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Perspective 2020: Transform Business, Transform India Perspective 2020: Perspective 2020: Perspective 2020: Perspective 2020: Transform Business, Transform India Perspective 2020: Perspective 2020: Perspective 2020: Perspective 2020: Transform Business, Transform India
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Page 1: Perspective 2020 -  Nasscom

Perspective 2020: Transform Business, Transform India

Perspective 2020:Perspective 2020:Perspective 2020:Perspective 2020:Transform Business, Transform India

Perspective 2020:Perspective 2020:Perspective 2020:Perspective 2020:Transform Business,

Transform India

Page 2: Perspective 2020 -  Nasscom

11

PERSPECTIVE 2020: KEY MESSAGES

The Decade in Review

An unparalleled impact on the Indian economy in the last 10 years – 6% of incremental GDPgrowth; 45% of incremental urban employment (direct and indirect); 6-7x increase in tertiary education in top 7 states that account for 90% of industry exports

Significant returns to customers – annual savings of USD 20-25 billion in 2008 alone

A large unfinished agenda remains – Especially structural changes (e.g., tertiary education reform), have not been implemented

Global economic crisis will have a far-reaching and as yet uncertain impact on the industry. Near-term volumes and pricing likely to be under pressure.

While 10-year aspiration of USD 50 billion in exports in 2008 has largely materialised, extreme contraction in the global economy likely to delay achievement of the 2010 goal by at least 3-4 quarters

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2

THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON

THE INDIAN ECONOMY

Rapid growth in the last decade

Exports USD billion47

18

82

2009200520021998

CAGR 1998-

2009 (exports)

CAGR 1998-

2009 (domestic)

33%

26%

Areas of Impact Impact

Employment

Creation

• 45% of new urban

jobs created (1995-

2005)

Contribution to

Education

• 6-7x fold increase in

tertiary education in

exporting states

Diversity and

Global

Exposure

• Women in the

workforce estimated

to be 30%; new

entrants-45%

• 30% of delivery

outside India

Contribution to

Exports

• Exports offset close

to 65 per cent of

India’s cumulative

net oil imports over

past decade

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33

PERSPECTIVE 2020: KEY MESSAGES

Social, environmental and technology trends will create hitherto unseen opportunities (e.g., climate change, servicing SMBs) and risks (automation of core service lines) that could endanger up to a third of today’s market

Perspective 2020: An Altered Landscape

Global Megatrends

Demographic shifts will fuel the growth of new sectors (healthcare), markets (BRIC, Japan, Germany) and service lines (process transformation for productivity improvement)

A Redefined Market

The addressable market for global sourcing will triple in size from USD 500 billion today to USD 1.5-1.6 trillion in 2020. 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

Industry Outlook

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion in revenues by 2020. Focused initiatives and innovation-led growth can lead to additional revenues of up to USD 135 billion by 2020

The domestic component will grow to USD 50 billion, equal to today’s exports revenues. Focused initiatives can drive an additional USD 15 billion in revenues by 2020

Page 5: Perspective 2020 -  Nasscom

4

2008

2020

60

12

9

92

13

38

54

27

35

16

18

14

Retiree (60+ years), Millions

55

53Germany

83

75Japan

750

920

India

207

222US

40

41UK

39

37Italy

Working age (15-60 years), Millions

Regional share of global GDP, 1990- 2025

0

20

40

60

80

100

1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025

CAGR

4.2%

3.4%

6.3%

2.1%

3.0%

1.4%

North America

Europe

Japan

Asia (except Japan)

Latin AmericaMiddle East & Africa

SHIFT IN ECONOMIC AND DEMOGRAPHIC BALANCE

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5

2020 WILL PRESENT A DRAMATICALLY ALTERED

LANDSCAPE (1/2)

• Managing for cost,

productivity and quality

• Labour arbitrage dominant

value driver

• “Onshore/offshore” mindset

• Innovation, end-to-end

transformation, risk & compliance

• Access to talent and expertise

• Global value chain

2

Customers

Past decade

• Concentrated footprint

– 75% of Fortune 500

– 80% from US/UK

– 75% from BFSI*, Telecom,

Manufacturing

– 60% from IT services

2020

• Significant opportunity outside today’s markets

– SMB (Beyond Fortune 500)

– BRIC, GCC, Japan, ROW

– Public sector and healthcare

1 Market

Demand

* Banking Financial Services and Insurance

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6

2020 WILL PRESENT A DRAMATICALLY ALTERED

LANDSCAPE (2/2)

3 Talent

Supply

• India accounting for more

than 50% of the global low-

cost workforce

• Diversified talent pool with

globalised recruiting and HR

practices

• Delivery-centric

management

• Multiple management tracks,

globalised expertise

• Recruiting and training as

key differentiators

• Emphasis on learning,

knowledge management,

research spending

• Trainable talent pool • Deployable and specialized talent

pools

Past decade 2020

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7

Total revenue potential for global sourcing, 2020

USD billion

CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF

INCREMENTAL GROWTH BY 2020

Growth in

core

markets

• Not

adjusted for

potential

erosion due

to

automation

200

190

New

verticals in

developed

countries

• Public

sector

• Healthcare

• Media

• Utilities

230

New

customer

segments

• SMBs

380

Outsourcing

market in

new

geographies

• BRIC

Up to 80% of growth from

markets that are not core today

1,500

Core

markets

2008

• 6 verticals*

• N. America,

Europe,

Japan

• Large

enterprises

500

* BFSI, telecom, retail, pharma, manufacturing, travel

Page 9: Perspective 2020 -  Nasscom

88

PERSPECTIVE 2020: KEY MESSAGES

Transform Business, Transform India

Reinventing Business Models

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Providers should consider distinctive approaches, each building on a source of competitiveness, with distinct performance markers and imperatives

Fostering Innovation in Business

India can become a laboratory for innovation for the world and own business systems in at least 3 areas – energy efficiency and climate change, mobile applications, clinical research outsourcing

Catalysing Inclusive Growth Through ICT

ICT-enabled solutions in healthcare, education, financial services and public services can drive socio-economic inclusion of 30 million citizens each year, faster, cheaper and more effectively than traditional models

Page 10: Perspective 2020 -  Nasscom

9

THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING

TECHNOLOGY TO ENABLE INCLUSIVE GROWTH

Healthcare

Potential of ICT solutionsAreas

50% of Indians do not have access to primary healthcare

• Technology can provide it at half the cost of traditional

solutions

Financial services

80% of Indian households do not have bank accounts

• Technology can enable access to 200 million families

EducationIndia faces a 3x shortage in teachers

• Technology can address this through remote solutions

Public services

40-50% of public food distribution in India does not reach the

targeted groups

• Technology can ensure efficiency and transparency

Page 11: Perspective 2020 -  Nasscom

10

PERSPECTIVE 2020: KEY MESSAGES

India’s opportunity at risk

India’s market share can decline by 10% by 2020 and be lost to other aspiring nations. In this case, export revenues would reach USD 175 billion in 2020 (an additional USD 50 billion is at risk due to protectionism).

With focused initiatives, the industry has the potential to achieve over USD 300 billion in revenues

Page 12: Perspective 2020 -  Nasscom

11

India’s technology and business services export market in 2020 – scenarios*

USD billion

AN OPPORTUNITY OF UP TO USD 150 BILLION COULD

BE AT RISK IN 2020 (1/2)

Likely scenario

Growth multiple

CAGR

FY 2020-Focused Initiatives and Innovation - driven growth

225-310 135

• Expedited reforms in tertiary education

• 10-15 Tier II cities with world class infrastructure

• Adoption of new business models by the industry

• India among the top 3 innovation hubs of the world

• Talent pool of 13.5 million

7.7x 18.6%

FY 2020-Current Initiatives

• Slow pace of reforms in education (talent pool of 10 million)

• Limited development of Tier II, III cities

• Continued trust as a sourcing hub

• Continued government support

• Limited lash back from protectionism

4.4x 13%

175

FY 2008

40

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12

Indian domestic technology and business services market in 2020 – scenarios

USD billion

AN OPPORTUNITY OF UP TO USD 150 BILLION COULD

BE AT RISK IN 2020 (2/2)

Likely scenario

Growth multiple

CAGR

• GDP CAGR of ~5.5%

• Moderate IT adoption across verticals

• Significant government thrust on IT adoption including broadband rollout

• Reinvented business models

FY 2020 - Current Initiatives

4.2x 12.6%

50

65

• GDP CAGR of ~7%

• Significant IT adoption across verticals

5.4x 15%

FY 2020 - Focused Initiatives and Innovation Led Growth

15

FY 2008

12

Page 14: Perspective 2020 -  Nasscom

13

PERSPECTIVE 2020: KEY MESSAGES

An agenda for action

Success will rely on concerted action by industry stakeholders (Companies, NASSCOM, Government) anchored on a five-fold vision:

• Catalysing growth beyond today’s core markets

• Establishing India as a trusted global hub for professional services

• Harnessing ICT for inclusive growth

• Developing a high calibre talent pool

• Building a preeminent innovation hub in India

Page 15: Perspective 2020 -  Nasscom

14

Catalysinggrowth beyond

today’s core markets

Establishing India as a

trusted global hub for

professional servicesHarnessing

ICT for inclusive growth

Developing a high calibre

talent pool of over 3 million

people

Building a preeminent innovation

hub in India

Five themes

15

2

3

4

14

• Winning through the downturn

• Reinvented business models

• New verticals, geographies, customer segments

• Robust domestic demand

• Infrastructure

• Corporate governance

• Risk management and security

• Global branding

• ICT solutions for healthcare, education, financial services, public services

• Connectivity and access

• Soft infrastructure

• Quality scale of tertiary education

• Curriculum and faculty quality

• Intellectual property framework

• Centres of Excellence

• Entrepreneurship

SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A

FIVE-FOLD VISION

Page 16: Perspective 2020 -  Nasscom

15

ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED

MANNER (1/2)

India as a trusted global hub for professional services

• Improve urban infrastructure and public services in 10-15 Tier II, III cities; incentivise through STPI extension

• Global awareness to

reposition India as a

trusted sourcing hub

• Develop self regulatory

framework to adhere to

world class standards

in corporate

governance and risk

management

Areas Government NASSCOM Industry

Catalysinggrowth beyond today’s core markets

• Foster domestic

demand through

national CIO office,

allocate 1-3% of budget

on e-governance

• Become a brand ambassador for global services

• Investing in new business models to tap into new geographies and verticals

Harnessing

ICT for inclusive growth

• Create a national information structure, (Internet connectivity, national ID, ICTliteracy)

• Collaborate with

government to develop

a national blueprint for

IT-enabled solutions for

major public services

• Collaborate to create

interoperable

applications and

standards, such as

integrated hospital

management systems

ILLUSTRATIVE

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ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED

MANNER (2/2)

Developing a high caliber talent pool of over 3 million people

• Educational reforms to facilitate increased private participation in higher education

• Scale up certifications

and faculty

development by 50x

• Invest in building a

specialized talent pool/

globalised workforce

Areas Government NASSCOM Industry

Building a Preeminentinnovation hub in India

• Allocate 2% of national budget for research

• Create quality institutions to increase PhD holders to 200,000 by 2020

• Roadmap and collaboration for developing 3-4 innovation hubs around climate change/mobile applications/clinical research

• Increase R&D

spending and co-invest

with universities to

drive research

ILLUSTRATIVE

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17

THE INDUSTRY CAN HAVE AN UNPARALLELED IMPACT ON

INDIA’S ECONOMY AND SOCIETY BY 2020

Employment

• 30 million urban employment (direct and indirect)

• Significant job creation in rural and non-metro areas

• Increased diversity (women are 50% of the total workforce)

• Significant global career opportunities due to location-independent

models

Reduced fiscal burden

• ICT can provide solutions at a fraction of the cost of traditional

solutions and reduce public spend on these areas (healthcare,

education, financial services and public services)

Economy• 6% of annual GDP

• 28% of annual exports

Areas Contribution of Indian technology-business services by 2020

Growth outside metro cities

• Infrastructure development

– 8-10 satellite townships around Tier-I cities

– 10-15 Tier-II cities with upgraded basic and business

infrastructure

Globally reputed

innovative

solutions

• Additional revenues of USD 50 billion-80 billion through

innovation, driving additional GDP contribution of 1.5-2%

ILLUSTRATIVE