The Rise and Future Development of ICT in India

31 May, 2011

Casa Asia, Madrid

Key agenda

2Apr 18, 2023

Key growth trends in the IT-BPO industry

Future outlook

India India – an emerging economy and market an emerging economy and market

India and Spain

Indian market – opportunities unlimited

3Apr 18, 2023

Fastest Growing Democracy

Vibrant Economy

• A $ trillion economy• GDP growth rate at 8.6% 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

• 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

Infrastructure Investment

USD 1.7 tn investment potential over the next 10 years

Combination of Contemporary and Traditional

Source: RBI, IBEF and McKinsey

4Apr 18, 2023

Hub for Knowledge-based industries

Large Automotive growth Retail market attracting major players

Healthcare spending

India’s automobile exports grew at 29 percent in FY11

125 Fortune 500 Companies have R&D bases in India

Opportunity of USD 77 bn by 2013

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

Source: MAIT, Frost & Sullivan, TRAI and IBEF

Increasing Adoption of ICT

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.

5Apr 18, 2023Source: A T Kearney FDI Confidence Index 2010

6Apr 18, 2023

•World anticipating shortage of working population in the future.

• 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.

Demographic dividend – Increasing working age population

55

53Germany

83

75Japan

750

920India

207222US

40

41UK

39

37Italy

38

54

27

35

1618

14

Retiree (60+ years), Millions

2008 2020 Significant shift

Increasing emphasis on education – science and technology professionals

Source: NASSCOM, IAMR, Indiastat, UGC, MHRD, AICTE

Technical Graduates (’000s) Technical & Post Graduates, (’000s)

Non-technical & Post Graduates, (’000s)Non-technical Graduates (’000s)

ENROLLMENT*** OUTTURN COMPOSITION

100% ~4 million

Postgraduates3 yr Engg Diploma/

MCA`4 yr Engg Degree

Science

Graduates

Commerce

Graduates

Arts + Other

Graduates

* 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)

Other Graduates****

Government spending on IT for masses

8Apr 18, 2023

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

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.

9Apr 18, 2023

geography

                                                                                                                                                                                                                  

geography

                                                                                                                                                                                                                  

Source: www.uidai.gov.in

Benefits and usage

•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 give migrants mobility of identity.

The focus resident segments are:

Below Poverty Line (BPL) familiesMarginalized and the deprivedLandless labourersDaily wage earnersMinorities (by caste, religion, region, etc.)MigrantsWomenChildren, especially those in the 6-14 age group

10Apr 18, 2023

India has among the highest returns on foreign investment.

Dan Scheinman, Cisco System Inc. Dan Scheinman, Cisco System Inc.

We came to India for the costs, stayed for the quality and are now investing for

innovation.

India is not simply emerging, India has already emerged.

India is a developed country as far as intellectual capital is

concerned.

US Department of CommerceUS Department of Commerce

By 2032, India will be among the three largest economies in the world.

BRIC Report, Goldman SachsBRIC Report, Goldman Sachs

Travyn Rhall, ACNielsenTravyn Rhall, ACNielsen

The Indian market has two core advantages - an increasing

presence of multinationals and an upswing in the IT exports.

Craig Barrett, Intel CorporationCraig Barrett, Intel Corporation

India has evolved into one of the world's leading technology

centers.

Why India? – Quote Unquote

Source: IBEF

Barack Obama, President, USBarack Obama, President, US

Jack Welch, General ElectricJack Welch, General Electric

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

11Apr 18, 2023

Its because we have problems that we have opportunities

Technology can transform India’s ability to provide basic services

Basic services Potential technology and services’ solutions

Healthcare50% 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

13Apr 18, 2023

Key growth trends in the IT-BPO industryKey growth trends in the IT-BPO industry

Future outlook

India – an emerging economy and market

India and Spain

IT-BPO industry – the India story

14Apr 18, 2023

Direct employment of 2.5 mn and indirect employment of 8.3 mn professionals

Indian IT-BPO Industry catalysing business transformation for global clients

From USD 5.8 bn in FY 2000 to current estimates of USD 76 bn for FY11

Contributing to 9% of India’s incremental GDP; 26% of India’s 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 global industry

• Mission critical in nature

• Ever changing technology environment

• Entirely people and skill based industry

• Young industry - average age 27 years

• Products and services are not defined, but are constantly evolving

• Adhering to global policies and laws

A unique industry

Current snapshot of industry Sourcing model for IT-BPO exports FY2010

Engg Design & ProductsIT Services BPO

Foreign Captives Foreign ProvidersIndian Providers

IT-BPO revenues, USD bn

Apr 18, 2023

19.1%

IT-BPO exports by Geography, FY2011E

IT-BPO exports by Vertical, FY2011E

15

• 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

76.1

16

India’s value proposition

Sustained cost competitiveness

•Sustained cost advantage of 60 - 70%•Productivity gains and operational efficiencies

Abundant talent

• Largest share (28%) of global talent pool

Quality and data security

• High standards of quality and data security

• Global quality certifications

Government policy

• Overall policy approach has aided IT-BPO growth• Targeted policy actions e.g. ITAA, SEZ, Telecom deregulation, etc.

Role of private enterprise

• World class business infrastructure - office space, telecom, highways, etc.• Entrepreneurs providing key input services like Training, etc.

Maturing landscape

• Enhancing overall value proposition• Adoption of Green IT, focus on innovationProactive capability

building

• Investing with customers in capability building across domain, process, technology

Strong

Fundamentals

Robust

ecosystem

Enhanced

value

India beyond cost – some examples

Outcome-based pricing model; Client: Global low-cost airline

Service provider benefits

▪ 14% rise in revenues from client

▪ Sales per day for new hires from 4 to 7

▪ Lower attrition, flexibility

17Apr 18, 2023

Client benefits▪ Revenue growth by 33.1%▪ Sales conversion from 18 to 32%▪ Customer complaints down by 80%▪ 66% reduction in refund claims

Transformational Business impact across the value chain; Client: Global BankClient benefits20% reduction in cycle time, revenue addition of USD 21 mnUSD 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 layoutsImproved 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

Key agenda

18Apr 18, 2023

Key growth trends in the IT-BPO industry

Future outlookFuture outlook

India – an emerging economy and market

India and Spain

19

Global Megatrends

Demographic shifts will fuel the growth of new sectors, markets and service lines

Social, environmental and technology trends will create hitherto unseen opportunities and risks that could endanger up to a third of today’s market

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

80% of incremental growth will be driven by opportunities outside the current core 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 today’s exports revenues.

Future outlook for the industry – a redefined market with tremendous potential

A Redefined Market

Industry Outlook

Apr 18, 2023

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3

4

5

6

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The industry’s vision for 2020 – Transform Business, Transform India

IT/BPO industry revenue potential

2020

225

175

50

FY2011E

59

17

76 Exports

Domestic

3.5x

USD billion Industry contribution by 2020

▪ 7% of annual GDP

▪ 30% of annual exports

▪ 14.3 million* employment opportunity (direct and indirect)

▪ Increased diversity (women are 50% of the total workforce)

▪ 4-5 satellite townships around Tier-I cities

▪ 8-10 Tier-II cities with upgraded basic and business infrastructure

▪ ICT as the key enabler for delivery of public services

▪ Innovation hub driving additional GDP contribution

Note: * As global employment and non-linearity increase, the employment multiplier will decrease

Key agenda

21Apr 18, 2023

Key growth trends in the IT-BPO industry

Future outlook

India – an emerging economy and market

India and SpainIndia and Spain

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

22Apr 18, 2023

Technology Companies

Non-technology Companies

23Apr 18, 2023

Indian companies in Spain Spanish companies in India

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

24Apr 18, 2023

Thank You