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Innovation transforming the growth landscapeCapitalising IP in Indian IT-BPM

India Leadership Forum 2014

2© 2014 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

What is Intellectual Property?

“Intellectual Property (IP) is the outcome of innovation across the value chain. An IP

asset in IT-BPM is classified over a wide ranging spectrum from reusable knowledge

assets and business processes to high end software products”

Based on the survey conducted by

KPMG India for the purpose of this

report, Indian technology leaders

associated the following objectives in

defining IP to their organizations.

Greater valuation

Non Linear growth potential

Customer Demand

Reusability/ Widespread Application

Competitive Advantage

Ability to protect

Ownership

Commercial value

8%

8%

17%

17%

42%

50%

67%

92%

Percentage of respondents citing the objective in defining IP

Source: Innovation transforming the growth landscape, KPMG in India, 2014


Leveraging IP is one of the key trends that will define the state of IT-BPM industry going forward


Platform markets and technologies will drive big share shifts. Cloud and platform will act as

powerful contributors to BPM transformation. There will be a shift from traditional onsite delivery

model to cloud based and off-premise/ mobile model.

Rise of SMAC

With IP at its helm, next innovation growth wave will have to concentrate on convergence of

technologies. Innovation ecosystem will change because of convergence and will result in

collaboration of multiple parties.

Convergence of Technologies

Global addressable market for products is already close to 296 Billion USD in 2013 is expected to

grow close to 439 Billion USD by 2020. Going forward, the success of global technology majors

will be attributed to the creation, development and monetisation of IP.

Monetization of Intellectual property


India will be relevant by 2020 only through Intellectual Property (IP) led growth

Source: NASSCOM Strategic Review, 2012 and 2013Source: NASSCOM set target by 2020

Source: KPMG Projection

2011 2012 2013 2020E Constrained Growth

2020E Innovation Driven Growth

1.3 1.5 1.6

60.4 70.8 77.2

11.712.8 13.3

221.165584341821

300

Total Spend

Indian software product market

Services

Hardware

~79

CAGR – 10.8%

Indian IT-BPM in USD BillionIndustry targets 300 bn USD by 2020

- Indian IT-BPM industry spend is 108 billion

USD in 2013 and is growing at the rate of

10.8 per cent CAGR.

- Projecting on the current growth rate, the

Indian IT-BPM spend can potentially reach 221

Billion USD by 2020 indicating a gap of 79

billion USD to the NASSCOM set target in

2020

Opportunity for Indian IT-BPM

- IDC predicts worldwide ICT spend to reach 5

Trillion USD by 2020 and 98 per cent of

growth will be driven by platform technologies

(SMAC).

- A global addressable market of 439 billion

USD for software related products

by 2020Source: Innovation transforming the growth landscape, KPMG in India, 2014


On a positive note, Indian IT-BPM leaders are confident of driving innovation

Q: Overall how do you rate the success of your country in enabling technology innovation?

USA China India Japan Korea Israel

Availability of talent 64% 62% 75% 20% 49% 79%

Ability to drive customer adoption in local and international markets

63% 57% 71% 17% 51% 64%

Mentoring and access to innovation network (start up CEOs, founders etc)

58% 58% 72% 29% 42% 73%

Access to capital 63% 62% 65% 17% 48% 68%

Supporting ecosystem (legal, law firms, accounting firms etc) 61% 51% 60% 20% 36% 39%

Educational system 42% 42% 65% 17% 47% 55%

Government incentives 23% 52% 56% 11% 38% 34%

In a recent global innovation

survey conducted by KPMG,

India’s technology leaders have

shown confidence that they

excel in most of the

criteria necessary for

innovation.

India’s experience in the

services sector, maturity

of customer adoption and

availability of quality talent has positioned India positively in

the global context.

Source: Global innovation survey, KPMG in US, 2013


Technology leaders are focused on driving innovation across the IP value chain

Innovation across Creation,

acquisition and collaboration

• Shifting from traditional top down

focused R&D to bottom up

approach in harvesting IP

• Inorganic acquisition for non

linear growth

• Rise of ‘Cluster Model’ and

increasing collaborations within

industry and with academia

Innovation across end to end

management of IP portfolio

• Adopting an IP strategy that is

both offensive and defensive

• Continuous performance

management to track

investments in IP

• Legal ecosystem working with

industry to form a healthy

protective environment for IP

Innovation to extract maximum

commercial value out of IP

• Realistic valuation of IP

• Adopting multi objective driven

monetization strategies

(licensing-in, licensing-out, JV

etc)

• Spinning off product as a

separate business



• Increase adoption of disruptive technologies

• Leverage convergence of technologies

• Improve collaborations with industry

• Focus on developing innovation based skills

• Drive ‘Bottom Up culture’ of innovation

• Increase penetration in the SMAC technologies

• Improve promotion of R&D in India through rationalisation of tax & transfer pricing laws

• Enhance protection laws & enforcement

• Change the perception of risk and invest in disruptive technologies

• Set realistic expectations from startups

• Focus on ideas & platforms in SMAC

• Leverage incubation centers and mentorship from VC/ PEs

Players of the IP ecosystem should empower IP driven culture in India

IP Ecosystem

Service Providers

Startups

GovernmentCustomers

Academia Funding Agencies


© 2014 KPMG Advisory Services Private Limited, an Indian limited liability company

and a member firm of the KPMG network of independent member firms affiliated

with KPMG International Cooperative (“KPMG International”), a Swiss entity. All

rights reserved.

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