Localization of ICT industry in India

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Localization of ICT industry in India
Milind Kamble Tata Consultancy Services Belgium
S.A./N.V.
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(No Transcript)
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Essential Characteristics

• A throbbing democracy with stable parliamentary
  system of Government
• An independent Judiciary and Press.
• English speaking workforce general universality
  of English in the country.
• An established tradition of research innovation
  in both the industry academia.
• World class educational institutions spread
  across the country.
• Indias one billion plus population denoting a
  huge market.
• The sheer size of India with growing number of
  cities IT centers.

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Essential Characteristics (contd)

• A software computing services sector with the
  highest compound growth rate for the last five
  years in a row.
• The facilitating role of Government visible in
  producing IT friendly budget year after year
  rationalising taxes, aimed at promoting inward
  investment creating wealth.
• Vibrant business sector a venture capital
  sector that actively invests in IT start ups.
• Competitively priced Telecommunications
  infrastructure
• Telecom network growing at 22 for basic
  services more
• than 100 for cellular internet services.
• Wide banking network, spread to rural areas as
  well.

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Trends in Indian Software Service Exports

• The industry moved from onsite to more offshore
  presence. In 2002-03, offshore revenues grew by
  49 while onsite growth was 12
• Although US remains the primary market at 67
  market share driven by BPO growth, Indian
  software companies increased their presence to
  Europe and Asia Pacific
• Indian companies increased presence in
  traditional as well as new verticals such as
  Healthcare, Utilities and Retail (No. of
  companies targeting new verticals have increased
  from 116 to 184)

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Trends in Indian Software Service Exports

• Indian IT companies moved up the value chain
  targeting new service lines such as systems
  integration, package implementation, IT
  outsourcing and IT consulting

• Indian companies now invited and bid for global
  outsourcing projects and have won multi-year
  outsourcing projects
• Indian companies increasingly beginning to focus
  on software products. Strength of companies
  focusing on this space have increased from 317 in
  1999-00 to 453 in 2001-02

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Cost, quality and productivity gains are
continuing to drive the outsourcing wave to India
Cost
Productivity

• 40-60 cost reduction for off shored process
• Labor cost arbitrage, the reason for cost
  savings, likely to exist for the next 20-30 years

• Faster turnaround time
• Time zone difference
• 24 x 7 service
• Learning effect/ specialisation
• Learning curve effect given increased activity
  across companies and increased centralisation
  within company

Indias value proposition
Quality

• Established methodologies and processes for
  better performance
• Well defined quantifiable quality and process
  metrics
• Access to highly qualified skill pool

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India Has Large Number of Sophisticated Vendors
More than half the worlds SEI CMM Certified
vendors are Indian IT Companies
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Large reservoir of skilled workforce

• With over 600,000 employees, India is the 2nd
  largest employer in IT software and services
  industry
• Huge pool of English speaking and computer
  literate workforce
• Annual output of 178,000 engineering graduates
  every year from campus
• 160 universities and 500 institutes provide
  computer education at degree level
• 73,000 to 85,000 professionals are ready to join
  the industry every year

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Programs to strengthen Human Capital

• Doubling the intake in all Indian Institutes of
  Technology (IITs), Indian Institute of Science
  and the Regional Engineering Colleges (RECs)
• State Governments started establishing Indian
  Institutes of Information Technology
• Plan to implement IT Enabled Distance Education
  programmes in collaboration with leading academic
  institutions
• Centre for electronic design technology of
  India (CEDTI) to train manpower in Electronics
  Design Technology
• Interaction with industry for an academic
  institution is considered necessary and encouraged

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Government Initiatives

• IT on National Agenda (IT and Communications
  Ministry)
• Strong Telecom and IT Policy
• National Telecom Policy
• The Information Technology Bill
• 100 customs duty exemption
• Zero duty on import of Software
• Zero Tax on Venture Capital Gains
• Income Tax Exemption to IT Software Services
• Opening of the long distance and International
  telephony sectors for private participation
• Internet Telephony opened in April 2002

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Government Initiatives (contd)

• Special Schemes - Software Technology Parks (STP)
  and Special Economic Zones (SEZ)
• 21 STPs all over in India
• Income Tax holiday till 2010
• STP building or Virtual Units
• Free Imports
• Minimum value addition required
• High speed Datacom Connectivity
• E-Governance
• 19 State Governments have IT Policies
• 1-3 of Government spending towards IT

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Government Initiatives (contd)

• Enforcement of Anti-Piracy laws
• MoUs have been signed with 18 countries to have a
  formal agreement for cooperation in the ICT
  sector
• Liberalised norms for investments of up to 100
  foreign equity with full repatriation benefits.
• 90 of profits from software exports is exempted
  from tax.
• Setting up of IT Venture Capital Fund.
• Fast track clearance of goods imported by
  manufacturers of electronic goods.

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Government Initiatives (contd)

• Signed ITA at WTO
• Semiconductor integrated circuits layout design
  Act 2000 for protection of semiconductor
  integrated circuits layout designs
• India being a signatory to Trade Related
  Intellectual Property Rights of World Trade
  Organisation, all Government departments are
  actively participating in amending IPR Acts
  Laws to confirm to TRIPS.
• IPR cell is making concerted efforts to enhance
  the awareness on the emerging IPR regime.

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Bridging the Digital Divide

• Working Group on Information Technology for
  Masses set up by the Department of Information
  Technology
• Ambitious target of at least 100 million Internet
  connections by the year 2008 and one million
  Internet enabled IT Kiosks/Cyber Cafes to be
  established covering the entire length and
  breadth of the country.
• Establish IT infrastructure in 60,000 schools
  over a period of five years.
• Web enabled citizen oriented Government services.
• Micro-credits program in rural areas
• Development of cheap computer for poor people

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Bridging the Digital Divide (contd)

• Promote development of Indian Language content
  and over Internet.
• To launch mass awareness campaign
• To set up a IT Mission for 5 years to carry out
  the program recommended in the report and follow
  up other recommendations of the report.
• Compulsory IT literacy for Government
  recruitment.
• Earmarking up to 5 budget for IT induction in
  Government.
• No licenses and controls for setting up IT
  infrastructure and services.

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Bridging the Digital Divide (contd)

• State Government Portals to help rural artisans
  and entrepreneurs.
• Internet Portal for one point Government
  information and services.
• All Government information and payments to be on
  internet.
• Results of Public examination to be made
  available on Internet.
• New investments into areas of
• Bio-Technologies and Bio-Informatics
• Environment protection
• Microelectronics and Photonics development
• Telemedicine