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Perspective 2020: Transform Business, Transform India Perspective 2020: Transform Business, Transform India Perspective 2020: Transform Business, Transform India

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Perspective 2020: Transform Business, Transform India

Perspective 2020: Transform

Business, Transform India

Perspective 2020:

Transform Business, Transform India

2

2

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

3

THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON THE INDIAN ECONOMY

Rapid growth in the last decade

Exports USD billion47

18

82

2009200520021998

CAGR 1998-2009 (exports)

CAGR 1998-2009 (domestic)

33%

26%

Areas of Impact Impact

Employment Creation

• 45% of new urban jobs created (1995-2005)

Contribution to Education

• 6-7x fold increase in tertiary education in exporting states

Diversity and Global Exposure

• Women in the workforce estimated to be 30%; new entrants-45%

• 30% of delivery outside India

Contribution to Exports

• Exports offset close to 65 per cent of India’s cumulative net oil imports over past decade

4

4

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

5 *Estimates Source: McKinsey Global Forces research

Regional share of global GDPPer cent

Middle East & Africa

Latin America

Asia (except Japan)

Europe

North America

Japan

0

20

40

60

80

100

1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025

7%

5%

20%

25%

33%

10%

2020 share

BY 2020, ASIA (INCLUDING JAPAN) WILL BYPASS EUROPE IN THE GLOBAL ECONOMY

6Source: UN population prospects, 2004; McKinsey Global Forces research

Decrease in working age (15-60 years) population: Japan

Millions of people

Increase in retiree (60+ years) population: United States

Millions of people

Current offshore base in India –

1.6 million

WORK FORCES WILL DECLINE AND AGEING POPULATIONS INCREASE IN KEY WESTERN COUNTRIES

7583

2008 2020

854

38

2008 2020

16

7

7

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

8

Total revenue potential for global sourcing, 2020

USD billion

CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF INCREMENTAL GROWTH BY 2020

Growth in core markets

• Not adjusted for potential erosion due to automation

200190

New verticals in developed countries• Public

sector• Healthcare• Media• Utilities

230

New customer segments• SMBs

380

Outsourcing market in new geographies• BRIC

Up to 80% of growth from markets that are not core today

1,500

Core markets 2008• 6 verticals*• N. America,

Europe, Japan

• Large enterprises

500

*BFSI, telecom, retail, pharma, manufacturing, travel

9

9

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

10

Total addressable market for global sourcing and domestic outsourcing, 2020

BUSINESS SERVICES WILL ACCOUNT FOR 60% OF TOTAL ADDRESSABLE MARKET OPPORTUNITY IN 2020

Business services

USD billion

Growth in core markets

New customer segments• SMBs

New verticals in developed countries• Public sector• Healthcare• Media*• Utilities

Domestic outsourcing market in new geographies• Brazil• Russia• India• China

Core markets 2008• 6 verticals (BFSI, telecom,

retail, pharma, manufacturing, travel)

• North America, Western Europe, Japan

• Large enterprises

Total addressable market in 2020

*Printing and publishing

Source:Global Insight; Gartner January 2009

280

220

500 120-140

200-250 130-150

190-220 145-160

230-250280-310

380-420

605-220

895-980

1,500-1,640

11

11

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

12

PROVIDERS CAN CONSIDER MULTIPLE “STEP-OUT” BUSINESS MODELS TO CAPTURE FUTURE OPPORTUNITIES

*Independent verification and validationSource:McKinsey analysis

NOT EXHAUSTIVEH

ow

to

co

mp

ete

(c

om

pe

titi

ve

ad

va

nta

ge

)

Multi-client services/ products

Domain expertise

Customer intimacy

Delivery excellence

New geographies (BRIC)

SMBs Large enterprises

SMBs

Developed markets

Where to compete (customer segments)

Large enterprises (Fortune 1000)

3 Domain approach

2 Customer-centric approach

1 Delivery/technical approach

4 Solution approach

“Step-out” plays

Customer specialist

Lean factory

Vertical specialist

Saas-enabled

BRIC specialist

13

13

PERSPECTIVE 2020: KEY MESSAGES

An unparalleled impact on the Indian economy in the last 10 years

Demographic shifts will fuel the growth of new sectors, markets, and service lines

80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments

80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models

Business services will account for 60% of the total opportunity in 2020

The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk

14

India’s technology and business services export market in 2020 – scenarios*

USD billion

AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (1/2)

Business services

Growth multiple

CAGR

FY 2020-Focused Initiatives

and Innovation - driven grow

225-310 135

• Expedited reforms in tertiary education

• 10-15 Tier II cities with world class infrastructure

• Adoption of new business models by the industry

• India among the top 3 innovation hubs of the world

• Talent pool of 13.5 million

7.7x 18.6%

FY 2020-Current

Initiatives• Slow pace of reforms in

education (talent pool of 10 million)

• Limited development of Tier II, III cities

• Continued trust as a sourcing hub

• Continued government support

• Limited lash back from protectionism

4.4x 13%

175

FY 2008

40

11

87110-150

15

Indian domestic technology and business services market in 2020 – scenarios

USD billion

AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (2/2)

• GDP CAGR of ~5.5%

• Moderate IT adoption across verticals

• Significant government thrust on IT adoption including broadband rollout

• Reinvented business models

FY 2020 - Current Initiatives

4.2x 12.6%

50

65

• GDP CAGR of ~7%

• Significant IT adoption across verticals

5.4x 15%

FY 2020 - Focused Initiatives

and Innovation Led Growth

15

FY 2008

12

2

24 32

Business services

Growth multiple

CAGR

16

Catalysing growth beyond

today’s core markets

Establishing India as a

trusted global hub for

professional servicesHarnessing

ICT for inclusive growth

Developing a high calibre

talent pool of over 3 million

people

Building a preeminent innovation hub in India

Five themes

15

2

3

4

16

• Winning through the downturn

• Reinvented business models

• New verticals, geographies, customer segments

• Robust domestic demand

• Infrastructure

• Corporate governance

• Risk management and security

• Global branding

• ICT solutions for healthcare, education, financial services, public services

• Connectivity and access

• Soft infrastructure

• Quality scale of tertiary education

• Curriculum and faculty quality

• Intellectual property framework

• Centres of Excellence

• Entrepreneurship

SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A FIVE-FOLD VISION