IT & ITeS

APRIL 2017 (As of 28 April 2017) For updated information, please visit www.ibef.org 1

IT & ITeS

❖ Executive Summary………………..……..…..3
❖ Advantage India…………………………..........4
❖ Market Overview and Trends………..…........6
❖ Porters Five Forces Analysis………….........17
❖ Strategies Adopted ………………..…..…....19
❖ Growth Drivers………………………….........21
❖ Opportunities... …..........................................33
❖ Success Stories………………………..…….39
❖ Useful Information…………...........................49

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IT & ITeS
EXECUTIVE SUMMARY

• The IT-BPM sector in India expanded at a CAGR of 13.7 per cent over 2010–16, which is 3–4
Strong growth
times higher than the global IT-BPM growth & is estimated to expand at a CAGR of 9.1 per cent
opportunities to USD350 billion by 2025

• As of 2015, India is a prominent sourcing destination across the world, accounting for
Leading sourcing approximately 56 per cent market share in the global services sourcing business.
destination • India acquired a share of around 38 per cent in the overall Business Process Management (BPM)
sourcing market

• India’s highly qualified talent pool of technical graduates is one of the largest in the world,
Largest pool of ready to facilitating its emergence as a preferred destination for outsourcing, computer science/information
hire talent technology accounts for the biggest chunk of India' fresh engineering talent pool, with more than
98 per cent of the colleges offering this stream

Most lucrative sector for • The sector ranks 4th in India’s total FDI share & accounts for approximately 37 per cent of total
investments Private Equity and Venture investments in the country

• In FY16, revenues of Indian IT-BPM market is estimated to touch USD160 billion
Cash Cow • In 2015, Indian IT companies have helped clients to save USD200 billion in the last 5 years.
• India’s IT-BPM sector includes 670 offshore development centres around 78 countries.

Source: NASSCOM, TechSci Research
Notes: BPM – Business Process Management, USP – Unique Selling Proposition

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IT & ITeS

ADVANTAGE INDIA

IT & ITeS
ADVANTAGE INDIA

Growing demand Global footprints
FY16E Growing demand • IT firms in India have delivery centres across FY25F
• Strong growth in demand for exports the world; as of 2015, IT firms had a total of
from new verticals
670 centres in >78 countries
Industry • Rapidly growing urban infrastructure Industry
has fostered several IT centres in the • India’s IT industry amounts to 12.3 per cent value:
value:
country of the global market, largely due to exports USD350
USD160
billion • Expanding economy to propel growth • IT & ITeS industry is well diversified across billion
in local demand verticals such as BFSI, telecom & retail
• Increasing strategic alliance between
domestic and international players to deliver
solutions across the globe
Advantage
Competitive India Policy support
advantage • The engineering sector is
• Tax holidays extended to the IT sector
delicensed; 100 per cent FDI is
• Cost savings of 60–70 per cent over • allowed
More in the
liberal sector
system for raising global capital,
source countries funding for seed capital and growth & ease of
• A preferred destination for IT & ITeS in Due business,
• doing to policy support,
etc. have there was
been addressed
the world; continues to be a leader in the • cumulative
USD0.17 FDIhave
billion of USD14.0 billion for raising
been allocated
global sourcing industry with 55 per cent into the
global sector
capital, over
start upsApril 2000 –
market share • February
Income Tax2012,
cut onmaking
royalty up
fee8.6
on per
tech services
• The Indian IT industry has saved clients tocent of cent
10 per total FDI into the country
USD200 Billion in the past 5 years • in that period
Cumulative FDI inflow in computer software
and hardware is USD22.83 billion from April
2000 to December 2016
Source: Nasscom, TechSci Research
Notes: SEZ stands for Special Economic Zone, BFSI stands for Banking, Financial Services and Insurance, E stands for Estimate, F stands for Forecast
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IT & ITeS MARKET OVERVIEW AND TRENDS .

the IT industry supported over 4.IT & ITeS EVOLUTION OF INDIA’S IT SECTOR 2005-16 2000–05 1995-2000 • Firms in India became multinational • The number of firms in companies with delivery centres India grew in size & across the globe (670 centres in >78 Pre-1995 started offering countries.ibef.7 million people infrastructure started • Western firms set up a directly & over 10 million indirectly. please visit www. as • India increasingly number of captives in of FY16 • By early 90s.200 new start ups APRIL 2017 For updated information.org 7 . as of 2015) • IT industry started to complex services such • Indian IT-BPM revenue is likely to mature as product reach USD160 billion in FY16 • Increased management & go-to • Employment in IT sector is expected to investment in R&D & market strategies increase & reach 3. moving from enterprise servicing destination work on low-cost & to enterprise solutions skilled talent pool in • The industry is 3rd largest start up base India • In FY16. US. seen as a product India based companies • India’s IT sector is at an inflection development began to outsource point.

TechSci Research Notes: FY16E – Figures for FY16 are estimated APRIL 2017 For updated information.org 8 .9 per cent during FY16E revenue comes from of revenue comes of revenue comes • The domestic market the export market from the export from exports accounts for a • BFSI continues to be market significant share the major vertical of • Market size of BPM • The domestic market the IT sector industry is estimated is experiencing to rise from USD41 growth as the billion in FY20 to penetration of USD54 billion by personal computers FY25 is rising in India Source: Nasscom.IT & ITeS SEGMENTS OF INDIA’S IT SECTOR IT & ITeS sector Business Process Software products & IT services Hardware Management (BPM) engineering services • Market Size: USD75 • Market size: USD28 • Market size: USD27 • Market size: billion during FY16E billion during FY16E billion during FY16E USD13.3 billion • Over 81 per cent of • Around 87 per cent • Over 83. please visit www.ibef.

Estimates APRIL 2017 For updated information.5 per cent The contribution of the IT sector to India’s GDP rose to approximately 9. accounting for about 10.5 cent of India’s total IT & ITeS sector revenue in FY16 76 86 69 The top 5 IT firms contribute over 25 per cent to the total 59 industry revenue. TechSci Research Note: E .4 per 98. implying a growth rate of 9. indicating the market is fairly 50 competitive 52 48 24 29 32 32 32 FY10 FY11 FY12 FY13 FY14 FY15 FY16E Domestic Export Source: Nasscom. TCS THE MARKET LEADER India’s technology & BPM sector (including hardware) is Market size of IT industry in India (USD billion) likely to generate revenues of USD160 billion during FY16 compared to USD146.ibef.IT & ITeS INDIA’S IT MARKET SIZE GROWING.org 9 .5 billion in FY15. please visit www.3 per cent in FY15 108 TCS is the market leader.

9 11.0 14.8 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 IT Services BPM Software Products and Engg.1 23.68 per cent during FY09–16 Export of IT services has been the major contributor.1 Software Products and 9.0 24.59% 15.5 61.0 20.5 39.0 11.63 per cent of total IT exports during FY16 Growth in export revenue (USD billion) Sector-wise breakup of export revenue FY16 CAGR 61.68% 20.8 10.8 25.0 33.9 52.7 55.63% 8.4 17.9 25.4 20.8 56.0 Engg.59 per cent of total IT exports (including hardware) during FY16 BPM accounted for 22.7 PER CENT OF INDIA’S IT & ITES EXPORTS Total exports from the IT-BPM sector (including hardware) were estimated to have been USD108 billion during FY16.0 13.4 BPM 14. exports rose at a CAGR of 61.IT & ITeS IT AND BPM ACCOUNT FOR 79.9 22. Make in India. accounting for 56. TechSci Research Note: E – Estimated APRIL 2017 For updated information.0 14.78% IT Services 22. please visit www.org 10 . Services 43.ibef. Services Source: Nasscom.

Retail. accounting for 54 per cent of total IT-BPM exports from India Approximately 79 per cent of total IT-BPM exports from India is across 4 sectors: BFSI. Services. Utilities & Construction.IT & ITeS BFSI .org 11 .32 billion by the end of 2016. please visit www. Financial Services and Insurance.Banking. telecom. The hitherto smaller sectors are expected to grow With introduction of new policies for healthcare & retail. Department of Electronics and IT Annual Report Notes: BFSI . Transportation The figures mentioned are for IT and BPM only and do not include engineering services and hardware exports APRIL 2017 For updated information.Retail. manufacturing & retail. Healthcare. these sectors are expected to grow at a faster pace in coming years.ibef.A KEY BUSINESS VERTICAL FOR IT-BPM INDUSTRY BFSI is a key business vertical for the IT-BPM industry. thus accelerating revenue of IT enabled services for the sectors Distribution of export revenue across verticals (FY16) BFSI 4% 11% Hi-Tech/Telecom 2% Manufacturing 3% 4% Healthcare 6% 54% Retail Construction & Utilities 16% Travel & Transportation Others Source: MoRTH. *Emerging. TechSci Research. It is expected to generate export revenue of around USD58.

APAC RoW (RoW) UK) 2012 2014 2015 2016 Source: Nasscom. please visit www. Department of Electronics and IT Annual Report Note: ROW is Rest Of the World.ibef. one of the fast growing IT markets in 2015. US IS MAJOR IMPORTER OF IT SERVICES US has traditionally been the biggest importer of Indian IT exports. over 62 per cent of Indian IT-BPM exports were absorbed by the US during FY16 Non US-UK countries accounted for just 21. TechSci Research. is expected to emerge as a potential market as higher inclination towards offshoring firms would increase demand for IT services Being the low cost exporter of IT services.0 per cent of total Indian IT-BPM exports during FY16 Europe.org 12 . India is going to attract more markets in other regions in the same manner it tapped US markets Geographic breakup of export revenue Distribution of export revenue across geographies (USD billion) (March 2016) 2% (FY16) 67 61 52 8% United States 42 11% United Kingdom Continental Europe 18 15 17 12 11 12 8 10 8 9 17% Asia Pacific 5 7 62% 2 2 2 2 Rest of World US UK Europe (Excl. APAC is Asia Pacific APRIL 2017 For updated information.IT & ITeS WITH OVER 62 PER CENT SHARE.

TechSci Research APRIL 2017 For updated information.000 firms • Small players focussing on specific niches in either services or verticals Small ~15.org 13 .000.IT & ITeS IT-BPM SECTOR DOMINATED BY LARGE PLAYERS Percentage of Number of Percentage of Category total export Work focus players total employees revenue • Fully integrated players offering complete range of services Large 11 47-50% ~35-38% • Large scale operations & infrastructure • Presence in over 60 countries • Mid tier Indian and MNC firms offering services in multiple verticals Medium 120-150 32-35% ~28-30% • Dedicated captive centres • Near shore & offshore presence in more than 30-35 countries • Players offering niche IT-BPM services ~1.000 9-10% ~15-18% • Includes Indian providers & small niche captives Source: Nasscom. • Dedicated captives offering niche services Emerging 9-10% ~15-20% 1.ibef. please visit www.200 • Expanding focus towards sub Fortune 500/1.

Indian IT-BPM sector is expected to grow 9. as of 2015 model • New business models. the number of global delivery centres in the IT-BPM sector reached 670. India continued to be the most preferred location for global R&D outsourcing. Infosys has opened a shop in Shanghai. In India. Global delivery spreading out across 78 countries. TCS already has a big set-up in Uruguay Global sourcing hub • India continues to maintain a leading position in the global sourcing market.ibef. with Engineering offshoring a share of 56 per cent • The sector includes 670 Offshore Development Centres (ODCs) around 78 countries Most lucrative sector • Increased focus on R&D by IT firms in India resulted in rising number of patents filed by them. In 2016. please visit www. India’s IT industry amounts to 7 per cent of the global market • In 2015.conducted by Nasscom APRIL 2017 For updated information. Its market share increased to 55 per cent in 2015.2 per cent since last year & for investments reach USD160 billion 1 .org 14 .IT & ITeS NOTABLE TRENDS IN INDIA’S IT & ITES SECTOR … (1/3) • Indian software product industry is expected to reach the mark of USD100 billion by 2025. technologies & addition of new markets is pushing growth.

about 80 per cent is contributed by 200 large & medium players • Disruptive technologies.000. such as cloud computing. social media & data analytics. analytics.IT & ITeS NOTABLE TRENDS IN INDIA’S IT & ITES SECTOR … (2/3) • India’s IT market is experiencing a significant shift from a few large-size deals to multiple small-size ones Changing business • The number of start-ups in technology is expected to reach 50.org 15 . from a vendor’s frame of reference • Large players with a wide range of capabilities are gaining ground as they move from being simple Large players gaining maintenance providers to full service players. IT companies in India are focusing on new models such as platform-based BPM services and creation of intellectual property APRIL 2017 For updated information. system integration & advantage consulting services • Of the total revenue. please visit www. mobility. adding to around 2 per cent of dynamics GDP • Delivery models are being altered. as the business is moving to capital expenditure (capex) based models from operational expenditure (opex). offering infrastructure. cloud) market is expected to grow to USD225 billion by 2020 • India’s IT sector is gradually moving from linear models (rising headcount to increase revenue) to Growth in non-linear non-linear ones models • In line with this.ibef. are offering new New technologies avenues of growth across verticals for IT companies • The SMAC (social.

IT & ITeS NOTABLE TRENDS IN INDIA’S IT & ITES SECTOR … (3/3) • Global outsourcing is being used to drive fundamental re-engineering of end-to-end processes Consumerisation of IT • Increased emphasis on beyond cost benefits • IT firms in the current phase have moved up the value chain.Service Level Agreement. please visit www.ibef. favourable government regulations. affordable real estate. Mobility. a paradigm shift in IT-BPM approaches Indian IT experienced until now.Return on Investment APRIL 2017 For updated information. an inflection point for • Social. Analytics & Cloud (SMAC).org 16 . tax breaks & cities SEZ schemes facilitating their emergence as a new IT destination • Giving rise to the domestic hub & spoke model.000 gram panchayats in the country Notes: SLA . aiming to establish business in India Emergence of Tier II • Cheap labour. III & IV as network of spokes SMAC technologies. with Tier I cities acting as hubs and Tier II. providing innovation-led growth to clients from SLA satisfaction & RoI calculations • Tier II & III cities are increasingly gaining traction among IT companies. is leading to digitisation of the entire business model • The National Optical Fibre Network (NOFN) is being laid down in phases to connect all the Rural Development 250. RoI .

IT & ITeS PORTER FIVE FORCES ANALYSIS .

such as Philippines • Large players.org 18 .IT & ITeS PORTERS FIVE FORCES ANALYSIS Competitive Rivalry • Intense competitive rivalry exists due to low switching costs • Most of the bigger Indian firms offer same services and there is little Threat of New product differentiation Entrants (Medium) Threat of New Entrants Substitute Products • Easy entry as the capital • Threat is medium as new required is low centres.ibef. are fast gaining ground among investors due to Bargaining Competitive Substitute toughen prospects of small and their low cost advantages Power of Rivalry Products medium players to win large Customers (High) (Medium) deals (High) Bargaining Power of Suppliers Bargaining Power of Customers • Bargaining power is high as • Bargaining power of suppliers many IT firms fight for a similar is less as most of their Bargaining project businesses come from the Power of same geographies Suppliers • Price taker rather than price • Firms are mostly dependent on (Low) maker same geography. and China. please visit www. however. which increases customer power APRIL 2017 For updated information.

IT & ITeS STRATEGIES ADOPTED .

legal services. within the BPM domain cloud-based services APRIL 2017 For updated information. Mobility.g.org 20 . e. which provides clients better digital space insights for future cases • Most of the IT companies have been offering similar products & services to their clients • The companies are working towards product differentiation through various other services by Product and Pricing branding themselves. Business Process as a Service (BPaaS). please visit www.ibef. Analytics and Cloud (SMAC) is taking significant leaps Movement to SMAC & • Companies are getting into this field by offering big data services. enhancing productivity and quality Promotion of R&D • R&D forms a significant portion of companies’ expenses. Building Tomorrow's Enterprise by Infosys differentiation • Indian IT firms have started to adopt pricing strategies to compete with Global firms like IBM and Accenture • Companies are now investing a lot in R&D and training employees to create an efficient workforce. which is critical when margins are in pressure.IT & ITeS STRATEGIES ADOPTED • Companies are expanding their business to Tier II and III cities to have low cost advantage Expanding in Tier II & III • In 2016. Infosys bought 2 office space in Pune and Bengaluru India. to promote innovations in the changing landscape Fast-growing sectors • Knowledge services. data analytics. TCS is planning to expand in cities and externally Mumbai • Companies are expanding their business towards emerging economies of East Europe and Latin American countries • Social Computing.

IT & ITeS GROWTH DRIVERS .

please visit www.Information and communications technology. TechSci Research Notes: STPI stands for Software Technology Park of India.7 million. seed money & ease of doing Policy Infrastructure • Technology mission for services in business.org 22 .4 per cent and reach increase USD2. skills and E-Kranti for government the government has made changes service delivery and governance in custom and excise duty of IT scheme hardware products Source: Nasscom. SEZ stands for Special Economic Zone. IT- BPM employees are estimated to reach 3. IT-BPM – Information Technology Business Process Management APRIL 2017 For updated information. • Strong mix of young and experienced professionals Talent pool • Global BPM spending estimated to • Computer penetration expected to rise by 4. training in IT • As a part of Union Budget 2016-17.ibef.7 billion in 2015 • Increasing adoption of technology Global Domestic demand growth and telecom by consumers & focused government initiatives Growth leading to increased ICT adoption drivers • Robust IT infrastructure across • Tax holidays for STPI and SEZs various cities in India such as • More liberal system for raising Bengaluru capital. ICT . wherein. support villages & schools.IT & ITeS IT SECTOR TO BE DRIVEN BY STRONG DEMAND AND INDIAN EXPERTISE • 6 million graduates are estimated to have been added to India’s talent pool in FY16.

Mphasis. new internet users are opting for non-English language.. Wipro Technologies Ltd. risk & compliance (GRC) solutions across the world Source: Nasscom. HCL. Infosys Technologies Ltd. the app is operational in Bangalore and Mumbai only. the number of non-English users will surpass those using English by 2021. Multinational Subscriber base of local language users in smartphones in Corporations (IBM. Larsen & Toubro Infotech IT Sector Segmental Breakup .0% (TCS. etc) In April 2017. Box8. please visit www. with 90% of Accenture. Dentsu Aegis Network acquired SVG Media Pvt.0% April 2017. As Microsoft. TechSci Research APRIL 2017 For updated information. Freshmenu. partnered with Faasos. As of April 2017. etc) Urbanclap. Tech Mahindra has entered into a strategic alliance with Metric Stream. etc) per the Google. HP.ibef.. Ltd. Wipro. a US-based firm. Oracle Financial. Zimmber and Honeywell.By Companies (FY15) Limited. with an aim to provide governance. Assorted News Articles. are expanding their footprint in order to meet client’s requirements globally Indian firms have started adopting the global delivery model to cater to the local market and for taking advantage of low Indian Service Providers cost 14.org 23 . Infosys.0% Global inhouse centers (EMC. The internet giant has 18. in 68. HCL Technologies Ltd.IT & ITeS TECHNOLOGY – A KEY INFLUENCER FOR DOMESTIC IT SERVICES … (1/2) Indian IT companies like TCS. India has increased over the past few years. Tech Mahindra Ltd. Google has launched an app named as “Areo” that aggregates food delivery & home services start- ups in India.. Fordm Boeing.

Union Territory.IT & ITeS TECHNOLOGY – A KEY INFLUENCER FOR DOMESTIC IT SERVICES … (2/2) Introduction of large e-Governance projects to provide Domestic revenue from IT and BPM (USD billion) better services through IT & focus on the formation of the cyber policy led to higher demand for IT & hardware from the government 100 The Central Government & State/UT Government allocated 0. respectively.2 per cent & 2.Forecasts Enhanced internet & mobile penetration Growing disposable income strengthening consumer purchasing power Emerging verticals (retail. TechSci Research Rising computer literate population Notes: UT . E:Estimated F .9–1. healthcare. utilities) are driving growth above 14 per cent APRIL 2017 For updated information.8–3 per cent. tablets & iPads Industry leaders are stressing the need for promoting support start-ups FY15 FY16E FY20F Source: Nasscom.org 24 .ibef. please visit www. of total budget for IT spend under the 12th Five Year Plan 48 52 Strong consumer demand for IT service & products: Advent of smartphones.

2 3.1 The BRIC IT market is estimated at USD380–420 22 35 11 15 2 7. Global IT-BPM spending (excluding hardware) has grown 0.2 billion by 2020 CADM ER&D IT consulting IS. In the year 2015 India comprised of around 500 BPM players generating a 108 99 revenue of USD23 billion.6 13 1. which is expected to rise & reach 86 50 billion in 2020 During FY17 the country’s revenue growth in IT exports is FY14 FY15 FY16E expected at 10 per cent Emergence of SMAC would provide USD1 trillion market by Core and non core segment’s growth prospects 2020 Core segments Emerging segments 17% Emerging economies are likely to be a major contributor to IT spend growth IT spend in emerging economies to grow 3-4 times 10% 20% 20% 21% faster than advanced economies 19% 5. please visit www.Estimated APRIL 2017 For updated information. Budget 2015-16 Notes: UT.IT & ITeS EXPORTS TO REMAIN ROBUST AS GLOBAL IT INDUSTRY MAINTAINS GROWTH In FY16 the estimated revenue from exports of IT & BPM Export revenue from IT and BPM (USD billion) sector was USD108 billion. Knowledge Software sourcing services testing Stable tax regime. reducing litigation related to tax & providing conducive environment for start-ups will improve FY13E FY16F the business environment Source: Nasscom.4 per cent over 2015 to nearly USD1.5 3. TechSci Research.26 per cent of the global market.ibef.Union Territory. E .2 trillion India’s IT industry amounts to 4.org 25 .5 5. largely due to exports as of 2015.

7 4.IT & ITeS INDIAN TALENT POOL READY TO TAKE IT SECTOR TO THE NEXT LEVEL … (1/2) Availability of skilled English speaking workforce has Graduates addition to talent pool in India (in millions) been a major reason behind India’s emergence as a global outsourcing hub 5. 5 to 10 per cent increase in hiring by BPO/KPO & ITES companies in Karnataka.4 India added more than 6 million graduates to the talent 4. please visit www.org 26 .0 During FY10-16.3 pool in India grew at a CAGR of 8.7 pool during FY16 Growing talent pool of India has the ability to drive the R&D & innovation business in the IT-BPM space According to India Hiring Intent Survey 2017. is anticipated in the coming year FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Source: Nasscom.39 per cent 4. TechSci Research Note: Graduates includes both graduates and post graduates APRIL 2017 For updated information.ibef.0 3.8 6. number of graduates addition to talent 5.

ibef. please visit www.6 billion is spent annually on training workforce and growing R&D spend Forty per cent of total spend on training is spent on training new employees Numerous firms have forged alliances with leading education institutions to train employees APRIL 2017 For updated information.IT & ITeS INDIAN TALENT POOL READY TO TAKE IT SECTOR TO THE NEXT LEVEL … (2/2) About 2 per cent of the industry revenue is spent on training employees in the IT-BPM sector USD1.org 27 .

IIIT . • Develop a robust & credible information has developed a unique initiative ’National repository Skills Registry’ a national database of registered & verified knowledge workers in the industry • Expansion of higher education infrastructure. TechSci Research Notes: NAC – Nasscom Assessment of Competence. in partnership with the industry. • Expand education capacity Long term 20 new IIITs to be set up by the government • Promote reforms in education • Programme to increase PhDs in technology Source: Nasscom.IT & ITeS NASSCOM’S PLAN TO INCREASE EMPLOYABILITY OF INDIA’S TALENT POOL Objectives Initiatives • Enhance overall yield of employees • Industry to enhance investment in training • Improve employability • Use NAC & NAC – Tech to assess Short term • Expand to Tier II cities to reduce operating employability of talent pool costs • Identified new tier II locations • Low skill dependence • Launched the National Faculty Development Programme to increase suitability of faculty • Reduce investment on training • Aiding industry access to specialist • Develop specialist & project management programmes offered by independent agencies Medium term expertise • NASSCOM. please visit www.org 28 .ibef.Indian Institutes of Information Technology APRIL 2017 For updated information.

TIER II CITIES EMERGE AS NEW CENTERS … (1/2) Characteristics of STPI and SEZ in India IT-SEZs have been initiated with an aim to create zones that lead to infrastructural development.ibef. exports & employment Parameters STPI SEZ As on 2nd September 2016.org 29 . there are over 186 operational SEZs across the country Term • 10 years • 15 years • 100 per cent • 100 per cent tax holiday on tax holiday on exports for 1st export profits Fiscal 5 years • Exemption benefits • Exemption from excise from excise duties & duties and customs customs • No location • Restricted to constraints Location & prescribed • 23 per cent size zones with a STPI units in restrictions minimum area tier II & III of 25 acres cities Source: Nasscom. please visit www. TechSci Research.IT & ITeS SEZ’S TO DRIVE IT SECTOR. STPI (Software Technology Parks of India) APRIL 2017 For updated information.

such as tax breaks.615 in Odisha’s 208 secondary schools. STPI & SEZ schemes.ibef. TechSci Research To encourage cash less economy. Persistent Systems. please visit www. affordable real estate & support from local government. The programme includes 4 vocational streams. vocational education programme was introduced 1.821 1. including IT & ITeS. TIER II CITIES EMERGE AS NEW CENTERS … (2/2) Trends in tier II and III cities Cost in newer cities is expected to be 28 per cent lower than that in IT sector employment distribution leading cities in Tier I and Tier II/III cities Lower cost & attrition. the government to distribute free Wi-fi service to more than 1000 gram panchayats in remote areas In February 2017.org 30 . E&Y. The initiative was taken to educate students & to enhance growth in these sectors.230 Some cities are expected to emerge as regional hubs supporting 175 domestic companies In December 2016. Retail & Tourism. are facilitating this shift of focus Over 50 cities already have basic infrastructure & human resource to support the global sourcing & business services industry 3.IT & ITeS SEZ’S TO DRIVE IT SECTOR. Tier I locations Tier II/III locations Odisha Government signed a MoU with Software Technology Parks of India (STPI) for setting up 4 software technology centres Source: Nasscom. secured development rights to a number of patented innovations for enhancing security of financial services from The United Services Automobile Association (USAA) APRIL 2017 For updated information. a Pune-based company. Financial Services & Insurance (BFSI). Travel. 2008 2018 Banking.

The 460 total GICs in the country generated a revenue of almost USD22 billion & employed a total of more than 0.org 31 . Nasscom. TechSci Research Development/Software Product Development (ER&D/SPD) is the largest sub-segment Companies from North America & Europe are major investors in the captive segment in India. 790 825 760 710 In March 2016. They also operate in engineering services & software product development. please visit www. contributing almost 20 per cent share in exports.79 million manpower 180 The impact of the segment goes beyond revenue & employment. there were over 1050 GICs operating out of India. also known as captive centres. as it helped in developing India as a R&D hub 2000 2005 2010 2012 2013 2014 2015 2016 & create an innovation ecosystem in the country Within the captive landscape.ibef.IT & ITeS TREMENDOUS GROWTH OF GLOBAL IN–HOUSE CENTRES Key highlights Number of GIC’s in India Global In-House Centres (GIC). Engineering Research & Source: Zinnov. accounting for over 90 per cent of captives in the country APRIL 2017 For updated information. are one of the major growth drivers of the IT-BPM 1025 1050 sector in India.

please visit www.9 2.2 104 1. Nasscom.ibef.7 per cent from USD0.2 0.2 50.org 32 .IT & ITeS IMPRESSIVE GROWTH PROSPECTS SUSTAIN PE AND VC INTEREST Total P/E investments in FY16 were observed to be USD5 billion.38 53 38. TechSci Research Notes: CAGR – Compound Annual Growth Rate APRIL 2017 For updated information.76 43. which increased at a CAGR of 25.8 billion in FY08 Total number of P/E investment deals increased from 235 in FY15 to 294 in FY16 PE-VC investments in IT & BPM (USD billion) Share of IT-BPM in PE-VC investments 9 294 262 235 5 5 161 137 3.8 2008 2011 2012 2013 2014 2015 2016 FY11 FY12 FY13 FY14 FY15 FY16 Number of Deals Share of IT-BPM Source: Venture Intelligence.9 40.38 40.

IT & ITeS OPPORTUNITIES .

Canada & Japan have IT spending of approximately USD380–420 billion • Adoption of technology & outsourcing is expected to make Asia the 2nd largest IT market New geographies New • Government.org 34 . media & New customer verticals utilities together have IT spend of • SMBs have IT spend of approximately segments approximately USD190 billion.IT & ITeS NEWER GEOGRAPHIES AND VERTICALS PROVIDE HUGE OPPORTUNITIES • BRIC nations. offerings and business models would products & automation aid in tapping market profitably & efficiently • Emerging verticals (retail. utilities) are driving growth Source: All the figures are taken from International Data Corporation (IDC) and Nasscom and are FY10 estimates Note: SMB .ibef.Small and Medium Businesses APRIL 2017 For updated information. please visit www. continental Europe. but contribute just account just 8 per cent of India’s IT 25 per cent to India’s IT revenue revenue • The emergence of new service • Non-linear growth due to platforms. healthcare. healthcare. but USD230–250 billion.

e. continue to remain the largest in terms of IT adoption & are expected to grow at an average of 15 per cent Implementation of cloud environment & mobility is the way forward for traditional verticals Emphasis on other emerging verticals (e.0 13. healthcare & retail) to aid growth in IT firms in India Shift from IT adoption infrastructure.g. telecommunication & manufacturing.0 4. i.5 23.0 13.org 35 .0 4. TechSci Research Note: E – Estimated. please visit www.0 14. ER&D and product development Source: Nasscom. education.0 FY13 FY14 FY15 FY16E FY17P IT services BPM Packaged Hardware eCommerce software.ibef.0 Domestic 86 76 Exports 0.0 20. BFSI.IT & ITeS EXPANSION OF FOCUS AREA TO AID FUTURE GROWTH … (1/4) Traditional verticals. P – Projected APRIL 2017 For updated information. automation & digitisation to smart IT marks future trend of services in emerging verticals Other untapped sectors like Education & utilities has a huge potential for IT & ITes to grow into IT-BPM Exports Revenue (USD Billion) Indian IT-BPM (Domestic and Export) Revenues (2015) 119-121 108 99 55.

sectors have a huge potential for IT enabled services. remote monitoring solutions & clinical information systems. health.IT & ITeS EXPANSION OF FOCUS AREA TO AID FUTURE GROWTH … (2/4) Govt. TechSci Research billion digital transactions for banks with the help of PoS (Point Note: Small and Medium Business of Sale) machines. Samsung launched a mobile payment service. would continue to Media 17 boost demand for IT service across the globe IT sophistication in the utilities segment & the need for Utilities 25 standardisation of the process are expected to drive demand Digitisation of content & increased connectivity is leading to a Healthcare 58 rise in IT adoption by media Companies to focus on local problems & find engineering Government 90 solutions SMB 250 RBI is executing a plan to reduce online transaction costs to encourage digital banking in India In March 2017. through which it facilitates the customers to make payments at numerous retail locations instead of using mobile wallets. please visit www.org 36 . as Market size of other progressing verticals by 2020 IT penetration is low in the sector. transactions enabled & merchants.ibef. In March 2017. the government set a target of achieving 25 Source: Nasscom. which have been added in firms. credit or debit cards. Increasing digitalisation will (USD billion) lead to growth in revenues for IT sector in coming years Technologies. such as telemedicine. APRIL 2017 For updated information.

IT & ITeS EXPANSION OF FOCUS AREA TO AID FUTURE GROWTH … (3/4) Emerging technologies present an entire new gamut of Growing technologies future growth opportunities for IT firms in India SMAC provide USD1 trillion opportunity 60% Cloud represents the largest opportunity under SMAC. please visit www.org 37 .ibef. *CAGR and market size for Big data/analytics is till 2015 APRIL 2017 For updated information. TechSci Research Note: Size of bubble indicates market size. increasing at a CAGR of approximately 30 per cent to Big 50% data/analytics* around USD650–700 billion by 2020 Social Media Social media is the 2nd most lucrative segment for IT 40% firms. offering a USD250 billion market opportunity by Cloud 2020 30% 20% Enterprise mobility 10% 0 200 400 600 800 Source: Nasscom.

high degree of domain expertise at competitive costs & attaining operational excellence hold key to success in new geographies Emphasis on export of IT services to current importers of other products & services Countries offering growth potential to IT firms Country IT spend India’s penetration Key segments Canada USD63 billion ~1. Salesforce automation. BPM Brazil USD47 billion ~2 per cent Low level application management.ibef. cyber security. ERP. healthcare IT Europe USD230 billion <1.5 per cent IT sourcing. BPM. infrastructure software & CAD Source: Nasscom.5 per cent IT sourcing. please visit www. artificial intelligence. SI Spain USD26 billion <1. R&D China USD105 billion <1 per cent Software outsourcing. TechSci Research APRIL 2017 For updated information.org 38 . R&D Australia USD48 billion ~4 per cent Procurement outsourcing. SI Mexico USD29 billion ~4 per cent IT sourcing.IT & ITeS EXPANSION OF FOCUS AREA TO AID FUTURE GROWTH … (4/4) Emerging geographies would drive the next growth phase for IT firms in India BRIC would provide USD380–420 billion opportunity by 2020 Focus on building local credible presence. IS outsourcing.5 per cent Enterprise applications. CAD Japan USD235 billion <1 per cent CRM.

IT & ITeS SUCCESS STORIES .

38 billion. The company provides end-to-end maintenance technology & technology-related services to global (ADM) enterprises. consulting & business 3% Application development and solution company.ibef.85 per cent in the (BPS) buyback of the total equity capital at US$42. The company’s business is spread across the 5% Enterprise solutions (ES) & Americas. Silver & Bronze Stevie® Winner at the American Business Awards Source: TCS website and Annual Report. TechSci Research 2014: Gold & Silver Stevie® Winner at the American Business Awards 2013: Won Best Performing Consultancy Brand Award in Europe 2013: Received Red Hat North America Awards for System Integrator Partner of the Year APRIL 2017 For updated information. Tata Consultancy Services (TCS) is an Information Technology (IT) services.39 per share. Asia-Pacific & Middle East & Africa consulting 9% (MEA) Infrastructure services (IS) 40% In April 2017. Europe. Assurance services Achievements: 15% Engineering and industrial 2016: Won 3 Silver Stevies at 14th Annual American services (EIS) 17% Business Awards Asset leveraged solutions 2015: Gold.IT & ITeS TCS: AN EMERGING GLOBAL IT MAMMOTH … (1/3) Segment-wise revenue breakdown (FY16) Established in 1968. TCS has approved a buyback plan for 12% Business process services US$2. The shares represent 2. please visit www.org 40 .

ibef. TCS 16.4 68 53 52 37 29 24 17 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 USD1 Mn+ USD5 Mn+ USD10 USD20 USD50 USD100 Mn+ Mn+ Mn+ Mn+ Revenue Operating Profit FY13 FY14 FY15 FY16 TCS accounts for nearly half of the Indian IT industry’s combined market capitalisation Leading IT players by revenue (FY16) During the second quarter of FY 2016-17. the company Company name Revenue (USD billion) reported a net profit of USD 989 million.7 Source: TCS website and Annual Report.1 136 121 2. showing a growth of 8.org 41 .1 1.2 354 298 290 6.8 3.5 Wipro 7.7 2.04 APRIL 2017 For updated information.4 per cent.4 173 162 3.3 261 6 231 211 4.9 4.6 714 15 638 13 12 10 429 381 8.8 HCL Tech 4.6 Infosys 9.IT & ITeS TCS: AN EMERGING GLOBAL IT MAMMOTH … (2/3) Financial performance (USD Billion) Number of Customers 829 791 16. please visit www. TechSci Research Tech Mahindra 4.3 73 1.

IT & ITeS TCS: AN EMERGING GLOBAL IT MAMMOTH … (3/3) Acquisition of IT service firm Alti in FY16 BFSI France in 2013 USD16. USD13.5 Consolidation of consolidated its Billion Manufacturing position as one market position revenue through CMC of the largest IT acquisition players Life sciences & FY03 FY13 healthcare Became the 1st FY12 Active client 1968 software company Acquired base: 1.60 Billion Expanded of revenue Retail & consumer geographic presence FY15 packaged goods USD15.2 With a brand billion in 2004 value of over FY14 USD1 billion.ibef.156 India’s 1st in India to cross microDAT New clients: Energy resources software service USD1 billion 153 A GIS & utilities company revenue 1968 2001 2003 2005 2007 2010 2013 2015 2016 Source: TCS website and Annual Report.org 42 . please visit www. TechSci Research APRIL 2017 For updated information.7 Billion Issued IPO in the Media & revenue market in India & entertainment raised USD1.

infrastructure management.org 43 .ibef. The company’s network of 26 offices is spread Application across the US.9% Infrastructure Services Achievements: Engineering and 2015: Won Golden Peacock Award for Occupational Health R&D Services & Safety Business Services 2015: Winner of CII .National Award for Excellence in 36. business transformation. business process outsourcing & engineering 5.7% 39. please visit www. Centre for Corporate Governance & Sustainability TechSci Research 2013: Won IT Europa. European IT Excellence Awards & Asia Pacific Enterprise Leadership Award 2013 APRIL 2017 For updated information.2% services.IT & ITeS HCL: GROWING BY LEAPS AND BOUNDS … (1/3) Segment-wise revenue breakdown (March 16) Established in 1991. HCL Technologies Ltd is an IT services company providing enterprise & custom application.2% Energy Management 2015: Wins 2 CA Technologies Partner Awards 2014: Received Best Governed Company Award from Asian Source: HCL Technologies website and Investor Presentation. Europe & Asia Pacific Services 18.

org 44 .IT & ITeS HCL: GROWING BY LEAPS AND BOUNDS … (2/3) Financial performance (USD Million) Number of customers 5952 233 5332 206 4710 183 4697 4443 144 3448 122 109 2559 2228 1879 1220 1470 925 1062 29 671 22 19 437 18 17 14 250 317 320 8 7 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 USD5 Mn+ USD10 Mn+ USD40 Mn+ USD50 Mn+ USD100 Mn+ Revenue Operating Profit 2014 2015 2016 Source: HCL Technologies website. TechSci Research APRIL 2017 For updated information. HCL Annual Report.ibef. please visit www. HCL Investor Presentation.

TechSci Research APRIL 2017 For updated information. crossed linear strategy. USD5.org 45 .5 Billion Telecom FY14 formation of JVs and alliances HCL forays into healthcare FY15 Retail & consumer with the HCL Organic growth launch of HCL Technologies packaged goods through prudent came in joint Healthcare strategies venture agreement Media FY06 FY09 with CSC Signed the Launched 1997 biggest ever IPO Established with software USD100 million+ Life sciences & spun-off HCL’s service deal clients reached 5 healthcare R&D business with DSG 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: HCL Technologies website and Annual Report.IT & ITeS HCL: GROWING BY LEAPS AND BOUNDS … (3/3) Acquisition of Capitalstream & FY16 Revenue Financial services AXON Group reached USD4.7 Diversification of Billion business & Manufacturing geography mix FY15 Revenue Adoption of non.ibef. please visit www.

is engaged in consulting. APRIL 2017 For updated information.ibef.5 billion Energy & Utilities. The company’s Segment-wise revenue breakdown (FY16) end-to-end services include consulting & system integration.IT & ITeS INFOSYS: EMERGENCE OF AN INDIA-BASED MNC … (1/3) Established in 1981. Packed Goods and at 2015 Economic Times Award Logistics (RCL) 23% 2015: Infosys would offer software solutions on Verizon Cloud for Life Sciences and the U. engineering. please visit www. Stellaris Venture Partners.89 million in a venture fund. Canada & Japan Insurance (FSI) 8% Manufacturing (MFG) 17% 33% Achievements: FY16: Revenue crosses USD9. technology & outsourcing services. China. 2013: Ranked 1st in the annual Euromoney Best Managed so as to gain access to new & innovative technology Companies in Asia survey offered by upcoming enterprises.7 Billion Services (ECS) 2016: Infosys was recognised with “Corporate Citizen of the Year” 19% Retail.S. Infosys invested around USD4. Infosys Ltd. Financial Services and Australia.org 46 . TechSci Research 2014: Infosys secured the “Green Energy Award” & “Gold Award” at the International Ashden Awards Ceremony In November 2016. the UK. Infosys operates through 30 offices across India. Consumer. the US. Communication and FY15: Revenue crosses USD8. Bank Healthcare (LSH) 2015: Infosys completed the implementation of Smart Oilfield Services Solutions for FTS International Source: Infosys website and Annual Report.

0 5.8 1.4 448 7.3 200 1.ibef.5 558 8. TechSci Research APRIL 2017 For updated information.3 600 501 7.8 268 244 232 231 300 213 177 159 148 2.0 400 4.6 1.7 529 8.0 500 6. please visit www.7 1.IT & ITeS INFOSYS: EMERGENCE OF AN INDIA-BASED MNC … (2/3) Financial Performance (USD Billion) Number of Customers 9.0 2.9 88 84 83 83 78 47 42 100 21 15 15 13 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 USD1 Mn+USD5 Mn+ USD10 USD25 USD50 USD100 Mn+ Mn+ Mn+ Mn+ Revenue Operating Profit 2013 2014 2015 2016 Source: Infosys website and Annual Report.org 47 .0 2.6 137 2.

please visit www.7 biotech Organic growth USD100 million Billion & listed on turnover Industrial NASDAQ manufacturing Strong 1981 1993 diversified Founded in Launched client base of Logistics and Pune with an IPO 890 clients in distribution initial capital of FY14 USD250 1981 1992 1995 1998 2002 2008 2012 2016 Source: Infosys website and Annual Report. defence AG & airlines FY16 USD9. 1999 FY15 pharmaceuticals & Reached USD8.org 48 .IT & ITeS INFOSYS: EMERGENCE OF AN INDIA-BASED MNC … (3/3) Acquisition of Lodestone Holding Aerospace. TechSci Research APRIL 2017 For updated information.5 Large client Billion Automotive acquisitions turnover Expansion across FY12 Financial service the world and Listed on the offshore business NYSE market Healthcare.ibef.

IT & ITeS USEFUL INFORMATION .

ibef.IT & ITeS INDUSTRY ASSOCIATIONS National Association of Software and Services Companies (NASSCOM) Address: International Youth Centre Teen Murti Marg. please visit www. New Delhi – 110 021 Phone: 91 11 2301 0199 Fax: 91 11 2301 5452 E-mail: info@nasscom.in APRIL 2017 For updated information.org 50 . Chanakyapuri.

IT & ITeS GLOSSARY … (1/2) APAC: Asia Pacific BFSI: Banking. Financial Services and Insurance BPM: Business Process Outsourcing CAGR: Compounded Annual Growth Rate C&U: Construction & Utilities FDI: Foreign Direct Investment GOI: Government of India INR: Indian Rupee IT & ITeS: Information Technology-Information Technology Enabled Services NAC: Nasscom Assessment of Competence RoI: Return on Investment ROW: Rest of the World SEZ: Special Economic Zone SLA: Service Level Agreement APRIL 2017 For updated information.ibef. please visit www.org 51 .

org 52 . please visit www. numbers have been rounded off to the nearest whole number APRIL 2017 For updated information.ibef.IT & ITeS GLOSSARY … (2/2) SMB: Small and Medium Businesses STPI: Software Technology Parks of India T&M: Telecom & Media T&T: Travel and Transport USD: US Dollar USP: Unique Selling Proposition UT: Union Territory Wherever applicable.

ibef.46 2015 64.14 2009 48.06 2014 61.72 2010–11 45.28 2013 58.IT & ITeS EXCHANGE RATES Exchange rates (Fiscal Year) Exchange rates (Calendar Year) Year INR equivalent of one USD Year INR equivalent of one USD 2004–05 44.27 2008 43. Average for the year APRIL 2017 For updated information.31 2012 53.62 2008–09 46.18 2006–07 45.org 53 .34 2007–08 40.22 Source: Reserve bank of India.95 2016 (Expected) 67.42 2010 45. please visit www.15 2016-17 (E) 66.14 2007 41.44 2014-15 61.14 2006 45.03 2015-16 65.42 2009–10 47.85 2012–13 54.98 2005–06 44.81 2005 43.88 2011 46.46 2013–14 60.62 2011–12 46.

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