slowdown

y

Software services and not products exported

Dependency

y Regional Concentration: There is high concentration of software industry in seven metropolitan cities (tier 1)across India.



SWOT analysis of IT industrySWOT analysis of IT industryStrengths

y Cost advantage due to labor arbitrage

y High level of customer relationship management

y Strong management team

y Strong financial position

y

Low Pricey Pool of English speaking skilled employees

y Unique customized products

Weaknesses

y Over dependence on US market

y High Employee cost in terms of attritiony Low R&D

y Least presence in Economies like Japan and China

y Not diversified product lines



SWOT (cont.)SWOT (cont.)Opportunities

y Acquisitions

y To be a more product centric business portfolio

y Emerging markets and expansion abroad

y To strengthen domestic presence

y

Product and services expansiony To strengthen its Consulting business

Threats

y Competition both from international firms from countries like Philippines,China etc.

y Cheaper technologyy Economic slowdown

y External changes (government, politics, taxes, etc)

y Exchange rate fluctuation

y Changing consumer sentiment in places like UK & US



Source: NASSCOM



Dependence on USDependence on US



Sources of revenue(industrySources of revenue(industry--wise)wise)

BFSI48%

Hi-Tech/Telecom

18%

Manufacturing

6%

Retail8%

Media/Publishi

ng4%

Construction3%

Healthcare4%

Airlines2%

Others7%



Problems with US dependencyProblems with US dependency

y Too much dependence on a single economy

y Obama·s stand on outsourcing to curb

unemployment.y Tax deferral benefits for companies

outsourcing to be ended.

y

Still struggling to come out of economic crisis.y H-1B hiring ban for companies getting bailout.



Example of InfosysExample of Infosys

Source: Infosys Annual Report



Opportunities inOpportunities inDomestic MarketDomestic Market



Opportunities in Public SectorOpportunities in Public Sector

y National e-Governance Plan (NeGP) tobring public services online. Rs 50,000 Crore tobe spent in next 5 yrs.

y Mission Mode Projects(MMPs) at state level.

y State Wide Area Networks (SWANs)

y Plan already approved for 29 states and 6 UTs

y

Establish and maintain network from StateHeadquarters upto the Block level with aminimum bandwidth capacity of 2 Mbps

y Total outlay of Rs 3,360 Crores.



State Data Centres (SDCs)

y important elements of the core infrastructure forsupporting e-Governance.

y create data repositories/data centres in variousStates/Uts

y

Rs. 1623.20 crore already sanctioned in 2009.

El ectronics / IT Hardware Manufacturing

y A Special Incentive Package Scheme (SIPS) wasannounced in March 2008 to attract investments in

semiconductor fabrication and nanotech manufacturinin India.

y A strong boost for IT hardware manufacturing.



y Information Technol ogy Investment Regions

(ITIR)y Govt identified tier-2 tier-3 cities and develop

infrastructure for IT growth.

National Informatics Centre (NIC)

y Backbone of e-governance and IT infrastructure.

y Setting up a satellite based VSAT network linking

all districts. One of its kind in developing world.y Will outsource most of application s/w to private

sector players.



Opportunities in Private SectorOpportunities in Private Sector

y A huge potential left untapped in Indian

industry.

y Indian industry·s mindset still a little

apprehensive about huge IT spending.

y Try to promote more end-to-end

solution and consultancy.

y Need for change in market strategies.



Opportunities inOpportunities in

International MarketsInternational Markets



EgyptEgypt

y Egypt's IT spending is expected to increasefrom US$1.3bn in 2010 to US$2.1bn by2014.

y IT industry expected to grow by 12% CAGR

2010-14y Emerging IT growth markets and

outsourcing destination.y Number of policies to attract foreign

investment in IT sector.y Wipro, Mahindra Satyam already investing

big time.



y

Many Egyptian firms working for clients inmiddle-east.

y IT implementation in big companies. SMEs also

gaining pace.

y A good access to African as well as middle-

east markets.

y Good trade relations with India. Fourth largest

trade partner of Egypt.





UAEUAE

y UAE IT sector to grow to $4.7 billion by2013.

y Industry still to utilise full potential of IT

services.y Even big firms did not have a dedicated

CIO·s office but now have a fullydocumented IT strategy.

y Only 10% of IT services are being off-shored. Expected to grow to 30% in next5 years.



y Currently China gets 50%of this business.Indian companies get 13% followed by

Philippines and Vietnam.

y

Launch of Dubai Outsourcing Zone in 2008.y Big opportunities of CRM packages in travel

and tourism industry.

y Coordial bilateral relations with India. About 1

million Indian expatriates.





Nordic CountriesNordic Countries

y Higher IT adoption is supported by

world-class telecommunication

infrastructure and government policies.

y IT services market estimated to be about$ 12 billion. Growing at 7-8% CAGR.

y Huge demand of IT services in SMEs that

want to emulate growth patterns of bigger companies.



y

Entry point for Indian companies into lucrativeEuropean market.

y Many Nordic companies are establishing

Shared Service Centers(SSCs) in East Europe

and India.

y Trade relations with India good. Many Nordic

firms have investments in India. Wipro

providing IT services since 2008.







ConclusionsConclusions

y Factors to be considered for judging thefeasibility of software exports

y Demandy National Vision and Strategyy International Linkages and Trusty Software Industry Characteristicsy Domestic Input Factors/Infrastructure

People Technology Finance

R&D



Entry StrategiesEntry Strategies

y Early Entrant Strategies

y Value Addition

y Diversification

y Innovation

y Late Entrants

y Low Cost

y Market Niche



Thanks. Questions pleaseThanks. Questions please

Opportunities for Indian I

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