Software - PowerPoint PPT Presentation

1 / 10
About This Presentation
Title:

Software

Description:

Most SMEs report strong utilisation rates and stable pricing ... vendors continue to lose share over 110 units have seat utilisation of 0.5 ... – PowerPoint PPT presentation

Number of Views:43
Avg rating:3.0/5.0
Slides: 11
Provided by: ferna6
Category:

less

Transcript and Presenter's Notes

Title: Software


1
Software Services IndustryFY04 Results FY05
ForecastsKiran Karnik, President Jerry Rao,
ChairmanJune 3, 2004
This report is solely for the use of NASSCOM. No
part of it may be circulated, quoted, or
reproduced for distribution outside without prior
written approval from NASSCOM. This material was
used by NASSCOM during an oral presentation it
is not a complete record of the discussion.
2
STRUCTURE
Indian software services industry performance
and outlook Industry Challenges Trusted Sourcing
Initiative Key thrust areas in 2004
3
INDIAN IT INDUSTRY EXCEEDS GROWTH PROJECTIONS IN
FY04
Key trends
  • Exports growth of 30.5 against forecast of
    26-28 in USD and actual growth of 25 in 2002-03
  • Exports grow to 12.5 bn against 9.6 bn in
    2002-03
  • Strong growth validates economics of offshore
    outsourcing
  • Highest growth since the slowdown of 2001

Growth exceeds projections
  • Domestic market growth of 22, same as 2002-03
  • Domestic market size is now 3.4 bn against
    2.8 bn in 2002-03
  • Growth rate marks drop in prices, volume growth
    higher

Domestic market grows 22
  • ITES BPO growth of 46
  • Exports grow to 3.6 bn, up from 2.5 bn in
    2002-03
  • Growth rate slows from 68 in 2002-03 due to
    larger base
  • Software services grow 25 up from 15 in
    2002-03, to 8.9 bn in 2003-04, from 7.1
    bn in 2002-03

ITES BPO grows 46, software services growth
rapid too
4
KEY IT SERVICES TRENDS REVEAL GROWTH IN ALL
INDICATORS
Pricing trends stable
  • Pricing trends of 2002 reversed
  • Onsite 55-60 per hour, offshore 18-24 per
    hour, stable since Q2

Growth in addressable market
  • New segments such as package software
    installation, systems integration and consulting
  • New markets not only Fortune 500 but Global
    2000
  • Number of million customers 442, up from 331
    in 2002-03

Geographical mix unchanged
  • North America 70 of market
  • Strong traction in Japan, Germany and France
  • UK share unchanged at 15

Start-ups increase
  • New startups grow to 112 from 47 in 2002-03
  • VCs increasingly demand strong offshore presence
    even for startups

SMEs outperform
  • Of NASSCOMs 660 SME members, 414 grew revenues
    by gt20
  • Most SMEs report strong utilisation rates and
    stable pricing
  • Year-end surveys reveal optimistic outlook

5
ITES BPO TRACTION CONTINUES
Customer interest
  • Offshore BPO is mainstream now
  • 80 of Fortune 500 evaluating offshore now -
    Gartner
  • Wide range of service lines technical help
    desks, FA, engg services, equity research
  • Strong focus on data protection, security, audit
    compliance
  • Attrition rates stabilise in Q4 50 for call
    centers, but lower for back office and EU markets
  • Pricing trends stable new pricing parameters
    per seat new business models - BOT
  • Captive presence continues at 65 of industry,
    1 new captive center a week in 2003-04
  • Greater presence beyond metros Vizag, Jaipur,
    Kochi, Pune, Ahmedabad, Chandigarh

Maturity in all parameters
Some negatives persist
  • Small, undifferentiated vendors continue to lose
    share over 110 units have seat utilisation of lt
    0.5
  • Infrastructure bottlenecks urban mass
    transport, airports
  • Education curriculum movement is slow
  • Govt tax policy needs to be consistent

6
FY05 INDUSTRY SIZE 20 billion, from 10
billion in FY02
Key forecasts
  • Industry to grow from 15.9 bn in FY04 to 20.5
    bn in FY05
  • Among the top 10 industries in India, larger than
    telecom
  • Driving productivity growth in India and around
    the globe

Overall industry growth 29
  • Exports growth at 30-32 to 16.3 bn
  • IT services forecast to grow at 26-28 to 11.2
    bn
  • ITES BPO growth at 40 to 5.1 bn

Export growth of 30-32
  • Government focus on governance, broadband and
    convergence will lead to market growth to 4.2
    bn ( 3.4 bn in FY04)
  • Mobile market strong growth drives applications
  • Higher spend from education, banking, automotive
    and retail sectors
  • Lower hardware tariffs further drive growth

Domestic market growth faster at 24
7
THREE MEGA TRENDS WILL DRIVE THIS INDUSTRY
Key trends
Key elements to be assimilated
  • Customers will outsource most non-strategic
    processes
  • BPO gains share in new contracts
  • IT services and BPO bundling
  • SI (Systems Integration) contracts only for
    strategic processes

Budgets shift to IT outsourcing and BPO contracts
  • Infrastructure elements (app servers, security,
    storage, middleware) are standardised
  • Top 3 players in each segment have 45-85 share
  • IBM, Microsoft, Oracle and SAP have architectural
    control
  • New apps customised at process level

Standards controlled by 3-4 vendors
  • Global vendors setting up offshore development
    bases in lower cost labor pools
  • Most companies will have 3 tier delivery
  • All winning players have a network of global
    centers

Execution through a global delivery model
8
THE INDUSTRY IN INDIA IS FOCUSING ON 3 INTERNAL
CHALLENGES
Key area
Key challenges
  • Developing new transition management
    methodologies, process and capabilities
  • Creating referencability through actual client
    work

Operational
  • Shifting significant component of workforce
    offshore while growing local jobs in markets
  • Attracting highest quality programming talent in
    India
  • Recruiting lateral, good senior/middle managers

Talent
  • Managing downward pressure on revenue (and
    absolute profitability)
  • Significant one-time costs of severance,
    knowledge transfer and duplicate facilities

Economics
9
THE INDUSTRY FACES EXTERNAL CHALLENGES AS WELL
Key area
Key challenges
  • Robust legal and enforcement framework in India
  • Abiding by country vertical specific laws

Security Privacy concerns
  • Anxiety re jobs
  • Numerous 3rd party studies endorse benefits
  • Work with allies
  • Focus on GATS, movement of personnel

Demonstrating benefits of free trade
  • Focus on upgrading quality and quantity of
    manpower
  • Focus on improving infrastructure

Enablers in India
10
NASSCOM 4E FRAMEWORK FOR TRUSTED SOURCING
Engage
  • Creation of Global and National Advisory Boards
    on Security
  • Meet all stakeholders in India and key markets
    SETS, CERT, BITS, FSTC, CGI, CMU, IISc, et al
  • Reports to members on model contracts, SLAs,
    security practices and standards, industry
    legislation like HIPAA, GLB, DPA
  • Seminars to educate members, lawmakers and
    judiciary
  • Create intellectual capital for members and other
    stakeholders

Educate
  • Examine areas to strengthen legal framework in
    India
  • Work with coalitions and regulators in key
    markets to identify relevant provisions
  • Best security practices in member companies

Enact
Enforce
  • Established Mumbai Cyber Labs to be extended to
    other cities
  • Security audit of members, security certification
    for employees
Write a Comment
User Comments (0)
About PowerShow.com