Perspective 2020: 2020: Perspective Transform
Transform Business, Business, Transform India Transform India
Perspective 2020: Transform Business, Transform India
PERSPECTIVE 2020: KEY MESSAGES The Decade in Review An unparalleled impact on the Indian economy in the last 10 years – 6% of incremental GDP growth; 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
Areas of Impact Impact
Exports USD billion
Employment Creation
47
8 2
2002
CAGR 19982009 (exports) CAGR 19982009 (domestic)
jobs created (19952005)
Contribution to • 6-7x fold increase in Education tertiary education in exporting states
18
1998
• 45% of new urban
2005
2009
Diversity and Global Exposure
• Women in the workforce estimated to be 30%; new entrants-45%
• 30% of delivery 33%
26%
outside India Contribution to • Exports offset close Exports to 65 per cent of India’s cumulative net oil imports over past decade 2
PERSPECTIVE 2020: KEY MESSAGES 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) 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 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
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SHIFT IN ECONOMIC AND DEMOGRAPHIC BALANCE
CAGR Middle East & Africa Latin America Asia (except Japan)
3.4%
UK
6.3% 1.4%
Italy
Europe 2.1%
Germany
40 Japan 20
3.0%
North America
India
0 1990 ‘95
38 54
4.2%
Japan 60
40
9
41
13
39
12
37
14
55
16
53
18 27
83 75
35 750
60 920
‘00
‘05
‘10
‘15
Retiree (60+ years), Millions
207 222
US
80
2020
Working age (15-60 years), Millions
Regional share of global GDP, 1990- 2025
100
2008
92
‘20 2025
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2020 WILL PRESENT A DRAMATICALLY ALTERED LANDSCAPE (1/2) Past decade
2020
• Concentrated footprint
• Significant opportunity outside
Demand
1
Market
– 75% of Fortune 500 – 80% from US/UK – 75% from BFSI*, Telecom, Manufacturing – 60% from IT services
• Managing for cost, productivity and quality Customers 2
• Labour arbitrage dominant
today’s markets – SMB (Beyond Fortune 500) – BRIC, GCC, Japan, ROW – Public sector and healthcare
• Innovation, end-to-end transformation, risk & compliance
• Access to talent and expertise
value driver
• “Onshore/offshore” mindset • Global value chain
* Banking Financial Services and Insurance
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2020 WILL PRESENT A DRAMATICALLY ALTERED LANDSCAPE (2/2) Past decade
2020
• India accounting for more
• Diversified talent pool with
Supply
than 50% of the global lowcost workforce
• Delivery-centric 3
Talent
management
• Recruiting and training as key differentiators
• Trainable talent pool
globalised recruiting and HR practices
• Multiple management tracks, globalised expertise
• Emphasis on learning, knowledge management, research spending
• Deployable and specialized talent pools
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CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF INCREMENTAL GROWTH BY 2020 Total revenue potential for global sourcing, 2020 USD billion
380
1,500
230 190 200 500 Up to 80% of growth from markets that are not core today Core markets 2008 • 6 verticals* • N. America, Europe, Japan • Large enterprises
Growth in core markets
• Not adjusted for potential erosion due to automation
New verticals in developed countries • Public sector • Healthcare • Media • Utilities
* BFSI, telecom, retail, pharma, manufacturing, travel
New customer segments • SMBs
Outsourcing market in new geographies • BRIC
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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 Areas
Potential of ICT solutions 50% of Indians do not have access to primary healthcare
Healthcare
• Technology can provide it at half the cost of traditional solutions
Financial services
Education
Public services
80% of Indian households do not have bank accounts
• Technology can enable access to 200 million families
India faces a 3x shortage in teachers
• Technology can address this through remote solutions 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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AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (1/2)
Likely scenario Growth multiple CAGR
India’s technology and business services export market in 2020 – scenarios* USD billion
7.7x 4.4x
18.6%
225-310
13%
135
175 40 FY 2008
FY 2020-Current Initiatives
FY 2020-Focused Initiatives and Innovation - driven growth
• Slow pace of reforms in
• Expedited reforms in tertiary
• • • •
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
• • • •
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
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Likely scenario
AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (2/2)
Growth multiple CAGR
Indian domestic technology and business services market in 2020 – scenarios USD billion
5.4x 4.2x
12.6%
15% 65
15
50
12 FY 2008
FY 2020 - Current Initiatives
FY 2020 - Focused Initiatives and Innovation Led Growth
• GDP CAGR of ~5.5% • Moderate IT adoption across
• GDP CAGR of ~7% • Significant IT adoption
• •
verticals Significant government thrust on IT adoption including broadband rollout Reinvented business models
across verticals
12
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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SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A FIVE-FOLD VISION • Winning through the downturn
• Intellectual property framework
• Reinvented business models
• Centres of Excellence • Entrepreneurship
Building a preeminent innovation hub in India 5
• Quality scale of tertiary education • Curriculum and faculty quality
Developing a high calibre talent pool of over 3 million people
4
• New verticals, geographies, Catalysing customer segments • Robust domestic demand growth beyond today’s core 1 markets
Five themes 2 3
Harnessing ICT for inclusive growth
Establishing India as a trusted global hub for professional services
• Infrastructure • Corporate governance • Risk management and security • Global branding
• ICT solutions for healthcare, education, financial services, public services • Connectivity and access • Soft infrastructure
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ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED ILLUSTRATIVE MANNER (1/2) Areas Catalysing growth beyond today’s core markets
Government
NASSCOM
Industry
• Foster domestic
• Become a brand
• Investing in new
demand through national CIO office, allocate 1-3% of budget on e-governance
• Improve urban India as a trusted global hub for professional services
infrastructure and public services in 1015 Tier II, III cities; incentivise through STPI extension
• Create a national Harnessing ICT for inclusive growth
information structure, (Internet connectivity, national ID, ICT literacy)
ambassador for global services
business models to tap into new geographies and verticals
• Global awareness to
• Develop self regulatory
reposition India as a trusted sourcing hub
framework to adhere to world class standards in corporate governance and risk management
• 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
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ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED ILLUSTRATIVE MANNER (2/2) Areas Developing a high caliber talent pool of over 3 million people
Government
NASSCOM
Industry
• Educational reforms
• Scale up certifications
• Invest in building a
to facilitate increased private participation in higher education
• Allocate 2% of Building a Preeminent innovation hub in India
•
national budget for research Create quality institutions to increase PhD holders to 200,000 by 2020
and faculty development by 50x
• Roadmap and collaboration for developing 3-4 innovation hubs around climate change/mobile applications/clinical research
specialized talent pool/ globalised workforce
• Increase R&D spending and co-invest with universities to drive research
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THE INDUSTRY CAN HAVE AN UNPARALLELED IMPACT ON ILLUSTRATIVE INDIA’S ECONOMY AND SOCIETY BY 2020 Areas Economy
Employment
Contribution of Indian technology-business services by 2020
• 6% of annual GDP • 28% of annual exports • 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
• Infrastructure development Growth outside metro cities
Reduced fiscal burden
– 8-10 satellite townships around Tier-I cities – 10-15 Tier-II cities with upgraded basic and business infrastructure
• 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)
Globally reputed • Additional revenues of USD 50 billion-80 billion through innovative innovation, driving additional GDP contribution of 1.5-2% solutions 17
