0000015579-Bim - Itpsm - 1.2 It Services

IT PSM – 1.2 IT Products and Services Industry -Services

1. IT Products and Services Industry (Duration 2 Sessions)h1.2. Services

1.Evolution of IT Services2.Market for IT Services3.Different type of services4.Indian IT Service companies5.Trends in IT Services6.Challenges in IT Services

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2IT PSM – 1.2 IT Products and Services Industry -Services

IT Services – History and Evolution

1960’s: The industry is non existent

1972: Software Export Scheme

1984-86: New computer policy

1990: Setting up of Software Technology parks of India

1992-2000: Entry of various MNCs, Evolution of offshore model and Global Delivery

Model.

Post 2000 issues like Y2k, dot com bubble helped India by positioning it as best cost

provider.

Post dot com, M&A activities across the globe helped the Indian IT Services

Companies

Post 2010 – SMAC started ruling the world


Worldwide IT Services market is growing at 5% CAGR

Network integration, Consulting and Application development are fastest growing segments.

Support and training are slowest growing segments.

2010 2015

IS Outsourcing

BPO

Support/Training

Systems

Integration

ADM

Network Consulting &

Integration

Consulting

23.22%

18.42%

18.28%

12.87%

12.35%

22.55%

18.81%

17.71%

12.52%

13.04%

11.65%

100% = $799.5 bn 100% = $ 1016

bn

Source: IDC, annual reports, TCS analysis

10.94%

10.94%

11.65%

CAG

R

5.2%

5.3%

3.5%

5.2%

6.1%

6.2%

6.9%

4.9%


Worldwide IT services market by region

Asia/Pac is the fastest growing market followed by America and EMEA

2010 2015

North America

W. Europe

APAC

Japan

Latin America

EMEA

43.9%

30.7%

9.4%

8.6%

42.1%

29.3%

11.3%

7.9%

4.0%

100% = $799.5 bn 100% = $ 1016

bn


3.8%

3.6%

5.0%


Worldwide IT services market by vertical

BFSI, Government, Telecom sectors likely to increase their share from current levels by 2015

2010 2015

BFSI

Government

Retail & Consumer

Telecom

ERU

Manufacturing

Life Sc & Healthcare

Media & InfoTravel

Hi-tech

Others

24.01%

20.52%

10.39%

9.52%

9.45%

5.33%

4.91%

3.45%3.64%

6.03%

2.75%

24.58%

20.66%

10.10%

9.61%

9.26%

5.17%

4.84%

3.45%3.63%

5.99%

2.70%


100% = $799.5 bn 100% = $ 1016

bn


IT Services – Market Size in India

Employs more than 1 million directly and another 3 million indirectly

Contributes to more than 50% of the country’s GDP.

Indian IT Industry expected to be a $120 billion market.

Indian IT exports growth at 12-14% with a market size of $84-87 billion

Indian Internet industry to be $100 billion by 2015


Types of IT and IT Enabled Services

IT and ITES Services

Software

Software Products

Engineering & R & D Services

IT Services

Project Oriented Services

IT Outsourcing

Assurance

ITeS-BPO

Customer Interaction

Services

Financing & Accounting

HR Services

KPO Services

IT IS

DB, OS Support

Network Support

Touch Services

DC Services


Types of IT and IT Enabled Services - Software

Software

Software products

Infrastructure Software

Enterprise Application

Software

Engineering,

R & D Services

Software Engineering Applications

Hardware Development


Types of IT and IT Enabled Services – IT Services

IT Services

Project Oriented Services

IT Consulting

System Integration

Engg. Services

ERP Rollout

BIPM

IT Outsourcing

Application Management

IS Outsourcing

Assurance

IV & V, Product Testing

SI / UA Assurance

Performance Testing


Types of IT and IT Enabled Services – ITeS – BPO/KPO

ITeS-BPO

Customer Information

Services

B2B

Customer Care

eCRM

Email Support

Technical Support

Telemarketing

FAO Services

Card Processing

ChequeProcessing

Data Capture/M

Document Management

Insurance Claims

Processing

Taxation

KPO

Research Services &

Remodelling

Medical Services

Language Translation

Content Creation

Strategy Consulting

Course Designing

Others

Media

Publishing

CAD/CAM

HR Services

Retirement Planning

Benefits Planning

Recruitment


Types of IT and IT Enabled Services – IT IS

IT IS

Database & Operating

System

DB Support

Server Support

Platform Support

Network Support

WAN, LAN Support

Data Communication

Links

Touch ServicesData Center

Services

DC Consolidation

Server Virtualization

Helpdesk support


Top 10 global IT service providers

NEC

CapGemini*

NTT Data*

CSC*

Accenture*

HP

Fujitsu

IBM

9247

11537

11675

11954

16128

26994

21551

13826

34935

Lockheed Martin

Deloitte**

56424

* total company revenue considered, ** consolidated revenues of Deloitte companies

Source: IDC, Company annual reports

IT Service revenue, $ mn.

NEC, NTT generates more than 90% revenues from Asia, predominantly from Japan

Lockheed generates more than 90% revenues from America

CapGemini generates more than 75% revenues from EMEA

CSC generates 62% revenues from America and 29% EMEA

IBM, HP, Accenture and Deloitte have more global penetration


Top 5 Indian IT Service providers

HCL**

Cognizant

Infosys

Wipro*

TCS

2705

5221

4592

6177

8193

Revenues, $ mn.

* IT Services revenues only, results are for FY ending with Jun 2010

Source: Annual Reports

TCS revenue gap with others are gradually increasing

At present, TCS enjoys better attrition rates compared to other top 5 players


Top 5 Indian IT Service providers geographical mix

HCL**

Cognizant

Infosys

Wipro*

TCS

58.80%

54.00%

78.00%

65.80%

53.90%


Cognizant dependence on North America is very high, followed by Infosys

TCS has better presence in India, followed by Wipro. Infosys is increasing its Indian presence

Cognizant has less presence in Asia compared to others

24.70%

23.00%

28.00%

18.60%

27.40% 9.50%4.30%

3.40%

9.00%

9.00%

10.00%

1.20%

9.20%12.20%

North America Europe India RO

W

Revenue by geography %


Top 5 Indian IT Service providers revenues by Industry

HCL**

Cognizant

Infosys

Wipro

TCS*

27%

27%

42.4%

35.8%

44.3%

* Not includes logistics revenues, ** estimates only


Infosys generates ~20% of revenues from Manufacturing vertical

Cognizant generates 25.6% of revenues from Healthcare/ Life Sciences vertical

Wipro has 10% of revenues coming from Energy & Utilities vertical

18.5%

12.9%

24%

13.5%

15% 17%2%

25.6%

9%10%

11.4%

6.1%

19.1

% 7%

BSFIMrrg, Retail &

Logistics

Tele,

media,

Hitech

Energy

,

Utilities

Revenue by Industry %Others

4.2%

33.8%

30%

18.5%

39%


Expanding Geographies in IT Services


Trends impacting IT services market (1/2)

Growth in emerging markets

Faster economical growth of India, China and Brazil enabling organizations in those countries to focus on growth and geographical expansion by leveraging technology

Focus on transformation and business integration of all aspects of IT management

Cloud Computing

Increased adoption of cloud based services in which resources are virtualized, shared, automated and accessed by self-service.

Business Analytics & Optimization

Enterprises are looking at ways to manage and leverage huge data and information available for strategic advantage


Trends impacting IT services market (2/2)

Cyber Security

Rising cyber attacks increasing the demand for secured critical infrastructure, systems, products and data privacy solutions

Social commerce

More than 50% of future of web sales by 2015 likely to be from social channels like Facebook, Twitter, YouTube and new mobile applications, creating the need for applications that can provide context specific data

Personal devices in Enterprises

Enterprises acceptance to personal devices likely to increase.

Need for application compatibility for multiple operating systems and devices like mobile phones, tablets etc.


Challenges facing by Indian IT service companies

Non-linear growth

Bigger IT companies are looking for non-linear growth and are changing their models to address challenges of new opportunities and threats

Stronger Regulation Policies

Regulation and Visa guidelines in USA, UK, Switzerland and Canada are moving towards stricter supervision and Visa rejection rates are slowly increasing

Growth of global players in India

Top 10 global players like IBM, Accenture, HP are increasing their Indian staff base. E.g. IBM India crossed one lakh mark including its BPO operations

Post recession effects

Given the low hiring during recession period, availability of 3-5 year experience staff in near future can be of an issue for companies


In conclusion

• Global economy sluggish, IT spending growth of 5.4 per cent. However, global sourcing grew nearly 2X of global technology spending in 2012-2013

• Worldwide hardware spending grew by 7.6 per cent, IT services spend increased by 3.3 per cent, BPO grew by 4.3 per cent, software products increased by 5.6 per cent, while ER&D spend grew by 2.2 per cent in 2012-13

• Emerging verticals (such as healthcare, government and utilities), Emerging geographies (such as Asia Pacifi c and EMEA) – highest IT adopters growing nearly twice the mature geographies and verticals

• The year witnessed a pronounced shift to smaller contracts while mature verticals and segments were growth driver for global sourcing deals

• While cost and talent still remain essential considerations for global sourcing, there has been an increasing shift to Tier II locations as organizations are going inorganic to add skills

• Global sourcing landscape is shifting as vendors are becoming more ‘customer-obsessed’

• Emerging technologies is altering business landscape and adding value

0000015579-Bim - Itpsm - 1.2 It Services

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