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  • 1. Innovation transforming the growth landscape Capitalising IP in Indian IT-BPM India Leadership Forum 2014
  • 2. What is Intellectual Property? “Intellectual Property (IP) is the outcome of innovation across the value chain. An IP asset in IT-BPM is classified over a wide ranging spectrum from reusable knowledge assets and business processes to high end software products” Percentage of respondents citing the objective in defining IP Commercial value 92% Ownership Based on the survey conducted by KPMG India for the purpose of this report, Indian technology leaders associated the following objectives in defining IP to their organizations. 67% Ability to protect 50% Competitive Advantage 42% Reusability/ Widespread Application 17% Customer Demand 17% Non Linear growth potential 8% Greater valuation 8% Source: Innovation transforming the growth landscape, KPMG in India, 2014 © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2
  • 3. Leveraging IP is one of the key trends that will define the state of IT-BPM industry going forward Monetization of Intellectual property Global addressable market for products is already close to 296 Billion USD in 2013 is expected to grow close to 439 Billion USD by 2020. Going forward, the success of global technology majors will be attributed to the creation, development and monetisation of IP. Rise of SMAC Platform markets and technologies will drive big share shifts. Cloud and platform will act as powerful contributors to BPM transformation. There will be a shift from traditional onsite delivery model to cloud based and off-premise/ mobile model. Convergence of Technologies With IP at its helm, next innovation growth wave will have to concentrate on convergence of technologies. Innovation ecosystem will change because of convergence and will result in collaboration of multiple parties. Source: Innovation transforming the growth landscape, KPMG in India, 2014 © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 3
  • 4. India will be relevant by 2020 only through Intellectual Property (IP) led growth Industry targets 300 bn USD by 2020 - Indian IT-BPM industry spend is 108 Indian IT-BPM in USD Billion billion USD in 2013 and is growing at the rate of 10.8 per cent CAGR. Total Spend Indian software product market - Projecting on the current growth rate, the Indian IT-BPM spend can potentially reach 221 Billion Services USD by 2020 indicating a gap Hardware of 79 billion ~79 USD to the NASSCOM set target in 2020 300 CAGR – 10.8% Opportunity for Indian IT-BPM 221 12.8 13.3 60.4 70.8 77.2 1.3 1.5 1.6 2011 2012 2013 - IDC predicts worldwide ICT spend to reach 5 11.7 Trillion USD by 2020 and 98 per cent of growth will be driven by platform technologies (SMAC). - A global addressable market of 439 billion USD for software related products by 2020 Source: NASSCOM Strategic Review, 2012 and 2013 2020E Constrained Growth Source: KPMG Projection 2020E Innovation Driven Growth Source: NASSCOM set target by 2020 Source: Innovation transforming the growth landscape, KPMG in India, 2014 © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 4
  • 5. On a positive note, Indian IT-BPM leaders are confident of driving innovation In a recent global innovation survey conducted by KPMG, India‟s technology leaders have Q: Overall how do you rate the success of your country in enabling technology innovation? USA China India Japan Korea Israel Availability of talent 64% 62% 75% 20% 49% 79% Ability to drive customer adoption in local and international markets 63% 57% 71% 17% 51% 64% Mentoring and access to innovation network (start up CEOs, founders etc) 58% 58% 72% 29% 42% 73% Access to capital 63% 62% 65% 17% 48% 68% 61% 51% 60% 20% 36% 39% Educational system 42% 42% 65% 17% 47% 55% Government incentives 23% 52% 56% 11% 38% 34% shown confidence that they excel in most of the criteria necessary for innovation. India‟s experience in the services sector, maturity of customer adoption and availability of quality talent has positioned India positively in the global context. Supporting ecosystem (legal, law firms, accounting firms etc) Source: Global innovation survey, KPMG in US, 2013 © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 5
  • 6. Technology leaders are focused on driving innovation across the IP value chain Innovation across Creation, acquisition and collaboration Innovation across end to end management of IP portfolio Innovation to extract maximum commercial value out of IP • Shifting from traditional top down focused R&D to bottom up approach in harvesting IP • Adopting an IP strategy that is both offensive and defensive • Realistic valuation of IP • Inorganic acquisition for non linear growth • Continuous performance management to track investments in IP • Rise of „Cluster Model‟ and increasing collaborations within industry and with academia • Legal ecosystem working with industry to form a healthy protective environment for IP • Adopting multi objective driven monetization strategies (licensing-in, licensing-out, JV etc) • Spinning off product as a separate business Source: Innovation transforming the growth landscape, KPMG in India, 2014 © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6
  • 7. Players of the IP ecosystem should empower IP driven culture in India • Drive „Bottom Up culture‟ of innovation • Focus on ideas & platforms in SMAC • Increase penetration in the SMAC technologies • Leverage incubation centers and mentorship from VC/ PEs Service Providers Startups • Improve promotion of R&D in India through • Increase adoption of disruptive technologies Customers • Leverage convergence of technologies IP Ecosystem Government rationalisation of tax & transfer pricing laws • Enhance protection laws & enforcement Academia Funding Agencies • Change the perception of risk and invest • Improve collaborations with industry • Focus on developing innovation based skills in disruptive technologies • Set realistic expectations from startups © 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Source: Innovation transforming the growth landscape, KPMG in India, 2014 7
  • 8. Thank you © 2014 KPMG Advisory Services Private Limited, an Indian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.