Indian IT-BPM Industry – FY2013

Performance Review, FY2014 Outlook

Mumbai, 12th February 2013

AGENDA

Where is the global economy heading

How is the Indian IT-BPM Industry evolving

Which are the new growth markets/ emerging verticals

The year that went by, and the year ahead

What challenges lie before us

AGENDA

2

Source: NASSCOM

Global sourcing continues to outperform

IT-BPM spend

Worldwide IT-BPM Spend

USD billion

1,311

748

269

156

627

1,350-1,400

797

278

164

648

ER&D

Hardware

Packaged Software

Business ProcessManagement

IT Services

2012

2011

USD 1.9

trillion*

* 2012

70-72

44-46

2011 2012

IT Sourcing Business Process Sourcing

Global Sourcing Market size

USD billion

~9%

114-118

124-130

76-80

48-50

• Global IT- BPM market recorded growth of 4.8 per cent in 2012

• APAC recorded highest growth of 6 per cent, ~1.6X Global IT-

BPM spend; driven by BPM services (~9 per cent)

• Global sourcing continues to outpace global technology and

services spend; growing ~2X as fast as global IT spend

• Cost remains a key driver of outsourcing; along with simplification

and standardisation

Source: Everest, Forrester, Gartner, IDC

GLOBAL IT-BPM SPEND & SOURCING

3

GDP Share

Contribution to India’s GDP grew ~3X in the last 10 years

Source: NASSCOM * funded startups

IT-BPM: Highest impact sector for India

Total exports share

IT-BPM exports share grew > 5X in the last 10 years

Direct Employment

One of largest organized private sector employers in India

Global Sourcing Share

India’s share of the global sourcing market

Domestic Market Growth

Outperforms exports-fastest growing IT market in the world

Start-up companies

Vibrant start-up community grew ~3X over the last 5 years

IT-BPM FACTS

4

~24%

~8%

3 mn

>52%

14.1%

450+*

IT-BPM Industry – resilient, growing, evolving

64.0 76.3

87.7 95.0

10.2

12.2

13.2 13.0

FY2010 FY2011 FY2012 FY2013E

Hardware Services

100.9 108

88.1

74.2

E: Estimate

Source: NASSCOM

IT-BPM revenue break-up

USD billion

IT-BPM REVENUES

• Growth figures reflect variable impact of

currency

• Highest value add sector for India – 60-70 per

cent

• Exports mainstay of the industry - >70 per cent

• Indian IT-BPM exports offsets 50% of India’s oil

imports

• IT services today is a USD 50+ billion dollar

industry

• BPM is a USD 20 billion segment

• ER&D and products segment closing in on the

USD 20 billion mark too

H/W Growth

in INR= 8.5%

5

IT-BPM exports logs double digit growth in

FY2013

IT-BPM Export revenues*

(USD billion)

39.9 43.9

15.9 17.8

13.0 14.1

FY2012 FY2013E

IT Services BPM S/W prod and Engg

68.8 75.8

• Industry growth in constant currency

terms meets NASSCOM guidance

• Exports: Y-o-Y growth 10.2 per cent, over

2X greater in INR terms

• Segments: IT service growth at ~10 per

cent; BPM growth faster at 12.2 per cent

• Business Drivers for the year-

• New verticals and geographies

• SMAC based services

• Transformation and innovation

• Restructured business models

• Growth Service lines: RIM, software

testing, knowledge services and F&A

services

FY2013E Y-o-Y Growth

INR 21.4%

Constant USD 10.9%

USD 10.2%

IT-BPM EXPORTS

6 * Excluding Hardware E: Estimate

Source: NASSCOM

Domestic market outperforms exports at 14.1

per cent

589 674

148

167 180

205

FY2012 FY2013E

IT Services BPM S/W products

918

1,047 14.1%

IT-BPM Domestic revenues*

(INR billion)

Source: NASSCOM * Excluding Hardware

• Meets NASSCOM guidance

• Domestic: Y-o-Y growth 14.1 per cent, fastest

growing IT market in the world

• Segments: IT services fastest growth 14.5 per

cent, BPM grew at 12.7 per cent

• Services: Managed services, unified

communications, collaborative applications,

integration of core enterprise applications

• Key Enablers:

• Mobile apps, cloud environment ,SMB out reach

• Government accelerating economic reforms,

• IT seen as a critical enabler for inclusive growth

and transformation

• Internet and Ecommerce companies driving

adoption

IT-BPM DOMESTIC

7

INR/USD rate used for calc

Q4FY13- 53.5

FY13E-54.2

Industry continues to be a net hirer- Adding

188,300 jobs in FY2013

• Industry employs ~3 million professionals

directly, and ~9.5 million indirectly

• Employee growth supplemented by non

linear model

• Over > 100,000 foreign nationals employed

by the industry

• ~30 per cent (800,000+) women employees

• World’s largest talent pool: ~ 4.7 million

graduates and post graduates

• Faster role progression and development,

structured training programs

• Sustained investment in structured training

programs, in-house universities and

affiliations with academia

Source: NASSCOM

Direct Employment (‘000)*

7%

* Excluding Hardware ** includes IT services, ER&D and Products *** includes S/w products

1,296 1,407

879 917

601 640

FY2012 FY2013E

IT exports** BPM exports IT-BPM Domestic***

2,776 2,964

IT-BPM KNOWLEDGEBASE

8

Industry unique differentiator- business,

service and delivery model evolution

M&A for domain and skill

End to End delivery

Moving up

the Value

Chain

Pricing models – Outcome

based

Products, Platforms,

Software assets, Solution

Accelerators Initiate Non

Linear Play

Future-ready workforce

Tier 2/3 movement

Changing employee mix Extend

Cost

Advantage

Source: NASSCOM

460 580

FY2009 FY2012

Number of global centers

8.6%

Employee Revenue

12.8%

CAGR 2008-13E

1.4 3.3

2009 2012

M&A deal value, USD bn

100

121

FY2008 FY2013E

Rev/employee (Indexed

to FY08=100)

FY2008 FY2012

Tier-II/III: Share in

employees

9-10%

11-12%

FY2009 FY2012

Domain Specialists as a

% of total employees

Integrating SMAC

Transformation

9

10% 12%

Operational metrics driving flexibility for

clients and efficiency for providers

CAPACITY UTILISATION*

73.9%

71.8% 72.4%

2010 2011 2012

18% 15%

13%

2010 2011 2012

ATTRITION (IT SERVICES)

ONSITE EFFORT FIXED PRICE CONTRACTS

(% of revenue)

44.7% 45.0%

46.6%

2010 2011 2012

SG&A (% of revenue)

14.1%

14.0%

13.8%

2010 2011 2012

26.1% 26.2%

25.2%

2010 2011 2012

*: Excluding trainees

Source: NASSCOM

INDICATIVE

Note: Data of top 4 companies as of December ending

EF

FIC

IEN

CY

F

LE

XIB

ILIT

Y

Utilization levels increasing

Attrition remained lower; employee

investments are paying off

SG&A lower due to operational

efficiency

Firms re-engineering, adopting

innovative operating models

Offshore higher than onsite

10

India a preferred destination: Five pronged

value proposition

INDIA VALUE PROP

Source: NASSCOM

SCALE & MATURITY

- 25+ years of outsourcing

- 5000+ companies, 750+ MNCs

- 580 ODCs in 75 countries

UNLIMITED TALENT

- Annual tech talent output :1ibllion

- Established training engine: 2-3%

- Industry revenues spent on training

COMPETITIVE

-60-70% more cost efficient than source countries

-15-20% lower than next lowest offshoring destination

CUSTOMER CENTRIC

- 30-32% revenues from verticalised BPM services

- Domain experts:12% Consultative selling

STRONG ECOSYSTEM

- Largest no delivery locations: 50

- Training & certification

- Secure environment

11

Global tech spend set to improve – grow over

5 per cent in 2013

Worldwide IT-BPM services spending growth

3.3%

4.2% 4.6%

4.9% 5.3% 5.4%

2012 2013E 2014P

IT BPM

GLOBAL IT-BPM OUTLOOK

• Global IT-BPM spend expected to be on the

surge; growth of over 5 per cent in 2013 to

touch USD 2 trillion

• Rate of introduction of disruptive technologies

will continue to be faster; SMAC technologies

– over USD 1 trillion by 2020

• IT shifting from traditional process automation

to strategic BI, collaboration, customer facing

technologies

• Future of industry is beyond just services -- a

complete blend of services, products,

solutions and platforms

• Expanding focus on unsung markets – APAC,

SMBs, domestic - the next big spenders

12 Source: Forrester, Gartner, IDC, NASSCOM

FY2014: Optimistic outlook, industry

expected to add USD 12-15 billion IT-BPM Export revenues*

Growth of 12-14%

E: Estimate, P: Projected Source: NASSCOM

IT-BPM Domestic revenues*

Growth of 13-15%

* Excluding Hardware

69 76 85-87

FY2012 FY2013E FY2014P

918 1,047

FY2012 FY2013E FY2014P

1,180-1,200

USD billion

INR billion

INDIAN IT-BPM OUTLOOK

• Indian IT-BPM industry transitioning from

enterprise services to a enterprising solutions

• Outsourcing models changing- – driven by

new technologies, reinvented business

models, new buyer segments and solutions for

emerging markets

• Technology changes – cloud, mobility,

analytics, social media creating new

opportunities

• New vertical, customer and geographic

markets will continue to gain importance

• Focus on greater efficiencies and flexibilities –

reengineer internally; diversify; non-linearity;

transforming customer business

• Internet and mobile expansion will encourage

entrepreneurship in products and content

13

14 12-Feb-13

‘Imagineering the Future’ Journey to the next 100 billion

• 21st edition

• 3 power packed days

• 120+ speakers

• 50+ sessions

• 1400+ delegates

• 35+ country representations

• Thought Leadership

• Future of Technology

• Customer Speak

• Emerging Markets

• India opportunity

• Reinvented business models

Future of Technology and Leadership Keynotes

Imagineering: Seeding the field of the Future! Mike Walsh

Consumerism: Responsible businesses focus on needs not wants

Stephen Lu University of Southern California

Leading in Uncertain Times Ram Charan, Business Advisor & Author

Transactional to transformational: Co-relating business to hidden intelligence Manoj Singh, Deloitte

Playing to Win: How Strategy really works Roger Martin Rotman School

Customer Speak

Karenann Terrell Wal-Mart

Shohreh Abedi Farmers Insurance

Adriana Karaboutis Dell Darryl West

Lloyds

Christoph Baeck Hilti

Sanjay Mirchandani EMC

Aditya Ghosh, IndiGo

Roger Gurnani Verizon

Sue McKinney Pitney Bowes

Creative Keynotes

Reinvention of Self: The Real Comeback! Amitabh Bachchan

Storytelling: Transforming through tales! Devdutt Pattanaik, Chief Belief Officer, Future Group

Valedictory Session Rahul Dravid

Emotional intelligence & bottomline Dr Travis Bradberry, Emotional Intelligence Expert

18 12-Feb-13

Various formats…

Analysts corner: interactive session to discuss changes in the sourcing sector

• Vendor consolidation & strategic partnerships - through the customers’ eyes - Chris Andrews, Forrester

• Generation Y: New Users, New Expectations, New Challenges - Frank Ridder, Gartner

• Transformation agendas & how they are driving two different market segments - Peter Bendor Samuel, Everest

• The Changing Dynamics of the G2000 - Paul Reynolds, ISG

• [R]evolution - Six trends that will drive business transformation and competitive advantage in 2013 - Ben Towbridge, Alsbridge

• Theme: Global IT Outsourcing Market Forecast: 2012-2016 - Rachael Stormonth, NelsonHall

Country sessions

• Analyzing Japan Conundrum: Is there an IT market Master Class workshops

• Outside In: Customer centricity

• Build a "Lean" Robot!

19 12-Feb-13

Global Participation

Delegates from across 35+ countries

• Americas - US, Canada, Colombia

• Europe - Belgium, France, Germany, Netherlands, Sweden, UK

• APAC & Middle East - Australia, New Zealand, China, Japan, Hong Kong, Malaysia,Philippines, Sri Lanka, Singapore, Pakistan, Bangladesh

• Africa - South Africa, Kenya, Nigeria

Executive Presence

20 12-Feb-13

• Anand Sharma, Hon’ble Union Minister of Commerce and Industry

• Prithviraj Chavan, Hon’ble Chief Minister of Maharashtra • Sachin Pilot, Hon’ble Minister for Corporate Affairs • Milind Deora, Hon’ble Minister for Communications and IT • Jack Markell, Governor, Delaware US • Takeshi Yagi, Ambassador of Japan to India • Nandan Nilekani, Chairman, UIDAI

21 12-Feb-13

Structured Networking

NILF

NASSCOM Connect

Enables delegates to connect and set

up meetings

Peer-to-Peer networking at

focused sessions

Country Delegations – partnership opportunity

The social platform

Entertainment evening, Awards night and more

Social Media groups – Twitter,

Facebook, Slideshare, You

tube

Questions