IT AND ITES

IT & ITES

Agenda
History  Current Scenario

IT & ITES

History

IT and ITES industry has its roots in the mid-seventies The market size was small with export = $24 million in 1984 Liberalisation of the sector in 1990 IT revolution had its spin-offs on other sectors
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Source: The Indian Renaissance

IT & ITES

History

IT Boom  The Y2K Scare  Dot-com boom  Success of the Indian expatriates

IT & ITES

.IT Industry IT & ITES .

BPO   BPO accounts for little less than half of the exports Emergence of domestic BPO is the key highlight for FY 2009 recording a growth of above 40 per cent in INR terms. The growth is led by the BFSI.1 billion in 2008-2009  IT & ITES Source : Nasscom . Telecom and Airline industries and a greater vendor focus with specific service offering  Revenue generated from BPO is $73.

Current Scenario IT & ITES .

IT Services  Contributes to 57% of the total software and services exports Domestic IT services spends grew at over 43 % in FY2009    IT & ITES Source : Nasscom .

8 billion IT & ITES           .Current Scenario   68 companies. 37 are private limited companies Export driven industry Share in GDP increased from 1.2% in 1998 to 6% in 2010 Share in global market increased from 3% in 2000-2001 to 6% in 2008-2009 Exports crossing $40.

IT & ITES .

Current Scenario  Out of the total revenue 61% is from the US based clients and 78. Euro Seven Indian cities account for 95 per cent of export revenues. focus on developing 43 new locations to emerge as IT-BPO hubs Source : Nasscom       IT & ITES .2% due to the strengthening of the USD versus GBP.8% from overall exports Volume growth addition of 2.

Current Scenario As we can see that the largest source of income for the industry is the Banking and financial services sector which was severely affected during recession Source: Department of Information Technology IT & ITES .

7 million in exports segment    IT & ITES .Current Scenario   Employment growth at CAGR of 26% Direct employment reached 2.2 million with 1.

5 million graduates and postgraduates that are added annually to the talent base           IT & ITES .Strengths  Cost leadership has been the competitive edge of the Indian software sector Innovation Breadth of service offering and innovation Specialised manpower A young demographic profile and over 3.

Weakness  Foreign Exchange Rate Erosion of advantage of Labor Arbitrage Incompetent infrastructure Low focus on Research and Development           IT & ITES .

Opportunities   Moving up value chain Emerging technologies Cloud Computing ◦ Internet based computing ◦ Customers rent third-party provider’s services     IT & ITES .

Moving Up Value Chain IT & ITES .

Threats   Rising Employee Costs Foreign countries entering India Other low cost countries developing skills Deal sizes are getting smaller        IT & ITES .

higher growth in European/Asian market               IT & ITES .Global View   55% market share of the global off-shore market 35% market share of the global ITES/BPO market 28% of IT and BPO talent among 28 low-cost countries Regulatory environment Knowledge of English Time zone attractiveness USA remains the dominant market.

 Top-tier IT exporters are likely to continue their growth momentum despite weak European economies Latest visa restrictions imposed by the UK and a sharp depreciation in the pound and the euro against the dollar are less likely to have any major impact on the performance The announcement of a major cut in the IT budget by petroleum giant BP may have a marginal impact     IT & ITES .

Effect of Recession Recov e econo ry in the my Steep Dip in profits due to global slowdown IT & ITES .

turnkey projects and products for the domestic and export market Second largest IT Company in India Market capitalization of 160.Infosys  Offers services. 21693 cr an increase of 4.58 cr Revenue for the year 2009-10 was Rs.83%       IT & ITES Source : Infosys w ebsit e . 22742 cr compared to the previous years’ Rs.026.

enterprise solutions.Tata Consultancy Services  Offers application developmnent.64 cr IT & ITES         Source : TCS w ebsit e . testing. business & IT consultancy Largest IT Company in India Market Capitalisation Revenue for the year 2009-10 was Rs. 7000.

enterprise solutions.Patni Computers  Offers ADM.73 cr     IT & ITES Source : Pat ni w ebsit e . product engineering and services 4th largest company in the sector Profit – 542. embedded technology.

Factors affecting IT Industry    End of STP tax deduction benefits US President Barack Obama Declares a Bill on Tax Increase on Outsourcing High attrition rate SEZ The dollar fluctuations         IT & ITES .

ØThe finance act 2008 and 2009 extended the tax holiday by 2 years ØBenefits on indirect tax  Central excise duty Customs duty Central sales tax ØTax holiday will be available only until the fiscal year 2011 IT & ITES .Factors affecting IT Industry  End of the STP tax deduction benefits Ø10 years complete tax exemption on export profits.

Factors affecting IT Industry  Solutions for STP issue ◦ Shifting to SEZ SEZ enjoy the tax waiver benefits for 15 years as against only 10 years for STP Further tax waiver for  VAT LST ◦ Increasing sops to STP’s Nasscom has requested the government to extend the sops for STP’s IT & ITES .

Factors affecting IT Industry  US government has proposed to tax expenditure by US companies on availing services from outside the country from 2011 Benefits enjoyed due to outsourcing ◦ A service whose expenditure in US would cost 70-80$ can be outsourced and done in 1015$ ◦ Also there was no tax on outsourcing money     Reason for the Bill ◦ To generate employment in US IT & ITES  .

Many people will become job less Worst effect that even recession had ◦ On US Company costs will increase the services will become costlier Some companies will stop production or some services  IT & ITES .Factors affecting IT Industry  Affects of the Bill ◦ On India India will loose a big share of outsourcing in com.

Factors affecting IT Industry   High attrition rate ◦ At least 60.000 workforce change jobs every year ◦  About 80% of them look for better leaders Attrition rates ◦ US 42% ◦ Australia 29% ◦ Europe 24% ◦ India 18% ◦ Global Average 24%  IT & ITES .000 of the 171.

Corporate Social Responsibiltiy  Use IT services to enable programs ◦ Provide Databases ◦ Help maintain spreadsheets etc.   Enable managers to ◦ View CSR information ◦ Improve decision making  IT & ITES .

Examples:o o o o o Infosys Foundation Wipro cares Accenture development partnerships Tech Mahindra Foundation TCS    IT & ITES .Corporate Social Responsibiltiy  Activities such as teaching rural women and their children computers. tree plantation drives. trusts etc.

Future Outlook  Services offered  Business Process Outsourcing(BPO)  Knowledge Process Outsourcing(KPO)  Legal Process Outsourcing(LPO)  Generation of Tier 1 and Tier 2 cities  Innovation  Infrasttucture  IT & ITES .

BPO  BPO generated $ 14.8 billion revenues which is 20 % of the total of revenue of Indian IT Industry BPO Industry in India expected to grow at 20% Expected to reach $ 181 billion worldwide by 2012 CAGR of 12 %       IT & ITES Source: nasscom.com .

education and expertise to handle the process is required KPO encompasses R&D. Ugam Solutions are the top three companies in KPO     IT & ITES . product development and legal e-discovery etc.KPO  Greater skill. Evalueserve. knowledge. GenPact.

IT Infrastructure  IT industry needs the following infrastructure  Telecom  Power  Roads and Transportation  IT Parks  .

for Knowledge Management ecosystem a holistic taking into view the entire lifecycle view of knowledge including knowledge creation and innovation. collaboration and knowledge sharing.Innovation   IT Industry has brought about a plethora of process. management and innovation ICICI Bank has changed the financial services industry with Internet banking and electronic payment systems Mindtree Consulting.     IT & ITES . and reuse. price.

Union budget 2010 for IT   Union Budget 2010 failed meet expectations of IT sector of India  FM failed to meet the extension of STPI (Software technology Park of India) in IT sector Tax Rebate has not been mentioned in the budget declaration and is expected to end on March 2011. the BPO are estimated to incur losses in future years. Allocation of Rs 1900 crore for UID (Unique Identity) project       IT & ITES .

96%  Infosys Technologies zoomed 2.   Wipro climbed 3. the best gainer in the 13 sectoral indices.2 million and its revenue increased by $145 million  BSE IT index rose higher by 178 points to settle at 5.54%to touch a year-high of Rs 871.94%     IT & ITES .99%while HCL Technologies advanced 2.640.99 .   TCS jumped 4.Latest news and current happenings Cognizant registered a net profit of 22% in Q1 to $172.

000 employees in FY 2010-11  TCS allotted the contract for providing total solution for the online voting during the October 2010 municipal polls in Gujarat  Wipro to develop crime and criminal tracking network system (CCTNS) for Home Ministry     IT & ITES .Latest news and current happenings Infosys to hire 36.

THANK YOU IT & ITES .

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