Opportunities for Indian I.T.

industry beyond U.S. markets

Presented by:
Shashwat Sharma
93048
Problem Statement
The strong dependence of Indian IT
industry on US market is an issue of
major concern.
Competition from other emerging
economies.

The project aims to find out the potential

areas where Indian IT players can expand
their market.
 Objectives of study
Part 1:
Doing Industry Analysis of Indian IT services industry and
identifying problems.

Part 2:
Identifying and analysing opportunities in domestic market.

Part 3:
Identification of Potential geographies for Market Expansion.
SWOT analysis of identified geographies
Recommendations for devising entry strategies.
 Research design
Secondary sources involves:
Reports, journals and articles from all the major IT
associations throughout the world.
Information from Web-sites of companies
Directors Report of various companies in the sector

Primary sources involve:

Personal interview with key executives in IT
companies.
 Respondents
Mr. Tarun Chanana (Sr. Consultant, Amdocs)
Mr. Narayanan Ganeshan (IT Head, Asia Pacific Region, Metso)
Ms. Neha Verma (Lead BD Manager, Gvt. Accounts, HCL
Commnet)
Mr. Raghav Aggarwal (Business Analyst, Infosys)
Mr. Harish Menon (VP Sales, Futuresoft Solutions)
Mr. Manjit Samrah (Sr Associate Consultant, Infosys)
Mr. Tarun Gurnani (Functional Consultant, Wipro Infotech)
Mr Shashank Garg (Project Manager, TCS)
Ms. Priya Jaiswal (Business Manager, QAI Global)
Mr Sagar Jain (Team Lead, Tech Mahindra)
Questionnaire
Ques 1: Do you think Indian IT industry is too much dependent on
US clients? What in your opinion are implications?

Ques 2: What are the major challenges that Indian IT industry is

facing nowadays?

Ques 3: Is domestic market, including government sector, lucrative

enough to sustain the IT industry?

Ques 4: What are the emerging markets, in your opinion, that can be
targeted to lower the dependencies on the US?

Ques 5: How easy or difficult is to work in these countries or work

with the clients from these countries?
Industry Analysis
 Introduction
A high percentage of economic growth in
India can be attributed to IT and ITES.
Global IT services industry $300 bn.*
India’s share $50 bn.* (about 16%)
More than 100 of Fortune 500 companies
outsourced to India.
Grown over 300% over last 10 years.

Source: IDC figures FY2010

 The genesis
Foundation laid in late 80’s.
A combination of resource endowments,
encouragement from govt and great timing.
IT revolution in developed countries.
Shortage of skilled manpower.
A substantial number of Indians working in US
firms at high positions struck a chord with Indian
suppliers.
Low investment and government
encouragement New start-ups.
Characteristics of Indian IT industry
Export oriented (90% exports)
Export market for customization and
consultancy while domestic for s/w
packages and ready-made products.
Export market for low-level design,
coding and testing. Wider range of
services for domestic. Eg. BSE and
Railway reservation by CMC.
(1981-2010)
 Challenges for Indian IT industry
Sustainabilityof high growth rate of software exports in future.
Shortage of skilled labour. (75% engineers unemployable:
Nasscom Report)
Low diffusion of information technology in the domestic
market
Computer hardware industry could not keep pace with the
software industry.
Rupee Appreciation and US Economic Slowdown
Software services and not products exported Dependency
Regional Concentration: There is high concentration of
software industry in seven metropolitan cities (tier 1) across
India.
SWOT analysis of IT industry
Strengths 
Cost advantage due to labor arbitrage
High level of customer relationship management
Strong management team
Strong financial position
Low Price
Pool of English speaking skilled employees
Unique customized products

Weaknesses 
Over dependence on US market
High Employee cost in terms of attrition
Low R&D
Least presence in Economies like Japan and China
Not diversified product lines

 
SWOT (cont.)
Opportunities 
Acquisitions
To be a more product centric business portfolio
Emerging markets and expansion abroad
To strengthen domestic presence
Product and services expansion
To strengthen its Consulting business

Threats 
Competition both from international firms from countries like Philippines, China
etc.
Cheaper technology
Economic slowdown
External changes (government, politics, taxes, etc)
Exchange rate fluctuation
Changing consumer sentiment in places like UK & US
Source: NASSCOM
Dependence on US
Sources of revenue(industry-wise)
Others
Airlines 7%
Healthcare 2%
4%
Construction
3%
Media/Publishing
4% BFSI
Retail 48%
8%

Manufacturing
6%

Hi-Tech/Telecom
18%
 Problems with US dependency
Too much dependence on a single economy
Obama’s stand on outsourcing to curb
unemployment.
Tax deferral benefits for companies
outsourcing to be ended.
Still struggling to come out of economic crisis.
H-1B hiring ban for companies getting bailout.
 Example of Infosys

Source: Infosys Annual Report

Opportunities in
Domestic Market
Opportunities in Public Sector
National e-Governance Plan (NeGP) to bring
public services online. Rs 50,000 Crore to be spent in
next 5 yrs.
Mission Mode Projects(MMPs) at state level.

State Wide Area Networks (SWANs)

Plan already approved for 29 states and 6 UTs
Establish and maintain network from State
Headquarters upto the Block level with a minimum
bandwidth capacity of 2 Mbps
Total outlay of Rs 3,360 Crores.
State Data Centres (SDCs)
important elements of the core infrastructure for supporting
e-Governance.
create data repositories/data centres in various States/Uts
Rs. 1623.20 crore already sanctioned in 2009.

Electronics / IT Hardware Manufacturing

A Special Incentive Package Scheme (SIPS) was
announced in March 2008 to attract investments in
semiconductor fabrication and nanotech manufacturing in
India.
A strong boost for IT hardware manufacturing.
Information Technology Investment Regions
(ITIR)
Govt identified tier-2 tier-3 cities and develop
infrastructure for IT growth.

National Informatics Centre (NIC)

Backbone of e-governance and IT infrastructure.
Setting up a satellite based VSAT network linking all
districts. One of its kind in developing world.
Will outsource most of application s/w to private
sector players.
Opportunities in Private Sector
A huge potential left untapped in Indian
industry.
Indian industry’s mindset still a little
apprehensive about huge IT spending.
Try to promote more end-to-end solution
and consultancy.
Need for change in market strategies.
 Opportunities in
International Markets
Egypt
Egypt's IT spending is expected to increase
from US$1.3bn in 2010 to US$2.1bn by 2014.
IT industry expected to grow by 12% CAGR
2010-14
Emerging IT growth markets and outsourcing
destination.
Number of policies to attract foreign
investment in IT sector.
Wipro, Mahindra Satyam already investing big
time.
Many Egyptian firms working for clients in
middle-east.
IT implementation in big companies. SMEs
also gaining pace.
A good access to African as well as middle-
east markets.
Good trade relations with India. Fourth largest
trade partner of Egypt.
UAE
UAE IT sector to grow to $4.7 billion by
2013.
Industry still to utilise full potential of IT
services.
Even big firms did not have a dedicated
CIO’s office but now have a fully
documented IT strategy.
Only 10% of IT services are being off-shored.
Expected to grow to 30% in next 5 years.
Currently China gets 50%of this business.
Indian companies get 13% followed by
Philippines and Vietnam.
Launch of Dubai Outsourcing Zone in 2008.
Big opportunities of CRM packages in travel
and tourism industry.
Coordial bilateral relations with India. About
1 million Indian expatriates.
Nordic Countries
Higher IT adoption is supported by
world-class telecommunication
infrastructure and government policies.
IT services market estimated to be about
$ 12 billion. Growing at 7-8% CAGR.
Huge demand of IT services in SMEs that
want to emulate growth patterns of bigger
companies.
Entry point for Indian companies into
lucrative European market.
Many Nordic companies are establishing
Shared Service Centers(SSCs) in East Europe
and India.
Trade relations with India good. Many Nordic
firms have investments in India. Wipro
providing IT services since 2008.
Conclusions
Factors to be considered for judging the feasibility of
software exports
Demand
National Vision and Strategy
International Linkages and Trust
Software Industry Characteristics
Domestic Input Factors/Infrastructure
◦ People
◦ Technology
◦ Finance
◦ R&D
Entry Strategies
Early Entrant Strategies
Value Addition
Diversification
Innovation
Late Entrants
Low Cost
Market Niche
Thanks. Questions please