Indian IT Industry: Quick facts

• Impressive 27% CAGR over last 5 years

• Key contributor to India’s Re-Branding, it accounts for 7% of

India’s GDP, and 35% of Export

• Attractive Sectors: Government, healthcare, education,

telecom, Financial services

• Domestic IT market witnessing huge growth

• Less than 3% of people in India own a computer today (1/5th

that of China). Huge potential

• Government key spender through its ambitious eGovernance

Projects (INR 23,000 Cr. Worth projects envisaged under

Five-year Plan launched in 2006)

Indian IT Industry SWOT

STRENGTH:

* Skilled manpower availability / Elaborate training infrastructure

* Mature GDM, Quality Processes

* Cash-rich; Can invest in innovative business models

WEAKNESS:

* Known as low-cost destination

* High Attrition, Rising salary levels and other cost bases

* Linear business model and concomitant scale-diseconomy

OPPORTUNITIES:

* Exploding domestic market

* High government spending and export-promotion Sops

* Biz-Model innovation for SMBs

THREATS:

* Economic uncertainty / Currency fluctuations

* Other emerging competitors

* Protectionist sentiments

IT Industry Landscape

Global IT Industry Size: US$ 1614 Bn

Indian IT Industry Revenue: US$ 71.7 Bn (Growing at CAGR 27%)

*2009 Data

IT Products Industry

Trends: – Stiff competition, Rapid technology changes

– Changing customer needs forcing frequent product introductions

– Cloud computing to gain momentum

– Security issues becoming increasingly important

Concern: – Growth rate expected to be subdued going forward

– Customer-centric Innovation

– Piracy major concern (Global loss ~US$ 48 Bn)

Market Size (2007) Market Size (2011E) CAGR

US$ 250 Bn US$ 339 Bn 7.9%

IT Services Industry

Services lines: – Projects based

– Outsourcing

– Support / Training

Trends: – Outsourcing to grow, but enhanced pressure on billing rates and Top

line growth

– Big players to try moving towards • Higher value-add services

• Greater workforce utilization, and

• Lowering SG&A expenses

Market Size (2008) Market Size (2012E) CAGR

US$ 360 Bn US$ 441 Bn 2.8%

IT Hardware Industry

Growth rate in Asia is three times the growth rate in North America

Trends:

– Cost optimization across value-chain (Design,

Manufacturing, Warranty, Operations etc)

– Increased focus on R&D

– Supply chain optimization required for reducing inventory

Market Size (2008) Market Size (2012E) CAGR

US$ 594 Bn US$ 683 Bn 3.6%

Domestic Market

Growth 1.0 (2003 – 2008) • Off-shoring Revolution

• Unprecedented growth of Indian Economy as well as in Domestic ICT demand; Revenue growth of 300%

• Domestic demand mainly led by large Corporate / Public sector

Growth 2.0 (2010 Onwards) • Growth to be led by End-users, SMBs

• ‘Consolidation’ and ‘Leveraging’ of IT and telecom infrastructure built in Growth Phase 1.0, to realize greater business efficiencies and launch innovative product/solution offering

• Increased adoption and acceptance of ‘game changing’ technologies

• Governments’ economic stimulus is unlocking market potential

Industry Megatrends

• Strategic M&As / Alliances for Platform creation

• Alliance-driven Sales model

• Greater Partnership with client for End-to-end offering

– Larger share of wallet and connecting with stakeholders so as to

create barrier to entry

• Sharper customer segmentation, Sub-Verticalization and

Domain-Specific Branding

• Multiplicity of Business Models and Growth Agendas

• Cost optimization across Value-Chain

Era of Strategic Alliances

Outsourcing Relationship - Roadmap

Source: Harvard case-study

IT / ITeS Industry: Challenges

• Growth: Organic / Inorganic, linear vs. non-linear

• Coping with speed of change and continually innovate / reinvent itself

• Develop innovation capability. Also ability to sell Innovation

• Successful differentiation (Branding)/ staying ahead on the curve (Business model Innovation)

• Identifying strategic targets for Acquisition / Alliances. Quantifying Synergy

• Alliance management. Moving up the value-chain with clients

• Ability to sell high value-add services (e.g. Business Process Integration)

• Transitioning top-talent from Technocrats to Business Managers

• Sales team need to understand data and communicate Business Value of IT

• Attrition

Strategic options to cope with these Challenges

• Understand Competitive Strategy; Invest in Execution Capability

• Industry is in Growth stage hence Identify Niches, Innovate in Business

Model and invest in Branding

• Scenario Planning: Understand forces shaping Business Landscape

• Change Management - to successfully transition Organization

• Appreciation of Marketing, and Customer-Centric Innovation

• Co-opetition: Cooperate in Value-Chain, Compete in Core-competence

• Develop capability of Cross-cultural Integration, Strategic Alliance

Management and Strategic Account Management

Strategic options …

• Move beyond Delivery Capability: Understand Client’s Business – Because your customer may not understand Technology

• Create various platforms to bring together key Decision Makers and enable them to experiment with IT

• Proactively build enhanced awareness to transformation potential of IT adoption

• Evolve multi-tiered Capability Enhancement Strategy – Tackle knowledge-attrition of your Senior Managers

– Create Leadership Pipeline; Support transition through Leadership stages

• Strategic Human Resource Management – HR as Strategic Partner. Alignment with Business Strategy

– Robust Supply Chain, Continuous re-skilling, Attrition Management

Up-skilling trends in IT Industry

• Building innovation culture – Foster Innovation and Creativity, Revolutionize service offering

– Successfully differentiate from overcrowding competition

– Identify approaches to non-linear revenue growth

– Building a learning organization (Knowledge-centric organization)

• Planning under uncertainty – Appreciate the changing Business Dynamics

– Discern inflection points. How current business models might be rendered obsolete

– Establish organizational ability for adapting to possible futures

• People management for higher performance – Energizing the workforce

– Leading high-performance teams

– Leading in a matrix organization – Influencing without authority

– Managing the new generation talent - tools to motivate people

Up-skilling trends… (2)

• Developing Strategic Thought Process – Strategic Planning Process

– Strategy Execution

– Competitive Strategy, Globalization Strategy, Corporate Strategy

• Customer Centricity – From being operations/product focused to being customer focused and

developing the sales and marketing competencies

– Silo-busting that promotes Customer Focus

• Leadership Development – Transitioning through Leadership Stages (Ram Charan’s Model)

– Change management: Overcome overt and covert resistance to change

– Self Leadership: Breaking the inward looking mould

– Looking at the big picture, developing a vision and motivating people to achieve that vision

Up-skilling trends… (3)

• Product companies

– Customer centric innovation

– Leveraging informal networks for Innovation

• Corporate teams

– Finance for Non-Finance Executives

– Value creation through M&A

– Post-merger integration

• Sales and Marketing

– Accelerating Sales Performance

– Relationship management : Engaging the client like a strategic partner

– Marketing Strategy, Services Marketing, B2B Marketing

• HR Teams

– Aligning HR with Business Strategy

– Strategic Talent Management

– Cross-cultural integration

THANKS

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