Indian IT Outsourcing


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Indian IT Outsourcing

  1. 1. INDIAN IT OUTSOURCING Debmalya Khan
  2. 2. AGENDA <ul><li>Industry Overview </li></ul><ul><li>Outlook </li></ul><ul><li>Major Players </li></ul><ul><li>Rivalry among existing players </li></ul><ul><li>Company Overview </li></ul><ul><li>SWOT Analysis </li></ul><ul><li>Factor evaluation Matrix </li></ul><ul><li>Competitive Strategies in Economic Downturn </li></ul>
  3. 3. INDUSTRY OVERVIEW <ul><li>Steadily growing industry </li></ul><ul><li>$150 million in 1991-92 to $5.7 billion in 1999-2000 ( $4 billion worth of software exports ) </li></ul><ul><li>Annual growth rate of Software Exports - over 50 percent </li></ul><ul><li>Software exports to around 95 countries around the world </li></ul><ul><li>More than one –third of the global Fortune 500 companies outsource requirements to India </li></ul><ul><li>Upcoming market openings for Indian IT industry </li></ul><ul><ul><li>IT Services </li></ul></ul><ul><ul><li>Software products </li></ul></ul><ul><ul><li>IT- enables services </li></ul></ul><ul><ul><li>E-business </li></ul></ul><ul><li>Source: Nasscom </li></ul>
  4. 4. OUTLOOK <ul><li>If company guidance's are anything to go by, then the outlook for the industry seems bleak </li></ul><ul><li>Collapse of the US car industry to impact TCS, Wipro and Infosys </li></ul><ul><li>During recessions, tech spending has historically fallen by more than the GDP </li></ul><ul><li>A McKinsey study indicates that IT spending has typically fallen by 5-7 times the GDP in the past recessions </li></ul><ul><li>The BFSI sector that pioneered the move offshore idea has been butchered and is expected to worsen </li></ul>
  5. 5. MAJOR PLAYERS <ul><li>Infosys Technologies </li></ul><ul><li>Wipro Technologies </li></ul><ul><li>Tata Consultancy Services </li></ul><ul><li>IBM Global Services </li></ul><ul><li>HCL Info systems </li></ul><ul><li>Cognizant technology solutions </li></ul>
  6. 6. RIVALRY AMONGST EXISTING PLAYERS <ul><li>Multiple players: </li></ul><ul><ul><li>TCS </li></ul></ul><ul><ul><li>Accenture </li></ul></ul><ul><ul><li>Wipro </li></ul></ul><ul><ul><li>Infosys </li></ul></ul><ul><ul><li>Cognizant </li></ul></ul><ul><ul><li>HCL Tech </li></ul></ul><ul><ul><li>Patni …. …. …. …. The list is large </li></ul></ul><ul><li>Competition is global in nature and stretches across boundaries and geographies </li></ul><ul><li>Replication of the Indian off shoring model by MNC IT majors </li></ul>
  7. 7. RIVALRY AMONGST EXISTING PLAYERS ( CONTD ) <ul><li>Until the recent crisis, the market as a whole was expanding </li></ul><ul><li>A growing market meant that there was enough and more for all the players in the market </li></ul><ul><li>The problem of stagnating markets </li></ul><ul><li>Implies that all the players need to gun it out amongst themselves to grow revenues </li></ul><ul><li>Rivalry expected amongst existing players to intensify </li></ul>
  8. 8. INFOSYS TECHNOLOGIES <ul><li>Specializes in delivering technology enabled business </li></ul><ul><li>Started in 1981 with seven people and cash worth US $250 </li></ul><ul><li>Business and technology consulting </li></ul><ul><li>Systems Integration </li></ul><ul><li>Application services </li></ul><ul><li>IT outsourcing </li></ul><ul><li>Business Process outsourcing </li></ul><ul><li>IT infrastructure services </li></ul>
  9. 9. INFOSYS TECHNOLOGIES ( CONTD ) <ul><li>Global presence with over 50 offices and development centers across the world </li></ul><ul><li>2008 turnover – excess of $4 billion </li></ul><ul><li>SOURCE: </li></ul>
  10. 10. SWOT ANALYSIS <ul><li>Strengths : </li></ul><ul><ul><li>Enhanced competitive edge – Indian based operations </li></ul></ul><ul><ul><li>Low labor costs, high relative rates of inflation </li></ul></ul><ul><ul><li>Relatively high skill levels in IT </li></ul></ul><ul><ul><li>Extremely strong financial position – enormous capital to expand </li></ul></ul><ul><ul><li>Global brand – respected across the world </li></ul></ul><ul><ul><li>Positive Cash flows – Supporting prospective global operations </li></ul></ul><ul><ul><li>Varied Domains of Businesses – foray into products and services </li></ul></ul>
  11. 11. SWOT ANALYSIS( CONTD ) <ul><li>Weaknesses </li></ul><ul><ul><li>Occasionally falters to secure contracts in North America – missing out on lucrative business </li></ul></ul><ul><ul><li>Small player as far as global players are concerned </li></ul></ul><ul><ul><li>Multi – cultural environment </li></ul></ul><ul><ul><li>Business consulting practices dominated by major players like Accenture and IBM </li></ul></ul>
  12. 12. SWOT ANALYSIS ( CONTD ) <ul><li>Opportunities </li></ul><ul><ul><li>Lucrative expansion options in China </li></ul></ul><ul><ul><li>Alliance between Infosys and Schlumberger </li></ul></ul><ul><ul><li>European and North – American companies to outsource a portion of BPO operations </li></ul></ul><ul><ul><li>Provides outsourcing and Cost reduction strategies – help clients during global recession </li></ul></ul>
  13. 13. SWOT ANALYSIS ( CONTD ) <ul><li>Threats </li></ul><ul><ul><li>Move to offshore service companies in countries like China or Korea </li></ul></ul><ul><ul><li>Has to compete for skilled labor – may affect wage levels and retaining staff </li></ul></ul><ul><ul><li>Competitors coming from China, Korea – low cost labor and adaptive to western practices </li></ul></ul>
  14. 14. <ul><li>IFE Matrix indicates that India IT Inc. is strong and it has done well, so far, to overcome its weakness </li></ul>INTERNAL FACTOR EVALUATION MATRIX
  15. 15. <ul><li>EFE Matrix indicates that India IT Inc. is not responsive in exploiting opportunities and in mitigating the impact of threats </li></ul>EXTERNAL FACTOR EVALUATION MATRIX
  16. 16. STRATEGIES IN DOWNTURN <ul><li>Companies such as Infosys exhort employees to go on a 1-yr sabbatical – work for an NGO </li></ul><ul><li>Cash rich firms such as TCS, Wipro and Infosys scouting around for dirt cheap acquisitions </li></ul><ul><li>Case in point </li></ul><ul><ul><li>TCS’ $505M acquisition of Citigroup’s Indian back office operations in October 2008 </li></ul></ul><ul><ul><li>Wipro’s acquisition of CITOS for $127M in December 2008 </li></ul></ul><ul><li>Slow down in wage hikes and a near recruitment freeze </li></ul>
  17. 17. REFERENCES <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  18. 18. THANK YOU