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Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
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Lse 4th December 2009
Lse 4th December 2009
Lse 4th December 2009
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Lse 4th December 2009

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  • Talking point – Lowest penetration in IT Outsourcing and highest growth expected
  • Wipro has a well balanced portfolio of services and has been an early investor in areas like BPO, testing, infrastructure management and R&D services - segments where we have grown to be industry leaders today. Wipro has also been an early mover in expanding its development centers to new geographies like Japan, China and Europe, where we are today the largest Indian service provider.
  • Wipro’s vision to emerge as one of the top five global service providers will be driven by strategic investments in the future in creating a global footprint, in perfecting the global delivery model through investments in delivery frameworks and IPs, investments in incubating new services and industry point solutions that are aligned with our customers’ business needs
  • To drive the full range of benefits available from global sourcing, ensure that cost-considerations don't outweigh or preclude the need for business growth, speed and agility. More options for services, delivery models, vendors and suitable country locations. The level of maturity of services, providers and country options is not uniform, so careful selection and review is needed for successful sourcing decisions.
  • Wipro has been growing ahead of industry growth rates with the combined technology business registering a CAGR of 36% in the past five years. With 180 Global 500 customers, 72000 people and a growing global presence that includes offices and development centers in 53 countries, Wipro’s vision is to emerge as among the top 5 global services provides by 2010.
  • © 2008 Capgemini. All rights reserved
  • © 2008 Capgemini. All rights reserved
  • © 2008 Capgemini. All rights reserved
  • © 2008 Capgemini. All rights reserved
  • Transcript

    • 1. The Evolution of the Indian Software Services Industry and their impact on the Global Competitive Landscape Kees ten Nijenhuis Senior Vice President Europe
    • 2. Global Demand at $1.7 Trillion Confidential © Copyright 2007 Wipro Ltd Source: IDC- Nasscom Geographical Distribution of 2006 Global Technology Related Spend Global Technology Related Spend ($ Bn)
      • Global Technology related spend estimated at $1.7 Trillion, growing at 4-5%
      • Americas contribute the largest share – 59% of IT+BPO and 41% of Engineering spend
      Source: Nasscom Geography IT Services BPO Combined IT + BPO   Engineering Spend Share YOY% Share YOY% Share YOY%   Share YOY% Americas 50% 7.0% 68% 10% 59% 8.7%   41% n.a Europe & ME 35% 6.5% 20% 9% 28% 7.3%   33% n.a Asia-Pacific 15% 7.5% 12% 20% 14% 12.7%   21% n.a Total ($Bn) 470 6.9% 423 11% 893 8.8%   783 3%
    • 3. But Offshore Still Small Part of Overall Spend Confidential © Copyright 2007 Wipro Ltd
      • Despite the growth India has seen in Global IT Services Market, it still a very small proportion (~2%) of global spend
      Global Technology Related Spend & India’s Current Exports ($ Bn) ~4% ~1% ~1% ~2% Indian Exports As % of Global Spend Source:Nasscom Review, 2007
    • 4. Robust Momentum & Industry Outlook Confidential © Copyright 2007 Wipro Ltd
      • Industry continues strong momentum – grew 33% in FY07
      • Well on its way to meet and exceed its $60 Bn target of 2010
      India’s offshore IT and BPO exports, US $ Bn. Source: NASSCOM McKinsey report 2005 CAGR 28% 6.2 17.7 CAGR 29% ~60 ~80 23.6 31.3 CAGR 24% 33% 33% Projected CAGR FY05-10 Offshore IT BPO > 24% > 37%
    • 5. India’s Competitive Edge Confidential © Copyright 2007 Wipro Ltd
      • India still one of the most cost- competitive destination for Offshore
      • India will add 71 Mn people to working age population between 2005 & 2010, the largest across the globe. China will add ~33 Mn
      • Even as current levels, India has the largest pool of suitable offshore talent - 28% of the worldwide total
      IT Services – ADM Example Indexed Salary Costs (Base 100 = US, Year 2006) Source: Mckinsey Global Institute, Everest Research 2006 *As of 2003, ** Numbers arrived by extrapolation, Source: Mckinsey Global Institute Aggregate Suitable Graduate Talent for Offshore IT & BPO (‘000) 28% 11% 10% 8% 7% 5% 4% 4% 4% 3% 16% 100%
    • 6. The evolution of the Offshore Market Confidential © Copyright 2007 Wipro Ltd
    • 7. The Emergence..
      • IBM’s departure
      • Labour Arbitrage
        • Y2K
        • Human Resource Pool
        • English Language
        • Internet
        • Education System
        • SEZ’s
      • Global Delivery Model
        • Onsite-Offshore
        • Local Delivery Centres
      Confidential © Copyright 2007 Wipro Ltd
    • 8. Demonstrate the value of the O-O Model Offshore Risk & Mitigation Confidential © Copyright 2007 Wipro Ltd
    • 9. A Resources Supply Chain Confidential © Copyright 2007 Wipro Ltd Attract Develop/ Nurture Engage/ Motivate Retain
      • Preferred employer in IT Services
      • Over 300,000 applicants
      • Recruit from over 160 leading engineering and management colleges
      • Less than 1 in 100 applicants offered employment
      • Technical Skills
      • Business Skills
      • Leadership skills
      • Behavioural skills
      • Language skills
      • Education programs with leading technical and management schools
      • Strong performance management processes
      • Business aligned compensation & benefits programs
      • Multipath, competency aligned career framework
      • Effective & ongoing two-way communication
      • Cultural induction
      • Meet Your People Program – for Supervisory effectiveness
      • Wipro Listens & Responds – for improving health of workplace
      • Talent tracking & bonding
      • Rewards & recognition programs
      • Rigorous selection process – offer rate of 0.8% of number of applicants World class education and training programs – Avg 12 days/employee/year of mandatory training
      • Supply chain initiatives –mass vs target hiring
      • Diversity management- Integrating with client culture-Value reinforcement and cultural continuity-Culture and language specific training-local talent assimilation
    • 10. Phase 2: Rapid Growth Confidential © Copyright 2007 Wipro Ltd
    • 11. Diversified Service Portfolio Confidential © Copyright 2007 Wipro Ltd Application Development and Maintenance 20% R&D Services 17% Products 21% Consulting 2% BPO 6% Package Implementation 11% Testing Services 8% Infrastructure Outsourcing 15%
    • 12. Offshore Business Models Confidential © Copyright 2007 Wipro Ltd
    • 13. Savings disparity due to complexity in calculations and many contingencies Confidential © Copyright 2007 Wipro Ltd
    • 14. A Strong Enterprise-wide quality culture Confidential © Copyright 2007 Wipro Ltd CMM Level - 3 CMM Level - 5 6 Sigma Methodologies for software TL- 9000 PCMM Level 5 CMMI BS 7799 ISO 9000 1997 Enterprise-wide process defined 1998 On the path to continuous improvement 2000 Defects prevention practices initiated at project level 2001 Industry-specific quality standards 2001 Six sigma methodology broad-based 2001 The best in people processes 2002 Gearing up for System Integration Six Sigma 1995 Re-certified twice Mature processes Metrics collection begun Software process achievement Award 2003 from IEEE USA 2003 COPC, BS 15000 and British data protection act compliance 2002 Information and Network Security Processes
    • 15. Phase 2 Rapid Growth Confidential © Copyright 2007 Wipro Ltd Investing in aligning our services to customer’s business Centers of Excellence, Vertical point solutions, integrated solutions combining IT, BPO and Infra mgt Investing in perfecting the global delivery model Wipro Way ™, Factory Model Investing in new service lines Testing; Consulting; Infrastructure; BPO; Package Implementation Creating a truly global foot print 1 2 3 4 Global development centers, Near-shore development centers, strategic acquisitions
    • 16. Phase 3: Reaching Maturity Confidential © Copyright 2007 Wipro Ltd
    • 17. Framework for Growth Confidential © Copyright 2007 Wipro Ltd ENABLERS GROWTH ENGINES
      • Organic Growth in Global IT, PES and ITES
      • Leadership in India & Middle East
      • Game Changing Initiatives
      • Acquisition Led Growth
      The Spirit of Wipro
      • Building Right Capability and Leadership
      • New Delivery Paradigms
      • Performance Management
      • Brand
      • Innovation
      • Consulting
      WIPRO WAY
      • Information Systems
    • 18. Global Sourcing Destinations Confidential © Copyright 2007 Wipro Ltd Active Participants Leader and Challengers Potential Players
      • Argentina
      • Belarus
      • Bulgaria
      • Costa Rica
      • Dominican Rep *New*
      • Dubai (UAE)
      • Egypt
      • Ghana
      • Morocco
      • New Zealand
      • Nicaragua
      • Northern Ireland
      • Senegal
      • Singapore
      • Slovenia
      • Sri Lanka
      • Turkey
      • Uruguay *New*
      • Ukraine
      • Vietnam
      • Armenia *New*
      • Bangladesh *New*
      • Chile *New*
      • Columbia *New*
      • Cuba
      • El Salvador *New*
      • Estonia
      • Fiji
      • Guatemala *New*
      • Jamaica
      • Korea (S)
      • Lithuania
      • Pakistan
      • Panama *New*
      • Peru *New*
      • Puerto Rica *New*
      • Taiwan
      • Thailand
      • Tunisia
      • Venezuela
      • India
      • Australia
      • Brazil
      • Canada
      • China
      • Czech Republic
      • Hungary
      • Ireland
      • Israel
      • Latvia
      • Malaysia
      • Mauritius
      • Mexico
      • Philippines
      • Poland
      • Romania
      • Russia
      • Slovakia
      • South Africa
      • Spain
      = Change in category from 2005
    • 19. Wipro, at a glance Confidential © Copyright 2007 Wipro Ltd Global Development Centers Clients Employees (in thousands) Revenues (in $ Mn) 2006-07 2005-06 2004-05 2003-04
      • Sustained Growth
      • CAGR of 36% in last 5 years
      • Part of NYSE’s TMT (Technology-Media-Telecom) Index, NSE Nifty Index and BSE Sensex
      • Partner to Industry Leaders
      • 180 Fortune 1000/ global 500 clients
      • 170 clients among Forbes 2000
      • 681 active clients as on September 30 ‘07
      • Global Footprint - 53 countries
      • Listed on NYSE
      • Presence in 53 countries
      • Over 13,500 employees onsite across geos
      • 24 near-shore development centers
      • Diverse Talent Pool
      • 49 nationalities
      • 2600 domain consultants
      • High gender and cultural diversity
      • More than 84,000 employees as of September 30 ’07.
      3128 2185 1699 1218 399 421 494 620 34 40 44 46 30 44 57 73 2007-08* 4150 681* 48 * global IT business is equal to H1 actuals + Q3 guidance into 2 and Indian IT H1 numbers annualized * Clients of only Wipro Technologies 85**
    • 20. Headwinds Confidential © Copyright 2007 Wipro Ltd
    • 21. Business Transformation Confidential © Copyright 2007 Wipro Ltd
    • 22. Confidential © Copyright 2007 Wipro Ltd The Preferred Destination of Choice!
    • 23. Global Competitive Landscape Confidential © Copyright 2007 Wipro Ltd
    • 24. Income Statement Summary of Global IT Firms Confidential © Copyright 2007 Wipro Ltd
    • 25.
      • Clients have experienced strong offshore/onshore coordination from Indian vendors;
      Strong Weak Onsite/offshore account management Cost transparency
      • Indian vendors are perceived to be more open about their pricing structure, and they generally price lower
      Language, cultural alignment
      • Indian vendors score lower in terms of client perception
      Management attention
      • Top management at Indian vendors is perceived to be very approachable
      Operating models The Indian Delivery model is well understood Sporadic instances of junior talent
      • At times, clients have perceived a lack of senior talent on projects delivered by offshore vendors
      Client perception Indian vendors
    • 26.
      • Clients have strong relationships with vendors, as they have been working together for years.
      Strong Weak Relationships Cultural alignment
      • As the vendors have local presence for years, they are more aligned with the specific cultural needs of clients
      Offshore coordination
      • This is one area where clients perceive global vendors to be weaker
      Cost competitiveness Language skills
      • Clients are more comfortable with global vendors in specific cases where language skills play a major part
      Transparency and access
      • Vis-à-vis Indian vendors, global vendors are perceived not to be transparent about their costs and delivery, offering very little direct access to resources
      Client perception about Global vendors
    • 27. Players trying to define the best mix value add client intimacy value add industrialized operations One Combination – One Team Large global Pure Player
      • IBM – Daksh (05)
      • EDS – MphasiS (06)
      • Capgemini – Kanbay (07)
      • CSC – Covansys (07)
      • TCS –Technosoft (06)
      • Infosys – Philips Shared Services (07)
      • Wipro – Infoscrossing (07)
      • TCS – T-Systems (08?)
    • 28. Western players are facing challenges developing their offshore capabilities Integration issues
      • “ One team”
      • Offshore factory, not enough business driven
      • Clients don’t see seamless delivery
      Financial impacts
      • Onshore restructuring costs
      • Staff levels onshore dilute profit
      • Project owner not able to manage offshore cost
      Size and growth in India
      • Tier I Indians: > 80,000 people
      • Tata: FY2009-10: + 25K staff
      • Home market growing
      Motivation
      • Few incentives to put work offshore
      • Difficult to attract top-talent
    • 29. Indian Pure Players also have some blind spots Margin obsession
      • Margins drive valuation
      • Reluctance to invest :
        • Onsite
        • in IP and solutions
      “ Anglo American ” focus
      • Gaps in coverage, especially in Continental Europe
      • Difficulties in setting up non-Indian operations
      • Risk adverse: Slow to acquire and integrate
      Lack of client intimacy
      • $1m-$10m (TCV) still largest part of portfolio
      • Big deals exception not rule
      • Limited CXO level relationships
      Risk exposure
      • Exposed to US (60% of revenues)
      • Exposed to FS (>25%)
      • Tax break disappears in 2010
    • 30. Growth Margin (TTM) Cognizant TCS I nfosys Indian Pure Players Atos CSC EDS 5% 0% 10% 20% 30% 25% 15% 28% 36% 44% 52% 12% 8% 0% 4% - 4% (since 2006 T-Systems <20% >25% ~75% IBM Leaders Accenture Wipro Laggards SIS Cap The Challenge is t o move to the Leaders playing field
    • 31. The Challenge of Global Sourcing “ A strong Global Delivery Model capability is no longer an option, but, a strategic imperative if Western IT services firms want to survive. The globally integrated operating model is based on a new way of managing organizations and processes, leveraging global talent, skills and capabilities which will deliver innovations”.
    • 32. Innovative operating models to encourage Distributed Delivery
        • Increase offshore leverage
      • Taking advantage of labor cost advantage
      • Increasing blended mark-up
        • Increased value added from offshore
      • Moving from a capacity model (number of seats) to a capability model (based on sector and technical expertise)
      • Developing offshore capabilities to deliver higher value added tasks
        • One Team
        • no prime/sub
      • Seamlessly integrating distributed teams (sales & delivery cycles)
      • Targeting and aligning investments in training
      • “ Sharing Pain and Champagne” – avoiding finger pointing
        • Ability to manage combined capacity
      • Changing behaviors to manage combined onshore and offshore capabilities in terms of training, recruiting, staffing, development, bench, pyramids etc…
    • 33. The O-O effect of new operating models
        • Sales
        • Transition and delivery
        • People
        • Support
        • Expected onshore changes
      • Involvement of offshore in sales process “from the start”
      • Reliance on offshore driven proposals and offer development
      • New sales mix (project, service staff)
      • Joint involvement in transition and delivery
      • Demand forecasting accuracy
      • Stronger focus on combined productivity
      • Reconfiguration of the onshore pyramid
      • Optimization of combined bench
      • F&A, HR transaction optimization
        • Expected offshore changes
      • Developing the ability “to go hunting”
      • Sharing “the pain and champagne” of winning or losing deals
      • Stronger responsibilities in service delivery and account expansion
      • Stronger drive on productivity (as opposed to selling seats to onshore BUs)
      • Engagement / client management capability building
      • Tools and methods harmonization
      • Support cost optimization
    • 34. The value chain and the combined management of pyramids Typical Pyramid Off-shore Grade F E D C B A On-shore Capabilities Off-shore Capabilities Sales Delivery
      • Offshore Res
      • Service Del. Mgr
      • KT Lead
      • KT People
      • Bus. Analysts
      • [KT Processes]
      • DeliveryAssurance
      • Sales+A/c Mgt
      • Offer
      • Development
      • Sales+A/c Mgt
      • Bid
      • Management
      • Bus. Analysts
      • Sales Support
      • Due Diligence
      • Service Del Mgr.
      • Delivery
      • Assurance
      • Release Mgr
      • Sys. Analyst
      • Bus. Analyst
      • Service Del. Mgr
      • KT Lead
      • KT People
      • Bus. Analysts
      • [KT Processes]
      • Delivery
      • Assurance
      • Service Del. Mgr
      • PMO
      • Bus. Analyst
      • Solution
      • Manager
      • Configuration
      • Manager
      • Off-shore Resourcing Mgr
      • Sales Support (Technical)
      • Bid Mgmt
      • Bus. Analysts
      • Service Del. Mgr
      • Delivery
      • Assurance
      • PMO
      • Bus Analyst
      • Sys Analyst
      • Service Del Mgr.
      • Bus. Analysts
      • Delivery
      • Assurance
      • PMO
      • Solution Manager
      • Configuration
      • Manager
      • Sales+A/c Mgt
      • Sales Support
      • Offer
      • Development
      Demand Creation Proposal Transformation Transition Service Delivery Key: Increasing % of staff Dedicated Off-shore interface staff identified in red text
    • 35. Operating Models with aligned KPIs and P&L
        • Offshore
        • P&L
        • Mgmt
        • KPIs
        • People
        • Model 1
      • 5-10%
      • Transaction based rate card
      • Offshore P&L
      • SPOC in region
      • No KPIs
      • India manages pool of staff
      • Pure staff aug.
        • Model 1.5
        • 18m
      • 10 -30%
      • Offshore P&L
      • Rate card
      • Dedicated team
      • Joint sales and delivery KPIs
      • BU commits for up to 50%, discounted
      • Other staff bought on rate card
        • Model 2
        • 24m
      • 30 -60%
      • Offshore P&L (of dedicated team) is consolidated onshore
      • Dedicated team
      • Joint sales and delivery KPIs
      • BU commits up to 80% , real cost
      • Other staff paid on rate card
    • 36. What sets IT Services suppliers apart and determines success is the degree to which technical, commercial and customer related collaborative activities are embedded in the DNA of the business. Key Success Factors
    • 37. 54 Wipro Technologies
      • Key figures:
        • 98,521 employees (July 2009)
        • Revenue FY2008-09 4,323B US$
        • YoY growth US$ 12%
        • Nett Income 676M US$ 15,6%
        • Clients 830
        • Onsite :Offshore49.6%:50.4%
      • Key figures:
        • 386,558 employees (2009)
        • Revenue FY2008 103.6B US$
        • India: 100,000 employees
      • Key figures:
        • 180,000 employees (31Aug 2009)
        • Revenue FY2008 23,4B US$
        • India: 60,000 employees
      • Key figures:
        • 88,000 employees (2009)
        • Revenue FY2008 8.710B Euro’s
        • India: 24,000 employees
      The new Outsourcing Heroes TCS Technologies
      • Key figures:
        • 141.642 employees (July.2009)
        • Revenue FY2008-09 6B US$
        • YoY growth US$ 23%
        • Nett income 1134M US$ 18.9%:
        • Clients >900
        • Onsite Offshore :44.4%/ 55.6 %
      Infosys
      • Key figures:
        • 104,850 employees ( April 2009)
        • Revenue FY2008-09 4,663B US$
        • YoY growth US$ 11.7%
        • Nett Income 1,281M US$ 27.4%
        • Clients 569
        • Onsite Offshore 46.2%:53.8%
    • 38. Thank You: ktnprivate@yahoo.com Confidential © Copyright 2007 Wipro Ltd

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