Indian Software & Services

: Key Ingredients for Success

National Goal National Goal

“Make India a Global Information Technology

power and one of the largest generators and

exporters of software in the world within 10

years.”

0 10 20 30

Ireland

India

Singapore

Israel

Philippines

China

Mexico

Hungary

Weighted RankingFactor Weight India Ireland

SEGMENT EXPERTISE 6 12 6LABOR COST 4 4 - 8LABOR SUPPLY 4 8 0EASE OF BUSINESS 3 0 6EASE OF VISAS 3 - 3 3ENGLISH SPEAKING 3 3

3TECH. COMPETENCE 3 3

3EDU. & TRAINING 2 0 2GOVT. INCENTIVES 2 0

4SECURITY 2 0

2TELECOM INFRA. 2 - 2 4DOMESTIC MARKET 1 1

2

WEIGHTED AVERAGE - 26 27

Beginning ……. Beginning …….

Extract of a World Bank Report - 1991

Policy Creation Policy Implementation Operational Flexibility

Challenges to GrowthChallenges to Growth

EOU’s & EPZ’s -

- Not Very Congenial for Software Industries

- Being implemented by the Commerce Ministry

- Foreign Investment Promotion Board

- Physical Boundary

- Minimal Communication Infrastructure

Result: Not Focused, lack of understanding, and discrete approach

Policy during 1991 Policy during 1991

A non-profit society set-up in 1991 by

the

Ministry of Information Technology,

Govt. of India to promote & facilitate Software Exports from India

Software Technology Parks of IndiaSoftware Technology Parks of India

One Stop Shop One Stop Shop

STP Scheme is being operated by the technical body

Investment Approvals decentralized Most of the authoritaties are sub-Delegated to

the Directors of the STPI Centers

Result: A De-Centralized Single Window Scheme

STPI DifferentiatorsSTPI Differentiators

Benefits

Complete duty free import 100% foreign equity permitted No corporate income tax till 2010 Dedicated Data Communication links Single window Government clearance Custom bonding and export certification provided at single

point.

What is STP Scheme? What is STP Scheme?

Industry

Academia

Finance

Government

STPI : Catalyst for Synergy STPI : Catalyst for Synergy

Earthstation Location

STPI Spread across …STPI Spread across …

Dehradun Rourkela Madurai Tiruchirappalli

Thirunelveli

Pondicherry

Vijayawada Tirupati Warangal Nasik Kolhapur

Other Sub-Centers

Under Implementation Gurgaon Gangtok Allahabad Agra Varanasi Meerut

BhubaneshwBhubaneshwarar

CoimbatorCoimbatoree

MysorMysoreeManipaManipa

ll

PunePune

Navi Navi MumbaiMumbai

HyderabaHyderabadd

Delhi - HQJaipurJaipur

NoidNoidaa

Mohali/ChandigarhMohali/Chandigarh

ChennaChennaii

HubliHubli

GuwhatGuwhatii

SrinagaSrinagarr

IndoreIndore

VizaVizagg

AurangabaAurangabadd

MangalorMangaloree

ShimlaShimla

KolkatKolkataa

GandhinagGandhinagarar

ThiruvananthapurThiruvananthapuramam

LucknoLucknoww BhilaiBhilai

NagpurNagpur

KanpurKanpur

Jalandhar Durgapur Kharagpur Shillong Agartala Salem

BangaloreBangalore

Map Not to Scale

Exponential Growth of Software IndustryExponential Growth of Software Industry

485 734 10851750

2650

3900

6100

8250

1000

2000

3000

4000

5000

6000

7000

8000

9000

94-95 95-96 96-97 97-98 98-99 99-00 00-01 '01-02

Year

US

$ in

Mill

ion

India : Vital Value Add

India’s Value Proposition on IT-Enabled India’s Value Proposition on IT-Enabled

Cost

• 40-60% cost reduction for

offshored process

• Labour cost arbitrage, the

reason for cost savings, likely to

exist for the next 20-30 years

Productivity

• Faster turnaround time

- Time Zone difference

- 24x7 service• Learning curve effect –

centralization within company

Quality

• Established methodologies and

processes for better performance

• Well defined quantifiable metrics for

quality & process

• Access to highly-qualified skill poolSource:McKinsey

Quality vs Productivity in IndiaQuality vs Productivity in India

Source:McKinsey

98

95

IndiaFacility

UK Facility

8

20

IndiaFacility

US Facility

92

85

IndiaFacility

US Facility

120

100

IndiaFacility

UK Facility

Quality

Productivity

No. of Correct transactions/Total transactions (%) Total Satisfaction factor

No. of transactions/hour (indexed to UK) Average speed of answer (Secs)

UK-based retail bank US financial services company

Success Formula

• Investment C• Telecom/Datacom Infrastructure• Cluster & Incubation Development• Entrepreneurship and VC Funding• Internationalisation of HR• E-Governance• Quality Systems & Methods

STPI-Network OperationsCenter

Connectivity ExchangeConnectivity Exchange

Cyber Park

Server Farm

International Fiber Landing PointInternational Fiber Landing PointIntl.Fiber

India to

USA

Spectranet

Metro Fiber Reliance

Metro Fiber

BSNL

Metro Fiber

9 Satellite Dishes4 Metro Fibers

Bharti

Metro Fiber

Mangalore

Manipal .

Enabling ClustersEnabling Clusters

Earthstation Location

IncubationCenter

13 Companies

US $ 50.52 M Exports

24 CompaniesUS $ 8.12 M

Exports

Started Operation

Mysore

Bangalore

Infrastructures : ITPL, Bangalore, HITEC City Hyderabad, Cyber Park Bangalore

Venture Capital Environment in KarnatakaVenture Capital Environment in Karnataka

12 Domestic Small Funds

16 Overseas Funds

28 Large Funds

50% of above Funds are Head Quartered in Bangalore

Concept of Investor/Incubation Combo is picking up

Human Resources in Karnataka StateHuman Resources in Karnataka State

Engineering Colleges 97 Polytechnics 181 Medical Colleges 27 General Colleges 812 Universities 11

Technical University 1 Agricultural Universities 2 Health University 1

10% Indian Graduates are produced in Karnataka

E-Governance Initiatives E-Governance Initiatives Mukya Vahini – Decision Support System for

Administration Bhoomi & Nondani – Land Records Computerisation &

Registration Khajane – E-enabling of Treasuries through linking of 250

treasuries to manage the complete expenditure of the state Therige – E-enabling Commercial Tax Offices and

Outposts Reshme – Online Transaction support for Sericulture

Farming E-Seva – One Stop bill payment center covering all

utilities, taxes, etc

Thank You...Thank You...

Sanjay @ inknowtek.com InKnowTech Pvt. Ltd.,A-306, STPI Complex,Electronics City, Bangalore – 561 229