India Inc.: An Overview of The IT-BPO Sector in India March, 2008

India Inc.
An overview of the IT-BPO sector in India

March, 2008
Copyright © NASSCOM 2008

Agenda
1. The rise of the • The Indian economy at a glance

Indian economy • Drivers of rapid growth
2. Dynamics of the • Current trends

Indian IT-BPO • Future outlook
industry
• Talent availability • Business environment

3. Sustaining India’s • Cost competitiveness • Value-add
value proposition • Risk management
2
India fact sheet
FY 07 unless indicated otherwise

Demographics Economy
Population (billion) 1.12 GDP (nominal, US$ 1135
billion, FY08E)
Population growth (%) 1.6 Highlights
Inflation (%) 3.5
Labor force (million) 516 Trillion Dollar Economy – 4th
Fiscal Deficit (% of 6.1 largest in terms of PPP
Less than 30 years (%) 52
GDP)
Urbanization (%) 28 India's National Stock Exchange
FDI (US$ billion) 19.5 (NSE) ranks first in the stock
Forex reserve (US$ 280 futures trade
Social/Developmental billion, FY08E) World's largest sales of mobile
phones (24.5 million in Q3 2007)
Literacy (%) 61 Trade
2nd largest two-wheeler and 4th
Unemployment (%) 7.2 Exports 126 largest passenger car market
Infant mortality (per 1000) 34.6 (US$ billion)
Fastest growing domestic retail
Life expectancy (years) 68.5 Imports 191 market, US$ 350 billion in 2007
(US$ billion)
Top 3 export US (17%)
Transport/Telecom
markets UAE (8.3%)
Passenger cars (million) 13 China (7.7%)
Two wheelers (million) 53 Top 3 import China (8.7%)
partners US (6%)
Mobile users (million) 240
Germany
Internet users (million) 32 (4.7%)
Sources: IBEF, EIU, RBI, CIA fact book
3
The Indian economy at a glance (1/2)
Real GDP growth Composition of India’s GDP, 2007
Percentage, 1991-2007
( ) - share in 1991
Manufacturing Agriculture
India
Developing
World
Average
Developed
Services
World
Average
Source: Usda.gov Source: Economic Survey
The Indian economy has experienced rapid growth buoyed by a shift from an
agriculture to a services-led
The Indian economy economy rapid growth buoyed by a shift from an
has experienced
agriculture to a services-led economy 4
The Indian economy at a glance (2/2)
Macro-economic indicators FDI confidence index, 2007
Low 0-3 scale High
Fiscal deficit (% GDP) Exports (US$ billion)
Forex (US$ billion) Consumption (% YOY) Source: AT Kearney
Credit ratings
Rating S&P Moody’s Fitch
Sovereign BB- Baa2 BBB-

credit rating (Investme (Investme (Investme
nt Grade) nt Grade) nt Grade)
Credit outlook Positive Stable Stable
Source: Credit rating websites
Source: Economic survey, Citigroup
Economic performance is strong and validated by growing investment confidence

Economic performance is strong and validated by growing investment confidence 5
Key drivers of rapid growth (1/4)
Progressive liberalization from 1991 Impact
• Free-market competition driving costs down
and quality up
Telecom example
• Lifting of import restrictions Subscriber base Long distance tariffs
• Streamlining of tariff structure (millions) (US$ per min)
• De-licensing and re-deregulation of sectors, 15x 0.05x
e.g., Telecom, Civil Aviation, Infrastructure
• Progressive ease of FDI caps
Examples
Rating Pre-’91 1994-95
Source: Merrill Lynch
Maximum 105% 70% • Upsurge in international investment

excise duty FDI growth
(US$ million)
Maximum 400% 65% 95x
import duty
Source: Ministry of Commerce
The rapid growth of the Indian economy has been driven by a unique combination
of
Theprogressive liberalization…
rapid growth of the Indian economy has been driven by a unique combination
of progressive liberalization… 6
Inherent lower-cost economy Impact
• Sustained growth in exports - reputation as
US/India GDP (PPP) ratio
low-cost, high quality sourcing destination
for goods and services
Sustained PPP
advantage India exports, US$ billion
Price comparison US vs. India*

Good/ Price in Eq. price in
Service US (US$) India (US$)
Coke bottle 2 0.2
Peak mobile 0.3 0.05
rate (per min.)
Taxi (per km) 1 0.2
Skilled labor – 25 5
manufacturing
(per hour)
* Indicative based on ranges Source: Morgan Stanley
…in an inherently lower-cost economy…

…in an inherently lower-cost economy… 7
Working age population Indian middle-class household growth
19-59 years, 2007 2002-2006
China 16.5
India
Europe
SE Asia
Latin Am.
USA
Japan
• Highest growth (~6% from 2005) 16.5 million households (~80

• Constant median age of ~25 years million people) added over 4 years
for the last 25 years - greater than the population of
UK!
Source: UN, WTO Source: Morgan Stanley
…along with the significant advantage of a large & young working-age population
with a strong
…along domestic
with the consumption
significant group
advantage of a large & young working-age population
with a strong domestic consumption group 8
Global working age population 2020
UK -2 Mn
0Mn Russia
Ireland Czech -6
RepublicTurkey Mn
-1
US * Mn Iraq 2Mn
-17Mn China
-3 Mn 2Mn Israel Pakistan -10 -9 Mn Japan
-2 Mn Mn
0Mn Iran 19 5Mn
* -5.6 m France Italy 3Mn Mn 7
in 2010 5Mn
Mn
Philippines
4Mn
47 Bangladesh
Mn
Mexico Egypt 4Mn
India Vietnam
1Mn
Malaysia
3Mn 5Mn
Indonesia
Brazil
Source : BCG
With an increasing imbalance in the global workforce, India’s demographic

advantage is likely to
With an increasing be a key in
imbalance driver of future
the global growth India’s demographic
workforce,
advantage is likely to be a key driver of future growth 9
Summary of key messages
• As a rapidly growing market based on sound fundamentals, India has become a

leading center for global sourcing of goods and services
• India’s growth is driven by a unique combination of a progressive free-market

policy, a low cost structure, and a sustained demographic advantage
• Global workforce imbalances are likely to increase India’s significance as a key

source of talent for services
10
Agenda
1. The rise of the Indian • The Indian economy at a glance

economy • Drivers of rapid growth

industry

3. Sustaining India’s
• Cost competitiveness • Value-add
value proposition
• Risk management
11
The Indian IT-BPO industry at a glance
Indian IT-BPO Sector Exports
Revenue Aggregate and Share of GDP
Domestic
US$ billion, percentage Percentage of GDP
5.2% 5.5%
4.7%
4.1%
3.6% 33% 64.0
29% 48.1 • Sustained export

growth – revalidates
31% strong fundamentals
37.4
• Revenue aggregate as
32% 28.5 a percentage of GDP
continues to rise
21.6
FY04 FY05 FY06 FY07 FY08E

Source: NASSCOM
12
Employment
Direct Employment ‘000s FY2008 estimates

7-8mn 9-10mn
• ~2 million
professionals
employed directly
• Indirect
employment ~4x, ~2mn
creating additional
7-8 million jobs
FY2007 FY2008E
Direct Indirect Total

Source: NASSCOM Source: NASSCOM Employment
Direct employment to reach nearly 2 million; indirect job creation estimated at 7-8
million
Direct employment to reach nearly 2 million; indirect job creation estimated at 7-8
million 13
Exports
Sourcing model
100% = US$ 64 billion Indian Providers
Global Captives
Global Providers
28% IT*
12%
18%
Exports 62-66%
30% 70%
BPO 28%
27.5
29%
%
28%
40%
Domestic 34-38%
Market ** 32%
Source: NASSCOM Source: NASSCOM
Export revenue remains the mainstay with steady growth across segments;
Industry structure
Export revenue is well-balanced
remains between
the mainstay Indiangrowth
with steady and Global providers
across segments;
*Includes product development and engineering
Industry structure is well-balanced between Indian and Global providers
** Negligible 14
Domestic market
100% = US$ 64 billion
44% • Rapid economic growth
• Increased consumption of
Exports 62-66% goods and services
43%
• Growth in tech-related
spends by enterprises
38%
• Internet connectivity
Domestic 34-38%
Market 44%
Source: NASSCOM
Domestic market is gaining momentum, driven by overall economic growth,

increased adoption
Domestic market is of technology
gaining and outsourcing
momentum, driven by overall economic growth,
increased adoption of technology and outsourcing 15
Geographic exposure – exports
Percentage CAGR FY2004-07
100% = US$ 31.4 billion* FY2007
ROW 2% FY2004
APAC2 6%
Continental
12% 43%
Europe1 30% >55%
UK 18% UK
Continental
Europe
US 36%
APAC
US 61%
Source: NASSCOM FY2007 Indian IT-BPO Exports grew at a CAGR of 35% over FY2004-07
While US and UK remain the dominant markets, the industry is steadily increasing
its exposure
While US andtoUK
other geographies
remain the dominant markets, the industry is steadily increasing
•Excludes hardware exports
its exposure to other geographies
1 Top 3 countries include Germany (~2.5%), Netherlands (~2%), Switzerland (~1%)
2 Top 3 countries include Australia (~1.5%), Japan (~1.5%), and Singapore (~1.3%) 16
Vertical exposure
FY2007 Airlines and
Transportation
3%
Healthcare Other
3% 5%
Construction and Utilities
• Banking, Financial
4% Services, Insurance and
BFSI Hi-tech / Telecom
40%
Media, Publishing and
Entertainment
account for nearly 60%
3% of Indian IT-BPO exports
Retail
8% • Manufacturing and retail
are other large sectors
• Airlines, media,
Manufacturing healthcare and utilities
15%
are some emerging high-
growth sectors
Hi-tech / Telecom
19%
Source: NASSCOM
Vertical market exposure for industry exports is well balanced across several
mature
Verticaland emerging
market sectors
exposure for industry exports is well balanced across several
* Excludes hardware exports
mature and emerging sectors 17
Service portfolio
BPO EXAMPLE
Coverage Revenue Split by Service Offered

Percentage of full service
Best in class 2007 2007 2005 2004 FY2008E
100% = US$ 10.3 billion

42 Customer
Human Resources 22
Management Vertical- Interaction &
11
specific BPO Support
44%
100 Services
Procurement 48
Services
14
73 18%
Knowledge 35
Services
15
22%
76
Finance & 34 Other
Accounting 8% Finance &
15 Horizontal
Services 4% 3% Accounting
Customer 82 Knowledge 1%
42 Human Resources Mgmt.
Interaction &
Services Procurement Services
Support 25
Source: NASSCOM
Source: NASSCOM
Export growth is also being supported by increasing breadth and maturity of the
service portfolio…
Export growth is also being supported by increasing breadth and maturity of the
service portfolio… 18
Buyer needs
Source: NASSCOM-Mckinsey Report 2005
…driven by mature buyer needs evolving towards beyond-cost benefits

…driven by mature buyer needs evolving towards beyond-cost benefits 19
Footprint
Global Delivery Footprint of Indian IT-BPO Firms
Significant addition of onshore presence
enabling firms to offer end-to-end service
capabilities
Over 77 cities*
across more than
25 countries
Progressive near-shore
expansion to enhance
“follow-the-sun” and
“multi-lingual” capabilities
Expanding Global Delivery capabilities complemented by a widening service

portfolio
Expanding is Global
helpingDelivery
providers deepen client
capabilities relationships
complemented by a widening service
* Excludes Indian cities / India
portfolio is helping providers deepen client relationships 20
Distribution of exports by region in India
New Delhi, Noida, 17%

Gurgaon
Mumbai, Pune 15%
Bangalore 36%
Hyderabad 14%
Chennai 15%
Others 3%
Source: NASSCOM
The industry is well spread across multiple Indian locations. Additionally, the next
wave of locations
The industry is spread
is well on the rise.
across multiple Indian locations. Additionally, the next
wave of locations is on the rise. 21
Future outlook
US$ billion
Addressable market of at least

US$ 380 billion (2007-08)
Global Sourcing of IT & Engineering Services Global Sourcing of BPO Services
~220 - 250
5-6x
~160 - 190
6-7x
~44-47
15-18
Others ~26-29
Others 15-18
India** >29
India** ~11
Current Addressable Current Addressable
size market size market
Source: NASSCOM analysis based on NASSCOM-Mckinsey Report 2005
With strong fundamentals and significant head-room, the Indian IT-BPO industry is
well
Withplaced
strong to further expand
fundamentals andits share of worldwide
significant head-room,IT-BPO spending
the Indian IT-BPO industry is
well placed to further expand its share of worldwide IT-BPO spending 22
• The Indian IT-BPO market continues to grow at a robust pace revalidating its
strong fundamentals
• While exports remains the mainstay, the domestic market is gaining momentum
• With the industry maturing, it is well distributed across a breadth of services

and verticals
• While US and UK continue to be the dominant markets, Continental Europe has

exhibited strongest growth over the last two years
• Going forward, the Indian IT-BPO industry is poised to expand significantly on

the back of its strong fundamentals and global head-room
23
Agenda
1. The rise of the Indian • The Indian economy at a glance

economy • Drivers of rapid growth

industry

3. Sustaining India’s
• Cost competitiveness • Value-add
value proposition
• Risk management
24
Is India’s value proposition sustainable?
Common questions...
• “High attrition and wage inflation… is India’s talent pool

Talent availability running dry?”
• “With cost increases, is India still cost competitive?”

Cost
competitiveness
• “How have quality and security standards matured?”

Risk management • “What is the environmental risk exposure?”
Business • “Will policy and infrastructure keep pace with the industry’s
environment rapid growth?”
• “Can India-based providers rise to my evolving needs?”

Value-add
25
1. Talent availability (1/3)
Annual Output
Technical Composition
Graduates 3 yr Eng. Dip. / MCA Postgraduates
‘000s
4 yr Eng. Arts + Other
Degree Graduates
Science
Graduates
Commerce
Graduates
Source: NASSCOM
Non-technical
Graduates
‘000s IT-BPO Demand
Year Net employee
addition (‘000s)
FY 08E 375
FY 06 328
FY 05 234
Source: NASSCOM
Source: NASSCOM
Overall, India’s large talent capacity is well placed to meet industry demand
26
Root causes
Rapid growth
Lead indicators
• Rapid influx of new and scale-
up of existing companies Attrition
• Aggressive lateral hiring to
lower training investment
High entry-level
Demand/ Supply Gap
churn
• Max. churn at 0-3 year level • Employable pool
• Primarily due to lack of − Basic skills Wage Inflation
company loyalty − Access to talent
outside key cities
Premium for
• Specialized skill pool
specialized skills
− Project management
• Increased demand for
− Technical skills
specialized skills e.g., six
sigma, project management
However, talent suitability is a concern, with higher attrition and wage inflation as
the lead indicators of a talent crunch
27
Objectives Initiatives
• Enhance overall yield • NAC, NAC-Tech: Entry-level assessment for

Short Term BPO and IT
• Improve employability
• Expand to tier 2 • Finishing schools
locations • Location studies and engagement with state
• Lower skill dependence governments to expand tier 2 locations
• Lower training • FDP, Faculty Development Program: to

Medium Term
investment increase the suitability of teachers
• Enhance specialist skills • Facilitating industry access to specialist
and project management programs offered by independent agencies
expertise
• Add education capacity • Expansion of higher-education
Long Term
• Promote education infrastructure: government to set-up 20 new
reform IIITs
• Program to increase PhDs in technology
• NASSCOM VC fund focused on technology
innovation
Recognizing this imperative, the industry is proactively working on several

initiatives to strengthen India’s long-term cost advantage
28
2. Cost competitiveness (1/3)
Loaded Costs per IT FTE p.a. Break-up of Loaded Costs

2007, US$ ‘000s 2007, Percentage
INDICATIVE
SG&A
Facilities • Semi-
Delivery OH variable
• Non-linear
inflation
Salary
Lower
impact of
wage
inflation
Source: Everest, NASSCOM Source: NASSCOM estimates
Despite cost increases, India continues to leverage its cost structure to deliver a
compelling cost advantage
29
Inflation of Loaded Costs per IT FTE, FY06-07 ILLUSTRATIVE

US$ per FTE
• Volume / scale expansion

• Lower cost structure through
Due to wide differential in expansion to Tier 2 cities • Improved seat/resource
cost base, absolute inflation • Flatter pyramids utilization
in developed countries is • Lower overheads (e.g., travel, • Process improvements
still higher than India reengineering
3 4
2
Net impact of 5%,
8 105 lower absolute
100 inflation vs. onshore
25.4
FY06 Wage US$ Effective cost Utilization & FY07

Loaded inflation depreciation management Productivity Loaded
Cost gains Cost
Source: NASSCOM estimates
Best-in-class players are successfully offsetting increasing factor costs with

ongoing productivity gains, process improvements, and delivery innovation
30
Projected cost comparison, 2007-2015
US$
@ 3%
US @ 100K
~60%
~67%
~53%
Wage @ 15%
Other @ 5%
Wage @ 10%
Other @ 5%
India @ 28K Wage @ 5%
Other @ 5%
2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: NASSCOM estimates
Additionally, India’s long-term cost advantage is likely to remain robust
31
3. Risk management: quality and data security (1/2)
Objectives Initiatives/Impact
• Compliance with global standards • Highest number of ISO 27001

Standards
e.g., ISO 27001, CoBIT certifications obtained globally
• Contractual safeguards, robust
BCP/DR planning
Network • Secure design, documentation & • Documented security policies covering
security implementation of network e.g., use of information, mobile computing,
firewall, antivirus encryption user access
Physical • Isolation of sensitive areas • Robust and uniform practices for

security • Access control systems e.g., CCTV physical security in delivery centres
surveillance, security guards
Personnel • Background checks • National Skills registry (NSR) to

security • Non-disclosure agreements facilitate personnel background checks
• Cyber security training and awareness
• Compliance with international laws • Amendments to strengthen the IT Act
Laws
• Strengthening of Indian legal system 2000 and Indian Penal Code under
parliament review
In addition, the industry continues to evolve its already high standards for data
security and IP protection…
32
3. Risk management: quality and data security (2/2)
Objectives
• Engaging policy makers, industry players,

Engage
enforcement agencies, etc. to build common
understanding of data security issues
• Educating industry constituents about data security

Educate best practices through publications, conferences,
and training programs Data Security
Council of India
• Enacting policy reform including: (DSCI) setup as
Enforce first-of-its kind
a) strengthening the legal framework
b) addressing country-specific challenges self-regulatory
c) establishing a national security framework organization
d) encouraging adoption of best practices
• Enforcing compliance through periodic audits,

Enact
certification, incident response databases, and
cooperation with enforcement agencies
…and is adopting a four-pronged program to institutionalize ongoing efforts
33
3. Risk management: environmental risk exposure
Concentration Risk Geopolitical Risk

• Tried and tested - Multiple centers • Stable democracy
of significant scale with
established firm-level practices • Neutral external affairs policies
and maturity in BCP and DR
• Consistent economic agenda to

• Well distributed - Industry
push free-market reforms
dispersed across the breadth of
the country, e.g., Mumbai, New
Delhi, Chennai • Conducive business environment
with established practices
Additionally, low geopolitical and concentration risks provide India with a favorable
ecosystem for the sustained growth of the IT-BPO industry
34
4. Business environment (1/3)
Indian IT-BPO Growth

Estimate
Key policy actions that have aided IT-BPO growth Forecast
US$ Billion
100
2001 onwards:
Progressive reform
80 continues; regular
Alignment of
easing of fiscal /
developmental
1991: STPI formed to procedural issues
policy with industry
60 promote the Indian IT- 2005: SEZ Act
needs; education
BPO industry introduced with special
and infrastructure
Early investment 1991onwards: Economic provisions for IT-BPO
are key priorities
on education (e.g. liberalization
40 IITs/ IIMs), science 1994 onwards: Telecom
and R&D (e.g. sector de-regulation
CSIR)
20
0
Pre-1990 1990-2000 2001-07 2007-12
The strong growth of the Indian IT-BPO industry is complemented by a sustained

emphasis on creating an enabling business environment
35
IT-BPO Sector Accounts for the Highest Number Almost all IT SEZs have formal approval
of Proposed SEZs (Total# = 572)
IT SEZs
Other SEZs
SEZ highlights
Term 15 years
Fiscal benefits
SEZ50%
• 100% tax holiday for first 5 years, Highlights
for next 5 years, and up to 50% for
balance 5 years
• Exemption from excise duties, service and sales taxes
Location and size Restricted to prescribed zones with a minimum area of 25 acres
Other Procedural ease, single-window clearance
Source: NASSCOM, CLSA
SEZs are expected to build on the success of STPI at a larger scale
36
Infrastructure development initiatives
Highlights from key sectors
Sector Current status FY 07 Key policy initiatives Public-Private Partnership
spend
(US$ bill.)
Roads • 10% of national 7.8 • Seven phase national • Capital grants and long-term
highways four-laned highway development annuity support to
• Average speed less program encourage private sector
than 50 km/hr participation
Telecom • India has done well 2.1 • FDI limit increased • Further encouragement of
here. Average per min from 49% to 74% foreign investment to
cost decreased by 90% support capex requirements
over 7 years
Airports • Top 6 airports (~75% of 3 • Modernization • Mumbai and Delhi airports
traffic) currently program covering 6 modernized by private
overstretched main cities and 35 tier players
2 cities • Greenfield airports at
Bangalore and Hyderabad –
Q1,Q2 2008
Power • High cost of electricity, 15.7 • Accelerated Power • ~ 20% of generation
losses due to theft Development capacity from private sector
Program
• Mega Power projects
Source: Morgan Stanley
Further, the government has prioritized infrastructure development through PPP-

led initiatives to address current infrastructure lags
37
5. Value-add
Key benefits driving companies to offshore Key value-add initiatives
• Expansion of delivery network

100 Global delivery to include nearshore and
model onshore centres
Savings • Provision of 24x7 services
80 Skills
Quality
Process • End-to-end process delivery
Process
redesign capabilities
maturity
Percentage of responses
60
• Active service-level
Speed to
improvement
market
• Process reengineering
40
expertise
Access to • Service innovation e.g.,
new Innovation customization for new markets
20 markets
• Active IP creation – increased
filing of patents
0
2004 2005 2006 2007
Source: Duke Offshoring Research Network (ORN)
The Indian IT-BPO industry is actively building on its leadership position to deliver
beyond cost benefits to global buyers
38
• India has the raw talent capacity to comfortably service the IT-BPO industry in
the future. While talent suitability is a concern, industry initiatives such as NAC
will help improve overall employability
• Despite cost increases, the Indian IT-BPO industry continues to leverage its
lower cost structure to deliver a compelling cost advantage
• Overall risk exposure is low with mature quality and data security mechanisms
and negligible geopolitical risk
• Proactive government policy is helping address existing infrastructure gaps.

Further, SEZs will take over from STPI in propelling industry growth.
• Providers are maturing their service delivery capabilities to actively deliver

value-adds through global delivery models, process expertise, and innovation
39
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India Inc.

An overview of the IT-BPO sector in India

Copyright © NASSCOM 2008

1. The rise of the • The Indian economy at a glance

2. Dynamics of the • Current trends

• Talent availability • Business environment

FY 07 unless indicated otherwise

Source: Usda.gov Source: Economic Survey

Forex (US$ billion) Consumption (% YOY) Source: AT Kearney

Sovereign BB- Baa2 BBB-

Economic performance is strong and validated by growing investment confidence

Maximum 105% 70% • Upsurge in international investment

Source: Ministry of Commerce

Price comparison US vs. India*

…in an inherently lower-cost economy…

• Highest growth (~6% from 2005) 16.5 million households (~80

With an increasing imbalance in the global workforce, India’s demographic

• As a rapidly growing market based on sound fundamentals, India has become a

• India’s growth is driven by a unique combination of a progressive free-market

• Global workforce imbalances are likely to increase India’s significance as a key

1. The rise of the Indian • The Indian economy at a glance

2. Dynamics of the • Current trends

• Talent availability • Business environment

29% 48.1 • Sustained export

FY04 FY05 FY06 FY07 FY08E

Direct Employment ‘000s FY2008 estimates

Direct Indirect Total

Source: NASSCOM Source: NASSCOM

100% = US$ 64 billion

44% • Rapid economic growth

Domestic market is gaining momentum, driven by overall economic growth,

Coverage Revenue Split by Service Offered

100% = US$ 10.3 billion

Source: NASSCOM-Mckinsey Report 2005

…driven by mature buyer needs evolving towards beyond-cost benefits

Expanding Global Delivery capabilities complemented by a widening service

New Delhi, Noida, 17%

Mumbai, Pune 15%

Addressable market of at least

Global Sourcing of IT & Engineering Services Global Sourcing of BPO Services

• With the industry maturing, it is well distributed across a breadth of services

• While US and UK continue to be the dominant markets, Continental Europe has

• Going forward, the Indian IT-BPO industry is poised to expand significantly on

1. The rise of the Indian • The Indian economy at a glance

2. Dynamics of the • Current trends

• Talent availability • Business environment

• “High attrition and wage inflation… is India’s talent pool

• “With cost increases, is India still cost competitive?”

• “How have quality and security standards matured?”

• “Can India-based providers rise to my evolving needs?”

• Enhance overall yield • NAC, NAC-Tech: Entry-level assessment for

• Lower training • FDP, Faculty Development Program: to

Recognizing this imperative, the industry is proactively working on several

Loaded Costs per IT FTE p.a. Break-up of Loaded Costs

Source: Everest, NASSCOM Source: NASSCOM estimates

Inflation of Loaded Costs per IT FTE, FY06-07 ILLUSTRATIVE

• Volume / scale expansion

FY06 Wage US$ Effective cost Utilization & FY07

Best-in-class players are successfully offsetting increasing factor costs with

2007 2008 2009 2010 2011 2012 2013 2014 2015

Additionally, India’s long-term cost advantage is likely to remain robust

• Compliance with global standards • Highest number of ISO 27001