Indian IT: Shifting sights from America to Europe Is that the solution? Sudhakar Ram Chairman & Managing Director Mastek Ltd www.mastek.com 13 February 2008

Indian IT/ITES: Low penetration in large markets Attempts to ‘shift focus from America to Europe’ assumes that the industry’s current challenges are geography-led, not business model led Market penetration data paints a different picture The US accounts for ~67% of India’s IT/ITES export, but our share of addressable market is very low Penetration is relatively better in the UK! UK has traditionally been more open to higher-end services The Mastek experience (LCC, NHS) Results in relatively higher penetration *Nasscom Strategic Review 2006 & 2007; CY2006/FY2006 estimated figures

Attempts to ‘shift focus from America to Europe’ assumes that the industry’s current challenges are geography-led, not business model led

Market penetration data paints a different picture

The US accounts for ~67% of India’s IT/ITES export, but our share of addressable market is very low

Penetration is relatively better in the UK!

UK has traditionally been more open to higher-end services

The Mastek experience (LCC, NHS)

Results in relatively higher penetration

‘Solutions’ is the solution Indian IT industry heavily focused on ‘services’ IP-led offerings, IT consulting, & SI account for <5% of Indian IT/ITES exports Limited presence in higher-end segments = Lower market penetration Shifting focus to Europe not the answer ‘ Services’-led model accentuates language and cultural barriers Move up the value chain, from ‘services’ to ‘solutions’ Engage in higher-end consulting and IP-led activities Strategic applications of IT

Indian IT industry heavily focused on ‘services’

IP-led offerings, IT consulting, & SI account for <5% of Indian IT/ITES exports

Limited presence in higher-end segments = Lower market penetration

Shifting focus to Europe not the answer

‘ Services’-led model accentuates language and cultural barriers

Move up the value chain, from ‘services’ to ‘solutions’

Engage in higher-end consulting and IP-led activities

Strategic applications of IT

Ride the ‘third wave’ of Indian IT Wave 1 (1969-1999): Establishing capability of the Indian professional Wave 2 (1995-2015?): Establishing India as a destination for offshore programming Wave 3 (2005 – 2020?): Indian IT players achieving world dominance Scale Play Niche Strategy ~$1bn ~$20bn ~$100bn

Wave 1 (1969-1999): Establishing capability of the Indian professional

Wave 2 (1995-2015?): Establishing India as a destination for offshore programming

Wave 3 (2005 – 2020?): Indian IT players achieving world dominance

Scale Play

Niche Strategy

Top-end presence drives broader market share Progression up the value chain drives greater market penetration Higher-end presence does not preclude lower-end market share A solutions provider naturally gets to maintain delivered applications Shift towards IP-led IT solutions can enable: deeper inroads in both American and European markets better margins to offset wage inflation & rupee appreciation IP System integration Custom application development and implementation Application management

Progression up the value chain drives greater market penetration

Higher-end presence does not preclude lower-end market share

A solutions provider naturally gets to maintain delivered applications

Shift towards IP-led IT solutions can enable:

deeper inroads in both American and European markets

better margins to offset wage inflation & rupee appreciation

Shift focus to ‘solutions’, drive growth in both US and European markets! Thank you

Shift focus to ‘solutions’, drive growth in both US and European markets!

Thank you