IT/ITES SECTOR IN

INDIA
PRESENTED BY: SABITAVO DAS
TABLE OF CONTAINT
01 SECTOR OVERVIEW
02 REVENUE BREAKUP
03 EMPLOYMENT STATISTICS
04 GOVERNMENT INITIATIVES
05 STRENGTH & WEAKNESS
06 CONCLUSION
Global scenario of IT & ITES.
The worldwide
information technology
industry, comprising
hardware, software,
information technology
(IT)services and BPO, is
estimated to have
clocked aggregate
revenues of $1,800
billion in 2012, an
increase of 5.0 per cent
over the previous year.
IT & ITeS account for a
major chunk of IT
revenues close to 45
percent, followed by
hardware and software,
which contribute
around 38 percent and
18 per cent,
respectively.
In the next 3-4 years, total
spending on IT is
expected to grow at a
CAGR of 5.5 per cent
globally.
At 8.2 per cent, IT-ITeS
spend is likely to grow
faster as compared to
other segments
Source: National Association of Software and Services Companies (Nasscom )data base
Indian IT sectors overview .

9%
3.1
mn
55% 38%
$2.4
bn
99 45% >60
Sectors
share in
GDP
Largest private
sector
employer


Share in global
offshoring
market
Largest share in
total services
exports
IT-BPM share:
47% Highest
attractor of
PE/VC
investments5
Cross border
M&A, 28%
share in total
M&As
Offsets
nearly half
of Indias oil
imports bill
Operational
IT-SEZs; 30%
in Tier II/III
cities35
Source :Nasscom
Evolution of Indian IT & ITES industry
The software
industry was
literally
nonexistent in
India until 1960.
Despite the
government initiatives,
the software exports
were not picking up
because of two reasons
mainly:
The exports of
software, was heavily
dependent on the
imports of hardware,
which was costly as
well as the procedure
for obtaining the same
was very cumbersome.
Secondly, there was a
lack of infrastructural
facilities for software
development.
By early 90s, US-
based companies
began to outsource
work on low-cost and
skilled talent pool in
India.
IT industry started to
mature.
Increased investment
in R&D and
infrastructure started
India increasingly
seen as a product
development
destination
Firms in India became
multinational
companies with
delivery centers across
the globe (580
center's in 75
countries, as of 2012).
Firms in India make
global acquisitions.
The IT sector is
expected to employ
about 3.0 million
people directly and
around 9.5 million
indirectly, as of FY13.
Indias IT sector is at
an inflection point,
moving from
enterprise servicing to
enterprise solutions.
Prior to
1980
1980-1990
1990-2000
2000-
onwards
Localization of IT industry..
Indias first it hub.
Good infrastructure
The idea of SEZ. Karnataka was among the first
to setup tax free SEZ to support technology
companies. This further encouraged IT
companies to set shop in Bangalore.
Bangalore
After Bangalore, Hyderabad has been
dubbed as the Silicon Valley of India, mainly
in light of the fact that more and more firms
have set up their operations there.
Hyderabads IT exports exceeded $1
billion in 2004
Hyderabad
Global leader for business process
outsourcing.(BPO)
Tamil Nadu was one of the first states in the
Indian Union to formulate an IT policy
Third largest it exporter from India

Tamil nadu
Maharashtra has reached the number two
spot in IT exports in the country and Pune
region is the leading source of IT exports
The total software exports out of
Maharashtra amount to Rs 51,760 crore,
second only to Karnataka (Rs 80,000 crore).
Maharashtra
Beginning to be recognized as a
fastest growing it destination
West Bengal
One the fastest growing it export hub.
Export it software 2000crore,its tenth
largest exporter .

Orissa
Source : The hindu,Livemint.
Indian IT sector broadly classified
into four segment
IT
IT services
Business
process
management
Software
products and
engineering
services

Hardware
Market Size: USD56.3 billion during FY13
Over 78 per cent of revenue comes from the export
market
BFSI continued as the major vertical of the IT sector
Market size: USD20.9 billion during FY13
Around 85 per cent of revenue comes from the export
market
Market size: USD17.9 billion during FY13
Over 79 per cent of revenue comes from exports
Market size: USD13.3 billion during FY12
The domestic market is experiencing growth as the
penetration of personal computers is rising in India
The sector has recorded a CAGR of 12% since 2010 to reach
USD118 billion in FY14, primarily driven by exports and IT
services segment
IT
54%
BPM
20%
SOFTWARE
SERVICES
15%
HARDWARE
11%
REVENUE BY SEGMENT
FININANCE YEAR(14E)
IT BPM SOFTWARE SERVICES HARDWARE
50.1
59.4
69.2
76.5
86.4
24.1
29
31.7
32.7
31.6
0
50
100
150
FY10 FY11 FY12 FY13 FY14
REVENUE BY YEARS
EXPORTS DOMESTIC
Export revenue grew by 13% year on year to USD 86.4 billion in14E,highest in five year.
Domestic revenue declined by 1.3% in year FY 14 from FY 13 due economic uncertainties, currency
fluctuation, slow down in GDP and near election 2014 ,all these are main reason for decline.
Among revenue segments, it was highest 54 % contributor, its growth is driven by IT consulting, soft
ware testing.
Domestic revenue break up
0% 10% 20% 30% 40%
Manufacturing
Govermnt
Consumer
Health care
Retail
Domestic revenue by
verticals (FY14)
0
200
400
600
800
1000
1200
1400
IT BPM S/W PRODUCTS
IT BPM REVENUE IN (IRN BILLON)
FY2012 FY2013E
Domestic: Y-o-Y growth 14.1 per cent, fastest
growing IT market in the world
Segments: IT services fastest growth 14.5 per
cent, BPM grew at 12.7 per cent

Services: Managed services, unified
communications, collaborative applications,
integration of core enterprise applications


IT services, export account for 75 %of Indian it services industry, IT services exports
have grown from $17.1 billion in FY 2007 to around $39.8 billion in FY 2012, a CAGR
for 18.5% and in FY13 it grew at $43.9$....
2
8

1
3

1
1

7

3

2

2

3
1

1
4

1
2

8

4

2

2

3
5

1
5

1
4

9

4

2

2

EXPORT REVENUE
GROWTH VERTICAL(USD
BILLION)
FY12 FY13 FY14
Growth in BFSI sector from year FY13 to FY14 is
increasing by12.9%,USD35billion ,growth in
manufacturing sector ,retail, and t&m (telecom
media) also increased by
16.6%,7.142%,7.142%.Growth in retail, healthcare,
travel was led by demand for mobility ,analytics,
government mandated and green technology
and digitalization .
Source:nasscom, Note: t&m- Telecom media,
c&u:construction and utilities
0
50
100
FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
IT -BPM -EXPORT REVENUE
IT SERVICE BPM S/W PRODUCTS AND ENGINNIERING
IT services revenue was increasing from FY2008 to FY 2014
by USD 29.7 billion. IF closely looking at the graph it clearly
understand that IT service growth at ~10 per cent; BPM
growth faster at 12.2 per cent from FY 2012TO FY 2013.
Business Drivers for the year-
New verticals and geographies
SMAC based services
Transformation and innovation
Restructured business mod

Growth Service lines: RIM, software testing, knowledge
services and F&A services

Export revenue by Geography.
The US accounted for nearly two-thirds of Indias total IT exports, while UK
experienced the highest growth in revenues
0
10
20
30
40
50
60
US UK CONTINENTIAL
EUROPE
APAC ROW
GEOGRAPHIC BREAKUO OF EXPORT REVENUE
(USD BILLION)
FY12 FY13 FY14
63%
18%
11%
6%
2%
61% 17%
12%
8%
2%
US
UK
CONTINENTIAL
EUROPE
APAC
ROW
TheUS,witha61%shareoftotalITexports,continuestobetheleadingcontributortoITsectorrevenues.ITexportstoU
Sincreased13%YoYinFY14.
TheUKandEuropearewitnessingincreaseddemand,asobservedfromthehigherYoYgrowth.TheAPACmarketis
relativelyunder-penetrated while Row is an emerging market with growing IT adoption.
SOURCE:NASSCOM
IT services revenue recorded a CAGAR
of9.5% during FY-12-14 led by exports
1
2
.
1
7

1
2
.
1
8

1
2
.
0
8

4
1
.
1
4

4
5
.
4
2

5
1
.
9
2

FY12 FY13 FY14
IT SERVICES REVENUE
DOMESTIC EXPORT
48%
17%
3%
7%
25%
EXPORTS REVENUE MIX
CUSTOM APPLICATION IT outsourcing ITCONSULTING SOFTWARE OTHER
TotalITservicesrevenuesincreasedataCAGRof9.5%toreachUSD64billioninFY14.DomesticITservicesmarketde
clinedataCAGRof0.5%.
ITservicesexportrevenuesgrewat14%YoYfromUSD45.4billionto~USD51.9billioninFY14.Thegrowthcanbeascr
ibedtorevivalindemandfromtheUSandEurope.
BPM revenues registered a CAGR of 10.5% during FY1214 with exports
having a 85% share (USD20 billion); CIS was the largest contributor to
export revenues
3% 3.22 3.24
16% 17.88 19.92
FY12 FY13 FY14
BPM REVENUES
DOMESTIC EXPORT
40%
19%
23%
14%
2% 1% 1%
Export revenue mix
customer
interaction
services
knodledge
services
finance &
accounting
verical specific
BPM services
TotalBPMrevenuesgrewataCAGRof10.5%totaling~USD23billioninFY14;theBPMdomesticrevenuesincrease
dataCAGRof2.8%.
BPM export revenues rose at~11%YoY over FY13 to reach~USD20 billion inFY14,accounting for nearly
one-fourth of total IT exports. The revenue growth was driven by knowledge services(data analytics
,legal services)and vertical-specific BPM Services.

SOURCE: Nasscom


Software product and ER&D revenues
3
.
7

3
.
8

3
.
7

1
1
.
7

1
2
.
8

1
4
.
1

FY12 FY13 FY14
DOMESTIC EXPORT
0% 10% 20% 30% 40%
1
SOFTWARE-USD1.7BILLION
RETAIL EDUCATION
MANUFACTURING PHARMA HEALTH CARE
BFSI TECHNOLOGY
OTHER
0% 5% 10% 15% 20% 25% 30% 35%
OTHER
TELECOME
SEMICONDUCTOR
AUTO
AERO
ENERGY
CONSUMER ELECTRONICS
MEDICAL DEVICES
ER&D-USD12.4BILLION


Software products &ER&D revenues grew steadily at a CAGR of 7.5% to reach~USD18billion FY14.
Software product revenues were driven by increased proliferation of mobile devices, advanced
technologies, cloud computing, greater uptake of software product by small and medium
businesses(SMBs)and enterprises ER&D revenues were driven by engineering
solutions(accountingfor55%ofrevenues) and embedded systems(accountingfor45%ofrevenues).
STARTUPS ARE INCREASING IN THE FIELD OF CLOUD,BIG DATA,DATA
ANALYSIS ,SOCIAL MEDIA, ECOMMERCE, seeing significant vc and angel
investor
162
335
400
450
500
2005 2009 2011 2012 2013
NUMBER OF START UPS
43
7
48
32
VC I NVESTOR ANGEL I NVESTOR
NUMBER OF ACTIVE
INVESTOR
2006 2012
43
13
180
80
VC I NVESTOR ANGEL I NVESTOR
NUMBER OF DEALS
2007 2012
32%
29%
21%
18%
18%
18%
14%
14%
14%
11%
11%
0% 5% 10% 15% 20% 25% 30% 35%
CLOUD /BIGDATA
MOBILE
BUSINESS
ECOMMERCE
WEBSITE& ONLINE
DEVICE/HARDWARE
DOMAIN FOCUS BY STARTUP
CLOUD/BIGDATA is
growing faster
than other domain
,account 32% in
the segment
followed by
mobile(29%),ecom
merce(14%).
Number of startups
are increased
by162 to 500 from
2005 to 2013.
Source :
NASSCOM,LIVEMINT
It-BPM service dominated by large players but majority of It-
BPM firms are small which contribute to18% of total
employment and 10% to the revenue
Company size Number of players %of total export
revenue
% of total
employees
Work focus
Large 11 47-50% 35-38% Full range of service
proving.
Presence over 60
countries.
Large scale of
operation and
infrastructure .
Mid size 85-100 32-35% 28-30% Mid size players offering
services in multiple
verticals
Near shore and off
shore presence in>30-
35 countries.
Emerging 450-600 9-10% 15-20% Players offering niche it-
bpm services
Small >40000 9-10% 15-18% Small players focusing
on specific services in
niche segment
Top players in IT-BPM services
Top players in IT SERVICES TOP PLAYERS IN ITES SERVICES TOP IT SECTOR EMPLOYERS
Tata Consultancy Services Ltd

Genpact India Pvt. Ltd. Tata Consultancy Services Ltd.
Infosys Ltd. Tata Consultancy Services Ltd Infosys Ltd
Wipro Ltd.

Serco Global Services
Cognizant Technology Solutions India Pvt. Ltd.
HCL Technologies Ltd. Aegis Ltd. Wipro Ltd.
iGATE

Wipro BPO
HCL Technologies Ltd.
Mphasis Ltd. Infosys BPO Tech Mahindra Ltd.
L&T Infotech Ltd.
Firstsource Solutions Ltd.
Genpact
Syntel Ltd. WNS Global Services (P) Ltd.
Serco Global Services
CSC, India
Aditya Birla Minacs Worldwide Ltd.
Cap Gemini India Pvt. Ltd.
Genpact India Pvt.Ltd.
EXL
Mphasis Ltd
Robert BOSCH Engineering and
Business Solutions Ltd.
Hinduja Global Solutions Ltd.
Aegis Ltd.
KPIT Technologies Ltd. HCL Technologies Ltd. -Business Services iGATE Global Solutions Ltd
Polaris Financial Technology Ltd. Tech Mahindra Limited CSC India
SOURCE :NASSCOM
EMPLOYEEMENT REVIEW
1296
879
601
1407
917
640
I T EXPORTS BPM EXPORTS I T- BPM EXPORTS
DIRECT EMPLYOEES(OOO)
2012 2013E
Industry employs ~3 million professionals directly, and ~9.5 million indirectly Employee growth
supplemented by non linear model. Over > 100,000 foreign nationals employed by the industry
~30 per cent (800,000+) women employees. Worlds largest talent pool: ~ 4.7 million graduates
and post graduates...

SOURCE :NASSCOM

FUTURE PROSPECT IN IT-ITES
Cloud Computing
Market is expected to reach USD650- 700 billion globally and USD1518 billion in India by
2020.
Cloud penetration in hardware is expected to show a major shift from 810% in 2012 to 22
24% in 2016.
Big Data/Analytics
The global market is estimated to grow 45% annually to reach USD25billionby2015.
Indian Big Data industry is expected to grow
from USD 200 million in 2012 to USD 1billionin 2015,aCAGR of over 83%.
Emergence of niche start-up s and technological developments would foster growth.
Social Media Analytics
An explosive growth opportunity for Enterprise Social Software with the global market exceeding USD6.4 billion
by 2016.
According to v Forrester Research ,spending on social business software is expected to grow at a CAGR of 61%
during 201316.
Enterprise Mobility (EM)
Global revenues are estimated to reach around
USD140billion by 2020, a CAGR of~15%.
North America is expected to remain the largest
market while APAC is expected to grow the fastest
at~21%.
Existing spend of less than 5% on EM is expected to
grow to 10-12% by 2020.
SMBs
SMBs are emerging as key stake holders for Indias IT sector.
Despite being large (47millionunits) and highly unorganized, this segment is witnessing rapid IT
adoption.
The key to exploiting the SMB opportunity is to offer cloud models(SaaS ,PaaS,IaaS),bundled end-
to-end offerings, bundled pricing, and intuitive solutions.
Source : NASSCOM
IT-ITES INDUSTRY OVERVIEW FOR NEAR FUTURE
India has the potential to build a US$ 100 billion software product industry by 2025, according to Indian
Software Product Industry Roundtable (iSPIRT).

The software products market in India, which includes accounting software and cloud computing-
based telephony services, is expected to grow at 14 per cent in 2014.

The IT services sector accounted for the largest share of the IT and ITeS industry, with a total market size
of US$ 56.3 billion during FY13, followed by BPM sector (US$ 20.9 billion), and software products and
engineering services (US$ 17.9 billion); the market size for hardware was US$ 13.3 billion during FY12.

The Indian IT-BPM industry is expected to add revenues of US$ 1314 billion to the existing revenues by
FY15, according to National Association of Software and Services Companies (NASSCOM).


Total exports from the IT-BPM sector (excluding hardware) were estimated at US$ 76 billion during FY13,
Export of IT services has been the major contributor, accounting for 57.9 per cent of total IT exports
(excluding hardware) in FY13.

The IT outsourcing sector is expected to see exports growing by 1315 per cent during FY15.
GOVERNMENT INITIATIVES FOR IT INDUSTRY
20 km
free Wi-
Fi zone
in Patna
US$ 6.4
billion
ESDM
PROJECT
SET UP IN
BANGAL
ORE
An
investmen
t of Rs 500
crore (US$
83.24
million)
Central
Government and
the respective State
Governments are
expected to
collectively spend
on it product
&services in 2014,an
increase over 4.3%
in 2013.
The longest across
the planet, making
a strong impression
on the world's
InfoTech map.
The ESDM project will
come up on a 1.16 acre
of land at an investment
of approximately Rs 85
crore (US$ 14.16 million)
More than 20 small
and medium
enterprises (SMEs) in
the IT sector have
recently received
land allotment letters
from the Government
of Punjab to set up
their units.
SOURCE : NASSCOM,GARTNER,
SEZ FOR IT /ITES IN INDIA
3
0
3

5
3
2

5
8
9

2008 2010 2012
IT SEZ UNIT GROWTH
SEZs have grown at a CAGR of ~18% during 2008-12 totaling 589 units in 2012.
Around30%ofalloperationalITSEZsarepresentinTierII/ III cities.
Tier II/III cities offer advantages such as low attrition, affordable real-estate, local government support,
and access to untapped SMB market that are rapidly adopting technology.
SOURCE: NASSCOM
The strengths of the Indian IT sector:
Highly skilled human resource;

Low wage structure;

Quality of work;

Initiatives taken by the Government

English-speaking professionals;

Cost competitiveness;

Quality telecommunications infrastructure.

The weaknesses of the IT sector

Absence of practical knowledge

Dearth of suitable candidates

Less Research and Development;

Contribution of IT sector to Indias GDP is still rather small

IT development concentrated in a few cities

Road Ahead For Indian IT Sector
Most preferred
location for
engineering
offshoring by
poll conducted
by Booz and Co.
Companies are
now offshoring
complete
product
responsibility
and increased
focus on R&D.
Indias IT
sector is
gradually
moving from
linear models
(rising
headcount to
increase
revenue) to
non-linear
ones.
IT companies
in the country
are focusing
on new
models such
as platform-
based BPM
services and
creation of
intellectual
property.
Tier II & III cities
are
increasingly
gaining
attraction
among IT
companies.
Cheap labor,
affordable real
estate,
favorable
government
regulations, tax
breaks and
special
economic zone
(SEZ) schemes
are facilitating
their emergence
as new IT
destinations.
Indian insurance
companies also
plan to spend Rs
12,100 crore
(US$ 2.01 billion)
on IT products
and services in
2014, according
to Gartner.
CONCLUSION :
Hence, IT sector is attracting considerable
interest not only as a vast market but also as
potential production base by international
companies.


Also, it is one of the fastest growing segments of
the Indian industry both in terms of production
and exports.