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NASSCOM Delegation to Africa 2012


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In this brief presentation on 'The Evolution of the IT industry in India and Opportunities for Africa' Sriram Bharatam shares some of the key facts about the evolution of the Indian ICT industry and …

In this brief presentation on 'The Evolution of the IT industry in India and Opportunities for Africa' Sriram Bharatam shares some of the key facts about the evolution of the Indian ICT industry and its growth patterns and key learnings.

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  • 1. The evolution of the IT industry in India and opportunities for AfricaSriram BharatamCEO & Founder, iridiumInteractive LimitedSeptember 2012
  • 2. INDIAN IT-BPO INDUSTRYIndian IT-BPO industry revenue crossesUSD 100 billion IT-BPO revenue aggregate1 USD billion 7.5% 7.1% • Total revenue: ~USD 101 billion 6.7% 6.5% 6.4% 69 • Relative to India’s GDP: ~7.5 per 59 cent 47 50 • Relative to merchandise exports: 41 ~25% 32 29 • Value add: 60-70 per cent 22 22 24 • Exports CAGR: 17 per cent for last 5 years FY2008 FY2009 FY2010 FY2011 FY2012E • Domestic CAGR in USD: ~10 per Exports Domestic Percentage of GDP cent – reflects impact of variable rupeeNote: 1) Exports (IT services, software products, OSPD, ER&D, BPO, hardware); Domestic (Hardware, IT services (incl. ER&D), S/W products, BPO) E: EstimateSource: World Bank, NASSCOM
  • 3. INDIAN IT-BPO INDUSTRYThe industry to provide employment toabout 12mn people in FY2012 FY2012 Estimates Direct Employment (’000) (Mn Nos) ~10.2mn ~11.7 2,770 2,540 2,300 601 562 525 876 ~8.9 826 774 1,153 1,295 1,000 Indirect FY2010 FY2011 FY2012E ~2.8 IT Services exports BPO exports IT-BPO Domestic Direct Total Emp • IT-BPO industry expected to employ around 2.8 million professionals (growth rate of 9 per cent) in FY 2012 • IT service exports remains the largest employer, with around 47 per cent share of total direct employment*Excluding HardwareSource: NASSCOM
  • 4. INDIAN IT-BPO INDUSTRYIndian IT-BPO exports continues on thegrowth path in FY2012 IT-BPO Export revenues* (USD billion) 68.7 • India’s share in global sourcing - 58 per 16.3% cent in 2011, up from 55 per cent in 2010 59 13.0 • IT services exhibiting fastest growth at 19 per cent, BPO growing by 12.2 per 11.3 cent, and Software Products & ER&D by 15.9 15 per cent 14.2 • Transformation, new business models, driving organisation wide efficiencies 39.8 33.5 • Services around disruptive technologies- cloud, mobility, analytics, social media • Flexible product portfolios, verticalised FY2011 FY2012E solutions IT Services BPO S/W prod and EnggSource: NASSCOM * Excluding Hardware
  • 5. INDIAN IT-BPO INDUSTRYIncreasing focus on diversifying into newgeographies and verticals Industry Geographic break-up, FY2012 Industry Vertical break-up, FY2012Industry Growth in emerginggeographies and 21% verticals ~1.4X more than 17% mature segments Geographic break-up, Q2FY2012 19.5% Vertical break-up, Q2FY2012 Revenue (top 10 companies) (top 10 companies) breakup of top 10 Indian companies demonstrates this 5Source: NASSCOM
  • 6. Impact of the industry on theIndian economy Learnings for Africa
  • 7. Lasting, Sustainable and Phenomenalcontribution over the last decade Contributing to India’s economy Driving Balanced Regional Development Multi-fold impact on the Indian Empowering the diverse human assets Economy Creating Innovation Platform Putting India on the Global map Socially responsible and inclusive
  • 8. Catalysing India’s transformation to aservices-based economy Indian IT-BPO Industry’s contribution to GDP • Contributes to 10% of India’s service sector revenues 6.0% • Unique “service led” export oriented model 1.2% • Contributing 9% of India’s incremental GDP FY98 FY09 • Per capita GDP contribution of IT-BPO employees ~ 80 times 50% that of agriculture 40% Decline 30% 20% Decline 10% Decline • By 2020, expected 0% Rise 10.0% to account for FY02 FY05 FY09 –~10% of Indias GDP Trade, Hotels,Transport & Comm –14% of total IT-BPO services sector Community,Social & Personal Services revenues Financing, Insurance, Real Estate & Business Services
  • 9. 8X increase in direct employment;3X increasein the share of organized private sector Direct employees (000) ~8x 2,200 284 FY00 FY09 Direct employment of 2.7 million; Indirect employment ~8 million 45% of total incremental urban employment in the last decade By 2020 - Direct employment of 10 million; Indirect employment of 20 million
  • 10. Employment opportunities for diversesections of the society  ~58% of the IT-BPO workforce is from tierEmployment 2/3 cities •Changing aspirations ofbeyond India’s youthUrban areas  ~ 56% employees are chief bread earners  ~31% women employees in FY09; account for •Created high paying jobs 45% of new intake Bridging the  ~26% of the female employees are chief wage •Setting new standards of gender divide earners  ~20% of the female employees are at work environment managerial level or above •Emerging as a “Skill Factory”  ~74% of employees are less than 30 years Empowering the old; youth  ~35% are less than 25 years of age By 2020 Livelihood for  ~5% of the IT-BPO workforce from 5 mn women Economically economically backward sections employees backward 4 mn direct employees from  ~60% of companies provide employment to tier 2/3 locationsEmploying the differently abled peopleDifferently abled *NASSCOM Evalueserve survey findings, 7500 participants pan India
  • 11. By 2020, this industry can become a strategic growthengine for India Areas Contribution by 2020 IT/BPO industry size Economy ~10% of annual GDP US$ billion 18-20% of annual exports 360-375 Employment 30 million employment opportunities (direct and indirect) Job creation in rural and non-metro areas - 20-fold increase in the number of employees operating from tier 2/3 locations Increased diversity (women are 50% of the 6x total workforce) Significant global career opportunities due to location-independent models Balanced 8-10 satellite townships around Tier-I cities 64 Regional Growth 10-15 Tier-II cities with upgraded basic and business infrastructure Reduced fiscal ICT can provide solutions at a fraction of the 2008 2020 burden cost of traditional solutions potential1 Globally reputed Innovation driving additional GDP innovative contribution of ~2% solutions*Innovation driven growth scenario
  • 12. India and AfricaHow can we work for a win-win?
  • 13. India and AfricaIndia and Africa • Historically shared friendly tiesMutual respect • Healthy trade, but largely dominated by commodities and natural resources 13
  • 14. African Closer countries toPartnership India as a economic and realise theirwith African CATALYST of commercial developmental countries development relations with aspirations in India can help Information Technology 14
  • 15. Africa – The Next Billion• 50+ Countries with a population of 1 billion+• Fastest growing ICT market worldwide – Growth 50% YOY largely dominated by growth in mobile phones• In last 5 years cellular market grew 5000% (400mn+ Telecom Subscribers); internet grew 630%• According IDC, Africas IT market is expected to be $22.53 billion in 2010• According to World Bank estimates, Africa needs over $90 billion per year to build the infrastructure it needs to support growth and meet stated development goals.• High tech business on the agenda of many African governments which is seen as a catalyst for development Source: Avasant
  • 16. Current Trends Positive Govt. ActionsIncreasing • Democracy • Economic • Increased spending targeted towards poverty Liberalization Robust Economic alleviation and social growth • Positive • WB, EU, AfDB providing $70 Growth Leadership bn + of aid • Favorable investment • Targeted action focusing Improved climate governance and education Optimism • Rising Stock Markets • ICT seen as a key driver to • Stronger Currencies achieve Millennium • Falling Interest Rates Development Goals (2015) Decreasing • Corruption • Violence • Political instability Huge needs in areas of e- Govt, Education, Security, H ealthcare and across private sectors are driving demand for ICT in Africa Source: Avasant
  • 17. Advantage for Indian industry • Africa has huge unmet ICT demand. Governments and business that were apprehensive till some time Right Time back have realized the potential of ICT and are willing to invest • Lack of service provider maturity has prevented many Lesser from outsourcing. Availability of competent providers Competition can unlock the potential, • Current deficit of credible Tier II and Tier III players • Brand India is no.1 in ICT Brand India • High respect for Indian companies and professionals.Source: Avasant
  • 18. The Win-Win OpportunityFor African region region For African India For India• Access to large pool of • New opportunity across specialist manpower IT-Services, BPO and• Use Innovative solutions Engineering Services. to solve problems • Access to a relatively• India has many untapped t IT-Services challenges that are market. different from Western • Opportunity to leverage markets, and Indian the strong cultural, trade companies have devised and historical affinity solutions that address with India these challenges • De-risk from over• SMEs have an dependence on the opportunity to establish English speaking themselves in a markets competitive market 18
  • 19. In conclusion Demand for IT/BPO services is strong driven by evolving business models; reducing product / service life cycles Verticals in focus for developing the African region Banking, financi al HealthcareE-Governance Education Telecom services, insuran industry ceNew models of partnership will have to be created 19 16-Oct-12
  • 20. Thank you