November 17, 2004

MIS 680 International HR

BRYAN HARGREAVES

JASON AUSTIN

JONATHAN MUEKE

KERRY OLIVER

SRIRAM KOTHANDARAMAN

Agenda

Geography

Demographics

Government

Culture

Economy

IT Industry

Company

Issues

Summary

Vs Pakistan

Questions

Agenda

•Geography•Demographics•Government•Culture•Economy•IT Industry•Company Showcase•Issues•Summary•Vs Pakistan•Questions

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Geography

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Geography

•5,000 year old civilization•325 languages spoken – 1,652 dialects•18 official languages •29 states, 5 union territories•3.28 million sq. kilometers - Area•7,516 kilometers - Coastline •1,000,000,000 people in 2000•Political Map of India

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Geography

•2.4% of the world's land area, support over 15% of the world's population•Over 30% of Indians younger than 15 years•More than 70% live in more than 550,000 villages• Remainder in more than 200 towns and cities

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Demographics

•Age structure0-14 years: 32.2% 15-64 years: 63%65 years and over: 4.8%

•ReligionsHindu 80%Muslim 13.4%Christian 2.3%Sikh 1.9%Others 2.5%

•Sex ratio1.07 male(s)/female

Factors that Influence the IT Outsourcing Environment

Level of EconomicGrowth

Political System

Culture

IT OutsourceReadiness

IT OutsourcingEnvironment

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Government•Sovereign, Socialist, Secular, Democratic Republic•Form of government

Parliamentary, based on universal adult franchise •Legislature

Parliament, consists of President and the two Houses, known as Rajya Sabha (Council of States) and Lok Sabha (House of the People )

•ExecutiveConsists of President, Vice-President and Council of Ministers led by the Prime Minister

•JudiciaryIndependent of executive

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Government

•ConstitutionAdopted on 26 November 1949 and came into force on 26 January 1950

•Federal GovernmentPresident is the constitutional head of Executive of the UnionReal executive power vests in a Council of Ministers with the Prime Minister as headThe Council of Ministers is collectively responsible to the Lok Sabha, the House of the People

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Government

•State GovernmentThe Governor- Representative of the President, is the head of ExecutiveReal executive power rests with the Chief Minister who heads the Council of MinistersThe Council of Ministers of a state is collectively responsible to the elected legislative assembly of the state

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Government

Indian Parliament Official Web Site

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Government

Some Indian Government Websites

•President of India

•Prime Minister Of India

•Ministry of Defense

•Ministry of Environment and Forest

•Ministry of Education

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Government

•Customs Regulations are good for IT industry

•Reduction of import duty on Computer Software from 114% to 0% including

Data

Sound or images

Source code or object code

CD- ROMs containing educational, journals, periodicals, or newspapers

IT Policies

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Government

•NASSCOM- National Association of Software and Service Companies -Secured tax exemption from profit on exports

•Income Tax Policies since 1990 have encouraged exports of computer software and technical services

•Tax deductions on IT profits let firms establish themselves

• By 2010 the Indian Government will slowly begin to reduce the Income Tax deduction amounts

IT Policies

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Government

•New revenue for the Indian Government will go toward IT industry development

• Laws and Regulations- Information Technology Act 0f 2000

Bill addresses jurisdiction, privacy, liability, uniform laws for electronic commerce, content regulation, and taxation.

Digital signatures are now acceptable and equal to hand signatures

Outlines penalties for IT criminal activity

IT Policies

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Government

•National Long Term IT Policy

Deregulation and de-licensing of import of software productivity tools

Insistence of higher quality through ISO 9000 standards or equivalent

Introduction of special incentives for increasing the language advantage for other languages such as Russian, Japanese, Chinese

Encourage mathematical talent into mathematically oriented software

Enforcement of copyright laws

IT Policies

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Government

•National Long Term IT Policy

Incentives for R&D

Deregulation of fiber optic linkages

Example- project for a National Internet backbone supporting 10mbps or more including series of Urban data networks

IT Policies

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Government

Software Development Parks

Example - TIDEL Park

•http://www.tidelpark.com/

IT Policies

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CultureHistory

•Indus Valley Civilization (up to 1500 BC) •Brahmanic Ages (1500 BC - 1000 AD) •Islamic period (1000 AD - 1750 AD) •British Rule (1750-1947)•The Indian Republic (1947-present)

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CultureReligion

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CultureHindu Caste System

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CultureHofstede Comparison

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CultureBusiness Etiquette – Appearance

•Men are generally expected to wear a suit and tie for business

•Women should wear conservative dresses or pantsuits

•When dressing casual, short-sleeved shirts and long pants are preferred for men; shorts are acceptable only when exercising. Women must keep their upper arms, chest, back, and legs covered at all times

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CultureBusiness Etiquette – Behavior

•Never point your feet at a person. Feet are considered unclean. If your shoes or feet touch another person, apologize

•Business lunches are preferred to dinners. Hindus do not eat beef and Muslims do not eat pork

•Whistling is impolite and winking may be interpreted as either an insult or a sexual proposition

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CultureBusiness Etiquette – Communications

•There are more than fourteen major and three hundred minor languages spoken in India. The official languages are English and Hindi. English is widely used in business, politics and education

•The word "no" has harsh implications in India. Evasive refusals are more common, and are considered more polite. Never directly refuse an invitation, a vague "I’ll try" is an acceptable refusal

•Titles are very important. Always use professional titles

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Culture

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CultureEducation – IT rank within Asia

Rank Science and Technology Schools Overall Score 100%

Rank 1999

1 Korea Advanced Inst. of Science & Tech 90.79 12 Pohang University of Science & Tech. (South

Korea)81.07 2

3 Indian Institute of Technology, Bombay 75.01 64 Indian Institute of Technology, Delhi 73.39 45 Indian Institute of Technology, Madras 72.1 56 Tokyo Institute of Technology* 71.44 37 Indian Institute of Technology, Kanpur 70.59 78 Indian Institute of Technology, Kharagpur 69.82 —9 Nanyang Technological University (Singapore) 67.75 810 Taiwan University of Science & Tech* 67.32 10

Asiaweek.com – 1999 data

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CultureIndian Institute Of Technology

•“IIT has probably produced moremillionaires than any other undergraduate institution.”

•“Indians, most of whom graduated from IIT, founded about 10 percent of the start-ups inSilicon Valley between 1995 and 1998.”

http://shantanunigam.tripod.com/html/iit_good.htm

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CultureIndian Institute Of Technology

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Economy• GDP composition

– Agricultural 23%, Industry 28%, Services 48%

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Economy• GDP ~ $3.033T USD (9% IT sector)• GDP Real growth rate ~ 8.3%• Investment ~ 23.1% of GDP• Poverty ~ 25% below poverty line• Labor force ~ 472 million (60% agricultural,

17% industry, 23% services)

• Unemployment ~ 9.5%• Exports ~ $57.24B USD:

– US 20%, China 6%, UK 5.2%

• Imports $74.15B:– US 7%, UK 5%, China 5%

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Economy•After Independence

•door closed to foreign investors•Gov’t was “interventionalist”, monopolized media, aviation, banking, and telecommunications

•Gandhian self-sufficiency or "swadeshi" that had inspired the Independence movement

•Policy-makers favored socialist economic planning with limited free-marketeering

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Economy•Private companies moved into agriculture, industry and the production of consumer goods

•By 1990, Country was broke

•Foreign exchange reserves were at an all time low.

•The World Bank and the IMF agreed to bail out India

•India joins Structural Adjustment Program

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Economy•In five years India became one of the world's top ten emerging markets

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Economy

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Economy

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Economy

Year US Exports to India US Imports from India 2003 $4.99 billion $13.1 billion 2002 $4.1 billion $11.8 billion 2001 $3.76 billion $9.74 billion

2000 2001 2002 2003 India Inward FDI $2.32 billion $3.4 billion $3.45 billion $6.0 billion India Outward FDI $336 million $757 million $431 million N/a

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Economy•FDI in India

FDI conference index (AT Kearney) ranks India as third best destination for FDI (overall) behind China and USA

In 2003, India was ranked 3rd

India displaced US as second place for FDI among manufacturing investors.

Telecom and Utility investors rank India 2nd (up from 5th in 2003)

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Economy•FDI in India

India (along with China) dominate the top two positions for:

Most positive investor outlook

Likely first-time investments

Most preferred offshore investment locations for business processing and information technology services

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IT - Access• Teledensity at 6.0

Significantly lower than other developing countries. Mainly because of low per capita income and low level of urban population

World average at 15 Increased from 3.6 in 2001 – to 6.0 in 2004

• 48,917,000 land lines (2003)• 23,154,400 mobile phones (2003)• 7.2 computers per 1,000 people• 86,871 internet hosts

• 18,481,000 internet users

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IT - Access• Age

68% users between the age of 15 and 30 use the internet

• GenderMale: 76%, Female 24%

• USA moved from similar profile to 49:51 ratio

• Usage purposeEmail - 90% Information - 50%Chat - 43%Academic - 41%Entertainment - 27%

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IT - Access

•Time Spent< 1/2 hr 21%1/2 hr - 2 hrs 64%> 2 hrs 15%

•Point of AccessHome 25% Cyber Cafe 30% Work 29%Others 16%

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IT - Infrastructure• Telecommunications

Grown by over 20% on a year to year basis since 1997

• Power6th largest power generator in the worldRegular, reliable un-interrupted power

• Roads3.3 million KM’s of road (2nd largest in world).

½ of them pavedRoads & highways improved over last few

years. Most cities linked

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IT – Major Locations

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IT – Economic Growth• Inward FDI

US largest investor

• Microsoft, Oracle, Cisco, Intel, Dell

• Job creation 40% compounded annual growth rate (2

million jobs by 2008)

• Real estate demand/growth as a result of business relocations

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IT – ecommerce• Low e-commerce activity

Low personal computer and Internet base lack of securityhigh access costsSmall number of credit cards (5 million)

• Dominated by low value productsMusic, greeting cards and gifts, books and

magazines, food stuffs and beverages

• E-commerce is picking up Increase from 4.5 billion Rs. In 2000 to an

estimated 252 billion Rs. in 2005 (233 billion from B2B e-commerce)

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IT – Outsourcing• Software development

Evolution• Started in 1984

• 160 fortune 500 companies in 1998

• 250 in 2004

Abundance of English speaking skilled IT workers at low cost

30% to 50% cost savingsReliable communication infrastructureTime zone advantageGood export relationships

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IT – BPO

• Business process outsourcing (BPO) is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality

• 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions

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IT – BPO• Kinds Of Service

Customer Support ServicesTechnical Support Services Telemarketing ServicesEmployee IT Help-desk Services Insurance ProcessingNew Business / PromotionPolicy Maintenance / ManagementData Entry Services / Data Processing Services Scanning, OCR with Editing & Indexing ServicesBook Keeping and Accounting Services Internet Search, Product Research, Market

Research, Survey, Analysis.

• Technical support

• Customer service

– 54% growth from 2002 – 2003

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IT – BPO•Industry had a growth rate of 54% in 2003-04

•BPO COMPANY

•Outsourced Product Development (OPD)

•R&D, prototyping, development, testing, maintenance, support and development of next generation of the products

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IT – BPO

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IT – BPO

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IT – Success factors• Trade organizations

– National Association of Software and Service Companies (NASSCOM)

• Indian Diaspora– Keep it’s edge in outsourcing due to influence

of the Indian Diaspora in the UK & the US

• Quality, speed, process orientation all at an attractive price

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INFOSYS•Started in 1981

•Offers its service in the following areas•Enterprise IT programs•Communications and Internet technology product development•Engineering product design and data management

•1999 the company became the first Indian company to list in NASDAQ

•In 2004 the company crossed a billion dollar in annual revenue

•Market cap of 16.13 billion dollars

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INFOSYS

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Hot off the Press !!!

India is magic in software: Steve Ballmer

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AMERICAN BRAND NAMES

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Issues•Patenting Intellectual Property•Boredom and Health concerns of Employees•Dwindling Pricing•Growing Competition

China factor•Security•Attrition

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Summary•Why Invest in IT in India?

Large pool of IT skilled labor

Good government polices on inward FDI

IT friendly import and export regulations

English widely spoken and understood

India enjoys the confidence of global corporations

Mature Industry

Relatively cheap labor

Of the 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian

Factors that Influence the IT Outsourcing Environment

Economy•Fast Growing•Stable•FDI Friendly

IT OutsourceReadiness

Government•Democracy•Stable•IT Friendly

Culture•English•Education•Resource Pool

Invest In

I. Offshore Development Center

II. BPO center

III. OPD center

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Vs Pakistan• Geography & Demographics

803,940 sq. km (~ 2x California)Border w/ India – 2912 km.Coastline 1046 km141,553,775 people41% under the age of 15Life expectancy ~ 61 yearsReligion – 97% Muslim (77% Sunni)English is official language of most

government ministries. Official language is Urdu even though less than 10% of population speak it as primary language.

Literacy – 37.8%

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• EconomyGDP ~ $318B USD GDP Real growth rate ~ 5.3% Investment ~ 12.9% of GDPPoverty ~ 35% below poverty lineLabor force ~ 44 million (44%

agricultural, 17% industry, 39% services)Unemployment ~ 7.7% Exports ~ $11.7B:

US 22%, UAE 9%,China 6%, UK 7%, Saudi Arabia 5%

Imports $12.51B:UAE 12%, China 12%, Saudi Arabia

11%, US 7%, UK 5%, 2004 FDI ($950M), 2003 FDI ($798M),

2002 ($485M)

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• IT Industry and Issues2002 ~ Ministry of IT createdExports $35 million worth of software a

year as compared to $8 billion from IndiaReasons Pakistan is not a significant

player:• low production of IT-trained workforce

(~ 800 per year)• underdeveloped and fragmented IT

industry• lack of any initiative from existing

industry leaders,

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• IT Industry and IssuesTo compete:

• Educate workforce to the int’l educational standards,

• incorporate new technologies and modern management practices into its industry,

• focus on building an information-based economy

Ex: October, 2004 ~ IT ministry approves Rs 236 million for ten IT projects for advancement of IT in private sector

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QUESTIONS ?