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FY2013 performance review and FY2014 Outlook with NILF.


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Despite challenges in the global market, Indian IT-BPM industry sustained its growth trajectory and is expected to clock export revenues of USD 75.8 bn with a Y-o-Y growth rate of 10.2 per cent. Domestic market also witnessed Y-o-Y growth rate of 14.1 per cent taking the domestic revenues to INR 1,047 bn. The Indian IT-BPM sector continues to be one of the largest employers in the country directly employing nearly 3 million professionals, adding over 180,000 employees. FY2013 can be characterized as the year of rapid transition and transformation leading the industry into expanding into newer verticals and geographies, attracting new customer segments, and transforming from technology partners to strategic business partners.

Europe despite the economic crisis, demonstrated higher acceptance of global sourcing with markets such as Germany or France increasing outsourcing as a way to keep their costs under control and gain greater flexibility in light of the increasingly volatile markets in the euro zone and beyond. At the same time, the industry explored increasing opportunities in Asia, Africa and Latin America. Customer centricity was the key focus as the industry expanded its global delivery model accounting for 580 global centers across 75 countries.

While the first USD 100 billion landmark can be attributed to the cost and quality advantage, the next USD 100 billion will be a combination of higher-value services and increasing non-linear growth. To sustain this growth, Indian IT-BPM industry is focusing on greater efficiencies, verticalized structures, geographical presence, IP based solutions, domain and increased collaboration across all stakeholders.

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FY2013 performance review and FY2014 Outlook with NILF.

  1. 1. Indian IT-BPM Industry – FY2013Performance Review, FY2014 Outlook Mumbai, 12th February 2013
  2. 2. AGENDA AGENDA  Where is the global economy heading  How is the Indian IT-BPM Industry evolving  Which are the new growth markets/ emerging verticals  The year that went by, and the year ahead  What challenges lie before us 2Source: NASSCOM
  3. 3. GLOBAL IT-BPM SPEND & SOURCINGGlobal sourcing continues to outperformIT-BPM spend Global Sourcing Market size Worldwide IT-BPM Spend USD billion USD billion 2012 ~9% 124-130 648 2011 114-118 IT Services 627 48-50 164 44-46 Business Process Management USD 1.9 156 trillion* 278Packaged Software 269 70-72 76-80 797 Hardware 748 1,350-1,400 ER&D 2011 2012 1,311 IT Sourcing Business Process Sourcing * 2012 • Global IT- BPM market recorded growth of 4.8 per cent in 2012 • Global sourcing continues to outpace global technology and services spend; growing ~2X as fast as global IT spend • APAC recorded highest growth of 6 per cent, ~1.6X Global IT- BPM spend; driven by BPM services (~9 per cent) • Cost remains a key driver of outsourcing; along with simplification and standardisationSource: Everest, Forrester, Gartner, IDC 3
  4. 4. IT-BPM FACTSIT-BPM: Highest impact sector for India GDP Share ~8% Contribution to India’s GDP grew ~3X in the last 10 years ~24% Total exports share IT-BPM exports share grew > 5X in the last 10 years Direct Employment 3 mn One of largest organized private sector employers in India >52% Global Sourcing Share India’s share of the global sourcing market Domestic Market Growth 14.1% Outperforms exports-fastest growing IT market in the world Start-up companies 450+* Vibrant start-up community grew ~3X over the last 5 yearsSource: NASSCOM * funded startups 4
  5. 5. IT-BPM REVENUESIT-BPM Industry – resilient, growing, evolving IT-BPM revenue break-up USD billion • Growth figures reflect variable impact of H/W Growth in INR= 8.5% currency 108 100.9 • Highest value add sector for India – 60-70 per 13.0 88.1 cent 13.2 74.2 12.2 • Exports mainstay of the industry - >70 per cent 10.2 • Indian IT-BPM exports offsets 50% of India’s oil imports 95.0 • IT services today is a USD 50+ billion dollar 87.7 76.3 industry 64.0 • BPM is a USD 20 billion segment • ER&D and products segment closing in on the USD 20 billion mark too FY2010 FY2011 FY2012 FY2013E Hardware ServicesE: EstimateSource: NASSCOM 5
  6. 6. IT-BPM EXPORTSIT-BPM exports logs double digit growth inFY2013 FY2013E Y-o-Y Growth • Industry growth in constant currency INR 21.4% terms meets NASSCOM guidance Constant USD 10.9% • Exports: Y-o-Y growth 10.2 per cent, over USD 10.2% 2X greater in INR termsIT-BPM Export revenues* • Segments: IT service growth at ~10 per(USD billion) cent; BPM growth faster at 12.2 per cent 75.8 68.8 14.1 • Business Drivers for the year- 13.0 17.8 • New verticals and geographies 15.9 • SMAC based services • Transformation and innovation • Restructured business models 39.9 43.9 • Growth Service lines: RIM, software testing, knowledge services and F&A services FY2012 FY2013E IT Services BPM S/W prod and EnggE: EstimateSource: NASSCOM * Excluding Hardware 6
  7. 7. IT-BPM DOMESTICDomestic market outperforms exports at 14.1per centIT-BPM Domestic revenues* • Meets NASSCOM guidance(INR billion) 1,047 • Domestic: Y-o-Y growth 14.1 per cent, fastest 14.1% growing IT market in the world 918 205 • Segments: IT services fastest growth 14.5 per cent, BPM grew at 12.7 per cent 180 167 • Services: Managed services, unified 148 communications, collaborative applications, integration of core enterprise applications • Key Enablers: • Mobile apps, cloud environment ,SMB out reach 674 • Government accelerating economic reforms, 589 • IT seen as a critical enabler for inclusive growth and transformation • Internet and Ecommerce companies driving adoption FY2012 FY2013E IT Services BPM S/W products INR/USD rate used for calc Q4FY13- 53.5Source: NASSCOM * Excluding Hardware FY13E-54.2 7
  8. 8. IT-BPM KNOWLEDGEBASEIndustry continues to be a net hirer- Adding188,300 jobs in FY2013Direct Employment (‘000)* • Industry employs ~3 million professionals 7% 2,964 directly, and ~9.5 million indirectly 2,776 640 • Employee growth supplemented by non 601 linear model • Over > 100,000 foreign nationals employed 917 by the industry 879 • ~30 per cent (800,000+) women employees • World’s largest talent pool: ~ 4.7 million graduates and post graduates 1,296 1,407 • Faster role progression and development, structured training programs FY2012 FY2013E • Sustained investment in structured training IT exports** BPM exports IT-BPM Domestic*** programs, in-house universities and affiliations with academiaSource: NASSCOM * Excluding Hardware ** includes IT services, ER&D and Products *** includes S/w products 8
  9. 9. Industry unique differentiator- business,service and delivery model evolution Number of global centers M&A deal value, USD bn End to End delivery Moving up 580 1.4 Integrating SMAC 460 3.3 the Value Chain Transformation FY2009 FY2012 2009 2012 M&A for domain and skill CAGR 2008-13E Rev/employee (Indexed to FY08=100) Products, Platforms, 12.8% Software assets, Solution 8.6% 121 Initiate Non 100 Accelerators Linear Play Pricing models – Outcome based Employee Revenue FY2008 FY2013E Domain Specialists as a Tier-II/III: Share in % of total employees employees Changing employee mix 11-12% Extend 12% 9-10% 10% Cost Tier 2/3 movement Advantage Future-ready workforce FY2009 FY2012 FY2008 FY2012Source: NASSCOM 9
  10. 10. Operational metrics driving flexibility forclients and efficiency for providers INDICATIVE CAPACITY UTILISATION* ATTRITION (IT SERVICES) SG&A (% of revenue) 18% 14.1%EFFICIENCY 73.9% 15% 14.0% 13% 72.4% 71.8% 13.8% 2010 2011 2012 2010 2011 2012 2010 2011 2012 FIXED PRICE CONTRACTS  Utilization levels increasing ONSITE EFFORT (% of revenue) 46.6% Attrition remained lower; employee 26.2% 26.1% investments are paying offFLEXIBILITY 45.0% 44.7% 25.2% SG&A lower due to operational efficiency  Firms re-engineering, adopting 2010 2011 2012 2010 2011 2012 innovative operating models  Offshore higher than onsite *: Excluding trainees Note: Data of top 4 companies as of December ending 10 Source: NASSCOM
  11. 11. India a preferred destination: Five prongedvalue proposition SCALE & MATURITY - 25+ years of outsourcing - 5000+ companies, 750+ MNCs - 580 ODCs in 75 countries UNLIMITED TALENT STRONG ECOSYSTEM - Annual tech talent output :1ibllion - Largest no delivery locations: 50 - Established training engine: 2-3% - Training & certification - Industry revenues spent on - Secure environment training INDIA VALUE PROP CUSTOMER CENTRIC COMPETITIVE - 30-32% revenues from verticalised -60-70% more cost efficient than BPM services source countries - Domain experts:12% Consultative -15-20% lower than next lowest selling offshoring destinationSource: NASSCOM 11
  12. 12. GLOBAL IT-BPM OUTLOOKGlobal tech spend set to improve – grow over5 per cent in 2013Worldwide IT-BPM services spending growth • Global IT-BPM spend expected to be on the surge; growth of over 5 per cent in 2013 to 5.3% 5.4% touch USD 2 trillion 4.9% • Rate of introduction of disruptive technologies 4.6% will continue to be faster; SMAC technologies 4.2% – over USD 1 trillion by 2020 3.3% • IT shifting from traditional process automation to strategic BI, collaboration, customer facing technologies • Future of industry is beyond just services -- a complete blend of services, products, 2012 2013E 2014P solutions and platforms IT BPM • Expanding focus on unsung markets – APAC, SMBs, domestic - the next big spendersSource: Forrester, Gartner, IDC, NASSCOM 12
  13. 13. INDIAN IT-BPM OUTLOOKFY2014: Optimistic outlook, industryexpected to add USD 12-15 billionIT-BPM Export revenues* • Indian IT-BPM industry transitioning from USD billion Growth of 12-14% enterprise services to a enterprising solutions 85-87 69 76 • Outsourcing models changing- – driven by new technologies, reinvented business models, new buyer segments and solutions for emerging markets FY2012 FY2013E FY2014P • Technology changes – cloud, mobility, analytics, social media creating new opportunitiesIT-BPM Domestic revenues* INR billion Growth of 13-15% • New vertical, customer and geographic markets will continue to gain importance 1,180-1,200 1,047 • Focus on greater efficiencies and flexibilities – 918 reengineer internally; diversify; non-linearity; transforming customer business FY2012 FY2013E FY2014P • Internet and mobile expansion will encourage entrepreneurship in products and contentSource: NASSCOM E: Estimate, P: Projected * Excluding Hardware 13
  14. 14. ‘Imagineering the Future’ Journey to the next 100 billion • 21st edition • Thought Leadership • 3 power packed days • Future of Technology • 120+ speakers • Customer Speak • 50+ sessions • Emerging Markets • 1400+ delegates • India opportunity • 35+ country representations • Reinvented business models12-Feb-13 14
  15. 15. Future of Technology and Leadership Keynotes Consumerism: Imagineering: Responsible businesses Seeding the field of focus on needs not the Future! wants Mike Walsh Stephen Lu University of Southern California Leading in Uncertain Times Transactional to transformational: Co- Ram Charan, relating business Business Advisor & to hidden intelligence Author Manoj Singh, Deloitte Playing to Win: How Strategy really works Roger Martin Rotman School
  16. 16. Customer Speak Karenann Terrell Shohreh Abedi Wal-Mart Farmers Insurance Roger Gurnani Verizon Adriana Karaboutis Dell Darryl West Lloyds Sue McKinney Pitney Bowes Christoph Baeck Sanjay Mirchandani Hilti EMC Aditya Ghosh, IndiGo
  17. 17. Creative Keynotes Storytelling: Reinvention of Self: Transforming through The Real Comeback! tales! Amitabh Bachchan Devdutt Pattanaik, Chief Belief Officer, Future Group Emotional intelligence & bottomline Valedictory Session Dr Travis Bradberry, Emotional Rahul Dravid Intelligence Expert
  18. 18. Various formats…Analysts corner: interactive session to discuss changes in the sourcing sector• Vendor consolidation & strategic partnerships - through the customers’ eyes - Chris Andrews, Forrester• Generation Y: New Users, New Expectations, New Challenges - Frank Ridder, Gartner• Transformation agendas & how they are driving two different market segments - Peter Bendor Samuel, Everest• The Changing Dynamics of the G2000 - Paul Reynolds, ISG• [R]evolution - Six trends that will drive business transformation and competitive advantage in 2013 - Ben Towbridge, Alsbridge• Theme: Global IT Outsourcing Market Forecast: 2012-2016 - Rachael Stormonth, NelsonHallCountry sessions• Analyzing Japan Conundrum: Is there an IT marketMaster Class workshops• Outside In: Customer centricity• Build a "Lean" Robot! 12-Feb-13 18
  19. 19. Global Participation Delegates from across 35+ countries • Americas - US, Canada, Colombia • Europe - Belgium, France, Germany, Netherlands, Sweden, UK • APAC & Middle East - Australia, New Zealand, China, Japan, Hong Kong, Malaysia,Philippines, Sri Lanka, Singapore, Pakistan, Bangladesh • Africa - South Africa, Kenya, Nigeria 12-Feb-13 19
  20. 20. Executive Presence • Anand Sharma, Hon’ble Union Minister of Commerce and Industry • Prithviraj Chavan, Hon’ble Chief Minister of Maharashtra • Sachin Pilot, Hon’ble Minister for Corporate Affairs • Milind Deora, Hon’ble Minister for Communications and IT • Jack Markell, Governor, Delaware US • Takeshi Yagi, Ambassador of Japan to India • Nandan Nilekani, Chairman, UIDAI 12-Feb-13 20
  21. 21. Structured Networking Country Delegations – partnership opportunity Social Media Peer-to-Peer groups – Twitter, networking at Facebook, focused sessions Slideshare, You tube NILF The social NASSCOM platform Connect Entertainment Enables delegates evening, Awards to connect and set night and more up meetings 12-Feb-13 21
  22. 22. Questions