Post on 28-May-2015
Perspective 2020: Transform Business, Transform India
Perspective 2020:Perspective 2020:Perspective 2020:Perspective 2020:Transform Business, Transform India
Perspective 2020:Perspective 2020:Perspective 2020:Perspective 2020:Transform Business,
Transform India
11
PERSPECTIVE 2020: KEY MESSAGES
The Decade in Review
An unparalleled impact on the Indian economy in the last 10 years – 6% of incremental GDPgrowth; 45% of incremental urban employment (direct and indirect); 6-7x increase in tertiary education in top 7 states that account for 90% of industry exports
Significant returns to customers – annual savings of USD 20-25 billion in 2008 alone
A large unfinished agenda remains – Especially structural changes (e.g., tertiary education reform), have not been implemented
Global economic crisis will have a far-reaching and as yet uncertain impact on the industry. Near-term volumes and pricing likely to be under pressure.
While 10-year aspiration of USD 50 billion in exports in 2008 has largely materialised, extreme contraction in the global economy likely to delay achievement of the 2010 goal by at least 3-4 quarters
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THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON
THE INDIAN ECONOMY
Rapid growth in the last decade
Exports USD billion47
18
82
2009200520021998
CAGR 1998-
2009 (exports)
CAGR 1998-
2009 (domestic)
33%
26%
Areas of Impact Impact
Employment
Creation
• 45% of new urban
jobs created (1995-
2005)
Contribution to
Education
• 6-7x fold increase in
tertiary education in
exporting states
Diversity and
Global
Exposure
• Women in the
workforce estimated
to be 30%; new
entrants-45%
• 30% of delivery
outside India
Contribution to
Exports
• Exports offset close
to 65 per cent of
India’s cumulative
net oil imports over
past decade
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PERSPECTIVE 2020: KEY MESSAGES
Social, environmental and technology trends will create hitherto unseen opportunities (e.g., climate change, servicing SMBs) and risks (automation of core service lines) that could endanger up to a third of today’s market
Perspective 2020: An Altered Landscape
Global Megatrends
Demographic shifts will fuel the growth of new sectors (healthcare), markets (BRIC, Japan, Germany) and service lines (process transformation for productivity improvement)
A Redefined 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
Industry Outlook
The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion in revenues by 2020. Focused initiatives and innovation-led growth can lead to additional revenues of up to USD 135 billion by 2020
The domestic component will grow to USD 50 billion, equal to today’s exports revenues. Focused initiatives can drive an additional USD 15 billion in revenues by 2020
4
2008
2020
60
12
9
92
13
38
54
27
35
16
18
14
Retiree (60+ years), Millions
55
53Germany
83
75Japan
750
920
India
207
222US
40
41UK
39
37Italy
Working age (15-60 years), Millions
Regional share of global GDP, 1990- 2025
0
20
40
60
80
100
1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025
CAGR
4.2%
3.4%
6.3%
2.1%
3.0%
1.4%
North America
Europe
Japan
Asia (except Japan)
Latin AmericaMiddle East & Africa
SHIFT IN ECONOMIC AND DEMOGRAPHIC BALANCE
5
2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (1/2)
• Managing for cost,
productivity and quality
• Labour arbitrage dominant
value driver
• “Onshore/offshore” mindset
• Innovation, end-to-end
transformation, risk & compliance
• Access to talent and expertise
• Global value chain
2
Customers
Past decade
• Concentrated footprint
– 75% of Fortune 500
– 80% from US/UK
– 75% from BFSI*, Telecom,
Manufacturing
– 60% from IT services
2020
• Significant opportunity outside today’s markets
– SMB (Beyond Fortune 500)
– BRIC, GCC, Japan, ROW
– Public sector and healthcare
1 Market
Demand
* Banking Financial Services and Insurance
6
2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (2/2)
3 Talent
Supply
• India accounting for more
than 50% of the global low-
cost workforce
• Diversified talent pool with
globalised recruiting and HR
practices
• Delivery-centric
management
• Multiple management tracks,
globalised expertise
• Recruiting and training as
key differentiators
• Emphasis on learning,
knowledge management,
research spending
• Trainable talent pool • Deployable and specialized talent
pools
Past decade 2020
7
Total revenue potential for global sourcing, 2020
USD billion
CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF
INCREMENTAL GROWTH BY 2020
Growth in
core
markets
• Not
adjusted for
potential
erosion due
to
automation
200
190
New
verticals in
developed
countries
• Public
sector
• Healthcare
• Media
• Utilities
230
New
customer
segments
• SMBs
380
Outsourcing
market in
new
geographies
• BRIC
Up to 80% of growth from
markets that are not core today
1,500
Core
markets
2008
• 6 verticals*
• N. America,
Europe,
Japan
• Large
enterprises
500
* BFSI, telecom, retail, pharma, manufacturing, travel
88
PERSPECTIVE 2020: KEY MESSAGES
Transform Business, Transform India
Reinventing Business Models
80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Providers should consider distinctive approaches, each building on a source of competitiveness, with distinct performance markers and imperatives
Fostering Innovation in Business
India can become a laboratory for innovation for the world and own business systems in at least 3 areas – energy efficiency and climate change, mobile applications, clinical research outsourcing
Catalysing Inclusive Growth Through ICT
ICT-enabled solutions in healthcare, education, financial services and public services can drive socio-economic inclusion of 30 million citizens each year, faster, cheaper and more effectively than traditional models
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THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING
TECHNOLOGY TO ENABLE INCLUSIVE GROWTH
Healthcare
Potential of ICT solutionsAreas
50% of Indians do not have access to primary healthcare
• Technology can provide it at half the cost of traditional
solutions
Financial services
80% of Indian households do not have bank accounts
• Technology can enable access to 200 million families
EducationIndia faces a 3x shortage in teachers
• Technology can address this through remote solutions
Public services
40-50% of public food distribution in India does not reach the
targeted groups
• Technology can ensure efficiency and transparency
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PERSPECTIVE 2020: KEY MESSAGES
India’s opportunity at risk
India’s market share can decline by 10% by 2020 and be lost to other aspiring nations. In this case, export revenues would reach USD 175 billion in 2020 (an additional USD 50 billion is at risk due to protectionism).
With focused initiatives, the industry has the potential to achieve over USD 300 billion in revenues
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India’s technology and business services export market in 2020 – scenarios*
USD billion
AN OPPORTUNITY OF UP TO USD 150 BILLION COULD
BE AT RISK IN 2020 (1/2)
Likely scenario
Growth multiple
CAGR
FY 2020-Focused Initiatives and Innovation - driven growth
225-310 135
• Expedited reforms in tertiary education
• 10-15 Tier II cities with world class infrastructure
• Adoption of new business models by the industry
• India among the top 3 innovation hubs of the world
• Talent pool of 13.5 million
7.7x 18.6%
FY 2020-Current Initiatives
• Slow pace of reforms in education (talent pool of 10 million)
• Limited development of Tier II, III cities
• Continued trust as a sourcing hub
• Continued government support
• Limited lash back from protectionism
4.4x 13%
175
FY 2008
40
12
Indian domestic technology and business services market in 2020 – scenarios
USD billion
AN OPPORTUNITY OF UP TO USD 150 BILLION COULD
BE AT RISK IN 2020 (2/2)
Likely scenario
Growth multiple
CAGR
• GDP CAGR of ~5.5%
• Moderate IT adoption across verticals
• Significant government thrust on IT adoption including broadband rollout
• Reinvented business models
FY 2020 - Current Initiatives
4.2x 12.6%
50
65
• GDP CAGR of ~7%
• Significant IT adoption across verticals
5.4x 15%
FY 2020 - Focused Initiatives and Innovation Led Growth
15
FY 2008
12
13
PERSPECTIVE 2020: KEY MESSAGES
An agenda for action
Success will rely on concerted action by industry stakeholders (Companies, NASSCOM, Government) anchored on a five-fold vision:
• Catalysing growth beyond today’s core markets
• Establishing India as a trusted global hub for professional services
• Harnessing ICT for inclusive growth
• Developing a high calibre talent pool
• Building a preeminent innovation hub in India
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Catalysinggrowth beyond
today’s core markets
Establishing India as a
trusted global hub for
professional servicesHarnessing
ICT for inclusive growth
Developing a high calibre
talent pool of over 3 million
people
Building a preeminent innovation
hub in India
Five themes
15
2
3
4
14
• Winning through the downturn
• Reinvented business models
• New verticals, geographies, customer segments
• Robust domestic demand
• Infrastructure
• Corporate governance
• Risk management and security
• Global branding
• ICT solutions for healthcare, education, financial services, public services
• Connectivity and access
• Soft infrastructure
• Quality scale of tertiary education
• Curriculum and faculty quality
• Intellectual property framework
• Centres of Excellence
• Entrepreneurship
SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A
FIVE-FOLD VISION
15
ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED
MANNER (1/2)
India as a trusted global hub for professional services
• Improve urban infrastructure and public services in 10-15 Tier II, III cities; incentivise through STPI extension
• Global awareness to
reposition India as a
trusted sourcing hub
• Develop self regulatory
framework to adhere to
world class standards
in corporate
governance and risk
management
Areas Government NASSCOM Industry
Catalysinggrowth beyond today’s core markets
• Foster domestic
demand through
national CIO office,
allocate 1-3% of budget
on e-governance
• Become a brand ambassador for global services
• Investing in new business models to tap into new geographies and verticals
Harnessing
ICT for inclusive growth
• Create a national information structure, (Internet connectivity, national ID, ICTliteracy)
• Collaborate with
government to develop
a national blueprint for
IT-enabled solutions for
major public services
• Collaborate to create
interoperable
applications and
standards, such as
integrated hospital
management systems
ILLUSTRATIVE
16
ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED
MANNER (2/2)
Developing a high caliber talent pool of over 3 million people
• Educational reforms to facilitate increased private participation in higher education
• Scale up certifications
and faculty
development by 50x
• Invest in building a
specialized talent pool/
globalised workforce
Areas Government NASSCOM Industry
Building a Preeminentinnovation hub in India
• Allocate 2% of national budget for research
• Create quality institutions to increase PhD holders to 200,000 by 2020
• Roadmap and collaboration for developing 3-4 innovation hubs around climate change/mobile applications/clinical research
• Increase R&D
spending and co-invest
with universities to
drive research
ILLUSTRATIVE
17
THE INDUSTRY CAN HAVE AN UNPARALLELED IMPACT ON
INDIA’S ECONOMY AND SOCIETY BY 2020
Employment
• 30 million urban employment (direct and indirect)
• Significant job creation in rural and non-metro areas
• Increased diversity (women are 50% of the total workforce)
• Significant global career opportunities due to location-independent
models
Reduced fiscal burden
• ICT can provide solutions at a fraction of the cost of traditional
solutions and reduce public spend on these areas (healthcare,
education, financial services and public services)
Economy• 6% of annual GDP
• 28% of annual exports
Areas Contribution of Indian technology-business services by 2020
Growth outside metro cities
• Infrastructure development
– 8-10 satellite townships around Tier-I cities
– 10-15 Tier-II cities with upgraded basic and business
infrastructure
Globally reputed
innovative
solutions
• Additional revenues of USD 50 billion-80 billion through
innovation, driving additional GDP contribution of 1.5-2%
ILLUSTRATIVE