1_SOM_Zensar GPW 2011 - 11 Feb 2011_SOM

8/6/2019 1_SOM_Zensar GPW 2011 - 11 Feb 2011_SOM

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11 February, 2011Pune

IT-BPO industry in India

Transforming global businesses

Presented By :Som Mittal

President, NASSCOM


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Role NASSCOM plays

14-Feb-11

IndiaInnovationFund

Represents IT, BPO, Products and Engineering services companies

Over 1200 members includes Indian Companies, MNCs and Captive units

PolicyAdvocacy

Industry

Development

Partnership with the Government

Research, Events, Forums, Market development

Entrepreneurship, Innovation, Resource building, Security initiatives,Infrastructure

EnablingEnvironment

Global TradeDevelopment

Policy advocacy, Market development, International partnership,International and bilateral engagements

SustainabilityCSR initiatives, Gender inclusivity, Driving Inclusive Growth, Green ITinitiatives


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IT-BPO industry the India story

314-Feb-11

Direct employment of 2.5 mn and indirect employment of 8 mnprofessionals

Indian IT-BPO Industry catalysing business transformation for globalclients

From USD 5.8 bn in FY 2000 to current estimates of USD 76 bn forFY11

Contributing to 9% of Indias incremental GDP; 26% of Indias

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 globalindustry

Mission critical innature

Ever changing

technologyenvironment

Entirely people andskill based industry

Young industry -average age 27years

Products andservices are notdefined, but areconstantly evolving

Adhering to globalpolicies and laws

A unique industry


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Current snapshot of industry

Sourcing model for IT-BPO exports FY2010

Engg Design&Prod DevptIT Services BPO

Foreign Captives Foreign ProvidersIndian Providers

IT-BPO revenues, USD bn

414-Feb-11

CAGR18%

IT-BPO exports byGeography, FY2010

IT-BPO exports byVertical, FY2010

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

Demand scenario strong in core markets ADM, BFSI,

US; Europe, telecom and manufacturing also picking up

Emerging segments healthcare, retail, RIM and Asia-

Pacific experiencing increased adoption


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Breadth of services New markets,New services, New verticals

Non-English speaking geographic IT-BPO revenues

Building language capabilities

BPO non-voice revenues

Growth of Non voice services

SMB revenues

New customer segments

IT-BPO revenues from new verticals

Greater Diversification14-Feb-11


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Industry establishing a viable hub and spokemodel, thus emerging as multinationals with global deliverycapabilities (nos) 2008 2009 2010 E

Countries ofOperations

~52 ~60 ~66

Operating Centers ~400 ~460 ~520

Egypt

Philippines

Eastern Europe

Ireland

Chile

Not exhaustive

China

Strategic Benefit: Near-

shore centre for

European and UK clients;

low corporate tax

Strategic Benefit:

Language and cultural

capabilities facilitateEuropean dealings

Strategic Benefit: Low cost

human resource, language

and cultural capabilities

facilitate dealings in South

East Asia and Japan

Strategic Benefit: Availability

of skilled workforce

proficient in English; low

operating costs

Strategic Benefit: Similar

time zones as that of the

US enable Indian

companies to offer 24-

hours support to US clients

Strategic Benefit: Strong

government support; skilled

workforce with multi-lingual

capabilities; good location

for servicing European and

Middle East clients

Mexico

Strategic Benefit:Similar time zones as

that of the US hence a

good location for

servicing US clients


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India multipliers Future ready; stayingahead of the curve; enhanced value proposition

Source: NASSCOM Strategic Review 2011

New BusinessModels

Innovation andTransformation

Global Delivery

Shift towards managed services model,risk sharing

From FTE based to outcome based;pay per use model, CAPEX to OPEX

IP Led innovation

Innovation through process re-engineering

Globally dispersed footprints, blurred corporateboundaries and decoupled value chains

Customer intimacy, geo political diversity

Service deliveryaround new tech

Develop applications around cloud andplatform based solutions

Patents granted to top 5 IndianIT companies

Fixed price contract revenues

Cross border and domesticM&A deals

Everything as a service model, platforms

Leading Indian companiesoffering cloud solutions

INDICATIVE

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At the same time internallyre-engineering itself

Source: NASSCOM Strategic Review 2011

Customer centricity

Push towards Non-linear growth

Talent re-

engineering

Enhance client relations from vendor topartnerships, augment sales teams

Development of IP, investment in labs

Alliances and partnerships, M&A

Sustained investments in training

Leveraging alternative talent streams

ContinuedOperational

Excellence

Reduction in expenses even asbusiness development increases

Increase fresher hiring, expansion toTier II/III locations

SG&A as a % of total revenues

YoY Growth of BusinessDevelopment

Revenue and Employee growthCAGR FY07-11E

INDICATIVE

Vertical focused business units to better serviceclients

% of fresh hires with Non technicalbackground in IT services

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Business transformation has become a coretheme for all segments within the industry

Do itcheaper

Do itbetter

Do itdifferently

EliminateWork

Cost Saving

Efficiency

Processes Functions Products Business

Transformation

Global delivery model Front end automation Adaptive operating model

Six sigma Benchmarking Technology augmentation

Role reengineering Shop floor automation Process & org restructuring Inter & Intra industry best practices

Integrate technologycapabilities to eliminatework

STP (Straight throughprocessing)

Value added reporting /analytics

Business assurance


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Case example IT services: Offering valuethrough consulting, technical and functional expertise

1114-Feb-11

Client: A semiconductor company formed by combining two global semiconductor giantslooking at integrating the parents IT infrastructure to ensure alignment of business and IT, costsavings and simplifying the IT environment.

Business Situation Robust programmanagement process

o to manage entireapplication portfolio

o to control internalresources for maximumimpact

Defined the IT

architecture and ITstrategy bringing inprocess excellence.

Defined, implemented andsupported the entire ITorganization.

Solution

Shortened month-end and year-end closing process Improved visibility and automation Independence from parent,bringing synergy and reducinghidden costs 247 support for criticalbusiness applications with 90%offshore leverage End-to-end service and createdassets for each service Knowledge repository creationand maintenance Process improvements to checkand validate business reports fromapplications Cost savings on IT spend

Benefits

To help set up IToperations for the newcompany.

Aligning the ITlandscape to businessrequirements, ensuringminimal impact on the

new company and theparents customers

Creating new ITleadership


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Case example BPO: Business impactacross the value chain

Transformational Business Impact has realised the true potential of off-shoring

OutsourcingSavings >$30 Million

Efficiency Gainsthrough processimprovements $ 1.5MillionCost out throughstaff optimization $ 5Million

Business Impactthrough Re-engineering & Endto end projects

LABOURARBITRAGE

EFFICIENCY EFFECTIVENESS

$100

Million

$40Million

$5Million

$1.5Million

$30Million

$140Million

$6.5Million

$100Million

EB

ITImpact

Cash

Flow

2006 - 2009

$146 Millionbusiness impactover $30 Millionoutsourcingbenefit

Value

Branch opening cycle time-20% reduction in cycletime, revenue addition-$21Mn

Improved customerexperience- C-SAT score up by 40bps

Banking operations-Efficiency up by 30%,12% additional space

creation, improvedworkflow and layouts

-$21 Mn reduction in net

market risk, unmatchedbond trades reduced to10% from 22%

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2004

Asset-heavymodels (IBM, HP,Cisco, etc.)

Dedicated/captivemodel

Time and material Staff augmentation

2008

Managed servicesincreasing inpopularity

SLA driven,requires maturityand understandingfrom both client andvendor

Risk and rewardsharing model

2010

2006

Shift towards asset-light models short-term deals

Shared servicesmodel gainspopularity

Vendor sharesresources with clientas required

Emergence ofmanaged servicesmodel

Movement to asset-light models to cloud Shared/managed services models offer lower costs and added flexibility Fixed-priced/output-based models preferred by large companies

Case example RIM: Business modelshift

SOURCE: Everest; NASSCOM

Shift towards managed

services model

Shift to utility model pay-per-use, cloud

14-Feb-11


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Case example Engineering services:Enabled an European customer to deliver an instrumentcluster for an American OEM

14-Feb-11

Customer: A large Automotive Tier -1 supplier based in Europe

Business Objective

The American OEM wanted theinstrument cluster delivered by the Tier

1 supplier in less than 24 months The customer neither had the capacity

nor was its current architecture suitablefor the intended cluster HMI software

Project Details

Indian SI deployed 35 engineers withintwo weeks and developed theproduction intent software from scratchin a period of 16 months

Indian SI followed the agilemethodology for faster development

Indian SI provided launch support to the

Tier-1 for the OEM program

Results Achieved

Business Benefits: Time to market reduced by 33% Significant cost advantage by

leveraging an Indian SI as astrategic partner

Success factors/ USP :

Deep knowledge of instrumentcluster domain and HMI architecture

Competence in agile methodologyof software development

Efficient project management skills

OEM Original Equipment ManufacturerSI

System Integrator


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Global Megatrends

Demographic shifts will fuel the growth of new sectors (healthcare), markets(BRIC, Japan, Germany) and service lines (process transformation forproductivity improvement)

Social, environmental and technology trends will create hitherto unseenopportunities (e.g., climate change, servicing SMBs) and risks (automation ofcore service lines) that could endanger up to a third of todays market

The addressable market for global sourcing will triple in size from USD 500billion today to USD 1.5-1.6 trillion in 2020.

80% of incremental growth will be driven by opportunities outside the currentcore 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 todays exports

revenues.

Future outlook for the industry a redefinedmarket with tremendous potential

A RedefinedMarket

Industry Outlook

14-Feb-11

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In summary

The Indian IT-BPO industry has moved beyond cost efficiencies to being atransformation partner

Given the maturity, process excellence and value add India continues to be thetrusted destination

Opportunities in the new decade will be different from the past and will require

the industry to focus more on innovation and new models of growth New level of partnerships to get built on trust

o Leveraging resources beyond contractual new markets, new products,new models, demand value-add

o Partner for supply chain of global talent with specialized technical skills

o Build opportunities in the fast-growing Indian market Technology and business services will play transformation role for countries and

businesses

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Thank You

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