Transcript Slide 1

The Rise and Future Development
of ICT in India
31 May, 2011
Casa Asia, Madrid
Key agenda
India – an emerging economy and market
Key growth trends in the IT-BPO industry
Future outlook
India and Spain
7-Jul-15
2
Indian market – opportunities unlimited
Fastest Growing
Democracy
Vibrant Economy
• A $ trillion economy
• GDP growth rate at 8.6%
•
•
Combination of Contemporary
and Traditional
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
Infrastructure Investment
• 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
USD 1.7 tn investment potential
over the next 10 years
7-Jul-15
Source: RBI, IBEF and McKinsey
3
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
Hub for Knowledge-based
industries
125 Fortune 500
Companies have R&D
bases in India
Large Automotive growth
Healthcare spending
Opportunity of USD 77 bn
by 2013
Retail market attracting
major players
Increasing Adoption of ICT
India’s automobile exports
grew at 29 percent in FY11
7-Jul-15
Source: MAIT, Frost & Sullivan, TRAI and IBEF
4
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.
7-Jul-15
Source: A T Kearney FDI Confidence Index 2010
5
Demographic dividend – Increasing
working age population
Comparison of population shifts
Working age (15-60 years),
Millions
207
222
US
UK
Retiree (60+
years), Millions
38
54
40
41
Italy
Germany
Japan
39
37
14
55
16
18
53
• World anticipating shortage of working
population in the future.
83
27
75
35
750
India
920
2008
7-Jul-15
2020
Significant shift
• 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.
6
Increasing emphasis on education – science
and technology professionals
ENROLLMENT***
Technical Graduates (’000s)
OUTTURN
Technical & Post Graduates, (’000s)
COMPOSITION
100% ~4 million
Postgraduates
3 yr Engg Diploma/
MCA`
4 yr Engg Degree
Other Graduates****
Science
Graduates
Non-technical Graduates (’000s)
Non-technical & Post Graduates, (’000s)
Commerce
Graduates
Arts + Other
Graduates
Source: NASSCOM, IAMR, Indiastat, UGC, MHRD, AICTE
* 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)
Government spending on IT for masses
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
7-Jul-15
8
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.
Benefits and usage
The focus resident segments are:
• 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
mobility of identity.
7-Jul-15
Source: www.uidai.gov.in
give
migrants
Below Poverty Line (BPL) families
Marginalized and the deprived
Landless labourers
Daily wage earners
Minorities (by caste, religion, region,
etc.)
 Migrants
 Women
 Children, especially those in the 6-14
age group
9
Why India? – Quote Unquote
India is not simply
emerging, India has
already emerged.
India has evolved into
one of the world's
leading technology
centers.
India has among the
highest returns on
foreign investment.
US Department of Commerce
Barack Obama, President, US
India is a developed country
as far as intellectual capital is
concerned.
We came to India for the
costs, stayed for the quality
and are now investing for
innovation.
Craig Barrett, Intel Corporation
The Indian market has two core
advantages - an increasing
presence of multinationals and
an upswing in the IT exports.
Jack Welch, General Electric
Dan Scheinman, Cisco System Inc.
By 2032, India will be
among the three
largest economies in
the world.
Travyn Rhall, ACNielsen
7-Jul-15
BRIC Report, Goldman Sachs
Source: IBEF
10
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
Its because we have problems that we have opportunities
7-Jul-15
11
Technology can transform India’s ability to
provide basic services
Basic services
Potential technology and services’ solutions
Healthcare
50% 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
India – an emerging economy and market
Key growth trends in the IT-BPO industry
Future outlook
India and Spain
7-Jul-15
13
IT-BPO industry – the India story
Strong growth in industry revenues
From USD 5.8 bn in FY 2000 to current estimates of USD 76 bn for
FY11
Contributing to economy
• A truly global
industry
• Mission critical in
nature
Contributing to 9% of India’s incremental GDP; 26% of India’s
exports and 11% of services revenues
• Ever changing
technology
environment
Employment generation
• Entirely people and
skill based industry
Direct employment of 2.5 mn and indirect employment of 8.3 mn
professionals
Global leader
Leader in the global sourcing landscape
Business transformation
Indian IT-BPO Industry catalysing business transformation for global
clients
7-Jul-15
A unique industry
• Young industry average age 27
years
• Products and
services are not
defined, but are
constantly evolving
• Adhering to global
policies and laws
14
Current snapshot of industry
IT-BPO revenues, USD bn
Sourcing model for IT-BPO exports FY2010
76.1
IT Services
BPO
Engg Design & Products
19.1%
Indian Providers
IT-BPO exports by
Geography, FY2011E
IT-BPO exports by
Vertical, FY2011E
Foreign Captives
Foreign Providers
• 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
7-Jul-15
15
India’s value proposition
Strong
Fundamentals
Sustained cost
competitiveness
Robust
Enhanced
ecosystem
value
Government policy
Maturing landscape
• Sustained cost advantage of
60 - 70%
• Productivity gains and
operational efficiencies
• Overall policy approach has
aided IT-BPO growth
• Targeted policy actions e.g.
ITAA, SEZ, Telecom
deregulation, etc.
• Enhancing overall
Abundant talent
Role of private enterprise
• Largest share (28%) of global
talent pool
• World class business
infrastructure - office space,
telecom, highways, etc.
• Entrepreneurs providing key
input services like Training, etc.
Quality and data security
• High standards of quality and
data security
• Global quality certifications
value proposition
• Adoption of Green IT,
focus on innovation
Proactive capability
building
• Investing with customers
in capability building
across domain,
process, technology
16
India beyond cost – some examples
Outcome-based pricing model;
Client: Global low-cost airline
Client benefits
Service provider benefits
▪ Revenue growth by 33.1%
▪ 14% rise in revenues from client
▪ Sales conversion from 18 to 32%
▪ Sales per day for new hires from 4 to 7
▪ Customer complaints down by 80%
▪ Lower attrition, flexibility
▪ 66% reduction in refund claims
Transformational Business impact across the value chain;
Client: Global Bank
Client benefits
 20% reduction in cycle time, revenue addition of USD 21 mn
 USD 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
layouts
 Improved 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
17
Key agenda
India – an emerging economy and market
Key growth trends in the IT-BPO industry
Future outlook
India and Spain
7-Jul-15
18
Future outlook for the industry – a redefined
market with tremendous potential
1 Demographic shifts will fuel the growth of new sectors, markets and service
lines
Global Megatrends
Social, environmental and technology trends will create hitherto unseen
2 opportunities and risks that could endanger up to a third of today’s market
A Redefined
Market
3
The addressable market for global sourcing will triple in size from USD 500
billion today to USD 1.5-1.6 trillion in 2020.
4
80% of incremental growth will be driven by opportunities outside the current
core markets, verticals and customer segments
5
The exports component of the Indian industry is expected to expand threefold and reach USD 175 billion in revenues by 2020.
6
The domestic component will grow to USD 50 billion, equal to today’s exports
revenues.
Industry Outlook
7-Jul-15
19
The industry’s vision for 2020 – Transform
Business, Transform India
IT/BPO industry revenue potential
Industry contribution by 2020
USD billion
225
50
▪
Increased diversity (women are 50% of the
total workforce)
▪
▪
4-5 satellite townships around Tier-I cities
▪
ICT as the key enabler for delivery of
public services
▪
Innovation hub driving additional GDP
contribution
Exports
175
59
FY2011E
7% of annual GDP
Domestic
3.5x
76
17
▪
▪
▪
2020
30% of annual exports
14.3 million* employment opportunity
(direct and indirect)
8-10 Tier-II cities with upgraded basic and
business infrastructure
Note: * As global employment and non-linearity increase, the employment multiplier will decrease
20
Key agenda
India – an emerging economy and market
Key growth trends in the IT-BPO industry
Future outlook
India and Spain
7-Jul-15
21
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
7-Jul-15
22
Indian companies in Spain
Spanish companies in India
Technology Companies
Non-technology Companies
7-Jul-15
23
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
7-Jul-15
24
Thank You