Changing Focus: Shifting sights from America to Europe, Sanjiv Puri, ITC Infotech


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  • Changing Focus: Shifting sights from America to Europe, Sanjiv Puri, ITC Infotech

    1. 1. Changing Focus: Shifting Sights from America to Europe Sanjiv Puri, Managing Director, ITC Infotech India Ltd. 13 th February, 2008
    2. 2. Europe vs. USA: Growth Trends <ul><li>Growth rates in Europe>>US across most Verticals </li></ul><ul><li>2007 saw the Americas fall behind EMEA in the number and value of outsourcing contracts >$25 mln for the first time </li></ul><ul><li>In Europe, the average deal size has increased by 35% </li></ul>Data Source: Datamonitor; TPI
    3. 3. Global Competitiveness a must. Globalization Deregulation Digitization YOU New Entrants Buyers Suppliers Substitutes Competitors Traditional Sources of Competitive Leverage The New Forces
    4. 4. Europe Outsourcing – Changing Trends Moderate economic pressure <ul><ul><li>Slower uptake in Europe for most technology trends </li></ul></ul><ul><ul><li>Less competitive pressures </li></ul></ul>Minimal exposure to India/ Indian players <ul><ul><li>US focus of Indian companies – group mentality </li></ul></ul><ul><ul><li>Perception of low cost but poor quality </li></ul></ul>Language barriers <ul><ul><li>Challenge of working through an on-site model </li></ul></ul>Socio-cultural barriers <ul><ul><li>Limited exposure to Indians </li></ul></ul><ul><ul><li>Demand of experience over youth and quality over price </li></ul></ul>Access to lower cost East European Markets <ul><ul><li>Poland, Hungary, Ireland and Russia were viable options </li></ul></ul>Visa restrictions <ul><ul><li>Stricter than in the US </li></ul></ul>Source: McKinsey <ul><ul><li>Companies engaging in in-house language training </li></ul></ul><ul><ul><li>Still real but Indian companies are becoming more culture-sensitive </li></ul></ul><ul><ul><li>Changing as European companies aspire to be globally competitive </li></ul></ul><ul><ul><li>Indian IT companies setting-up key local offices and near-shore development centers </li></ul></ul><ul><ul><li>Increasing student population in Europe (in particular the U.K) </li></ul></ul><ul><ul><li>Inability of East European markets to meet the demand </li></ul></ul><ul><ul><li>The off shoring model puts less pressure on Visa efforts </li></ul></ul>Historic Trend Changing Scenario
    5. 5. Europe vs. USA: Networked Readiness Index <ul><li>The Index indicates maturity of a country in terms of: </li></ul><ul><ul><li>Environment for ICT offered by a country or community </li></ul></ul><ul><ul><li>Readiness of the community's key stakeholders (individuals, business and governments) </li></ul></ul><ul><ul><li>Usage of ICT among these stakeholders </li></ul></ul><ul><li>European countries rank high and are going up among all these measures </li></ul><ul><li>The USA’s rank has gone down by 6 places in the last year </li></ul>Source: World Economic Forum -1  31 32 4.35 Spain +4  42 38 4.19 Italy +1  26 25 4.9 Luxembourg +1  25 24 4.93 Belgium -1  22 23 4.99 France +1  18 17 5.17 Austria +1  17 16 5.22 Germany +3  13 10 5.42 Norway +1  10 9 5.45 United Kingdom -6  1 7 5.54 United States +6  12 6 5.54 Netherlands +4  9 5 5.58 Switzerland +1  5 4 5.59 Finland +6  8 2 5.66 Sweden +2  3 1 5.71 Denmark   Evolution Rank 2005-2006 Rank 2006-2007 Score 2006 Countries     Networked Readiness Index: Variation 2006-2007
    6. 6. ITC Infotech: European Experience
    7. 7. The themes ……..that matter. <ul><ul><li>Partner-based strategic relationship approach as opposed to conventional client-vendor relationship </li></ul></ul><ul><ul><ul><li>Value Arbitrage vs Cost Arbitrage </li></ul></ul></ul><ul><ul><li>Engagement structured around Extended Enterprise Principles </li></ul></ul><ul><ul><li>Cultural alignment through mutual adaptation </li></ul></ul><ul><ul><li>Focus on domains and business solutions </li></ul></ul><ul><ul><li>Sustainability ;CSR and Green IT </li></ul></ul><ul><ul><li>Deep focus on processes-mature outsourcing processing </li></ul></ul><ul><ul><li>Empowerment and Collaborative decision making </li></ul></ul>
    8. 8. But US is still the biggest market…. <ul><ul><li>Competitive and Regulatory pressures will require “Business Solutions” </li></ul></ul><ul><ul><li>What is globally sourced is still a small percentage of the IT Services Industry </li></ul></ul><ul><ul><ul><li>Off shoring </li></ul></ul></ul><ul><ul><ul><li>Flexible Resource Pool </li></ul></ul></ul><ul><ul><li>Reducing spends and economic downturn in the USA – threat or opportunity? Will it accelerate off shoring? </li></ul></ul><ul><ul><li>USD Depreciation vs Business Value. </li></ul></ul>
    9. 9. Thank You