the rise and future development of ict in india 31 may, 2011 casa asia, madrid
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The Rise and Future Development of ICT in India
31 May, 2011
Casa Asia, Madrid
Key agenda
2Apr 18, 2023
Key growth trends in the IT-BPO industry
Future outlook
India India – an emerging economy and market an emerging economy and market
India and Spain
Indian market – opportunities unlimited
3Apr 18, 2023
Fastest Growing Democracy
Vibrant Economy
• A $ trillion economy• GDP growth rate at 8.6% for FY11• Rated as one of the most
attractive investment destinations across the globe• Forex reserves of USD 303 bn, as on March 2011
Huge Domestic Market
• Lucrative market of 1.2 bn people, a young population• Growing middle class – will be nearly 600 mn by 2025• The 5th largest consumer market by 2025, worth over USD 1,500 bn
Infrastructure Investment
USD 1.7 tn investment potential over the next 10 years
Combination of Contemporary and Traditional
Source: RBI, IBEF and McKinsey
4Apr 18, 2023
Hub for Knowledge-based industries
Large Automotive growth Retail market attracting major players
Healthcare spending
India’s automobile exports grew at 29 percent in FY11
125 Fortune 500 Companies have R&D bases in India
Opportunity of USD 77 bn by 2013
Indian market – opportunities unlimited
Increasing Connectivity
Fastest growing telecom market in the world• 787 mn subscribers with 10-15 mn mobile subscribers being added every month
Source: MAIT, Frost & Sullivan, TRAI and IBEF
Increasing Adoption of ICT
What is driving growth?
• Booming Indian services and industry sector are providing the required impetus to economic growth
• Growth primarily driven by the strong domestic market
• Domestic savings rate at more than 35%
• Rising index of global investor confidence – 3rd most attractive FDI destination in the world
• Rise in the size of the Indian middle class o Rapid rise in incomes will lead to an even faster increase in demand for
consumer durables and expendables
• Investments in improving infrastructure facilities (hydro, transportation, roadways, telecommunications, etc.)
• Key emerging sectors in India – Infrastructure, Education, Health care, Insurance, etc.
5Apr 18, 2023Source: A T Kearney FDI Confidence Index 2010
6Apr 18, 2023
•World anticipating shortage of working population in the future.
• India is among the world's youngest nations, with a median age of 25 years.
• India will see an increase in working age population from 63 percent in 2008 to 67 percent in 2020.
• India will have skilled resources that the world can leverage.
Demographic dividend – Increasing working age population
55
53Germany
83
75Japan
750
920India
207222US
40
41UK
39
37Italy
38
54
27
35
1618
14
Retiree (60+ years), Millions
2008 2020 Significant shift
Increasing emphasis on education – science and technology professionals
Source: NASSCOM, IAMR, Indiastat, UGC, MHRD, AICTE
Technical Graduates (’000s) Technical & Post Graduates, (’000s)
Non-technical & Post Graduates, (’000s)Non-technical Graduates (’000s)
ENROLLMENT*** OUTTURN COMPOSITION
100% ~4 million
Postgraduates3 yr Engg Diploma/
MCA`4 yr Engg Degree
Science
Graduates
Commerce
Graduates
Arts + Other
Graduates
* Provisional estimates
** NASSCOM estimates based on past trends in annual enrollments / intake and outturn
*** Enrollment figures reflect the total number of students enrolled across all years of study
Technical graduates include people with a 4 year engineering degree, 3 year diploma or a masters degree in computer applications (MCA)
Other Graduates****
Government spending on IT for masses
8Apr 18, 2023
Government leveraging technology for inclusive growth
• 250,000 panchayats (village councils) to be connected through broadband
• National eGovernance Program – 27 MMPs at the central and state levels o To make all Government services accessible to the common
man, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realise the basic needs of the common man
• Investments of INR 30-40 bn over the next four years on developing IT infrastructure
• Unique ID Project (Aadhar) – Mission mode project for creating an unique Identity number for every resident in India
What will Aadhar do?
• The Unique Identification number (Aadhaar) conceived by the Indian government is a 12 digit number for every individual, including infants.
• Will enable 'anytime, anywhere, anyhow' authentication.
• Creation of the world’s largest database – 1.2 bn people.
9Apr 18, 2023
geography
geography
Source: www.uidai.gov.in
Benefits and usage
•Empowering poor and underprivileged residents to access government programmes and services such as – banking, public distribution system (PDS), education, healthcare, taxes, direct benefit transfers, etc.
•Aadhaar will thus give migrants mobility of identity.
The focus resident segments are:
Below Poverty Line (BPL) familiesMarginalized and the deprivedLandless labourersDaily wage earnersMinorities (by caste, religion, region, etc.)MigrantsWomenChildren, especially those in the 6-14 age group
10Apr 18, 2023
India has among the highest returns on foreign investment.
Dan Scheinman, Cisco System Inc. Dan Scheinman, Cisco System Inc.
We came to India for the costs, stayed for the quality and are now investing for
innovation.
India is not simply emerging, India has already emerged.
India is a developed country as far as intellectual capital is
concerned.
US Department of CommerceUS Department of Commerce
By 2032, India will be among the three largest economies in the world.
BRIC Report, Goldman SachsBRIC Report, Goldman Sachs
Travyn Rhall, ACNielsenTravyn Rhall, ACNielsen
The Indian market has two core advantages - an increasing
presence of multinationals and an upswing in the IT exports.
Craig Barrett, Intel CorporationCraig Barrett, Intel Corporation
India has evolved into one of the world's leading technology
centers.
Why India? – Quote Unquote
Source: IBEF
Barack Obama, President, USBarack Obama, President, US
Jack Welch, General ElectricJack Welch, General Electric
However, there are challenges in the current environment
• While we have a rising economy, there are problems to tackle
o Upgradation of Infrastructure
o Agriculture and land reforms
o Lack of education and basic healthcare facilities
o Income and social inequalities – bridging the gap
o Bureaucracy and Governance
• Steps taken to address these
o Building world class airports – investments of USD 8 bn for mordernization of the airport infrastructure
o Some of the largest infrastructure creation in the world (Golden quadrilateral - 5,400 Kms)
o Transport alternatives – Metro Rail
11Apr 18, 2023
Its because we have problems that we have opportunities
Technology can transform India’s ability to provide basic services
Basic services Potential technology and services’ solutions
Healthcare50% of Indians do not have access to primary healthcare – technology
can provide it at half the cost
Financial
services
80% of Indian households are unbanked – technology can enable
access for 200 million families
Education
India faces a 3-fold shortage in teachers – technology can address this
through remote solutions (e.g., virtual classrooms, recorded lectures
by senior faculty, modular multimedia content)
Public
services
India suffers from a leakage of 40-50% in public food distribution –
technology can ensure transparency
Key agenda
13Apr 18, 2023
Key growth trends in the IT-BPO industryKey growth trends in the IT-BPO industry
Future outlook
India – an emerging economy and market
India and Spain
IT-BPO industry – the India story
14Apr 18, 2023
Direct employment of 2.5 mn and indirect employment of 8.3 mn professionals
Indian IT-BPO Industry catalysing business transformation for global clients
From USD 5.8 bn in FY 2000 to current estimates of USD 76 bn for FY11
Contributing to 9% of India’s incremental GDP; 26% of India’s exports and 11% of services revenues
Leader in the global sourcing landscape
Strong growth in industry revenues
Contributing to economy
Employment generation
Global leader
Business transformation
• A truly global industry
• Mission critical in nature
• Ever changing technology environment
• Entirely people and skill based industry
• Young industry - average age 27 years
• Products and services are not defined, but are constantly evolving
• Adhering to global policies and laws
A unique industry
Current snapshot of industry Sourcing model for IT-BPO exports FY2010
Engg Design & ProductsIT Services BPO
Foreign Captives Foreign ProvidersIndian Providers
IT-BPO revenues, USD bn
Apr 18, 2023
19.1%
IT-BPO exports by Geography, FY2011E
IT-BPO exports by Vertical, FY2011E
15
• 55% of total global sourcing market
• Foreign providers – over 30% of the total market
• Services delivered from 50+ locations and 20+
villages (Rural BPO)
• Transformation, new business models, driving
organisation wide efficiencies
• Emerging segments – healthcare, retail, RIM
and Asia-Pacific experiencing increased adoption
76.1
16
India’s value proposition
Sustained cost competitiveness
•Sustained cost advantage of 60 - 70%•Productivity gains and operational efficiencies
Abundant talent
• Largest share (28%) of global talent pool
Quality and data security
• High standards of quality and data security
• Global quality certifications
Government policy
• Overall policy approach has aided IT-BPO growth• Targeted policy actions e.g. ITAA, SEZ, Telecom deregulation, etc.
Role of private enterprise
• World class business infrastructure - office space, telecom, highways, etc.• Entrepreneurs providing key input services like Training, etc.
Maturing landscape
• Enhancing overall value proposition• Adoption of Green IT, focus on innovationProactive capability
building
• Investing with customers in capability building across domain, process, technology
Strong
Fundamentals
Robust
ecosystem
Enhanced
value
India beyond cost – some examples
Outcome-based pricing model; Client: Global low-cost airline
Service provider benefits
▪ 14% rise in revenues from client
▪ Sales per day for new hires from 4 to 7
▪ Lower attrition, flexibility
17Apr 18, 2023
Client benefits▪ Revenue growth by 33.1%▪ Sales conversion from 18 to 32%▪ Customer complaints down by 80%▪ 66% reduction in refund claims
Transformational Business impact across the value chain; Client: Global BankClient benefits20% reduction in cycle time, revenue addition of USD 21 mnUSD 21 mn reduction in net market risk, unmatched bond trades reduced to 10% from 22%Banking operations – Efficiency up by 30%, 12% additional space creation, improved workflow and layoutsImproved customer experience – C-SAT score up by 40 bps
Value engineering services; Client: Medical solutions provider
Client benefits
Reduction in number of parts, production time, assembly time etc
Reduced 60% of initial component cost, against a target of 30%. Additionally, the solutions also reduced cost of inventories, which is a recurring cost advantage
Redesigned various mechanisms and integrated multiple parts
Key agenda
18Apr 18, 2023
Key growth trends in the IT-BPO industry
Future outlookFuture outlook
India – an emerging economy and market
India and Spain
19
Global Megatrends
Demographic shifts will fuel the growth of new sectors, markets and service lines
Social, environmental and technology trends will create hitherto unseen opportunities and risks that could endanger up to a third of today’s market
The addressable market for global sourcing will triple in size from USD 500 billion today to USD 1.5-1.6 trillion in 2020.
80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments
The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion in revenues by 2020.
The domestic component will grow to USD 50 billion, equal to today’s exports revenues.
Future outlook for the industry – a redefined market with tremendous potential
A Redefined Market
Industry Outlook
Apr 18, 2023
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3
4
5
6
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The industry’s vision for 2020 – Transform Business, Transform India
IT/BPO industry revenue potential
2020
225
175
50
FY2011E
59
17
76 Exports
Domestic
3.5x
USD billion Industry contribution by 2020
▪ 7% of annual GDP
▪ 30% of annual exports
▪ 14.3 million* employment opportunity (direct and indirect)
▪ Increased diversity (women are 50% of the total workforce)
▪ 4-5 satellite townships around Tier-I cities
▪ 8-10 Tier-II cities with upgraded basic and business infrastructure
▪ ICT as the key enabler for delivery of public services
▪ Innovation hub driving additional GDP contribution
Note: * As global employment and non-linearity increase, the employment multiplier will decrease
Key agenda
21Apr 18, 2023
Key growth trends in the IT-BPO industry
Future outlook
India – an emerging economy and market
India and SpainIndia and Spain
India – Spain Opportunities
• Indian industry can partner with Spanish companies to transform and offer innovative solutions that are competitive globally
• Uniqueness of Indian market
o A virgin market with new opportunities in the fast growing Indian domestic market
o Large market, open for investment
o Opportunity to sell more to India – Spanish companies can partner with Indian companies to enter the market
• Potential areas for Spanish investments in India
o Automotives industry
o Pharmaceutical & Chemical Products
o Food, beverages and Wine industry
o Tourism industry
o Textile, Garment & Apparel industry
22Apr 18, 2023
Technology Companies
Non-technology Companies
23Apr 18, 2023
Indian companies in Spain Spanish companies in India
In summary
• Time to create win-win partnerships through entrepreneurial connect between India and Spain
• Focussed efforts required to facilitate and enhance two way investments between the countries
• Partnering with Spanish companies to promote their goods and services
• To deepen co-operation in: Trade in goods, Information technology, Manufacturing sector, etc.
• Technology and business services will play transformation role for countries and businesses
• Globalization demanding higher efficiencies and competitiveness
24Apr 18, 2023
Thank You