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Indian Information Technology Sector 

 

 
 
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Published:  January 16, 2010
 
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Slide 1: www.imacs.in Infotech September 2006
Slide 2: www.imacs.in INFOTECH Contents • Market Overview • Government regulations & policy • Advantage India and business opportunities
Slide 3: www.imacs.in INFOTECH Market Overview • Market Overview • Government regulations & policy • Advantage India and business opportunities
Slide 4: www.imacs.in INFOTECH Market Overview IT-ITES one of the fastest growing sectors in India Revenues (USD Bn.) 40 CAGR - 30% • Revenues ~ USD 36 billion (2006 Est.) 36 20 28 22 • CAGR (FY 2004-06) - 30 % • Contribution to GDP up from 2% in 2000 to 5% in 2006 • Exports ~ USD 23.5 billion (2006 Est.) • CAGR (FY 2004-06) - 35 % • Has nearly doubled in last three years 0 2004 2005 2006 (Est) Exports (USD Bn.) 20 CAGR - 35% • Domestic Market - USD 13 billion (2006 Est.) • CAGR (FY 2004-06) - 22% • Buoyed by an economy growing at nearly 8% per annum over the last 3 years 10 9 0 2004 11 13 2005 2006 (Est) Source: NASSCOM
Slide 5: www.imacs.in INFOTECH Market Overview Exports contribute nearly 65 % of IT sector revenue Segment wise revenue trend 40 19% 100% = USD 36.4 bn 13% 35 48% 100% = USD 28.5 bn 21% 47% 20% Year 2006 (E) 30 100% = USD 21.7 bn 14% 23% 48% 18% Year 2005 IT services ITES- BPO Engg Services, R&D and products Hardware 25 13% 16% 20 Year 2004 • IT services and ITES-BPO revenue largely export driven • Exports contributed 75% of IT services and 87% of ITES-BPO revenue • Share of services in domestic market increasing • Revenue from services up from 43% to 47 % in the last 3 years Source: NASSCOM
Slide 6: www.imacs.in INFOTECH Market Overview Business pressures and India advantages continue to drive off-shoring Share of Offshore component of revenue on the rise • The Global Offshore Delivery Model adopted by Indian software services vendors and increasing sophistication to sustain delivery over the last decade or more is already translating into more work being handled off-shored % of revenue 57% 45% 36% 29% • IT companies have developed capabilities 64% 74% to handle larger slices of work offshore and provide substantial value to customers facing pressure to drive down costs while maintaining quality 43% 2000 Onshore Offshore 55% • Continued pressure on margins and 2002 2004 2006 (E) tangible benefits from off shoring is expected to substantially increase the momentum in offshore outsourcing. Source: NASSCOM
Slide 7: www.imacs.in INFOTECH Market Overview India’s IT industry structure is vibrant and competitive Category Tier I Tier II Offshore operations of Global IT majors Pure play BPO No. of players 3-4 7-10 20-30 Share of export revenue • 45% of IT Services • 4-5% of BPO • 25% of IT Services • 4-5% of BPO • 10-15% of IT Services • 10-15% of BPO • 20% of BPO Revenue Performance > than USD 1 billion USD 100 million-USD 1 billion USD 10 million-USD 500 million 40-50 USD 10 million-USD 200 million (Excl. leader - USD 500 million) USD 25 million-USD 150 million (top 10 units) < USD 100 million (IT) < USD 10 million (BPO) Captive BPO Emerging players 150 >3000 • 50% of BPO • 10-15% of IT Services • 5% of BPO Source: NASSCOM
Slide 8: www.imacs.in INFOTECH Government regulations & policy • Market Overview • Government regulations & policy • Advantage India and business opportunities
Slide 9: www.imacs.in INFOTECH Government regulations & policy IT-ITES is one of the key thrust areas of Government of India • Liberal Policy framework for the sector. • Continuous liberalisation and reform policies of Government of India had a positive impact • Liberalisation and reforms in the telecom sector have had a direct impact on the industry’s competitiveness and created further avenues for the growth of IT and BPO sectors • Export promotion and Tax/duty incentives • Foreign Trade Policy 2004 - 2009 permits import of all kinds of computers (Except second hand computers) in India without any licenses. • EPCG Scheme for software sector allows import of capital goods at 5 % basic customs duty subject to undertaking certain export commitments • A number of Special schemes including Export Oriented Unit , Special Economic Zone etc offer a wide range of duty concessions and exemptions for IT exports India’s federal governments have comprehensive IT policies to facilitate greater investments in the sector
Slide 10: www.imacs.in INFOTECH Government regulations & policy India has enacted comprehensive legislation (IT Act 2000) which covers copyright protection and cyber laws • Copyright and IPR • Intellectual Property Rights (IPR) of computer software covered under the Copyright Law. • Copyright of computer software protected under the provisions of Indian Copyright Act 1957. • Major changes to Indian Copyright Law were introduced in 1994 and came into effect from 10 May 1995, making, Indian Copyright law, one of the toughest in the world. • Regulatory norms in Indian cyberspace • Comprehensive legislation for Information Technology - The Information Technology Act 2000 enacted. • Aims to provide the legal infrastructure for e-commerce in India • India only the 12th nation globally to enact cyber laws.
Slide 11: www.imacs.in INFOTECH Advantage India and Business opportunities • Market Overview • Government regulations & policy • Advantage India and business opportunities
Slide 12: www.imacs.in INFOTECH Advantage India and business opportunities India’s cost and talent pool advantage is well established University graduates in Science/Engineering every year in 2002-04 800 475 525 690 425 • India with 28% has the largest share of the global talent pool • While China with around 11% stands next, the use of English as the official business language gives India a significant edge 400 350 000 graduates 0 Japan United States European Union China India • India also continues to hold a significant labor advantage over developed countries thus offering significant cost saving opportunties by off shoring Hourly Labour Costs index (US=100) • India lead among potential outsourcing 116 140 105 70 35 0 India China US 12 19 100 111 destinations as per the A T. Kearney Global Services Location Index 2005 UK Japan Source: McKinsey Report, The Emerging Labour Market, June 2005
Slide 13: www.imacs.in INFOTECH Advantage India and business opportunities Rising FDI and PE are indicative of India’s advantage and global interest FDI in IT-ITES CAGR 178.6% Sector IT -ITES Manufacturing Healthcare and Life Sciences BFSI Textiles Number of Deals 33 23 13 6 12 Value (INR Bn) 19.9 15.4 9 6.6 6.5 Private Equity in IT -ITES Source: NASSCOM
Slide 14: www.imacs.in INFOTECH Advantage India and business opportunities India’s IT exports to touch US$ 60 billion by 2010 • Global IT-ITES spending to cross USD 1198 billion by 2010 Current size and Addressable market 160 Untapped potential • The addressable market for offshore IT services and BPO industry is estimated at be USD 150-180 billion and USD 120-150 billion respectively 120 • With USD 13 billion, India has less than 10% of the current addressable market 80 USD Billion 40 150 • India expected to be well on track to achieve USD 60 billion by 2010. 0 6.4 13 Current size India Addressable Market Others Source: Nasscom. The IT Industry in India - Strategic Review 2006
Slide 15: www.imacs.in INFOTECH Advantage India and business opportunities India’s IT spending is providing significant opportunities • India’s domestic market is also set to grow substantially, having grown at a CAGR of 22% over the last three years • India’s spending on software and services has grown at a CAGR of 27% • Large Indian corporates have already begun to outsource their entire IT activities • A number of large outsourcing deals have been stuck in the domestic market in the recent past, with the Banking and Financial Services Space and Telecom being the noteable sectors. • India will be the fastest growing market in Asia Pacific in terms of IT spending • Servers shipments are expected to cross 100,000 during 2006 • Outsourcing Services to outgrow Technology Product Services in 2006 and would contribute to nearly of 24% of Indian IT Services market Excerpts from India Top 10 ICT Market Predictions 2006
Slide 16: www.imacs.in INFOTECH Advantage India and business opportunities India’s tier 1 companies Tata Consultancy Services Ltd. • Ranked 1 in 2005 by NASSCOM • Incorporated - 1968 • Revenues - USD 2.97 Bn • 71,000 employees Wipro Technologies Ltd. • Ranked 3 in 2005 by NASSCOM • Incorporated - 1997 • Revenues - USD 1.81 Bn • over 50,000 employees Infosys Technologies Ltd. • Ranked 2 in 2005 by NASSCOM • Incorporated - 1991 • Revenues - USD 2.04 Bn • 52,700 employees Satyam Computer Services Ltd. • Ranked 4 in 2005 by NASSCOM • Incorporated - 1987 • Revenues - USD 0.72 Bn • 24,798 employees
Slide 17: www.imacs.in INFOTECH The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundation’s primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email j.bhuyan@ciionline.org Web www.ibef.org
Slide 18: www.imacs.in INFOTECH ICRA Management Consulting Services Limited Disclaimer This publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand Equity Foundation (“IBEF”). All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of knowledge and belief of IBEF and IMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF and IMaCS neither recommend nor endorse any specific products or services that may have been mentioned in this publication and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication.

   
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