July 2012No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Zinnov
Context                               Global R&D spending is expected to grow by about 5.2% to more than                  ...
Agenda         1     Zinnov – Global Service Provider Rating         2   GSPR 2012 Market Leader: Analysis & Insights     ...
Global Service Providers Rating is an annual exercise at Zinnov in which we conduct acomprehensive analysis of the service...
GSPR 2012 was done across 10 major industry verticals                                                                     ...
Methodology1     Zinnov – Global Service Provider Rating                                                     Rating2   GSP...
Zinnov’s GSPR is a structured process and it begins with the filtered list of top 75R&D service providers from initial lis...
Zinnov’s proprietary GSPR methodology is based on a robust framework thateffectively quantifies qualitative data and subse...
Results from the analysis were ported onto an AHP modeler to plot the relativepositioning of service providers across the ...
Results from the analysis were ported onto an AHP modeler to plot the relativepositioning of service providers across the ...
Methodology1     Zinnov – Global Service Provider Rating                                                     Rating2   GSP...
Overall Rating                                                                                             HCLExpansive   ...
Aerospace and Defense                                      Zinnov Zones – Leading Aerospace & Defense R&D Service Provider...
Automotive                                                         Zinnov Zones – Leading Automotive R&D Service Providers...
Computer peripherals and storage                                 Zinnov Zones – Leading Computer Peripherals & Storage R&D...
Consumer Electronics                                   Zinnov Zones – Leading Consumer Electronics R&D Service Providers  ...
Consumer Software                                                       Zinnov Zones – Leading Consumer Software Service P...
Healthcare                                                          Zinnov Zones – Leading Healthcare R&D Service Provider...
Industrial Automation                                     Zinnov Zones – Leading Industrial Automation R&D Service Provide...
ISV – Enterprise Software (Outsourced Software Product Development)                                                       ...
Semiconductor                                                      Zinnov Zones – Leading Semiconductor R&D Service Provid...
Telecommunication                                         Zinnov Zones – Leading Telecommunication R&D Service Providers  ...
Transport                                                          Zinnov Zones – Leading Transport R&D Service Providers ...
Agenda         1      Zinnov – Global Service Provider Rating         2   GSPR 2012 Market Leader: Analysis & Insights    ...
India is the world’s leading offshore ER&D and PES destination with ~22% marketshare in the R&D offshoring segment        ...
Telecom, ISV and Semiconductor are the largest verticals in the ER&D and PES space          Vertical wise revenue distribu...
Service Providers contribute close to 36% of overall ER&D and PES revenues;Software and Telecom are the verticals that are...
Service Providers have built strong capacity of experienced professionals in Telecom,Automotive and Consumer Electronics a...
Vertical Growth Insights            Verticals         Presence                                          Inorganic growth ...
In their quest to improve the domain and technical capabilities the Service Providershave significantly invested in improv...
Billing Rates                   Average and Range of Offshore                 Average and Range of Onsite                 ...
The mature delivery models, adopted by Indian service providers enables them tooffer multiple pricing options and hence st...
Thank You69 "Prathiba Complex", 4th A    Vatika Business Centre, 2nd   3701 Patrick Henry Dr.,   21, Waterway Ave,Cross, K...
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Global R&D Service Providers (GSPR) Rating 2012

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Key Findings of the Study

* Wipro and HCL are the overall leaders in the ER&D and PES segment; followed by iGate, Infosys, Tech Mahindra & Mahindra Satyam and MindTree
* Though Wipro and HCL are leaders with overall capabilities, companies like Aricent, iGate, Infotech Enterprises, L&T IES, Persistent Systems, Symphony Teleca establish themselves as leaders in specific industry verticals
* China based Vanceinfo and EPAM Systems from CEE region have significant capabilities in the ISV - Enterprise Software vertical and are clearly in the leadership zone
* Overall Indian ER&D and PES services market is USD 14.78 Bn as of FY 2012, representing an overall growth of 13 percent
* Over FY 2011, the MNC Captive Centers grew by 11 percent whilst the Service Providers grew by 16 percent
* Telecom and ISV verticals constitute almost 50% of the total Indian ER&D and PES revenues

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Transcript of "Global R&D Service Providers (GSPR) Rating 2012"

  1. 1. July 2012No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from Zinnov
  2. 2. Context Global R&D spending is expected to grow by about 5.2% to more than $1.4 trillion in 2012 The increase in R&D spend drives up demand in Engineering R&D (ER&D) and Product Engineering Services (PES) On an average, 45 % of R&D headcount (Captive & Outsourced) of the companies is located outside of Headquarter country The post 2000 period saw emergence of new global hotspots and a shift of operations to Asia-Pacific and Central/Eastern European region The service providers in the emerging regions are evolving as key strategic partners to R&D companies; They deliver ~35% of the overall ER&D and PES needs of R&D companiesNote:Source: Zinnov Research and Analysis 2
  3. 3. Agenda 1 Zinnov – Global Service Provider Rating 2 GSPR 2012 Market Leader: Analysis & Insights 3
  4. 4. Global Service Providers Rating is an annual exercise at Zinnov in which we conduct acomprehensive analysis of the service provider landscape in ER&D and PES space Zinnov is a leading management consulting firm in India with a focus on helping its customer globalize their R&D / Product Engineering activities. • With more than 125 active customers and close to 350 customer engagements in the last 10 years, Zinnov has been at the forefront of evangelizing Globalization of R&D. • Zinnov works with a number of fortune 1000 companies and its key customers include Google, Microsoft, Yahoo!, Intuit, Amazon, Paypal, Honeywell, Hitachi, BOSCH, Schneider Electric, EMC, DELL, Samsung, LG, John Deere, Continental, Daimler etc. GSPR 2009 • Zinnov conducted the first ever Rating of the top R&D service providers globally in 2009. Zinnov’s GSPR, quickly became a well accepted document as an objective analysis of the top Product Engineering Services Providers from Emerging Markets. GSPR 2010 & 2011 • GSPR 2010 and 2011 was much more comprehensive and, ranked the top Product Engineering Service providers across 10 key verticals and 2 horizontals. • The ratings of the exercise was shared at no cost with 100+ Zinnov customers, as well as a database of 14000 subscribers of our online reports, case studies etc. • Zinnov’s GSPR has now established itself as one of the key components of the outsourcing play book of most of our customers 4
  5. 5. GSPR 2012 was done across 10 major industry verticals Industry Verticals Computer Peripherals & Storage Consumer Software ISV/Enterprise Software Consumer Electronics Transportation & Logistics Telecom, Networking & Communications Healthcare Aerospace Semiconductor Industrial Automation Automotive Service Offerings Mechanical Engineering Services E.q. CAD, CAM, CAE, etc Embedded Engineering Services E.g. Embedded H/W, Embedded S/W, V&V Software Services E.g. system software, device drivers, user experience design etc., 5
  6. 6. Methodology1 Zinnov – Global Service Provider Rating Rating2 GSPR 2012 Market Leader: Analysis & Insights 6
  7. 7. Zinnov’s GSPR is a structured process and it begins with the filtered list of top 75R&D service providers from initial list of 200+ service providers across geographies a c Secondary Research Shortlist of 75 companies 1 Based on: Based on: • R&D Service Landscape • Vertical Presence • Geographic Spread • Focus on R&D / PES Rating Invitation • Leadership Teams • Client Base & Business models • Organization Size b d List of 200 Companies RFI Creation and Roll-out to 75 Co. 2 Primary Research Data Collection Response Cleanup and RFI Response Collection Follow-up Clarification and Analysis Secondary Research 3 Rating and Validation by Customer Final Initial Rating Rating Zinnov Experts Feedback Validation 7
  8. 8. Zinnov’s proprietary GSPR methodology is based on a robust framework thateffectively quantifies qualitative data and subsequently uses a AHP model Methodology Data Point Classification AHP & Rating Scale AHP Rating Scale 1 2 3 4 5 Data Point 1 Data Point 2 AHP is a statistical model used for assigning weights to the Classification of company and vertical specific data points dimensions and the data points. Rating point of 1 to 5 is available from various RFIs decided for each data point based on criteria Rating & Zones Data Extraction & Rating Score Rank Look-up Companies were rated based on the scores arrived from the previous steps, using the parameter based modeler. For all data points extracted from RFIs, corresponding The vertical specific capabilities were then included to plot rating was mapped in the Rating Scale the companies in Zinnov Zones 8
  9. 9. Results from the analysis were ported onto an AHP modeler to plot the relativepositioning of service providers across the Zinnov Zones at a vertical level Zinnov Zones – Vertical Rating Model Nurture Zone Breakout Zone Execution Zone Leader Zone • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go- • R&D and PES as a focus area R&D services effectively, tear down , product development as a true To-Market for the product –Significant purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure Attributes • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering, service (Engineering / Embedded / Embedded and Software services and service types and at least generic Embedded and Software services Software) Niche capability in one area capability level in one service type • Formal innovation culture, resulting in • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits IP’s and strategic innovations optimization tangible benefit to customers quantified • Leadership role in alliances, leverage • Generic - MoUs with universities and • Specific industry alliances, partnerships • Alliances with Customers who are startups, Specific academic research, alliances and membership in Global forums Industry Leaders and co-creation with customers • Acquiring new customers. • Acquiring large customers • Growing small accounts into • Succeeding as go to market • Building product engineering • Growing existing accounts and deep relationships partner in emerging markets Challenges competencies repeat business • Building Concept to Market • Building end to products of • Developing PES specific Sales • Developing across the PDLC Capabilities with deep domain their own organization competencies expertise • Building product management • Understanding the differences • Building domain capabilities • Building relevant IP’s capabilities between PES/ IT Service • Building a product engineering • Executing on new & innovative • Scaling new vertical practices in business culture within the organization business models PES to drive continued growth • Driving innovation culture inside the organization • Focus on targeted customer • Focus on PDLC Skill • Focus on IP creation • Focus on end customer ofRecommended segment and vertical Development • Focus on Account Mining and customers Initiatives • Build technology competency in • Focus on augmenting domain execution on new business • Drive customer led innovation niche focus areas skills models • Build strong Go-To-Market • Focus on building credibility by • Work on building trust with • Focus on internal and external capability to become viable delivering on initial projects existing customers innovation incubation efforts channel partner for customers 9
  10. 10. Results from the analysis were ported onto an AHP modeler to plot the relativepositioning of service providers across the Zinnov Zones at an overall level Zinnov Zones – Overall Rating Model • Market Leaders across verticals • Emerging Companies with Presence • Presence Across Multiple VerticalsExpansive • Across Multiple Verticals Focus on Building Competencies Across • Strong Focus on IP Creation, Innovation and Ecosystem Linkages across most Multiple Verticals verticals • Developing Cross PDLC Competencies • Excellent Breadth and Depth of Services Vertical Coverage across multiple verticals across most Verticals • High Scalability across most verticals • Market Leaders in Niche Verticals • Emerging Companies in Niche Verticals • Well Established Competency in One or • Focus on Building Niche R&D and Vertical Two Verticals Competencies • Excellent Breadth and Depth of Services • in Focus Verticals Niche Developing Cross PDLC Competencies in Focus Verticals • High Scalability in focus verticals Emerging Established Specialization, Scale, R&D Practice Maturity, Innovation & IP, Eco-System Linkages 10
  11. 11. Methodology1 Zinnov – Global Service Provider Rating Rating2 GSPR 2012 Market Leader: Analysis & Insights 11
  12. 12. Overall Rating HCLExpansive Wipro iGate Infosys MindTree Vertical Coverage Clasoft Labs Tech M & Mahindra Satyam Luxoft Symphony Teleca L&T IES Infotech Enterprises Tata Elxsi GlobalLogic Persistent Syntel Aricent Group Mindfire Solutions Beyondsoft Sasken BlueStar Quest Global Cybage Infotech Niche Xchanging Aspire Systems Virtusa Vanceinfo EPAM Sonata Software Span Systems CoMakeIt Emerging Established Specialization, Scale, R&D Practice Maturity, Innovation & IP, Eco-System Linkages 12
  13. 13. Aerospace and Defense Zinnov Zones – Leading Aerospace & Defense R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL Infosys Infotech EnterprisesScalability Wipro Quest Global L&T IES Luxoft Tata Clasoft Elxsi Labs Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 13
  14. 14. Automotive Zinnov Zones – Leading Automotive R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone Wipro HCL Infosys Infotech EnterprisesScalability iGate Tata Elxsi Luxoft L&T IES Symphony Teleca Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 14
  15. 15. Computer peripherals and storage Zinnov Zones – Leading Computer Peripherals & Storage R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone Wipro HCL SymphonyScalability Teleca Infosys iGate Clasoft Labs MindTree L&T IES BlueStar Infotech Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 15
  16. 16. Consumer Electronics Zinnov Zones – Leading Consumer Electronics R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL Symphony Wipro Tata Elxsi TelecaScalability L&T IES iGate MindTree Sasken Infotech Low Enterprises • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 16
  17. 17. Consumer Software Zinnov Zones – Leading Consumer Software Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL Symphony Teleca Beyondsoft Persistent Global Logic EPAM WiproScalability Cybage VanceInfo MindTree Sonata BlueStar Infotech Aspire LowR&D Practice • R&D and PES as a focus area • On the way into big league • Capable of delivering complete • Capable of performing concept to Go- product development as a true To-Market for the productMaturity engineering partner • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable components IP’s built, and • Formal innovation culture, resulting inInnovation IP’s and strategic innovations optimization tangible benefit to customers benefits quantifiedCustomer Type • Generic ISVs, Startups • Niche ISVs • Large Internet and Consumer ISVs • Large Internet and Consumer ISVs 17
  18. 18. Healthcare Zinnov Zones – Leading Healthcare R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL iGate WiproScalability Persistent Infosys Global Logic Tech M & Symphony Mahindra Satyam Teleca L&T IES Clasoft Labs Tata Elxsi BlueStar Infotech Infotech Enterprises Aspire Systems Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 18
  19. 19. Industrial Automation Zinnov Zones – Leading Industrial Automation R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL L&T IES iGateScalability Wipro Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructure • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering,Breadth service types and at least generic Embedded and Software services service (Engineering / Embedded / Embedded and Software services and Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 19
  20. 20. ISV – Enterprise Software (Outsourced Software Product Development) Zinnov Zones – Leading Software/ ISV R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone HCL Symphony Teleca Persistent Infosys EPAM MindTree VanceInfo Cybage Mindfire Solutions WiproScalability iGate Global Logic Virtusa Clasoft Labs Aspire Sonata Xchanging Software Systems Impetus Span Systems Beyondsoft Technologies Luxoft BlueStar Infotech LowR&D Practice • R&D and PES as a focus area • On the way into big league • Capable of delivering complete • Capable of performing concept to Go- product development as a true To-Market for the productMaturity engineering partner • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable components IP’s built, and • Formal innovation culture, resulting inInnovation IP’s and strategic innovations optimization tangible benefit to customers benefits quantifiedCustomer Type • Generic ISVs, Startups • Niche ISVs • Large ISVs and Niche ISVs • Worlds Largest ISVs 20
  21. 21. Semiconductor Zinnov Zones – Leading Semiconductor R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone WiproScalability HCL Infotech Enterprises Tata Elxsi Sasken L&T IES Luxoft Symphony MindTree Teleca Low • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go-R&D Practice R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity purpose fit labs engineering partner, Customer Labs investment in Lab infrastructureInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverage alliances partnerships and membership in Industry Leaders startups, Specific academic research,Connect Global forums and co-creation with customers 21
  22. 22. Telecommunication Zinnov Zones – Leading Telecommunication R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone Wipro HCL Aricent Group Infosys VanceInfoScalability MindTree Infotech Tech M & Enterprises Mahindra Satyam Global Sasken Xchaging Logic Symphony - Teleca Persistent Luxoft L&T IES Beyondsoft Low Span SystemsR&D Practice • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go- R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity engineering partner, Customer Labs investment in Lab infrastructure purpose fit labsBreadth • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering, service (Engineering / Embedded / Embedded and Software services and service types and at least generic Embedded and Software services Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverage • Generic - MoUs with universities andConnect alliances partnerships and membership in Industry Leaders startups, Specific academic research, Global forums and co-creation with customers 22
  23. 23. Transport Zinnov Zones – Leading Transport R&D Service Providers High Nurture Zone Breakout Zone Execution Zone Leadership Zone Infotech Enterprises iGate L&T IESScalability Infosys LowR&D Practice • R&D and PES as a focus area • On the way into big league, delivering • Capable of delivering complete • Capable of performing concept to Go- R&D services effectively, tear down , product development as a true To-Market for the product –SignificantMaturity engineering partner, Customer Labs investment in Lab infrastructure purpose fit labsBreadth • Niche capability in one type of PES • Generic Capability across Engg, • Niche capability spans across two • Niche capability across Engineering, service (Engineering / Embedded / Embedded and Software services and service types and at least generic Embedded and Software services Software) Niche capability in one area capability level in one service typeInnovation • Innovation, if at all, in process • Innovation frameworks resulting in • Reusable IP’s built, and benefits • Formal innovation culture, resulting in optimization tangible benefit to customers quantified IP’s and strategic innovationsEco-system • Generic - MoUs with universities and • Specific industry alliances, • Alliances with Customers who are • Leadership role in alliances, leverageConnect startups, Specific academic research, alliances partnerships and membership in Industry Leaders Global forums and co-creation with customers 23
  24. 24. Agenda 1 Zinnov – Global Service Provider Rating 2 GSPR 2012 Market Leader: Analysis & Insights 24
  25. 25. India is the world’s leading offshore ER&D and PES destination with ~22% marketshare in the R&D offshoring segment Growth in ER&D Exports (USD Billion) 14.7 13 FY2011 FY2012  The ER&D, PES revenue grew by 13% over FY 2011  ER&D and PES segment contributes 19% of the Indian IT Exports  India has close to 850+ MNC captive centers and 85+ service providers delivering a wide range of ER&D & PES services  15 of the top 20 Global Service Providers in ER&D and PES space are IndianNote:Source: Zinnov Research and Analysis 25
  26. 26. Telecom, ISV and Semiconductor are the largest verticals in the ER&D and PES space Vertical wise revenue distribution FY 2012 Captive & Service Provider Analysis ER&D and PES Services Semiconduc tor 11% 100% 80% ISV(OSPD) Percentage 60% Service 32% Telecom Providers 19% 40% Captive 20% Centers 0% FY 2012 Medical Revenue Devices/He Distribution althcare Consumer 3% Electronics Computing Growth Rates in Automotive Others* 6% Systems ER&D and PES 8% 10% 7% Aerospace 4% MNC Captive centers = 11% Service Providers = 16%Others: Cons,Infra, Heavy Machinery, Energy, Industrial/Industrial Automation) 26
  27. 27. Service Providers contribute close to 36% of overall ER&D and PES revenues;Software and Telecom are the verticals that are most catered to by service providers Verticals Presence Aerospace & Defence  Cost pressure, Access to flexible capacity, Automotive local market access for growth and decreasing time to market are some of the Cloud computing key reasons of driving ER&D/PES offshoring Consumer electronics  Indian ESPs have been expanding their Consumer software capabilities across new verticals such as Aerospace, Consumer Electronics, Healthcare Computer Peripherals & etc. Storage Enterprise Mobility  Industry Automation being the most underpenetrated vertical still offers a large Healthcare scope of growth for service providers Industrial Automation ISV Semiconductor Number of companies present in verticals (by % of total companies covered under GSPR ) Telecom Transport <20 % 20-30% 30-50% 40-50% >50 % 27
  28. 28. Service Providers have built strong capacity of experienced professionals in Telecom,Automotive and Consumer Electronics are other verticals with a better revenue mix Service Provider Experience Pyramid ( Number of Years of Experience) 0-5 5-10 10-15 15+ 6% 6% 5% 4% 5% 4% 6% 4% 9% 8% 8% 9% 9% 9% 12% 15% 27% 29% 28% 29% 34% 33% 33% 29% 58% 59% 59% 59% 52% 50% 54% 49% Aerospace & Automotive Consumer Computer Healthcare ISV Semiconductor Telecom Defence electronics Peripherals and StorageNote: Transport & Industrial Automation verticals were not included as the data was not sufficient to arrive at conclusive figuresSource: Zinnov Research and Analysis 28
  29. 29. Vertical Growth Insights Verticals Presence  Inorganic growth in Aerospace came through Aerospace & Defence Quest Global’s acquisition of GKN Aerospace - In Aerospace, Infotech & HCL were the major Automotive contributors to the growth  Companies like HCL and Igate grew in the Consumer electronics Automotive space Computer Peripherals &  Even though, there was a growth across the board Storage in the consumer electronic space it was not significant and hence posted a single digit growth Healthcare  Telecom witnessed a de-growth in revenues across major telecom R&D service providers Industrial Automation  The growth in Healthcare/Medical devices was ISV restricted to only the Industry leaders; Global Logic significantly increased its capacity in this vertical Semiconductor  The growth in Computer Peripherals & Storage vertical was led by Wipro Telecom 29
  30. 30. In their quest to improve the domain and technical capabilities the Service Providershave significantly invested in improving the quality of experience pyramid Improved Quality of Experience Pyramid Experience Pyramid(2011) Experience Pyramid(2012) 4% 4% 11% 12% 28% 30% 56% 54% 0-5 yrs 5-10yrs 10-15 yrs 15+ yrs 0-5 yrs 5-10yrs 10-15 yrs 15+ yrs 30
  31. 31. Billing Rates Average and Range of Offshore Average and Range of Onsite Billing rates in USD/Hour Billing rates in USD/Hour 140 50 45 120 45 120 40 95 100 35 85.00 33.5 30 27 25 80 70 60.95 25 25 23.27 60 70 20 45.00 20 18.01 15 40 45 40 10 10 20 5 0 0 Project Design & Testing & Project Design & Testing & Management & Development Support Management & Development Support Consulting Consulting Minimum Maximum Average Minimum Maximum 31
  32. 32. The mature delivery models, adopted by Indian service providers enables them tooffer multiple pricing options and hence still remain competitive Tren Model Insights d • BOT model has the least number of clients and engagements out of all Business Models • Telecom vertical has seen a maximum increase in the number of engagements over the BOT last year • ISV and Computer Peripherals & Storage are verticals in which BOT model is not followed • Both the number of clients and number of engagements have increased for the Risk Risk reward model Reward • Aerospace, and Telecom verticals have the maximum adoption of Risk reward model • The number of clients have remained same for the revenue share model, however Revenue there has been an increase in the number of engagements Share • Telecom verticals has the maximum adoption of Revenue share model, it witnessed both an increase in the number of clients and number of engagements • Fixed price is the second most preferred business model across all verticals except Fixed Transport vertical where it is the most preferred model Price • Fixed Price model has seen a tremendous increase in adoption in the Automotive, Consumer Electronics, Healthcare and ISV verticals • Time and Material continues to be the most preferred business Model across all Time & verticals expect Transport MaterialNote:Source: Zinnov Research and Analysis 32
  33. 33. Thank You69 "Prathiba Complex", 4th A Vatika Business Centre, 2nd 3701 Patrick Henry Dr., 21, Waterway Ave,Cross, Koramangala Ind. Layout, Floor, Block B Building 7 Suite 3005th Block, Koramangala 1st India Place, M.G Road, Santa Clara The WoodlandsBangalore – 560095 CA – 95054 TX – 77380 Gurgaon-122002. Phone: +1-408-716-8432Phone: +91-80-41127925/6 Phone: +91-124- 4028888 Phone: +1-281-362-2773
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