© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
“Living up to the promise”
Challenges in the Asian market
V. Sriram
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Agenda
■ IT Services Market in Asia Pacific■ Infosys in Asia Pacific today – A Snapshot■ Key Characteristics of the region■ Infosys in Japan, Australia, Singapore and
HongKong
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
A Snapshot of IT Services Market - Asia Pacific Vs. Worldwide
IT Services Revenue Share M USD 2001United States 250,791Asia Pacific incl. Japan 93,194Europe 151,729Rest of the world 46,570Total Worldwide 542,284
IT Services Revenue Share in M USD 2005United States 311,304Asia Pacific incl Japan 129,440Europe 193,744Rest of the world 61,714Total Worldwide 696,201
Source: Gartner Dataquest July 2002
Worldw ide IT Services Revenue Share (%) - 2001
Europe
27.98%
United
States46.25%
Asia
Pacif ic 17.19%
Rest of the
w orld8.59%
Worldw ide IT Services Revenue Forecast - 2005
United
States
44.71%Europe
27.83%
Asia
Pacific
18.59%
Rest of
the world
8.86%
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Asia Pacific IT Services Market size forecast by Country (in Billion US $)
64
.8
11
.8
5.4
3.8
1.8
5.3
65
.2
12
.9
6.2
4.2
1.9
6.0
70
.2
14
.2
7.2
4.7
2.2
7.0
76
.3
15
.8
8.4
5.2
2.4
8.2
83
.0
17
.9
10
.1
5.9
2.7
9.8
2001
2002
2003
2004
2005
Japan ANZ China & HK South Korea Singapore Rest of APAC
Total93.1 b0
Total96.4 b
Total105.3 b
Total116.4 b
Total129.4 b
Source: Gartner Dataquest July 2002
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Japan : TokyoAustralia : Melbourne
SydneyHong KongSingapore
Infosys in Asia Pacific Today - Snapshot Total Revenues / Head Count / Offices
■ ~7 % of company revenues■ 5 offices (excluding offices in India)■ Approximately 900 employees working for APAC Clients
Coverage■ From Japan - Japan and Korea■ From Hong Kong - Hong Kong, Taiwan and China■ From Singapore - ASEAN countries■ From Australia - Australia and New Zealand
Year of start for offices■ Japan 1997■ Australia 1999■ Hong Kong 1999■ Singapore 2000
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Infosys APAC has grown rapidly in the past 2 years through new account acquisition…..
0
5
10
15
20
25
30
35
40
45
1997-98 1998-99 1999-00 2000-01 2001-02
0%
1%
2%
3%
4%
5%
6%
7%
8%
APAC Revenue in M USD Percent of Total Revenue
0
5
10
15
20
25
30
1997-98 1998-99 1999-00 2000-01 2001-02
Total # of Clients
28 clients inFY 2001-02
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Infosys APAC Revenue Split for 2001-2002
Percentage Revenue in FY 2001-02
3.5%
12.4%
33.6%
48.6%
2.0%
Japan
Australia
Hong Kong
Singapore
Others
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Verticals and service footprint
Verticals■ Manufacturing■ Financial Services■ Telecom
Services■ IT strategy and effectiveness■ Large Scale reengineering including platform
conversion■ Package implementation
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
APAC – Key Characteristics■ Diverse Markets
■ Challenges include diversity of language, culture, business practices
■ Outsourcing as a concept slowly getting accepted
■ In most countries (except Japan) no credible mid size Consulting/ SI company
■ Need for skills in latest technology areas acute
■ Infosys in APAC■ has traditionally grown at twice the company growth rate■ 90% of clients are Global 1000 companies■ Long term client relationships■ Have built local capability to deliver in markets like Japan
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Communications7%
Education2%
Finance19%
Government13%Healthcare
2%
Distribution11%
Services6%
Transportation6%
Utilities6%
P rocess Manufacturing
11%
Discrete Manufacturing
17%
67.8 b 64.8 b 65.2 b
70.2b 76.3 b82.9 b
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2000 2001 2002 2003 2004 2005
Softw are Maintenance and SupportHardw are Maintenance and SupportBusiness Process and Transaction ManagementManagement ServicesEducation and TrainingDevelopment and IntegrationConsulting
Japan IT Services Market Size and Forecast
World’s Second largest economy, Japan accounted for 12% of the worldwide IT services market in 2001. CAGR will be 4.1% through 2005
Japanese IT services market was forecast at $64.8 billion in 2001, growing to $83 billion in 2005
88 Companies in Fortune 500 (July 2002)
Japan – Salient Features
Source: Gartner Dataquest July 2002
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Infosys in Japan■ Key Initiatives / Achievement
■ Marketing Office setup in Japan in 1997 ■ 48.6% of Infy APAC revenue from Japan(FY 02) ■ 6 Fortune 500 clients started since the inception of the branch in-spite of a sluggish
economy■ Sales, Marketing,HR & Support teams include Japanese nationals■ Japanese - English technical hires, Dedicated translation team
■ Challenges■ Language Proficiency, Culture■ Slow Decision ■ Intense pressure on prices■ Highly cost and quality conscious market■ Hiring of locals and other Japanese - English enabled Technicals■ Short cycle projects with evolving requirements■ Aggressive schedules in almost every project
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Australia – Salient Features
Australia will remain the largest IT Services country in Asia Pacific after Japan, It will grow up to 16.7 b US $ by 2005 (Gartner Dataquest July 2002); Australia accounted for 11.8% of the Asia Pacific IT services market in 2001
Restructuring of industries such as utilities and telecommunications is generating demand for consulting leading to integration projects
6 Companies in Fortune 500 (July 2002)
Communications15%
Education2%
Finance18%
Government25%
Healthcare2%
Distribution5%
Services8%
Transportation8%
Utilities5%
Discrete Manufacturing
8%
P rocess Manufacturing
4%
16.7b
14.7b13.1b
11.9b10.9b10.3b
0
20004000
6000
800010000
12000
1400016000
2000 2001 2002 2003 2004 2005
Softw are Maintenance and SupportHardw are Maintenance and SupportBusiness Process and Transaction ManagementManagement ServicesEducation and TrainingDevelopment and IntegrationConsulting
Source: Gartner Dataquest June 2002
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Infosys in Australia
Key Initiatives / Achievement■ Marketing Office setup in 1999■ Infy getting established in Australia ■ 13% of Infy APAC revenue from Australia (FY 02) ■ Continuous hiring of Australian nationals for Sales and Delivery■ High end positioning■ Lot of “consulting”/ “trouble shooting work” ■ Infosys as a “Thought Leader” in Australia ■ Accounts like Telstra/ Vodafone/ Suncorp Metway/Swiss Re
Challenges■ Establish credibility of Global Delivery Model■ Create Infosys Brand Equity
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
1.35b
1.2b1.27b
1.47b
1.62b
1.8b
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005
S/W maintenance & Support
H/W maintenance & Support
Business Process & TransactionManagementManagement Services
Education & Training
Development & Integration
Consulting
Total
Singapore and Hong Kong IT Services Market size Forecast (in US $)
Hong Kong
1.75b1.8b
1.9b2.2b
2.4b
2.7b
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2400
2600
2800
3000
2000 2001 2002 2003 2004 2005
Softw are Maintenance and Support
Hardw are Maintenance and Support
Business Process and TransactionManagementManagement Services
Education and Training
Development and Integration
Consulting
Total
Singapore
Source: Gartner Dataquest June 2002
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
Infosys in ASEAN RegionMarket
■ Manufacturing, Financial and Telecommunications markets are strong and their expansion in IT is a main business driver for Software support services
■ Govt’s push into ebusiness and developing SMB segment is driving the IT services market in Singapore and Hong Kong
■ Fragmented market; Cultural linguistic diversity
Key Initiatives / Achievement■ Marketing Office setup in Hong Kong in 1999 and in Singapore in 2000■ Global strategic partnerships for large Asian companies■ Marketing to tap into the influencing positions of Head Quarters
Challenges■ Low brand of Indian Companies■ Cheaper alternative (but unproven) location like China
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
How do we cope with these challenges ?
■ Increase local content■ Invest in linguistic capability■ Customise solution / delivery process to meet local
requirements■ Alliances specific to markets■ Focus on business development activities
(Services/Verticals)
© 2002 Infosys Technologies Limited
Analyst MeetAugust 27, 2002
“Living up to the promise”
Thank You