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Points covered: The Indian IT/BPO Industry. The story so far.. ...

Points covered: The Indian IT/BPO Industry. The story so far..
BFSI – The dominant vertical
BFSI – Will it grow as a vertical ?
PE/VC interest high
The “Non Linear” Path..
Looking Ahead
Presented by Ramit Sethi, June 2013

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Indian IT - BPO Industry BFSI Presentation Transcript

  • 1. Indian IT/BPO Industry | BFSIRamit SethiJune 2013
  • 2. 22Agenda• The Indian IT/BPO Industry. The story so far..• BFSI – The dominant vertical• BFSI – Will it grow as a vertical ?• PE/VC interest high• The “Non Linear” Path..• Looking Ahead
  • 3. 33Indian IT/BPO | The Story so far ..• Size of Industry USD108bn in 2013. 8% of India GDP.• Exports from India USD 76bn. Key Markets US (61%) & UK(17%)• Very Profitable ~ 20%-25% margin. Large Cash Reserves.• Excellent Hiring engine; Infrastructure and Ability to Scale.• Inorganic Growth path used selectively to growCapability, Customers and Geography.• Global Delivery Model/ Time & Material price at the heart ofthe offerings. It worked well !• Domestic India market growing.. But low margin.• Social, Mobility, Cloud and Analytics. Promising but small.• The quest for a viable “Non Linear” play continues..What got them here, wont be enough…!
  • 4. 44BFSI - The dominant vertical• With a 41 % market share of the industry, you cant ignore it• Mature in its outsourcing models and pricing models.• Captives, to Managed services to Virtual Captives. All tried !• BFSI has genuine Vertical processes, in addition to the usualhorizontals like F&A, HR etc.• Low hanging fruit taken! CustomerService, Cards, Mortgages, Capital Markets all been done.• Client set expansion and new geographies being explored.• Move to KPO – Research & Analytics. Bundled with BPO.• Pricing under squeeze.So is this saturated..? Not really!
  • 5. 55BFSI – Will it grow as a vertical ?• Legacy annuity business stable.• Cost pressures / Reorganisation / Regulatory Needs, drive furtherspending in IT/BPO.• Mature markets will innovate.. New markets will follow the old trend.• Products Vs Process. Utilities.• Increasingly the need for a joint IT/BPO solution. Managed Services?• Regulatory Load increasing. Dodd Frank / Basle / IFRS.. It wont stop• New Emerging Trends : Social, Mobility, Could & Analytics. How willthese affect legacy systems ? Risk ? Delivery ?• Captive Vs Third party. Structures.• Pricing models. Leverage balance sheet.New deal structures, delivery models and markets.. Will drive new business.
  • 6. 6Source: Venture Intelligence / NASSCOM 2013156237PE/VC Deals byVolumeIT/BPO Others40% of all PE/VCDeals were in IT/BPO3.25.47PE/VC Deals by ValueUSD BnIT/BPO Others37% of all PE/VCDeals by Value were IT/BPO2012 – Volume or Value. Both are significantPE/VC interest in the IT/BPO sector – High
  • 7. 77The “Non-Linear” path.. is possible• Investments in IP led platforms and products.• Leverage Balance Sheet strength. Capex to Opex ?• Pricing Models. “Outcome based” and “Pay per use”.• Bundling of solutions. IT/BPO/Consulting.• KPO services.• Data into Insights. Analytics.• Catch the new Emerging Areas. Social, Cloud and Mobility.• Structure Large Deals. Quasi M&A portfolio.Are just some examples…
  • 8. 8IT/BPO will use M&A to grow.• Adding scale /size.• Expanding to newgeographies.• Gain domain expertise• Set-up global deliverycapability.Inorganic Route to Growth - M&A’sSource: NASSCOM2006-2008 2009 - 2013WNS - Aviva BPO Serco – IntelenetTCS – Citi BPO Genpact – HeadstrongEDS – Mphasis BPO iGate – PatniWipro – InfoCrossing Tech Mahindra -SatyamHCL – Axon Infosys - LodestoneIt’s Quicker !
  • 9. 99Looking Ahead – Key Imperatives• Non Linear Strategy in place ?• Use the Cash. Large Deals / M&A• Recognise “Captives”. Think BOT.• Domestic Market Delivery Model (DMDM). Cheaper / different• Move DMDM to new difficult geo’s. Europe / China /Japan.• Embrace emerging new trends. SMAC.• Bundle Offerings. Dig deep.• Defend US business. Currency / H1B visa…Interesting times to watch these companies make the turn !
  • 10. 10Ramit Sethi – Presenter ProfileA seasoned business executive with 25 years of leadership experience inGlobal Banking, Corporate Finance, M&A, Corporate RestructuringAdvisory, Business Process Outsourcing (BPO) / Knowledge ProcessOutsourcing (KPO) industries and Eco Energy. Chartered Accountant.StrongBox Ventures, Founder & CEO – Advisory Services since 2012.Founded CareerCo, an online assessment and counselling company.Wipro - Senior Vice-President and Global Head - Financial Services (BFSI)BPO/KPO businesses. Built the business. Opened Poland / China. 2007 - 2012Infosys BPO - Member, Executive Council. Built the KPO services.2005-2006.KPMG India – Partner, Corporate Finance & Head, Restructuring Services.Several M&A, valuations and advisory deals. Won “Emerging Market Deal ofthe Year in 2004”. Built Restructuring Services for India. 2000- 2005.13 years with Standard Chartered Bank (SCB). India & Dubai.
  • 11. 11Thank You!Ramit Sethi16/2 Friends Colony - West,New Delhi, Indiawww.sboxx.inEmail: ramit.sethi@sboxx.inPh: +91 98183 70000