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LONDON NOW
Using the Downturn to Access Technology Opportunities in the UKWebinar
29th September 2009
Speakers
Sunil Dwivedi, Head of India, Think London
Ian Gomes, Partner,
Chairman New and Emerging Markets, KPMG
Udayan Guha, Vice President Europe,
HCL Technologies
3
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Who we are
London’s foreign direct investment agency
Supported by Government & the business community
Confidential & comprehensive consultancy service
Experts on London business
4
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Think London ICT Clients
Quick Poll
So why London Now ?
7
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Talent▲Talent Pool – Deeper & Wider
8
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1.9millionHighly qualified workers
9
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Property▼West End Rent down 30% from 2008
10
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£▼18% against the dollar
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£ Living▼From 3rd to 16th rank worldwide
Think 2012 Games
Europe’s capital of ICT
• More than 20,000 companies in software and IT• London’s ICT sector is worth $27 billion• 500,000 IT and technology workforce• Europe’s most e-enabled city• 7,000+ wireless access points• 50% of UK mobile subscribers will use mobile internet services by 2010
3.5%
4.3%
5.5%5.8%6%6.2%
9%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Public sector Banking FinancialServices
Telecoms &Media
Insurance Energy &Utilities
Retail,Wholesale,Hospitality
6% pa
UK demand for Software & IT Services Source: Holway/Ovum
Average growth across all vertical markets up to 2010
Vertical market growth (CAGR 2005-2010)
15
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Touchdown London
16
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London Now!
17
Ian Gomes, KPMG
London's window of opportunity - how much longer?
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 18
London within Europe – IT/BPO opportunity
SEPTEMBER 2009
HIGH GROWTH MARKETS
KPMG
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 19
Strategic imperatives facing global IT players in Europe
Strategic Imperatives Key Challenges
Service offering (IT, Services, Consulting)
Market Focus (sector, geography)
Outsourcing capabilities (onshore, offshore)
Scale (growth, consolidation)
Pricing pressures
Skills shortages
Language and cultural differences
Acceptance of outsourcing
Increasing protectionism
Customer Behavioral pattern UK Germany France Italy Spain
Price H M M H H
Quality of solution L H M L M
Personal relationships M M H H H
Local culture L M H H M
Importance of local staff L L H M L
Impact of local regulation L M M H L
Responsiveness/Service levels M H L L L
Vendor Reputation H M M M M
Openness to outsourcing H M M M H
Openness to offshoring H M M M H
Globalization is a natural consequence of the development of the worldwide IT industry
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 20
European IT/ITES Market Landscape
Russia
Poland
Moldova
Ukraine
Serbia
Bulgaria
Romania
Hungary
SlovakiaCzech Republic
Belarus
Bosnia
CroatiaSlovenia
Estonia
Latvia
Lithuania
Montenegro
MacedoniaSpain
France
UK
Italy
Ireland
Sweden
Finland
Poland
TurkeyPortugal
Germany
Norway
Austria
Belgium
Netherlands
Switzer-land
Greece
Albania
Denmark
Russia
Poland
Moldova
Ukraine
Serbia
Bulgaria
Romania
Hungary
SlovakiaCzech Republic
Belarus
Bosnia
CroatiaSlovenia
Estonia
Latvia
Lithuania
Montenegro
MacedoniaSpain
France
UK
Italy
Ireland
Sweden
Finland
Poland
TurkeyPortugal
Germany
Norway
Austria
Belgium
Netherlands
Switzer-land
Greece
Albania
Denmark
UKComputer hardware, Software products, IT services
Revenues 2006 € million
2007€ million
2008 € million
2009 € million
2008-09 CAGR
UK 40,627 43,380 45,528 48,033 5,5 %
Germany 28,517 30,767 32,806 34,950 6,5%
France 22,091 23,478 24,837 26,308 5,9 %
Italy 10,005 10,040 10,126 10,248 1,2 %
Spain 6,831 7,333 7,808 8,313 6,5 %
GermanySoftware products, IT services
France Datacom and network equipment, Software products, IT services
ItalyDatacom and network equipment, Software products , IT services
SpainComputer hardware, Software products, IT services
Source: EITO
What do the important European markets buy?
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 21
Emergence of the Offshoring Market in Europe
Traditional Coverage
Outsourcer Offering
Sample Products
Appetite in important European sectors
Manuf.Financial Services
Telecom/ Retail
Public Sector
Front Office
Sale, Marketing, Distribution
CRMOriginating sale,
after sales serviceL H H M
Internal Office
Production, Services, Delivery
Develop New/ Administer Application
New Proposal Processing
L M M M
Back Office
Maintaining Efficiency in Cost
FunctionsEAD/BPR F&A/HRO M H H H
Upkeep of Efficient IT Systems
Systems Integration,
MaintenanceITO H H H H
Weight of FS, Services and Public Sector in UK economy and their current pressures to rationalize costs/improve efficiencies makes it an interesting Offshore market
9%
6.2%
6%
5.8%
5.5%
4.3%
3.5%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Public sector
Banking
Financial Services
Telecoms & Media
Insurance
Energy & Utilities
Retail, Wholesale, HospitalitySource: Holway/Ovum
Growth in Customer Segments (2005-10)
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 22
UK Offshoring Market continues to surge
0
500
1000
1500
2000
2500
3000
3500
4000
2004 2005 2006 2007 2008 2009
Ma
rke
t S
ize
(E
UR
Mn
)
UK/Ireland Germany/Austria/Switzerland France Nordics Benelux Italy
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Infrastructure Application Management BPO
Share of BPO has grown from less than a third of UK outsourcing to just under half
Market EUR Mn 2004 2005 2006 2007 2008 2009 CAGR
UK/Ireland 768 1076 1453 1882 2332 2766 29%
Germany 115 126 53 185 223 266 18%
France 97 111 134 157 183 212 17%
Nordics 40 52 67 86 110 138 28%
Benelux 38 50 65 83 105 133 28%
Italy 39 43 49 63 74 86 17%
Spain/Portugal 16 18 21 27 31 36 17%
Total 1,113 1,476 1,943 2,483 3,057 3,636 27%
UK has emerged as the dominant Offshore Market in Europe
Source: Forrester
Source: Ovum
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 23
How does the UK IT market compare with Rest of Europe ?
UK Rest of Europe
Size Second largest Offshore market after US
Relatively lower sized Offshore market
Appetite Large and growing. Entirely driven by considerations of saving cost and improve efficiencies
Not yet as widely accepted. Customers less familiar and more wary
Language Hub for tapping English speaking geographies viz. UK, Ireland, Benelux, Nordics
Language continues to be a barrier
Immigration and labour laws
Easier mobility and Home Office regulations on UK WP & Business Visas
Often tougher labour laws and unions can impede staff transfers and BPO supplier options
Talent pool Easier availability of Indian nationals and even UK nationals that are well-versed with the ‘Indian Offshore Delivery Model’
vs
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 24
What makes London so special within UK?
• Hub for Global Banking
• Centre of Intellectual Excellence
• High standards of living
• Amongst largest services driven economies
• Abundant pool of talent
Apple ComputersAlcatel-LucentAT&T CorporationAtos OriginAxill EuropeCanonChina NetcomCisco SystemsChina TelecomDoCoMo EuropeEedo Knowledge CorporationElectronic Data SystemsEMC2EYP Mission CriticalFrance telecomFujitsu Services HoldingsGoogleHCLHutchison WhampoaIBMInfosysInnopathLarsen & Toubro Infotech
KG InternationalMcKeesson CorporationMicrolandMicrosoft UKNCRNokiaNTTOrgangePerot SystemsQualcommRadiant SystemsRaytheonSamsungSharpSiemens CommunicationSony EricssonT-MobileTata Consultancy ServicesTelenorTelesoneraTelstra EuropeUnisys CorporationWIPRO
© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 25
Contacts
Ian GomesChairmanHigh Growth Markets PracticeKPMG LLP+44 (0) 20 [email protected]
26
Udayan Guha,HCL Technologies
Think London
Udayan Guha
Vice President, Europe
28th September 2009
28 28
The HCL Enterprise
A culture of trusted partnerships with large
customers including JVs with organizations
like Hewlett-Packard (1991), Deutsche Bank
(2001), British Telecom (2002), NEC (2005),
to name a few
Founded 33 years ago, by Shiv Nadar,
a globally respected visionary,
a Forbes billionaire and the recipient of the
Padma Bhushan, one of the highest civilian
recognitions bestowed by the Govt. of India
HCL Technologies
Highlights
HCL Infosystems
The software services
arm
Total Revenues $5B
Employees 60,000
Countries 26
Systems integration arm
29
HCL in Europe
Headquartered in UK - Offices in London and Greater London ( Croydon and Romford) Continental Europe: Offices in Germany, Netherlands, Belgium, France, Italy,
Switzerland, Sweden Total number of employees in Europe today ~ 4500 Total number of employees in UK as on 31 Mar 09 ~ 3725 employees Three of the largest customers of HCL are from UK Executed one of largest IT acquisitions in UK. £441 million acquisition of AXON Group
plc (2000 employees, £205 million revenue) Growing faster than any other geography, HCL’s Europe business contribution has
increased from 7% of the company’s revenues (FY01) to 35% (FY09). European revenues have grown by 54% year-on-year to 30.5% of total revenue.
Industry Accreditations
30
Recognitions for HCL in Europe
One of Britain’s Top Employers in 2007 and 2008 by CRF UK.Recognized for its long standing commitment to supporting employee productivity in a culture and working environment in which they feel appreciated and innovation is allowed to thrive. Third successive year that HCL has been shortlisted and nominated as one of Britain’s Top Employers
The FT ArcelorMittal Boldness in Business Award. Presented the ‘Readers’ Award’ in recognition for the strategic acquisition of Axon, Employee First philosophy and exceptional contribution to client success
The International Investor Of The Year Award - presented by the Greater Paris Investment Agency in recognition of the investment made by HCL in the greater Paris area in 2008
Commended Vendor of the Year by the National Outsourcing Association (NOA) in the UK for the Best Practice Winner Awards
Investor of the Year - HCL UK was recognized as Top Investor of the Year 2006 by the UK Trade and Investment Board. HCL Technologies Chairman, Shiv Nadar was conferred the UK Trade and Investment Business Person of the year award for 2009
London Business School published a report in their annual “Business Strategy Review” recognizing “Organizational Innovation” in 10 notable global organizations, including HCL Technologies, the lone Indian company featured. Report talks about “Employee First” as a new model of management and talks about “HCL heading in the right direction”
31
Why London as your base in Europe?
London and greater London offers the best pool of global talent. Some of the world’s best universities and B Schools are based in London providing a talent base in excess of 65,000 per year.
TalentTalent
London is the European / global base for 75 per cent of the Fortune 500 companies making it ideal for client relationship management.
London is the place to be if you want to develop business in emerging verticals like UK Public Sector, pharmaceuticals, bio-technology
The traditional sectors in London are predominantly Financial Services, having more international banks than any other city and naturally the biggest customer segment for most ITES companies.
Centre for global financial service clients
Centre for global financial service clients
Access to large global corporates / emerging verticals
Access to large global corporates / emerging verticals
32
Why London as your base in Europe? ... contd
Hub of international travel routes, making it the world's best-connected city. Major Airports include Heathrow, Gatwick, Luton, City ,Stanford all operating multiple carriers to all major cities in the world.
Eurostar makes it easy to travel to Paris and Brussels
Travel accessTravel access
Convenient international time zones making it the most ideal place for setting base to conduct business with organisations in Europe, Middle East, South Africa and Asia.
Time-zoneTime-zone
Business friendly city – hardly any red tape to start a company Flexible labour laws
Ease of starting businessEase of starting business
Think Now - Think Londonwww.thinklondon.com
Any Questions?Any Questions?