Fundamental analysis of IT sector


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Fundamental analysis of IT sector

  1. 1. Fundamental Analysis of IT sector in India
  3. 3. The Growth Story Of IT Sector  India is a preferred destination for companies looking to offshore their IT and back-office functions.  It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people.  The country’s domestic market for business process outsourcing (BPO) is projected to grow over 23 per cent to touch US$ 1.4 billion in 2011, says global research group Gartner.  In 2010, the domestic BPO market was worth US$ 1.1 billion. The firm predicts that the domestic BPO market would reach US$ 1.69 billion in 2012 and increase to US$ 2.47 billion by 2014.
  4. 4. • With the first quarter of the new fiscal 2011-12 offering positive business outlook, hiring sentiments for sectors like IT, ITeS and telecom have risen by over 20 per cent, says a study by TeamLease Services Pvt. Ltd. • As per the Employment Outlook Report for the period April-June 2011, released by TeamLease Services Pvt. Ltd., hiring intent from IT and ITeS was the highest in cities like New Delhi, Mumbai, Hyderabad and Pune. • India's top technology firms like TCS, Infosys, Wipro and HCL are readying plans to gain a bigger share of their largest market, US, by aggressively chasing contracts being served by multinational rivals. • Analysts expect the top IT firms to grow between 23-27 per cent in the FY2012 on the back of more number of discretionary projects, improved pricing, and robust business volumes.
  5. 5. Investments • Between April 2000 and February 2011, the computer software and hardware sector received cumulative foreign direct investment (FDI) of US$ 10,705 million, according to the Department of Industrial Policy and Promotion. • The total investments of EMC Corporation, a leading global player of information infrastructure solutions in India, will touch US$ 2 billion (over US$ 2.01 billion) by 2014. • Russian IT security software provider, Kaspersky Lab, will be investing US$ 2 million in its India operations at Hyderabad during 2011.
  6. 6. • On the back of 40 per cent revenue growth, Cognizant will invest more than US$ 500 million till 2014 to expand its campuses to add over 8 million square feet to house over 55,000 employees. • It will create additional software development and training facilities in regions designated as special economic zones in Chennai, Pune, Coimbatore and Kolkata. • In order to integrate the learning experience for the students, Globsyn Business School, would launch an online platform, e-Globsyn, by July 2011 that would work as a virtual classroom environment for its students, as well as facilitate them with other amenities.
  7. 7. Government Initiatives • Government sector is a key catalyst for increased IT adoption- through sectors reforms that encourage IT acceptance, National eGovernanceProgrammes (NeGP) , and the Unique Identification Development Authority of India (UIDAI) programme that creates large scale IT infrastructure and promotes corporate participation. • Certain crucial steps taken by the Indian government to propel the sector growth are: – Constitution of the Technical Advisory Group for Unique Projects (TAGUP) under the chairmanship of Nandan Nilekani. The Group would develop IT infrastructure in five key areas, which includes the New Pension System (NPS) and the Goods and Services Tax (GST) • Setting up the National Taskforce on Information Technology and Software Development with the objective of framing a long term National IT Policy for the country.
  8. 8. • Enactment of the Information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions. • Plans to formulate Information Technology Investment Regions (ITIRs). These regions would be endowed with excellent infrastructure and would reap the benefits of co-sitting, networking and greater efficiency through use of common infrastructure and support services.
  9. 9. Swot Analysis »Strengths • Highly skilled human resource • Low wage structure • Quality of work • Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-governance projects) • Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc. • Following Quality Standards such as ISO 9000, SEI CMM etc. • English-speaking professionals • Cost competitiveness • Quality telecommunications infrastructure • Indian time zone (24 x 7 services to the global customers). Time difference between India and America is approximately 12 hours, which is beneficial for outsourcing of work.
  10. 10. Weaknesses • Absence of practical knowledge • Dearth of suitable candidates • Less Research and Development • Contribution of IT sector to India 's GDP is still rather small. • Employee salaries in IT sector are increasing tremendously. • Low wages benefit will soon come to an end. » Opportunities • High quality IT education market • Increasing number of working age people • India 's well developed soft infrastructure • Upcoming International Players in the market
  11. 11. Threats • Lack of data security systems • Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier • IT development concentrated in a few cities only
  12. 12. Tata Consultancy Services (Rank 1) according to a study by CyberMedia's Dataquest Research. Revenue FY11: Rs 33,112 crore Revenue FY10: Rs 26,576 crore Growth FY11: 25% TCS is the largest provider of information technology services in Asia and second largest provider of business process outsourcing services in India. Headquartered in Mumbai, TCS has over 198,500 employees.
  13. 13. Infosys Technologies (Rank 2) • Infosys Technologies (Rank 2) Revenue FY11: Rs 25,997 crore Revenue FY10: Rs 21,355 crore Growth FY11: 22% • Infosys is the second largest IT company in India with 133,560 employees as of March 2011. • Infosys is ranked 28th globally in the list of IT services providing firms. • It has offices in 33 countries and development centres in India, China, Australia, UK, Canada, Brazil and Japan.
  14. 14. Wipro (Rank 3) • Revenue FY11: Rs 24,899 crore (Rs 248.99 billion) Revenue FY10: Rs 21,949 crore (Rs 219.49 billion) Growth FY11: 13% • Wipro is the third largest IT services company in India and employs more than 122,385 people worldwide as of March 2011. • Wipro is ranked 31 globally in 2011 in the list of IT service providers. The company does business in information technology, consumer care, lighting, engineering and healthcare businesses.
  15. 15. HCL Technologies (Rank 7) • Revenue FY11: Rs 14,111 crore (Rs 141.11 billion) Revenue FY10: Rs 10,983 crore (Rs 109.83 billion) Growth FY11: 28% • Headquartered in Noida, HCL Technologies is the IT services arm of HCL Enterprise, a $5.5 billion IT company. • HCL Technologies is fifth largest IT company in India and is ranked 48 in the global list of IT services providers.
  16. 16. Thank you