INDIA THE ROAD AHEAD

1
INDIA - THE ROAD AHEAD IN SEARCH OF A NEW VALUE
PROPOSITION
Suvas Mahapatra General Manager - PES Wipro
Technologies
2
India A snapshot
Area More than 1/3 of USA
Population 1.10 BnCurrency
Rupees (44.5/) Capital New
Delhi Coastline gt 5000 miles. Multi
Cultural 15 languages, over 200 variations,
multi ethnic, multi religious-Hindus (80.5),
Muslims (13.4), Christians (2.3), Sikhs (1.9),
others (1.2)
3
Familiar India
4
Indian Economy is big and low on risk
Risk Ratings
Source Economist Intelligence unit, April 2005
Aggregate of political stability, political
efficacy, monetary, fiscal, exchange, trade,
regulatory, global climate, growth, current
account, debt structure, financial structure, and
liquidity
Source IMF, April 2005
5
and Getting Bigger
Worlds growth engine - Fastest growing economy
by 2012
Source Goldman Sachs
More service driven (gt 50 in 2003) than most
middle income economies Reduction in agriculture
share ? Less dependence on monsoon (2004-05 GDP
figure at 6.9 despite agricultural growth of
just 1.1)
6
Globalization Underlying Theme
Knowledge can be rendered anywhere
Products / services can be created anywhere
Removing boundaries
7
Wipros 3C collaboration modelOffshore as a
strategic enablers for market leadership
8
Global collaboration strategic framework
Resource Based Capability and Capacity Increase
available resource capacity
Capacity
41 of projects
C
C
C
Complexity
Cost
13 of projects
88 of projects
Execution complexity and Context Utilize global
tacit market or industry knowledge
The 3C model
Cost Reduction Obtain substitute skills at lower
costs
Multiple Strategies Per Project
9
Global sourcing An irreversible mega-trend
so much so that it has become a part of our
every day lexicon
10
Opportunity - The Bottom of the Pyramid
emerging mass markets
Source Prahalad Hammond, Harvard Business
Review, Vol. 80, Issue
11
Through the new faces on the mirror
12
India Sixth largest economy by 2020 in real terms
Largest economies in 2020
GDP in 2020 (US Bn)
Gap between India and next two largest
economies is not large.
Source Goldman Sachs Economic Paper 99
13
Third largest economy by 2050 in real terms
Largest economies in 2050
GDP in 2050 (US Bn)
Huge gap between three largest economies and the
next few
Source Goldman Sachs Economic Paper 99
14
Technology Destination India
15
India Technology Superpower

• Over 100 MNCs have set up RD facilities in India
  in the past five years. These include GE, Bell
  Labs, Du Pont, Daimler Chrysler, Eli Lilly,
  Intel, Monsanto, Texas Instruments, Caterpillar,
  Cummins, GM, Microsoft and IBM.
• Indias telecom infrastructure between Chennai,
  Mumbai and Singapore, provides the largest
  bandwidth capacity in the world, with well over
  8.5 Terabits (8.5Tbs) per second.
• With more than 250 universities, 1,500 research
  institutions and 10,428 higher-education
  institutes, India produces 300,000 engineering
  graduates and another 300,000 technically trained
  graduates every year.
• Besides, another 2 million other graduates
  qualify out in India annually.
• The Indian Institute of Technology (IIT) is among
  the top three universities from which McKinsey
  Company, the world's biggest consulting firm,
  hires most.

16
India Technology Superpower

• Geneva-based STMicroelectronics is one of the
  largest semiconductor companies to develop
  integrated circuits and software in India.
• Texas Instruments was the first to open
  operations in Bangalore, followed by Motorola,
  Intel, Cadence Design Systems and several others.
  
• 80 of the Worlds 117 SEI CMM Level-5 companies
  are based in India.
• 15 of the world's major Automobile makers are
  obtaining components from Indian companies. This
  business fetched India 1.5 B in 2003, and will
  reach 15 B by 2007.

• New emerging industries areas include,
  Bio-Informatics, Bio-Technology, Genomics,
  Clinical Research and Trials.
• World-renowned TQM expert Yasutoshi Washio
  predicts that Indian manufacturing quality will
  overtake that of Japan in 2013.
• Flextronics, the 14 B global major in Electronic
  Manufacturing Services, has announced that it
  will make India a global competence centre for
  telecom software development.

17
India in the eyes of MNCs - that have chosen India
India has not only established its leadership in
the software sector, but also proved its
pre-eminence in the fields of aeronautics and
aerospace, thanks to a strong industrial and
engineering base, built over the last four
decades - Mr. Dominique Paris, Sr VP, Snecma
(France)

• Working with our Indian partners, we intend to
  increase our presence on the world market
• Mr. Philippe Camus, CEO, EADS

I'm amazed at the kind of engines and the number
of engines that are made in India - Mr. David
Friedman, Managing Director, Ford India
There is a high potential of very good technical
people in India and the cost to the company is
almost a fourth -Mr. Hans Juffermans, Technical
Director (RD operations), Akzo Nobel India
The driving reason why GE has come to India is
not the cost, but the talent pool - Mr. Guillermo
Wille, Managing Director, John F. Welch
Technology Centre, India
18
360º Opportunity space
RD Services
Infrastructure Services
Business process
Mechatronics ED Services
IT Services
Consult architect
Design develop
Maintain, Manage support
19
Indias Offshore IT and BPO Industries can reach
Exports of US 60 Billion by 2010.
Indias offshore IT and BPO exports, US Bn.
80
Projected CAGR 2005-2010
CAGR 28
60
gt 37
BPO
CAGR 29
Offshore IT
gt 24
17.2
6.2

• Indias Offshore IT and BPO industries can
  achieve US 60 Bn. in exports by 2010 if they
  sustain their current leadership.
• These industries could also aspire for an even
  bigger pie in the next five to ten years an
  additional 20 Bn. in exports by extending
  leadership through a targeted expansion of the
  Offshore market.

Source NASSCOM McKinsey report 2002. NASSCOM
McKinsey report 2005
20
By 2020 Indias share of the Engineering Services
market can reach 50 billion

• The largest Engineering Services segment is the
  high-tech industry incl. software telecom

21
Significant Demand Growth
Billion
Billion
Total Offshore IT Services Revenue
Total Offshore BPO Services Revenue
India Offshore IT Services Revenue
India Offshore BPO Revenue
Global BPO Revenue
Global IT Services Revenue
22
Enablers
23
Global Business drivers

• Falling Tariffs barriers
• Reducing Trade Barriers
• Telecom / Datacom Revolution
• Evolved Global Skill Set
• New Technology Offshore, Call-Centers
• Death of Distance

The next decade is unlikely to see any disruptive
technology with the exception of WiMax.
Corporates would derive their competitive
advantage from non-technological innovations.
24
Changing values
Value Migration from Goods to Services
Services
Manufacturing
Goods carry the value
Value is in Goods
Technology removes major competitive advantages
Services
Manufacturing
Telecom and Data-com Online Sales Support
Sales Channel Supply Chain Logistics and
Transport Technology
25
De-coupling of value chain
Fragmentation Of Processes
Product design
Back office
Process Competency
Front office
26
India People power
Vast educational system Universities
237 Deemed Universities
47 Engineering Colleges
1,200 Indian Institute of Technology (IITs)
7 Indian Institute of Management (IIMs)
6 Medical College 171 Degree College
10,600 Dental College
78 Polytechnic
1,210 Schools 1.1Mn Over 250
m students 7.5 m teachers Evenly spread all over
the Country
Population 1.08 Bn (25.7 urban)
Population growth rate1.6 pa Sex Ratio
933 /1000 Literacy rate
65.4 Life expectancy 63 years
27
Technical education Producing the best work-force

• One of the largest pools of technical talent
• Global employability due to English medium of
  education
• Strong social status of engineers sustaining the
  momentum

No of engineering colleges
Annual intake of engineering students
Source All India Council for Technical Education
28
Market The emerging opportunity

• The consumer classes are growing
• Increasing spending power of well educated,
  highly motivated
• Young consumer (western influence)
• But still a country of vast contrasts

Household in Mn
gt 19090 14320-19090
9550-14320 4776-9550 lt 4775
Annual HH PPP Income in
Source Economist Intelligence Unit, Apr 2004
29
IT services Leading the service boom
Relative Performance Global IT Services market
Indian IT Services exports ( Bn)
Source IDC, National Science Foundation,
Nasscom, Company estimates

• Global scarcity Indian talent
• Offshore risk Quality mitigation
• Incentive to Innovate Purchasing Power Parity
  61

Performance driven by global talent scarcity
profitability pressure on corporates
30
Quality Numbers

• 80 of the worlds 117 SEI CMM Level 5 companies
  are based in India
• 360 ISO 9002 companies are in India
• Over 15 companies are in US Stock exchanges
• 35 Silicon Valley start-ups are by Indians
• 90,000 Microsoft Certified Software Engineers
  Equal to US Largest outside US
• Largest English speaking technical Manpower

Quality of people and processes provides
sustainable advantage for India
31
Growing Telecom Connecting virtually

• Only infrastructure sector in which
  liberalisation has led to fall in prices for the
  consumer
• Tele-density doubled in last 3 years and is
  9.12 currently
• 2001 2004
• Cellular connections 3.6 Mn 54 Mn
• Internet Subscribers 2.5 Mn 5.5 Mn
  
• Basic Telephony 30 Mn 46.3 Mn
• Cable Connections 33 Mn 46 Mn
• Foreign Direct Investments (FDI)
• Year FDI Inflow (in Mn)
• 1993 0.47
• 1997 283
• 2001 902
• 2004 2180

Significant improvement in quantity and quality
32
Location Maturity Country Comparison
33
McKinsey Survey Forces Shaping the Business
Environment
Executives around the world see innovation and
the free flow of information as the primary
drivers of an accelerating pace of change in the
global business environment
34
An Established Player Vs. An Innovative Upstart
Company
Barnes and Noble vs. Amazon.com
Amazon
Barnes and Noble
Forbes100 from 1917 to 1987 Only 39 members of
the Class of 17 were alive in 87 Only 18 in
87 featured in the F100 18 F100 survivors
underperformed the market by 20 Just 2 (2), GE
Kodak, outperformed the market 1917 to 1987
35
Staying in the lead
36
1. Improve talent supply

• India will need a 2.3 million-strong IT and BPO
  workforce by 2010 to maintain its current market
  share. Supply projections indicate a potential
  shortfall of nearly 0.5 million qualified
  employeesnearly 70 per cent of which will be
  concentrated in the BPO industry.
• This gap can be bridged by the following
  initiatives
• expanding the pipeline of people willing to join
  the industry
• improving the quality of education
• database and other initiatives for people
  mobility
• quality education technical and soft skills
• global skills

37
2. Drive operational excellence

• India-based IT services providers have retained
  their cost leadership position despite increasing
  wage rates. This has been accomplished through
  greater automation and code reuse, as well as
  tighter people management.
• IT services players need to focus on three key
  areas
• Enhance customer interaction and solution
  delivery (e.g., effectively influencing customer
  requirements and decisions)
• Improve resource management (e.g., hiring people
  with the right skills at the right tenure)
• Upgrade support processes (e.g., accurate and
  quick financial reporting to facilitate decision
  making)
• For BPO players, NASSCOM and McKinsey have
  jointly developed a benchmarking framework called
  Process360 to help providers identify key
  operational gaps. The framework enables tangible
  improvements in output metrics (e.g., cost), by
  analyzing 14 different operational areas.

38
3. People transformation
Two way learning - It is clear that the flow
of knowledge has changed. Indian business people
traditionally learned from western business
schools. The flow of knowledge is now
two-way Building Technical Competency We must
not veer away from technical supremacy. With the
cost arbitrage advantage reducing, its our
technical competency which will help us to
sustain our advantage Nose for Business Its
important for managers to understand the
customers business and provide a solution
approach. Re-emphasize on skills, like
communication, knowledge of basic finance and
ability to build leaders
39
4. Leadership traits
5. Surround yourself with people who are smarter
than you
1. Know your genuine self
2. Challenge yourself and those who work with
you
6. Become obsessive with excellence.
3. Plan and structure your work
7. Be open to change, but do not compromise on
your values
4. Learn to be like an éclair, hard when it comes
to tasks and soft inside, when it comes to
dealing with sensitive issues
8. Never react to provocations
40
5. Innovation
Executives around the world recognize Innovation
as the most important capability for growth
41
5. Maintain cost leadership

• Continue to use the factor inputs in India
• That is a major source of our competitive
  advantage
• Improve the infrastructure and investments
• That is the only way to reduce the per unit
  variable cost
• Automate and rationalize growth opportunities
• Never lose focus from Quality, Reliability and
  Measurability
• There is no scope for obesity keep lean

42
Propensity to Innovate
Sight on value and result may be lost
Fresh innovative thinking
Propensity to Innovate
Not enough confidence to change and innovate
Reduced impetus for innovation
State of Economy
Depressed
Uncertain
Growing
Booming
India is a Growing Economy with Tremendous
Potential and Propensity to Innovate
43
Dont stop experimenting.

• Changes in the environment are quicker than ever
  before
• Learn and unlearn regularly
• There are few or no short cuts, whatever you do,
  you have to be the fastest, bestest
  and.cheapest??

Remember, experiments can fail, but thats
where inventions are born.
Thank you