e+ opportunities & winning strategies
TRANSCRIPT
E+ Opportunities & Winning Strategies
Zinnov Centre of Excellence for Emerging Markets
This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulatedor reproduced for distribution outside the client organization without prior written approval from Zinnov
We are an 12 year old management consulting company
2012 - 2013• IAOP: Top 20
GlobalizationAdvisors overthe last 4 years
2010 - 2012
and talent solution - Talent Neuron,
• Global Technology Firms
2006 - 2010
enabler in India for Industry associations
technology companies
120 People150+
Customers
2002 - 2006
funded companies, R&D center setup for
2
Globalization advisory for US based VC
mid size to large technology companies
Knowledge Partner and Eco-System
and GoI, India Market Expansion for
Our Customers:
• Indian IT-BPO Companies
• Government• Industry Associations
Focus Areas
• Modern IT/ Cloud• R&D• Shared Services• Innovation• SMB• Start-ups• Emerging Markets
Growth strategies for technology companies, Zinnov’s proprietary location
helped large MNCs in GTM
Global Office Locations:
• Santa Clara (US)• Houston (US)• Bangalore (India)• Gurgaon (India)• Singapore• Beijing (China)
Zinnov’s launch of COE for “Emerging Markets”, New global locations – China &
Singapore
Our illustrative list of customer speaks volume about our growth
ConsumerElectronics &Semiconductor
Engineering InternetSolutions
ServerStorage
Associations &Trade Bodies
SoftwareProducts
Telecom &Networking
3
Introduction to E+1
Vertical Transformation2
Winning Strategies3
4
Agenda
Zinnov Management Consulting
E+ Markets: Markets with sizable consumption base and growingeconomic power
E+ Economies
China
GDP PPP Per Capita: $9,162Population: 1,354 Million
Over 40% of worldPopulation
~USD 19 Tr in GDP (PPPBasis)
Philippines
GDP PPP Per Capita: $4,430Population: 95.8 Million
India
GDP PPP Per Capita: $3,830Population: 1,223.2 Million
GDP Reinvestment at 43%,US stands at 16%
Malaysia
GDP PPP Per Capita: $16,922Population: 29.5 Million
Indonesia
GDP PPP Per Capita: $4,977Population: 244.5 Million
Global GDP contribution at23%
US contribution 19%
5Note: Considered APAC economies excluding Japan and Singapore for evaluation and filtered on the basis of GDP and Population
E+ economies will lead the next wave of Investments
Growth In Government SpendingCAGR 2008-11
1
Key sectors for investment :• Technology led inclusive growth• Education & healthcare sectors21%17% 17%3% 12% 12%
United States China India Indonesia Malaysia Philippines
Growth In Household SpendingCAGR 2008-11
2
Rising young population (15-45 years)driving the household expenditure 16% 14% 14%2% 10% 9%
United States China India Indonesia Malaysia PhilippinesGrowth In Foreign InvestmentsCAGR 2008-11
3
-8%25%-9% 17%9% 9% Liberalization of key sectors such as
multi-brand retail, aviation, Auto etc.
IndonesiaUnited States China India Malaysia Philippines
6
The focus on technology investments in E+ Economies is on the rise
Share Of IT SpendingUSA V/S E+ Economies (China, India, Indonesia, Philippines, and Malaysia)
2020
IT spending growth in E+ Economies will be more
2008
E+ EconomiesUSA
than that of the USA USA65% Malaysia India
35%14%86%
China
Growth in IT Spendingin E+ Economies is
driven by:Philippines Indonesia
E+ Economies
A
Expanding base of globally competitive large and mid-market
enterprises
B C
Strong base of growingdomestic micro & small
companies
Growth of enabling ITinfrastructure
7
%IT
Spe
nd
ing
Enterprise led opportunity in E+times of US Market
could potentially be 3 to 4A
Large & Mid Market EnterprisesEmploying more than 200 employees (2012)
Total Enterprises in Forbes 2,000 List
1500
41,000
# of Forbes 2,000enterprises to grow by~300% in E+ economies
BankingGas
IndustrialTelecomElectronics
United States
1000
Automotive95,000 Retail
Real Estate543
500
China 55,000E+ Economies
India 15,700
Indonesia 4,800
Malaysia
0
2012
United States
2020
E+ Economies
3,500
Philippines174,000
8
1160BankOil &InduTelecElectAutoRet
543 Real
378Banking
275 Oil & GasIndustrialTelecom
Enterprises from E+ are already making it big in global markets A
Operationsin 80
Countries
US$ 100 Bnin Revenue
Business in7 Sectors
58% ExportRevenue
Largest PCManufactur
er
Operationsin 60
Countries
US$ 30 Bnin Revenue
27,000Employees
9
Micro and small businesses are startingeconomic growth of E+ markets
to play a key role inB
Number of Small and Medium BusinessesEmploying less than 200 employees (Mn) (2012)
SMBs account for over 20% of thetotal GDP for E+ markets
23United States
Philippines’s SMBs contribute 36%of Total Manufacturing output51
China
48E+ Economies
IndiaIndian SMBs contribute 40% to the
total exports of the country25
Indonesia 0.8Malaysia 0.6
Philippines125.4
10
)
Strong internet and mobile infrastructureIT investment growth in E+ countries
Internet Users (Mn) and Penetration (%) (2012)
is enablingC
Potential Internet Users(2020)1
United States
2,256 Mn
E+ Economies)(23%)E+ Economies
Philippines
China India Indonesia Malaysia
Smartphone Users (Mn) (2012) Potential Smartphone Users(2020)
United States
1,795 Mn
E+ EconomiesE+ Economies
Philippines
Malaysia
IndonesiaChina
India
11Note: 1Estimated based on the assumption that E+ markets will be nearing the internet population penetration of USA in the coming years
330 52 44 29 7.8
175
564(42%)
157(11%)
55
(23%)
34
(35%
18 (70%
244 (78%)
Introduction to E+1
Vertical Transformation2
Winning Strategies3
12
Agenda
Zinnov Management Consulting
We believe that several key verticals in E+ markets will present amassive unparalleled IT opportunity in the next few years
Constitute more than 60% ofEmerging Markets GDP
Healthcare
Telecom Energy
Constitute more than 75% of thetotal IT spend by E+ Economies
E+ EconomiesMajor Verticals
Retail Education
Modern IT (Big Data, Cloud, M2M,and Mobility) is starting to gainstrategic importance in these
sectors
Banking
13
E+ economies are witnessing tremendousglobal hubs for healthcare industry
traction in becoming
Transformational Drivers Market Reactions
Pharmaceutical & MedicalEquipment Market in E+ by 2020
Of top 20 pharma companies setup/ expanded R&D centers in E+since 2006
$300 Bn 70%
Lower R&D & Clinical Trial Costs asCompared to the US
85%Relocated 115 year old X-Ray unitglobal Head quarters to China totap growth in ChinaLower Manufacturing Costs in
Comparison to the US50%
Invested $1 Bn in China for R&D onlocally prevalent diseases makingShanghai one of the top 3 researchbases
Faster Time to Market due to LargeAvailability of Patients for Trials
6X
Of the World’s Medical TourismMarket to be Serviced by E+ by 2020
50%Set up its largest global vaccinemaking facility in Hyderabad, Indiagiven the large scale of diseasesprevalent in India
Typical Out-of-pocket healthexpenditure in E+ (21% in US)>75%
14
Technology is starting to play a significant role in availability andquality of healthcare in E+
Jinzhou city government in China implemented Big Data for predicting future1
Malaysia Genomics Research Institute is leveraging Big Data technologies for2
Apollo Tele-health Services India is setting up 30 tele-medicine facilities in Africa3
Manipal Hospitals in India is leveraging mobility solutions for constant monitoring4
15
of fetus along with storage, and display of radiology images
using Telepresence technologies
analyzing Terabytes of data generated by Genome Mapping
health problems of its citizens (manages & stores over 100 million documents)
E+ economies are investing aggressively in Oil & Gas exploration &smart grids to meet rising demands
Transformational Drivers Market Reactions
Malaysiaof Oil and Gas demand in India andChina to be fulfilled by imports
75% $30 Bn investments in Oil and Gasexploration in 2012
Of China and India’s Oil reservesremain unexplored
75%
$7.8 Bn investment in Shale Gas inIndonesia in 2012
Household electrification in India &Indonesia
<70%
IndiaIndia Smart grid task force hasplans to launch 14 pilot projects forsmart grid deployments
of the power produced is stolen inPhilippines & India
>33%
Transmission losses in India incomparison to the world average
3XChina
$3.2 Bn smart grid investment byChina in 2012
Higher power consumption by E+economies by 20202X
16
Significant use cases of modern IT adoption are emerging in theenergy vertical
PetroMalaysia deployed digital oil fields using big data technologies to enhance oil1
Meralco, the largest utility company in Philippines is leveraging GE smart meter2
Bharat Petroleum Corporation Limited (BPCL), an Indian public sector company has3
BSES has deployed an advanced load forecasting solution which takes into account4
17
lifestyle pattern, income levels, population & weather data for demand prediction
deployed M2M solutions to determine equipment health and avoid downtime
technologies for their smart grid initiatives to allow consumers to manage expenses
recovery
Unorganised retail sector in E+ countries is forcing many globalFMCG companies to develop large distribution networks
Unilever Delivery Reach inIndonesia
3 Co-Packers3 Central Distribution Centres10 Depot Warehouses21 Sales Area Offices473 Distributor
Share of Unorganized andOrganized in Retail Markets
United
States
Indonesia has over 17,000 islands
••
•
•
•
China
India
Came up with products relevant for high humidityscenarios. Water proof products for Muslim population
base – 30% sales growthIndonesia
Opened its largest factory globally in Java in 2012 andexpects Indonesia to become the 3rd largest market in
Asia for beauty productsUnorganizedMarket
OrganizedMarket
18
22% 78%
8% 92%
20% 80%
85% 15%
High growth in e-commerce is resulting into increased localcompetition from these markets
Gross Merchandise Value, 1997-2012E-Commerce Market ($Mn) Amazon V/S eBay V/S Alibaba/Taobao
~$165 Bn2012 YoY Growth 2013
China based Alibaba / Taobaoexceeded Amazon and e-Baycombined in terms of Gross
Merchandise Value
~$160 Bn31%
UnitedStates
36% ~$75 BnAsian Powerhouses
33%
China
31%
India1997 2005 2012
Ebay Amazon Alibaba / Taobao1,000 2,150115%
Indonesia
• Pioneered Cash/Card-on-deliverydistribution model in India
Expects to touch over $1 Bn sales by 2015104 145.5
39%•
Philippines
19
18,34014,000
265,000200,000
286,000217,074
262,000224,621
Education transformation in E+investment in IT infrastructure
Economies will be unleashed by
Transformational Drivers Market Reactions
Education expenditure in E+economies; second highest afterdefence
Student drop-outs from primaryand secondary education in 2012
$180Bn
100 Mn
200k Shortage of schools in IndiaIndia Indian Government to connect
~30,000 Colleges to improve e-learning scenarios
Non-English speaking population inChina
95%Philippines
Philippines Government deployedGoogle apps across 45,000 schoolsfor collaboration
Average spend per graduate in India& Indonesia of the US average
>10%
One of the largest cloud servicesdeal with AICTE to connect 10,000technical colleges in India
Of World’s internet population willbe in E+ countries by 2020
50%
Ecosystem collaboration for skillingrelated virtual content &experience for manuf. workers
Addressable market for manuf.employee skilling & training in India>$5 Bn
20
Non-traditional banking innovationsinclusion in E+ markets
will drive large scale financial
Transformational Drivers Market Reactions
Rise of Banking Assets to $40.6 Tnby 2020
Resolving the issue ofunavailability of identificationdocuments for unbanked people
2X
Bank branches per 10,000 peoplecompared to developed markets
1/3rd
China Mobile partnered with sixcommercial banks to providemobile banking services
Unbanked Population in E+economies currently1.4 Bn
Provides low cost bankinginfrastructure at retail outletsfor largest banks in India
Banking Penetration and Unbanked Population (Mn)
United States
89%
Un-BankedPopulation
India
40%
726 Mn
Indonesia
39%
144 Mn
Philippines
48%
46 Mn
Provide mobile wallet servicesand already has 50.9 Mnsubscribers
21
Global Comparison of ARPUs (USD) (2012)
Smartphone penetration & increasing data consumption is creatingnewer opportunities in the telecom space
Transformational Drivers Market Reactions
Mobile workforce across E+economies by 2020
400Mn
46.5 32 8.3 2
IndiaChina>70% of employees to bringtheir own device for work in E+by 2020
UKUS
Global Comparison of Data Growth
16Xgrowth
12Xgrowth
17Xgrowth
60Xgrowth China leads in m-commerce
adoption and expected to be$61 Bn market by 2020
MobileCommerceIndonesiaGlobal China India
Growth of Smartphones in E+E+ Economies MPOS market toreach ~300 Bn by 2017Mobile Point
of Sale
1,795 MnCAGR – 24.5%312 Mn
Close to 50% of India’s musicrevenue comes from mobiles
20122020 22
Introduction to E+1
Vertical Transformation2
Winning Strategies3
23
Agenda
Zinnov Management Consulting
Winning Strategies for Emerging Markets
1
Focus on Large Government Projects
2
Re-defining Distribution to Suit Local Needs
3
Leveraging Influencer Models to Drive IT Adoption
4Creating Enabling Ecosystem for Market Development
5
Focus on Region Specific Deep Consumer Insights & Localization
24
IT companies are aggressivelyacross the world
targeting e-governance opportunities1
Leverage Domestic wins for GlobalContracts
Consortium Bidding for Contracts
Unique ID Authorityof India (UIDAI) TCS Strategy
• Exhibit scale and complexity domestically through large projects
• Target global contracts based on capabilities built from past projects
• Consortium leader• Awarded with IT
infrastructure contact
• Consortium member• Awarded with network
and telecom supportcontract
India Post Norway Post
HCL - $ 400 Mn Contract (7 years) India Post - $ 205 Mn Contract (6 years)
RCOM - $ 55 Mn Network and Subscriber Contract Norway Post - $ 42Mn Contract (6 years)
25
Apple reworked its global GTM strategy for success in thepredominantly pre-paid Indian telecom market 2
2008Introduced iPhone in India with developed market strategy:
2012/13Aligned GTM to Indian market
Shifted DistributionStrategy
Distribution partnerslike Redington &Ingram
LimitedDistribution
ExpandedDistribution
Offered exclusively byTelecom Operators
IncreasedReach
Long-term 36/48month contracts
Local stores and e-commerce sites
Lock-in
Changed SalesModelsiPhone Plans were
50% higher thancompetitors
IncreasedAffordability
Introduced Buyback &EMI schemes
Costly Plans
Failed to generate volumesTreated India as lowpotential/low priority market
400% increase in shipmentsExpected to generate $1 Bnsales in FY 2013
26
Microsoft leveraged ecosystem partnerships to penetrate the SMB3market in Philippines
Partnership
• Microsoft provided training & bundled solutionsto SMB’s with considerable discounts
• NATCCO gave Microsoft access to huge base ofpotential customers
Benefits
• Increased SMB affordability through volumelicencing deals
• Largest federation of co-operatives inPhilippines1.9 million individual members and500 member cooperatives
•• Increased relevance among large number of
SMBs with low adoption of genuine software
27
Google partnered with Hostgator for a unique program to get theIndian SMBs online 4
Partnership
• Google and Hostgator to fund SMB website for 1year post creation
Hostgator to provide domain, hosting, site building tools & assistance to SMBs to create websites
Post the completion of 1 year, SMBs to have anoption to continue services at discounted costs
•
•
Success and Roadmap
• 150,000 websites built by Google across 7,850 citieswithin a year after launch
Invited Union Cabinet Minister in ‘Chandni Chowk’, a popular market in Delhi, and got 2,500 SMBs online under this program
Google plans to build 500,000 free SMB websites by end of 2014
• •World-wide provider of shared, reseller,VPS and dedicated web hosting
~400,000 customers globally
Manages ~12,000 servers for providingservices
•
• •
28
Tencent has leveragedcompetitors at bay
insights of local consumers to keep global5
Deep Local Insights
• US$50bn company inless than 15 years • Tencent has deep understanding of Chinese
netizens as compared to global counterparts
• 711 million active users
1
China’s most popularinstant messenger
Modify & Adapt Locally
• Instead of developing original services, Tencentchooses to “modify” popular competingproducts and add more local functionality2
China’s most popularOnline Gaming Platform
“Freemium” model
3 • Ad supported “Freemuim” services have lead toTencent’s deep penetration in the consumerbase
China’s most popularGroup Messaging App
29
Sitti became the largest online ad publisher in Indonesia byfocussing on local language content 5
Vast reach in localcontent
Indexed over 800 million pages of websites and blogs with Indonesian Bhasha content
Indonesia’most popular locallanguage ad serving platform
•
Indexes' local language websitesand social media conversations Huge network of local ad
publishers
Deep understanding of over 30,000 local ad publishers
•
Enables advertisers to push ads linked toselected contextual keywords
Targeting SMBs
Click Through Rate comparedto Google Adsense
3X • Targeting the base of 52 million local IndonesianSMBs through awareness & education programs
30
Winning Strategies for Emerging Markets
1
Focus on Large Government Projects
2
Re-defining Distribution to Suit Local Needs
3
Leveraging Influencer Models to Drive IT Adoption
4Creating Enabling Ecosystem for Market Development
5
Focus on Region Specific Deep Consumer Insights & Localization
31
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This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reprodu ced for distribution outside the client organizationwithout prior written approval from Zinnov