The evolution of the IT industry in India and opportunities for Africa
Sriram Bharatam
CEO & Founder, iridiumInteractive Limited
September 2012
Indian IT-BPO industry revenue crossesUSD 100 billion
INDIAN IT-BPO INDUSTRY
Note: 1) Exports (IT services, software products, OSPD, ER&D, BPO, hardware); Domestic (Hardware, IT services (incl. ER&D), S/W products, BPO) E: EstimateSource: World Bank, NASSCOM
• Total revenue: ~USD 101 billion
• Relative to India’s GDP: ~7.5 per cent
• Relative to merchandise exports: ~25%
• Value add: 60-70 per cent
• Exports CAGR: 17 per cent for last 5 years
• Domestic CAGR in USD: ~10 per cent – reflects impact of variable rupee
4147 50
59
69
22 22 2429 32
6.4%6.7% 6.5%
7.1%7.5%
FY2008 FY2009 FY2010 FY2011 FY2012E
Exports Domestic Percentage of GDP
USD billionIT-BPO revenue aggregate1
The industry to provide employment to about 12mn people in FY2012
INDIAN IT-BPO INDUSTRY
*Excluding HardwareSource: NASSCOM
1,000 1,153 1,295
774826
876
525562
601
FY2010 FY2011 FY2012E
IT Services exports BPO exportsIT-BPO Domestic
2,300
2,770
2,540
Direct Employment (’000)
• IT-BPO industry expected to employ around 2.8 million
professionals (growth rate of 9 per cent) in FY 2012
• IT service exports remains the largest employer, with around
47 per cent share of total direct employment
FY2012 Estimates (Mn Nos)
Indirect
Direct Total Emp
~10.2mn
~2.8
~11.7
~8.9
Indian IT-BPO exports continues on the growth path in FY2012
IT-BPO Export revenues*(USD billion)
FY2011 FY2012E
33.539.8
14.2
15.9
11.3
13.0
IT Services BPO S/W prod and Engg
59
68.7
16.3%
Source: NASSCOM * Excluding Hardware
• India’s share in global sourcing - 58 per cent in 2011, up from 55 per cent in 2010
• IT services exhibiting fastest growth at 19 per cent, BPO growing by 12.2 per cent, and Software Products & ER&D by 15 per cent
•Transformation, new business models, driving organisation wide efficiencies
•Services around disruptive technologies- cloud, mobility, analytics, social media
•Flexible product portfolios, verticalised solutions
INDIAN IT-BPO INDUSTRY
Increasing focus on diversifying into newgeographies and verticals
INDIAN IT-BPO INDUSTRY
Source: NASSCOM
Industry Vertical break-up, FY2012
5
19.5%
17%
21%
Industry Geographic break-up, FY2012
Vertical break-up, Q2FY2012 (top 10 companies)
Geographic break-up, Q2FY2012 (top 10 companies)
Industry Growth in emerging
geographies and verticals ~1.4X
more than mature
segments
Revenue breakup of top
10 Indian companies
demonstrates this
Impact of the industry on the Indian economy
Learnings for Africa
Lasting, Sustainable and Phenomenal contribution over the last decade
Contributing to India’s economy
Empowering the diverse human assets
Putting India on the Global map
Socially responsible and inclusive
Driving Balanced Regional Development
Creating Innovation Platform
Multi-fold impact on the
Indian Economy
Catalysing India’s transformation to a services-based economy
0%
10%
20%
30%
40%
50%
FY02 FY05 FY09
Trade, Hotels,Transport & CommIT-BPOCommunity,Social & Personal ServicesFinancing, Insurance, Real Estate & Business Services
Decline
Decline
Decline
Rise 10.0%
• Contributes to 10% of India’s service sector revenues
• Unique “service led” export oriented model
• Contributing 9% of India’s incremental GDP
• Per capita GDP contribution of IT-BPO employees ~ 80 times that of agriculture
Indian IT-BPO Industry’s contribution to GDPIndian IT-BPO Industry’s contribution to GDP
• By 2020, expected to account for
–~10% of India's GDP
–14% of total services sector revenues
FY98 FY09
1.2%
6.0%
8X increase in direct employment;3X increase in the share of organized private sector
284
2,200
FY00 FY09
Dire
ct em
ploye
es ('
000)
Direct employment of 2.7 million; Indirect employment ~8 million
45% of total incremental urban employment in the last decade
~8x
By 2020 - Direct employment of 10 million; Indirect employment of 20 million
Employment opportunities for diverse sections of the society
Livelihood forEconomically backward
Empowering the youth
Bridging the gender divide
Employment beyondUrban areas
Employing the Differently abled
~5% of the IT-BPO workforce from economically backward sections
~5% of the IT-BPO workforce from economically backward sections
~74% of employees are less than 30 years old;
~35% are less than 25 years of age
~74% of employees are less than 30 years old;
~35% are less than 25 years of age
~31% women employees in FY09; account for 45% of new intake
~26% of the female employees are chief wage earners
~20% of the female employees are at managerial level or above
~31% women employees in FY09; account for 45% of new intake
~26% of the female employees are chief wage earners
~20% of the female employees are at managerial level or above
~58% of the IT-BPO workforce is from tier 2/3 cities
~ 56% employees are chief bread earners
~58% of the IT-BPO workforce is from tier 2/3 cities
~ 56% employees are chief bread earners
~60% of companies provide employment to differently abled people
~60% of companies provide employment to differently abled people
•Changing aspirations of India’s youth
•Created high paying jobs
•Setting new standards of work environment
•Emerging as a “Skill Factory”
By 2020 5 mn women employees
4 mn direct employees from tier 2/3 locations
*NASSCOM Evalueserve survey findings, 7500 participants pan India
By 2020, this industry can become a strategic growth engine for India
IT/BPO industry size
US$ billion
64
360-375
2020 potential1
2008
6x
*Innovation driven growth scenario
Areas Contribution by 2020Economy ~10% of annual GDP
18-20% of annual exports
Employment 30 million employment opportunities (direct and indirect)
Job creation in rural and non-metro areas - 20-fold increase in the number of employees operating from tier 2/3 locations
Increased diversity (women are 50% of the total workforce)
Significant global career opportunities due to location-independent models
Balanced Regional Growth
8-10 satellite townships around Tier-I cities 10-15 Tier-II cities with upgraded basic and
business infrastructure
Reduced fiscal burden
ICT can provide solutions at a fraction of the cost of traditional solutions
Globally reputed innovative solutions
Innovation driving additional GDP contribution of ~2%
How can we work for a win-win?
India and Africa
India and Africa
13
India and Africa• Historically shared friendly ties
Mutual respect• Healthy trade, but largely dominated by
commodities and natural resources
14
Partnership with African
countries
India as a CATALYST of development
Closer economic and
commercial relations with India can help
African countries to realise their
developmental aspirations in Information Technology
Africa – The Next Billion
• 50+ Countries with a population of 1 billion+
• Fastest growing ICT market worldwide – Growth 50% YOY largely dominated by growth in mobile phones
• In last 5 years cellular market grew 5000% (400mn+ Telecom Subscribers); internet grew 630%
• According IDC, Africa's IT market is expected to be $22.53 billion in 2010
• According to World Bank estimates, Africa needs over $90 billion per year to build the infrastructure it needs to support growth and meet stated development goals.
• High tech business on the agenda of many African governments which is seen as a catalyst for development
Source: Avasant
Current TrendsIn
creasi
ng
• Corruption• Violence• Political instability
• Democracy• Economic
Liberalization• Positive
Leadership
Improved Optimism
Robust Economic Growth
• Favorable investment climate
• Rising Stock Markets• Stronger Currencies• Falling Interest Rates
Dec
reas
ing
Positive Govt. Actions
• Increased spending targeted towards poverty alleviation and social growth
• WB, EU, AfDB providing $70 bn + of aid
• Targeted action focusing governance and education
• ICT seen as a key driver to achieve Millennium Development Goals (2015)
Huge needs in areas of e-Govt, Education, Security,
Healthcare and across private sectors are driving demand for ICT in Africa
Source: Avasant
Advantage for Indian industry
Right Time
• Africa has huge unmet ICT demand. Governments and business that were apprehensive till some time back have realized the potential of ICT and are willing to invest
Lesser Competition
• Lack of service provider maturity has prevented many from outsourcing. Availability of competent providers can unlock the potential,
• Current deficit of credible Tier II and Tier III players
Brand India• Brand India is no.1 in ICT• High respect for Indian companies and professionals.
Source: Avasant
For African region
The Win-Win Opportunity
18
IndiaFor African region
• Access to large pool of specialist manpower
• Use Innovative solutions to solve problems
• India has many challenges that are different from Western markets, and Indian companies have devised solutions that address these challenges
• SMEs have an opportunity to establish themselves in a competitive market
For India
• New opportunity across IT-Services, BPO and Engineering Services.
• Access to a relatively untapped t IT-Services market.
• Opportunity to leverage the strong cultural, trade and historical affinity with India
• De-risk from over dependence on the English speaking markets
In conclusion
19
Apr 11, 2023
New models of partnership will have to be created
Verticals in focus for developing the African region
E-Governance Education Telecom
Banking, financial services,
insurance
Healthcare industry
Demand for IT/BPO services is strong driven by evolving business models; reducing product /
service life cycles
Thank you