Perspective 2020 - Nasscom


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Perspective 2020 - Nasscom

  1. 1. Perspective 2020: Perspective 2020:Transform Transform Business, Business, India Transform Transform India Perspective 2020: Transform Business, Transform India
  2. 2. PERSPECTIVE 2020: KEY MESSAGES The Decade in Review An unparalleled impact on the Indian economy in the last 10 years – 6% of incremental GDP growth; 45% of incremental urban employment (direct and indirect); 6-7x increase in tertiary education in top 7 states that account for 90% of industry exports Significant returns to customers – annual savings of USD 20-25 billion in 2008 alone A large unfinished agenda remains – Especially structural changes (e.g., tertiary education reform), have not been implemented Global economic crisis will have a far-reaching and as yet uncertain impact on the industry. Near-term volumes and pricing likely to be under pressure. While 10-year aspiration of USD 50 billion in exports in 2008 has largely materialised, extreme contraction in the global economy likely to delay achievement of the 2010 goal by at least 3-4 quarters 1
  3. 3. THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON THE INDIAN ECONOMY Rapid growth in the last decade Areas of Impact Impact • 45% of new urban Exports USD billion Employment 47 Creation jobs created (1995- 2005) Contribution to • 6-7x fold increase in Education tertiary education in 18 exporting states 8 • Women in the Diversity and 2 Global workforce estimated Exposure to be 30%; new 1998 2002 2005 2009 entrants-45% • 30% of delivery CAGR 1998- outside India 33% 2009 (exports) Contribution to • Exports offset close Exports to 65 per cent of CAGR 1998- 26% India’s cumulative 2009 (domestic) net oil imports over past decade 2
  4. 4. PERSPECTIVE 2020: KEY MESSAGES Perspective 2020: An Altered Landscape Global Megatrends Demographic shifts will fuel the growth of new sectors (healthcare), markets (BRIC, Japan, Germany) and service lines (process transformation for productivity improvement) Social, environmental and technology trends will create hitherto unseen opportunities (e.g., climate change, servicing SMBs) and risks (automation of core service lines) that could endanger up to a third of today’s market A Redefined Market The addressable market for global sourcing will triple in size from USD 500 billion today to USD 1.5-1.6 trillion in 2020. 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments Industry Outlook The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion in revenues by 2020. Focused initiatives and innovation-led growth can lead to additional revenues of up to USD 135 billion by 2020 The domestic component will grow to USD 50 billion, equal to today’s exports revenues. Focused initiatives can drive an additional USD 15 billion in revenues by 2020 3
  5. 5. SHIFT IN ECONOMIC AND DEMOGRAPHIC BALANCE 2008 2020 Working age (15-60 years), Retiree (60+ Regional share of global GDP, 1990- 2025 Millions years), Millions CAGR 207 38 US 222 54 100 4.2% Middle East & Africa Latin America 40 3.4% 9 UK 41 13 Asia (except Japan) 80 6.3% Japan 12 39 Italy 1.4% 37 14 60 55 16 Europe Germany 2.1% 53 18 40 27 83 Japan 75 35 20 3.0% North America 750 60 India 0 92 920 1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025 4
  6. 6. 2020 WILL PRESENT A DRAMATICALLY ALTERED LANDSCAPE (1/2) Past decade 2020 Demand • Concentrated footprint • Significant opportunity outside today’s markets – 75% of Fortune 500 – SMB (Beyond Fortune 500) – 80% from US/UK 1 Market – BRIC, GCC, Japan, ROW – 75% from BFSI*, Telecom, Manufacturing – Public sector and healthcare – 60% from IT services • Managing for cost, • Innovation, end-to-end productivity and quality transformation, risk & compliance • Labour arbitrage dominant • Access to talent and expertise Customers value driver 2 • “Onshore/offshore” mindset • Global value chain 5 * Banking Financial Services and Insurance
  7. 7. 2020 WILL PRESENT A DRAMATICALLY ALTERED LANDSCAPE (2/2) Past decade 2020 Supply • India accounting for more • Diversified talent pool with than 50% of the global low- globalised recruiting and HR cost workforce practices • Delivery-centric • Multiple management tracks, management globalised expertise 3 Talent • Recruiting and training as • Emphasis on learning, key differentiators knowledge management, research spending • Deployable and specialized talent • Trainable talent pool pools 6
  8. 8. CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF INCREMENTAL GROWTH BY 2020 Total revenue potential for global sourcing, 2020 USD billion 380 1,500 230 190 200 500 Up to 80% of growth from markets that are not core today Core Growth in New New Outsourcing markets core verticals in customer market in markets developed segments new 2008 • SMBs countries geographies • 6 verticals* • Not • Public • BRIC • N. America, adjusted for sector potential Europe, • Healthcare erosion due Japan • Media to • Large automation • Utilities enterprises * BFSI, telecom, retail, pharma, manufacturing, travel 7
  9. 9. PERSPECTIVE 2020: KEY MESSAGES Transform Business, Transform India Reinventing Business Models 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Providers should consider distinctive approaches, each building on a source of competitiveness, with distinct performance markers and imperatives Fostering Innovation in Business India can become a laboratory for innovation for the world and own business systems in at least 3 areas – energy efficiency and climate change, mobile applications, clinical research outsourcing Catalysing Inclusive Growth Through ICT ICT-enabled solutions in healthcare, education, financial services and public services can drive socio-economic inclusion of 30 million citizens each year, faster, cheaper and more effectively than traditional models 8
  10. 10. THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING TECHNOLOGY TO ENABLE INCLUSIVE GROWTH Areas Potential of ICT solutions 50% of Indians do not have access to primary healthcare Healthcare • Technology can provide it at half the cost of traditional solutions 80% of Indian households do not have bank accounts Financial services • Technology can enable access to 200 million families India faces a 3x shortage in teachers Education • Technology can address this through remote solutions 40-50% of public food distribution in India does not reach the Public targeted groups services • Technology can ensure efficiency and transparency 9
  11. 11. PERSPECTIVE 2020: KEY MESSAGES India’s opportunity at risk India’s market share can decline by 10% by 2020 and be lost to other aspiring nations. In this case, export revenues would reach USD 175 billion in 2020 (an additional USD 50 billion is at risk due to protectionism). With focused initiatives, the industry has the potential to achieve over USD 300 billion in revenues 10
  12. 12. Likely scenario AN OPPORTUNITY OF UP TO USD 150 BILLION COULD Growth multiple BE AT RISK IN 2020 (1/2) CAGR India’s technology and business services export market in 2020 – scenarios* USD billion 7.7x 18.6% 135 225-310 4.4x 13% 175 40 FY 2008 FY 2020-Current FY 2020-Focused Initiatives Initiatives and Innovation - driven growth • Slow pace of reforms in • Expedited reforms in tertiary education (talent pool of 10 education million) • 10-15 Tier II cities with world • Limited development of Tier class infrastructure II, III cities • Adoption of new business • Continued trust as a sourcing models by the industry hub • India among the top 3 • Continued government innovation hubs of the world support • Talent pool of 13.5 million • Limited lash back from protectionism 11
  13. 13. Likely scenario AN OPPORTUNITY OF UP TO USD 150 BILLION COULD Growth multiple BE AT RISK IN 2020 (2/2) CAGR Indian domestic technology and business services market in 2020 – scenarios USD billion 5.4x 15% 4.2x 12.6% 15 65 50 12 FY 2008 FY 2020 - Current Initiatives FY 2020 - Focused Initiatives and Innovation Led Growth • GDP CAGR of ~5.5% • GDP CAGR of ~7% • Moderate IT adoption across • Significant IT adoption verticals across verticals • Significant government thrust on IT adoption including broadband rollout • Reinvented business models 12
  14. 14. PERSPECTIVE 2020: KEY MESSAGES An agenda for action Success will rely on concerted action by industry stakeholders (Companies, NASSCOM, Government) anchored on a five-fold vision: • Catalysing growth beyond today’s core markets • Establishing India as a trusted global hub for professional services • Harnessing ICT for inclusive growth • Developing a high calibre talent pool • Building a preeminent innovation hub in India 13
  15. 15. SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A FIVE-FOLD VISION • Winning through the downturn • Intellectual property framework • Reinvented business models • Centres of Excellence • New verticals, geographies, Catalysing customer segments • Entrepreneurship Building a • Robust domestic demand preeminent growth innovation beyond hub in India today’s core 1 markets 5 Establishing Five • Infrastructure Developing a • Quality themes 2 India as a 4 • Corporate high calibre scale of trusted global 3 governance talent pool of tertiary hub for over 3 million education • Risk professional people management • Curriculum services Harnessing and security and faculty ICT for inclusive quality • Global branding growth • ICT solutions for healthcare, education, financial services, public services • Connectivity and access • Soft infrastructure 14 14
  16. 16. ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED MANNER (1/2) ILLUSTRATIVE Areas Government NASSCOM Industry • Foster domestic • Become a brand • Investing in new demand through ambassador for business models to Catalysing national CIO office, global services tap into new growth beyond allocate 1-3% of budget geographies and today’s core on e-governance verticals markets • Improve urban • Global awareness to • Develop self regulatory infrastructure and reposition India as a framework to adhere to India as a trusted public services in 10- trusted sourcing hub world class standards global hub for 15 Tier II, III cities; in corporate professional incentivise through governance and risk services STPI extension management • Create a national • Collaborate with • Collaborate to create information structure, government to develop interoperable (Internet connectivity, a national blueprint for applications and Harnessing national ID, ICT IT-enabled solutions for standards, such as ICT for inclusive literacy) major public services integrated hospital growth management systems 15
  17. 17. ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED MANNER (2/2) ILLUSTRATIVE Areas Government NASSCOM Industry • Educational reforms • Scale up certifications • Invest in building a Developing a to facilitate increased and faculty specialized talent pool/ high caliber private participation development by 50x globalised workforce talent pool of in higher education over 3 million people • Allocate 2% of • Roadmap and • Increase R&D national budget for collaboration for spending and co-invest research developing 3-4 with universities to Building a • Create quality innovation hubs drive research Preeminent around climate institutions to innovation hub change/mobile increase PhD holders in India applications/clinical to 200,000 by 2020 research 16
  18. 18. THE INDUSTRY CAN HAVE AN UNPARALLELED IMPACT ON INDIA’S ECONOMY AND SOCIETY BY 2020 ILLUSTRATIVE Areas Contribution of Indian technology-business services by 2020 • 6% of annual GDP Economy • 28% of annual exports • 30 million urban employment (direct and indirect) • Significant job creation in rural and non-metro areas Employment • Increased diversity (women are 50% of the total workforce) • Significant global career opportunities due to location-independent models • Infrastructure development Growth outside – 8-10 satellite townships around Tier-I cities metro cities – 10-15 Tier-II cities with upgraded basic and business infrastructure • ICT can provide solutions at a fraction of the cost of traditional Reduced fiscal solutions and reduce public spend on these areas (healthcare, burden education, financial services and public services) Globally reputed • Additional revenues of USD 50 billion-80 billion through innovative innovation, driving additional GDP contribution of 1.5-2% solutions 17