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The It-Bpm Sector in India: Strategic Review 2015
The It-Bpm Sector in India: Strategic Review 2015
Sector in India
Strategic Review 2015
The IT-BPM
Sector in India
Strategic Review 2015
NASSCOM is the premier trade body for the IT-BPM sector in India. It is a not-for-profit organisation
and has emerged as the authentic voice of this industry in India. It is also the single reference
point for all information on IT industry in India. NASSCOM publishes an annual edition of its
Strategic Review to disseminate the latest status of the industry performance.
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R Chandrashekhar O ver the last few years, we have all come to agree that VUCA- volatility,
uncertainty, complexity and ambiguity is the new normal. Economic
and political upheavals, disruptive technologies, expanding competition
President
and rapidly evolving customer requirements presents both- new challenges,
and new opportunities for the global technology industry, which now
has to serve two distinct requirements simultaneously- drive operational
excellence and create enterprise digital transformation which can enable
organisations to improve customer reach and engagement, make faster
decisions, improve time to market of solutions and help clients grow their
businesses. While operational excellence currently garners major share of IT
investments, enterprise digital transformation will increasingly drive future
growth of the technology industry, and success of individual industry players
will rest upon their ability to create sound business strategies that address
both opportunities.
While worldwide IT-BPM spend was USD 2.3 trillion, growing at 4.6 per
cent over 2013, global sourcing of services grew by 10 per cent, and India
continued to hold on to its leadership position with a 55 per cent market
share. In FY2015, the Indian IT-BPM industry is estimated to account for
revenues of USD 146 billion, growing by 13 per cent over last year. Industry
exports are over USD 98 billion growing at 12.3 per cent, while the domestic
segment, which has benefited from the inclusion of ecommerce and mobile
app industry, is estimated to touch USD 48 billion.The industry today is India’s
largest and most diverse private sector employer, with a direct workforce
Exports market:
FY2015 is expected to see the exports market at over USD 98 billion, recording a 12.3
per cent growth over last year. ER&D and product development segment is the fastest
growing at 13.2 per cent, driven by higher value-added services from existing players
and an increased business from GICs. IT services exports are to grow at industry rate of
12.6 per cent. Value-added services around SMAC – upgrading legacy systems to be
SMAC enabled, greater demand for ERP, CRM, mobility from manufacturing segment
and user experience technologies in retail segment is driving growth in IT services. BPM
is being driven by greater automation, expanding omni-channel presence, application
of analytics across entire value chain, etc.
Exports to USA, the largest market grew above industry average, aided by an economic
revival and higher technology adoption. Demand from Europe remained strong during
the first half of the year, but softened during the second half due to currency movements
and economic challenges. Manufacturing, utilities and retail growth remained strong
as clients increase discretionary spend on customer experience, digital, analytics, ERP
updates and improving overall efficiency. BFSI, the most mature market experienced
cost pressures affecting growth.
The industry is attempting to shift from a linear to a non-linear growth model and has
therefore been following a differentiated growth path. These strategies include both
inward- and outward-looking initiatives. One of the primary strategies focuses on
product/IP development; this is further being supported by their verticalised offerings.
Expertise developed in specific verticals is enabling IT-BPM firms to deliver innovative
products and services to customers that in turn facilitates entry into new markets/
geographies, access to customers, etc. Rapid upscaling of capabilities around SMAC and
Domestic market:
The need for Indian firms to effectively compete in a globalized world presents an
immense. untapped opportunity for the supply side. As an economy, India is beginning
to stabilise post elections. Overall business confidence is picking up with the new
government in place and its clear policies and economic growth agendas particularly
– Digital India and Make in India, have helped drive a vision of a technology enabled
India.
India is jumping the technology maturity curve and is already a well-established digital
economy – a trend driven largely by consumers. >75 per cent of the population is mobile-
enabled, 278 million internet users (overtaking the US) and a rapidly multiplying online
population, and a USD 14 billion eCommerce market, which is growing at an average
of >30 per cent.
A further push in this direction is coming from the government’s Digital India campaign
which envisages a USD 20 billion investment covering mobile connectivity throughout
the country, re-engineering of government process via technology and enabling
e-delivery of citizen services.
The domestic IT-BPM market is rapidly approaching the USD 50 billion mark. In FY2015,
the market is expected to be a little over USD 48 billion, an annual growth of 14 per
cent. This is faster-than-industry growth that is largely being driven by the growth in
eCommerce segment.
IT services (>USD 13 billion) and software products (>USD 4 billion) segments are the
next fast growing segment at 10 per cent and 12 per cent respectively. IT services is being
driven by SMAC-cloud enablement, custom developing application for mobile; with the
return of focus on infrastructure projects (largely in later half of 2014), there is an uptick
in demand for SI and IT consulting. SMEs are also increasingly opting for managed and
datacentre services as a cost saving measure. Software products is growing on the back
Packaged
software,
ER&D
USD IT and Hardware eCommerce TOTAL
billion services BPM product
develop-
ment
FY2015E
Exports 55 23 20 0.4 - 98
Domestic 13 4 4 13 14 48
Total 69 26 24 14 14 146
India-Excellence in
India-The world's
business delivery
most attractive market
• Optimum costs
• Improving economic growth
• Highest volume of diverse,
• Connected economy-digital
employable talent
ready market
• Strong network of GDCs,
• Growing spending power of
multi-shore presence
1.2 billion people
• Quality infrastructure
• Positive investment climate
• Mature ecosystem
• Unmet needs
• Effective collaboration/
partnerships
India-A hub
for digital skills
• Enabling environment for India-Leading innovator
skill-set development, in global IT-BPM industry
focussed trainings • Large firms fostering innovation
• >7,000 firms in India focusing on –collaboration, building scale,
digital solutions co-creating best solutions
• ~1.5 lakh digitally skilled employees • Strengthening entrepreneurial
• >2,000 digitally focused start-ups environment, rise in investments
• ~30 per cent start-ups working • Rise in technology & digital
on innovative solutions start-ups - making innovation
and IP available across
the world
India continues to reinforce its position as the only country in the world from where
one can do anything and everything. India has continued to maintain its first mover
advantage and retained its leadership position in the global sourcing arena with a share
of 55 per cent in FY2015. At the foundation of this value proposition are four robust
growth pillars, which defines its attractiveness as a key destination.
A highly connected and a digital ready economy- India remains a high potential
market worldwide, offering multiple opportunities for unmet needs. With the world’s
Future outlook:
The future of the global technology industry will be shaped by economic forces, and
adoption of new technologies. To survive in a globally connected, and increasingly
competitive world, IT enabled enterprise digital transformation will be a must. With
rapidly-evolving technologies, changing consumer preferences and oftentimes
competing channels, many organizations struggle with how to transform internally to
meet the challenges of this new, always connected digital world. Organizations therefore
need to carefully walk the path towards a comprehensive digital transformation with
a concrete strategy to utilize its strengths and alleviate its challenges. As the global
economy improves, and consumer confidence increases, investing in new technologies
such smart computing products, internet of things, products and platforms, cloud
computing, mobility and analytics will enable vendors to gain efficiency, agility, access
to consumers, and innovation which when properly leveraged will provide tremendous
opportunity for the delivery of real competitive value to clients.
The Indian IT-BPM industry is expected to continue to partner and handhold clients to
enable business success in the digital era, and is well set on its goal to reach revenues
of USD 300 billion by 2020. At the same time, challenges around economic volatility,
protectionism, competition and customer understanding will need to be addressed by
concerned stakeholders.
5. Appendix 159
a. Tables 161
b. Glossary 165
c. Abbreviations 170