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India as outsourcing destination – Key milestones

George Anthony

VP & CTO

Tech Mahindra Limited

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Agenda

Introduction Key statistics India outsourcing – Milestones Current Challenges China-India model

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Growth is at fast pace (Offshore based outsourcing)

0

10

20

30

40

50

60

70

80

90

2000 3 0.25 0.25 0.25

2002 8 2 0.4 0.75

2005 50 10 2 1.5

2008 80 25 8 3

India China Philippines Russia

* NASSCOM, McKinsey, Forrester, Aberdeen, neoIT

IT Exports

$ B

illi

on

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IT-ITES Sector performance

USD billion FY 2004 FY 2005 FY 2006EIT Services 10.4 13.5 17.5-Exports 7.3 10.0 13.2-Domestic 3.1 3.5 4.3

ITES-BPO 3.4 5.2 7.2 -Exports 3.1 4.6 6.3-Domestic 0.3 0.6 0.9

Engineering Services and R&D, Software Products

2.9 3.9 4.8

-Exports 2.5 3.1 3.9-Domestic 0.4 0.7 0.9

Total Software and Services Revenues 16.7 22.6 29.5

Of which, exports are 12.9 17.7 23.4Hardware 5.0 5.9 6.9Total IT Industry (including Hardware) 21.6 28.4 36.3

Source - NASSCOM

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Outsourcing Drivers & India advantages

FocusFocus

QualityQuality

Time to MarketTime to Market

SkillsSkillsShortageShortage

Specialist Specialist RequirementsRequirements

Cost Savings/Cost Savings/ContainmentContainment

OUTSOURCINGDRIVERS

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Total Outsourcing Proposition

New applicationDevelopment & Mgmt

Process Consulting

Technology Consulting

Infrastructure Optimization

Infrastructure Set up & Provisioning on a pay-by-use basis

Infrastructure Management

Application

Optimization

Business Applications Sustenance

Strategic Consulting

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India’s Competitive advantage

Critical Ingredients of

India’s success

Critical Ingredients of

India’s success

Abundant Talent

Abundant Talent

Highlights

• India has 28% of suitable talent among all cost competitive offshore locations

• Key stakeholders are taking initiatives to further enhance India’s talent proposition

• Significant primary infrastructure is being built in leading centres

• ~ 25 million sq feet of Class A real estate was available in 2005

• End-to-end network uptime for India and other offshore locations vis-à-vis US levels (~99.95%)

• India’s business environment is competitive with those in other countries

• Key government policy interventions have catalyzed growth

• Increase in domestic spending on IT

Performance

= Low = High

Quality & Scaleable

Infrastructure

Quality & Scaleable

Infrastructure

Operational Excellence

Operational Excellence

Conducive Business

Environment

Conducive Business

Environment

Growing Domestic IT/ BPO Market

Growing Domestic IT/ BPO Market

1

2

3

4

5

• India based players have managed to maintain quality and cost leadership vis-à-vis other countries

Source: Nasscom-McKinsey Report 2005

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The Outsourcing Value Chain

Ris

k a

nd

Ow

ne

rsh

ip

Professional Services

T&M Projects

Fixed Price Projects

ApplicationOutsourcing

SystemsOutsourcing,

ProductTesting

E2EOwnership

Level of Maturity

ManagedServices,Product

Sales linked revenue

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India as a Pivot in GDM

Source: IDC and Forrester

Low Cost Global Delivery Player Worldwide Offshore IT Services Share

by Region, 2004

Total = $9.8 Bn.

India well established on the Global Outsourcing Stage

75.5%

6.8%

4.5%

2.1%

3.3%3.8%

1.7%2.3%

India CEE

Philippines Latin America

China Canada

MEA Others

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Leading to 2nd Generation Outsourcing

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Key Challenges

Attrition

• Pure-play, MNC, Captive, Product Engineering, R&D

• Ambitious growth plans Costs are going up Quality of resources

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China-India model

China IT Outsourcing industry is emerging Advantages of China

• Great Infrastructure, Huge domestic market, Better living conditions, increasing engineering graduates

Adoption of best practices from INDIA outsourcing model

COMPLEMENTARY and SYNERGESTIC model between China and India

CHINA is important in our growth strategy Working model

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Telecom Expertise

Effective & Proven Solutions for players in telecom ecosystem Developing business solutions & consulting capabilities Multiyear partnerships, preferred vendor status, partners in key

transformations

Process & Quality Leadership

Proven mASTERTM Service Delivery Framework Integrated Business Management System comprising SEI CMM Level 5 &

ISO9001:2000, BS7799 adherent practice Customer benefits:

Predictable high quality results Consistently delivered on time & budget

Annualized Revenue of US$ 290 Million*

Global JV of BT Group Plc.(43%) & Mahindra & Mahindra (57%)

18 years of focused IT experience

exclusively in the Telecom domain

Wide range of services right from IT

Consulting to Operations Outsourcing

Over 9,500 dedicated resources

Overview

Tech Mahindra

165

217.3

23

5991

39

130

158

112

0

75

150

225

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Revenue US$ Mn.

Global Reach

People from diverse culture and nationalities Global Fortune 500 customers

Financials

People and Services

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Thank You