Indian IT Industry Country Risk by MikeJenny

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Indian IT Industry Country Risk

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									                       Indian IT Industry
                  (Information Technology)

                       Swedish Trade Commission
                               New Delhi




Ver01 Dt-050525
OVERVIEW ON INDIAN IT INDUSTRY
(Information Technology Industry)




                                                 IT-T Industry


                                   IT - ITES Industry               Internet          Telecom Industry
                                      (USD 28.9 Bn)



   IT Services & Software             Hardware Industry           ITES - BPO Market
         (USD 20.5 Bn)                    (USD 4.8 Bn)               (USD 3.6 Bn)


  Exports          Domestic        Exports            Domestic
(USD 16.3 Bn)     (USD 4.2 Bn)   (USD 0.5 Bn)      (USD 4.3 Bn)




                India is the 4th largest IT market in Asia Pacific – IDC Study
            INDIA’ S TOTAL IT-ITES INDUSTRY


                                                                       28.9   • 200 large and medium IT
                                                                                companies
                                                   19     20
                                            18
                                                                              • More than 1500 small ones.

                          11.36
                                                                              • 15 out of world total of 21
                                  7.2
                                                                                SEI CMM level 5 companies.
                    2.7

                                                                              • Above 150 companies having
                   1998   1999    2000     2001   2002   2003   2004
                                                                                ISO 9001 cert.


                                         IT+BPO+HW = USD 28.9 B USD in 2004


Source : Nasscom
            INDIAN SOFTWARE INDUSTRY

                        Total Software & Service Industry
                        Export Market                                                                                                                                    20.5
                        Domestic Market

                                                                                                                                                                                16.3
                   Figures in Billion USD                                                                                                                  15.9

                                                                                                                                     12.4                  12.5


                                                                                                                           10               9.6
                                                                                                      8.34
                                                                                                                         7.6
                                                                                                             6.24
                                                                                      5.7
                                                                      3.9                   4                                                                     3.4              4.2
                                                          2.7               2.65                                                                  2.8
                        1.124                                                                                   2.1            2.4
                                         1.76                   1.75           1.25             1.7
                                0.734           1.10.67            0.95
                                  0.49

                        FY1996           FY1997       FY1998          FY1999      FY2000              FY2001          FY2002         FY2003             FY2004          FY2005




Source : Nasscom
             INDIAN SOFTWARE INDUSTRY – PROJECTION 2008

                              Software Exports From India        Domestic Software Industry in India


                                                                                         50
                                              90
                               16.3
                                                                          4.2
                             FY2005          2008 ( Target )           FY2005           2008 ( Target )


             Figures are in Billion US $




                     Total Software Industry - Projection 2008
                                                                                     140
                                                                      20.5

                                                                    FY2005           2008 ( Target )

Source : Nasscom- McKinsey
                PROJECTIONS FOR VARIOUS SOFTWARE SECTORS
               Figures in Billion USD


                                                                                                 23
                                                    IT Services
                                                                                                                     40

                                                                          8
                                              Software Products
                                                                                            20

                                                                                     15
                                                          ITeS
                                                                                            20

                                                                      4
                                                    E-business
                                                                              10


                                                            Export M arket in 2008        Domestic M arket in 2008

                                                                  $ 90 B                      $ 50 B
Source : Ministry Of Information Technology
            TYPES OF SERVICES

                              Onsite Services                                                                                                 3833.3
                                                                                                                                3541.7
                              Offshore Services
                              Products & Packages                                                          3312.5          7%


                       Figures in Million USD
                                                                                                                           2281.3
                                                                                               2045.8


                                                                                        1326              1239.6               64%

                                                                       802.5               772.9
                                                      476.9                    438.1
                   194.6             316.7                    245.4                                           287.5        312.5              312.5
                           94.6              166                                119.6          180.2
                              30.4             42.3             90.2
                                                                                                                                                       Dated
                     FY1995           FY1996           FY1997            FY1998         FY1999          FY2000        FY2001         FY2002

                                                                                                                                 7.6 B USD


Source : Nasscom
GLOBAL SPENDING ON IT AND BPO OUTSOURCING

              300


              250


              200

USD Billion
              150


              100


               50


                0
                    2000   2001   2002   2003        2004     2005   2006   2007   2008


                                                IT          BPO
            SHARE OF VERTICALS IN INDIAN SOFTWARE INDUSTRY
            (2003-04)

                                                                 Banking &
                                                                 Financial
                                 Others                           Services
                                  26%                               39%



                    Healthcare
                       5%
                        Retail
                         5%      Telecom                Manufacturing
                                             Telecom
                                 Services                   12%
                                            Equipment
                                    4%
                                                9%




Source : Nasscom
            SOFTWARE INDUSTRY ACTIVITY BREAK UP


                                              DOMESTIC                     EXPORT


                   IT Enabled
                                                      Products &
                     Services                                                                   Products &
                                                      Packages                                  Packages     Training
                      10%
                                                         41%            IT Enabled                 8%          2%
                                                                         Services                                                     Professional
                                                                           10%                                                         Services
                                                                                                                                         39%

               Projects                                      Training
                33%                                            4%                    Projects
                                 Support &    Professional                            37%                                Support &
                                Maintenance                                                                             Maintenance
                                                Services                                                                    4%
                                    4%            8%




Source : Nasscom
            DESTINATION OF INDIAN SOFTWARE EXPORTS


                   USA & Canada
                   Europe
                   S.E Asia
                   Japan
                                                         4%    4%   2% 2%
                   W . Asia                                                 4%

                   Australia & NZ           23%

                   Rest Of World


                                                                                 61%



                                    India is exporting software to over 95 countries


Source : Nasscom
            TOP 10 IT PLAYERS (2003-04)
             Export revenue ranking

             Rank Company                           Revenue ( million USD )   Graphical Comparison


             1     Tata Consultancy Services        1198.9
             2     Infosys Technologies Limited     1026.0
             3     WiproTechnology                  854.1
             4     Satyam Computers Services Ltd.   538.6
             5     HCL Technologies Limited         412.9
             6     Patri Computers Systems Ltd      266.4
             7     iFlex Solutions                  168.4
             8     Mahindra British Telecom Ltd     158.5
             9     Polaris Software                 126.1
             10    Perot Systems TSI                118.6



Source : Nasscom
INVESTMENT POLICY IN INDIA
•   Automatic route for foreign equity upto 100 percent in software and electronics,
    except aerospace and defence.

•   100% foreign investment permitted for exports, like:
     – Electronic Hardware Technology Parks (EHTPs),
     – Software Technology Parks(STPs),
     – Free-Trade Zones/Export Processing Zones (EPZs) and
     – Export Oriented Units (EOUs)

•   A number of states have developed their own IT policy to promote the development of
    software sector.

•   Tax holiday upto 2010 for IT units to be set up in Software Technology Parks

•   Tax holiday to R&D for upto 10 years.

•   IT venture capital fund set up

•   Simplification and liberalisation of Export & Import Policy
OFFSHORE PRODUCT DEVELOPMENT

Indian companies can
contribute towards                        Benefits to Global ISVs
• Development of patches and              • Lower cost resources
  upgrades for core products
                                          • Decrease time-to-market through 24x7
• Support migration to multiple             development cycles
  platform versions
                                          • In-house team can focus on higher
• Legacy product maintenance                value-adding activities

• Localization/ internationalization of   • Rapidly expand development capacity
  core products                             without fresh recruiting

• Development of specific modules         • Low-risk opportunity and plug skill gaps
  and offer testing services                due to emergence of new technologies
LEVERAGING THE OFFSHORE MODEL

•   More than 60% of global majors are conducting product development from India
     – Top-tier ISVs adopt a captive model
     – Mid-sized ISVs partner with Indian ITS vendors

          •   Microsoft
          •   Intel
          •   Hughes
          •   Oracle
          •   SAP
          •   Novell
          •   Adobe
          •   IBM
          •   Veritas
          •   Symantac
          •   Cadence
          •   i2
          •   CA
IMPORTANT IT-CENTERS




                       •   New Delhi, Gurgaon,
                           NOIDA


                       •   Mumbai
                       •   Pune

                       •   Hyderabad

                       •   Bangalore

                       •   Chennai
INDIAN HARDWARE INDUSTRY
                                                                   Expected
                                                                   Projection

    Figures In Billion USD                                    10



                                                4.8
                                           4
                                3.5
                   1.9
         1.3


       1995-96   1996-97     1999-2000   2001   2004   2008
PC SHIPMENTS

        2,000,000                                                                 1,881,640

                                                                                                    1,670,880
        1,600,000
                                                               1,405,290


        1,200,000
                                             1,027,190
Units




                           799,058
         800,000



         400,000



                  0                                                                                             Dated
                           1997-98            1998-99           1999-00            2000-01           2001-02

              •       CAGR: 24%; down from earlier 35%
              •       Install base of PCs in 2000 was 4.3 M, which is projected to become 20 M in 2008.
 MAJOR PLAYERS IN HARDWARE INDUSTRY


                                      Indian Branded
                                         21%




        Unbranded
        ( i.e. Locally Assembled )

57%
                                                       22%
                                                MNC’s
Why India ?
               WHY INDIA ?
                                      High

                                              Hong Kong
                                                                        UK          Ireland

    Location Attractiveness                                                                           India
        • Infrastructure
        • Foreign Direct Investment                  Philippines
          Incentives & Country Risk
        • Time zone attractiveness
                                                                   Mexico


                                                           China
                                       Lo
                                             Lo                                                          High
                                                               Workforce Capability
                                                               •   Skill Sets, Language Proficiency
                                                               •   Quality of work / work ethic
                                                               •   Cost Differential

                                        Size of circle corresponds to Number of Qualified Workers
Source: STC, New Delhi
  MANPOWER : NO. OF IT PROFESSIONALS ( INCLUDES ITES ALSO )




                                                  7

                       Nos. In Lakh ( 100,000 )   6
                                                  5

                                                  4
                                                  3

                                                  2
                                                  1

                                                  0
                                                      1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003.04

Source : Nasscom
         A LARGE POOL OF ENGINEERS COME OUT EVERY YEAR




                                    No. Of Graduates


Source : Department Of Education
ADVANTAGE INDIA

•   Large pool of skilled and university trained technical manpower matching global standard

•   Manpower costs in India are a quarter of internationals costs

•   Relatively well developed supporting infrastructure

•   Usage of latest software tools and a variety of computer hardware platforms

•   Large number of research and development organizations and design / development
    centres

•   Elaborate testing and quality control infrastructure and large number of companies
    approved for ISO 9000 , IECQ
ADVANTAGE INDIA
•   India ranks as the most competitive supply of skilled Information Technology
    professionals today and is the preferred supplier of software solutions to the developed
    world, led by the US.
•   In 2000, 205 of the Fortune 1000 companies out sourced software requirements to India.
•   Of the 32 companies worldwide having SEI-CMM Level 5 certification – the highest
    quality standard in software, 16 are Indian companies.
•   Indian companies have earned credibility in delivering to mission-critical requirements,
    following the successful implementation of Y2K and Euro conversion solutions.
•   38% of e-commerce startups of 1999 in Silicon Valley by Indians.
•   50 portals being launched in India every month.
•   170 Indian software companies have already acquired quality certification : ISO
    9000/SEI.
•   Large pool of software professionals, proficient in English.
•   Economic and political stability
OPPURTUNITIES

Abundant investment opportunities exist in the following thrust areas in India:

•   Satellite-based Communication
•   Communication Infrastructure
•   Gateways
•   Wireless
•   Software Development
•   IT-enabled Services
•   IT Education (100,000 post-graduate professionals in IT required annually by 2004)
•   IT-enabled education
•   Optic Fibre Cable
•   Data Centres & Server Farms
WELCOME TO INDIA

  A FRIENDLY BUSINESS
      DESTINATION


Swedish Trade Commission, New Delhi

C/o Embassy of Sweden,
Nyaya Marg, Chanakya Puri,
New Delhi-110021, India

Tel : +91 11 2410 7142-44
Fax: +91 11 24105183, 24104983
Email: newdelhi@swedishtrade.se
Web: www.swedishtrade.se
       www.swedishtrade.com

								
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