Competitiveness analysis of IT cluster, Bengaluru region Presentation - CEU Business School 2016

1. IT Cluster Bengaluru India
BY
VINEETHA YELLIMELLI
WEN JUAN LI
YU LI
YEKATRINA PANOVA
PHANI KUMAR NELANUTHULA

2. Presentation Contents
1. Introduction – India
2. IT in India - Outlook
3. IT in India – Timeline
4. IT industry Snapshot
5. Bengaluru – IT cluster
6. Diamond model
7. Challenges
8. Suggestions

3. INDIA
 Population – 1,335,280,665
Area – 3.287 Million Sq.Km
Literacy Rate – 72.23
Female Literacy Rate – 62.98
Employment to population – 49.9%
Global Competitiveness Rank - 39
Global innovation Rank – 66
Knowledge & Technology Output – 43
Business Sophistication – 57
1980 2015
GDP Per-capita
ppp
566 USD 6746 USD
GDP Per-capita
Nominal
266 USD 1942 USD
Inflation 11.38% 5.22%
GDP 189.593 Billion USD 2095.4 Billion
IT share of GDP 0 9.3%
http://en.unesco.org/countries/india
http://www.ilo.org

4. IT in India - Outlook
 TCS Being 1st IT company of India
established in Pune
1st International Project achieved in 1971.
 IT era started outside India in 1980.
 Infosys established in Pune 1981 & moves
corporate head Quarter to Bengaluru in
1983
 Employment in IT is nearly 3.5 Million with
34% women employment
 Contribution of Indian IT to the world(
market share) 67% in 2015- update data
 Total 53 Software Technology Parks Centres
are in India of which 46 are tier 2 and tier 3
cities

5. IT in India - Timeline
TCS
1968
Emergency
1975-77
IBM
leaving
India
1978
Infosys
1981
Global
Recession
1980-1984
FDI
1991
Electronic City
in Bengaluru
Industrial
norms
liberalization
Infosys
Model
Hi-tech City
in
Hyderabad
Recession
2008
1st in
Outsourcing
1st in BPM.
2017

6. IT Industry Snapshot
http://www.nasscom.in/it-services

7. Bengaluru IT Hub
 Bengaluru a.k.a Garden city of India, Silicon Valley of India, is the capital of Karnataka State.
 Most Dynamic City by World Economic Forum in 2017
As Per Government Statistics in the year 2014:
 Population – 8,971, 800
 Area – 741 sq.Km
 GDP PPP – USD 45,313 Million
 GDP per-capita PPP – 5051
 Employment – 3,603,500 (Ranks 40th in world)
 Employment in IT – 1 Million Direct Employment
 Number of Domestic IT companies – 3500 (Registered)
 Number of IT MNC’s – 750
 Number of IT R & D centres - 400 approximately

8. Strategy Structure & Rivalry
Rivalry
Other IT Hubs of India
China & Philippines targeting IT
growth & outsourcing
Strategy
Partnership with other Indian IT Hubs
etc
Factor Conditions
Inward Remittances/Indian Diaspora
living Abroad
Cost & Efficiency
Skilled Labour
Quality
etc
Demand Conditions
Exporting of Software Services (to US,
Europe)
Dependency of Fortune 500 companies
Domestic Market Demand
Related and supporting Industries
Education & Training
Banking & Financial Service
Transportation
Real-Estate
etc
Government
Industrial Policies
Trading Policies
Make in India
Digital India
Cashless Economy
etc
Bengaluru
IT-Cluster
Diamond
Model

9. Strategy & Rivalry
Rivalry
 Other IT Hubs of India
 China & Philippines targeting IT growth & outsourcing
Strategy
 Partnership with other Indian IT Hubs
 Acquiring more Qualitative approach
 Improving skills and Technologies
 Developing Hardware with in Bengaluru.
 Establishing more effective and efficient Support Industries
 Acquiring more skilled Labour from States which doesn’t have any
IT industries

10. Factors Conditions
Inward Remittances/Indian Diaspora living Abroad
Cost & Efficiency
Skilled Labour
Quality
Industrial support system
FDI
Finance
Language for ITES
Culture – Colonised – diversity
Infrastructure & Resources/climate
Trading opportunities

11. 1983- 2000
mainly depends on export
 US is the biggest client for IT
outsourcing from India
US absorbs about 2/3 of all of India’s IT and
ITES exports
 Developed countries like Japan
Accounted for three percent
 Most of Fortune 500 companies
outsource software related work from
India
2000 – now
Internal demand is more and more important
 IT industry structure results more
competition
 More user industries embrace IT to enhance
competitiveness
For example: retail, healthcare, government
industry
Reason: due to downturn of US economy
Reason: to reduce cost

12. Related and Supporting Industries
Supporting Industries Related Industries
 Education & Training
 Banking & Financial Service
 Transportation
 Real-Estate
 Hardware
 Tele-communication
 Hospital and Hotel Industry
 Logistics
 Advertisement
 Aerospace & aviation industry
 Military institution
 Manufacturing industry
 Agriculture Industry
 Flora industry

13. Government
 Government proposed projects - Bangalore IT
park and a Hardware Park at Devanahalli, Export
Promotion Industrial Park (EPIP) Park at
Dakshina Kannada District, IT SEZ at Mangalore,
Aryabhatta Park at Hubli.
 Make in India – A project to manufacture goods
and services in India
 Start-up India – New start ups
 Digital India – To digitalize every Industry and
Household needs
 Political system – Diversified (Left, Right and
Liberal).
 Indian government is funding for IT development
in Aeronautics to Elementary school Tablets for
education
 Industrial Policies
 Trading Policies
 Cashless Economy Drive
 More Govt. funded domestic projects
 Government funded training centres like CDAC.
 Establishment of more IT Institutes and education
courses.
 Tax benefit compared to other countries
 Easy Start-up support policies.
 More Involving Students in innovation driven
trainings.

14. Challenges
Faced Anticipated
 Establishment issues
 Connectivity issues, Internet/telecom
 Lack of Internal Projects
 Less Product Based more Service Based
industries
 Service Based projects are all from
Developed Countries. Cost of acquiring
project.(impression cost)
 Competing Hubs – Hyderabad and Pune
 Lack of IT, computers based education
Institutions and Technically skilled labour
 Infrastructure & Real estate
 Resistance to Change
 Government Income through Incoming
Technology/taxes/ opportunities
 Quantity driving out Quality – hardware.
Hard-ware Dependency on China & Taiwan
 Infrastructure
 Local Contingencies/Nationalism issue
 Controlling Change – Government/ Establishment is
unable to strategize the upgrade technology
 Over Control of Change – forcing the technologies
without proper analysis & R&D, whether feasible for
product or not
 Lack of Skilled Labour
 Increase in number of IT hubs in India
Migration of skilled labour to other countries
 Real estate price rise
 Kaveri River/ drinking water/ sewage water issues
Establishment of Other Industries
 Political Influence

15. Suggestions
 With UIDAI, government opened IT in public service, Many Government IT projects are yet to come.
 Leading International players like Google are expanding their Projects, Apple is reaching IT in India.
 Universities like MIT, York, are partnering and establishing their institutes in India,
 Civil Establishments are yet to improve, So projects supporting better lifestyle of people leads to IT
expansion.
 Due to Telangana state Agitations many companies migrated to Bangalore from Hyderabad. They can
expand themselves with branches in the newly constructed capital of Andhra Pradesh - Amaravathi and
Expanding Capital of Telangana Hyderabad.
 With Increasing Imports of Hardware and Technology. India, in particular Bangalore, is in race of
becoming first smart capital of the world.
 Goods & Services Tax, new Tax reform which helps the Manufacturing and Product development
companies in reducing their Taxation expenses. IT companies should gain maximum out of this reform.
 Demonetization lead huge economic loss at the same time has given opportunity to Intellectual IT
companies to persuade many financial Institutions in the digital direction.

16. Thank you

17. References
 http://www.bangaloreitbt.in/
 https://www.ukessays.com/essays/economics/the-
development-of-it-cluster-in-india-economics-essay.php
 http://www.makeinindia.com/sector/it-and-bpm
 http://www.tradingeconomics.com/india/gdp-growth-
annual/forecast
 http://www.ide.go.jp/English/Publish/Download/Dp/pdf/0
85.pdf
 http://www.worldometers.info/world-population/india-
population/
 http://www.tradingeconomics.com/india/gdp-growth-
annual/forecast
 http://www.sciencedirect.com/science/article/pii/S097038
961500004X
 https://en.wikipedia.org/wiki/IBM_India
 https://www.weforum.org/agenda/2017/01/these-are-the-
most-dynamic-cities-in-the-world-and-they-re-not-the-
ones-you-d-expect/
http://www.nasscom.in/it-services
www.tradingeconomics.com/india/gdp
https://www.statista.com/statistics/320776/contribution-of-indian-it-
industry-to-india-s-gdp/
http://www.investkarnataka.co.in/karnataka-at-a-glance
https://www.stpi.in/writereaddata/links/STPI%20Annual%20Report
%20English%202014-15.pdf
https://www.brookings.edu/research/global-metro-monitor/
http://www.ilo.org/gateway/faces/home/ctryHome?locale=EN&coun
tryCode=IND&_adf.ctrl-state=a4on9p0vf_9
http://universityi.com/list-of-indian-universities/851/indian-india/
http://www.livemint.com/Companies/P0h3ATmjjBt2pJayfHIIVJ/Kris-
Gopalakrishnan-the-last-of-Infosys-founders-leaves.html