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Perspective 2020: Transform Business, Transform India

Explore the key messages and opportunities for growth in the Indian economy, driven by demographic shifts and the need for new business models. Discover the untapped markets and the impact of business services in 2020.

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Perspective 2020: Transform Business, Transform India

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  1. Perspective 2020: Transform Business, Transform India Perspective 2020: Perspective 2020: Transform Business, Transform Business, Transform India Transform India

  2. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 1 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  3. THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON THE INDIAN ECONOMY 47 Rapid growth in the last decade Impact Areas of Impact Exports USD billion Employment Creation • 45% of new urban jobs created (1995-2005) Contribution to Education • 6-7x fold increase in tertiary education in exporting states • CAGR 1998-2009 (exports) • CAGR 1998-2009 (domestic) Diversity and Global Exposure • Women in the workforce estimated to be 30%; new entrants-45% • 30% of delivery outside India • 1998 • 2002 • 2005 • 2009 33% Contribution to Exports • Exports offset close to 65 per cent of India’s cumulative net oil imports over past decade 26%

  4. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 3 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  5. 100 • Middle East & Africa • Latin America 80 • Asia (except Japan) • Japan 60 • Europe 40 20 • North America 0 1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025 BY 2020, ASIA (INCLUDING JAPAN) WILL BYPASS EUROPE IN THE GLOBAL ECONOMY Regional share of global GDP Per cent • 2020 share • 7% • 5% • 20% • 10% • 25% • 33% * Estimates Source: McKinsey Global Forces research

  6. 54 WORK FORCES WILL DECLINE AND AGEING POPULATIONS INCREASE IN KEY WESTERN COUNTRIES Increase in retiree (60+ years) population: United States Decrease in working age (15-60 years) population: Japan Millions of people Millions of people • 8 • 16 • 2008 • 2020 • 2008 • 2020 Current offshore base in India – 1.6 million Source: UN population prospects, 2004; McKinsey Global Forces research

  7. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 6 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  8. 500 CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF INCREMENTAL GROWTH BY 2020 Total revenue potential for global sourcing, 2020 USD billion 380 1,500 230 190 200 500 • Core markets • 2008 • 6 verticals* • N. America, Europe, Japan • Large enterprises • Growth in core markets • Not adjusted for potential erosion due to automation • New verticals in developed countries • Public sector • Healthcare • Media • Utilities • New customer segments • SMBs • Outsourcing market in new geographies • BRIC Up to 80% of growth from markets that are not core today * BFSI, telecom, retail, pharma, manufacturing, travel

  9. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 8 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  10. 0 BUSINESS SERVICES WILL ACCOUNT FOR 60% OF TOTAL ADDRESSABLE MARKET OPPORTUNITY IN 2020 • Business services • Total addressable market for global sourcing and domestic outsourcing, 2020 • USD billion • 380-420 • 1,500-1,640 • 280-310 • 605-220 • 230-250 • 145-160 • 190-220 • 130-150 • 200-250 • 500 • 120-140 • 895-980 • 280 • 220 • Core markets • 2008 • 6 verticals (BFSI, telecom, retail, pharma, manufacturing, travel) • North America, Western Europe, Japan • Large enterprises • Growth in core markets • New verticals in developed countries • Public sector • Healthcare • Media* • Utilities • New customer segments • SMBs • Domestic outsourcing market in new geographies • Brazil • Russia • India • China • Total addressable market in 2020 * Printing and publishing Source: Global Insight; Gartner January 2009

  11. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 10 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  12. “Step-out” plays • Solution approach 4 • Multi-client services/ products • Saas-enabled • Domain approach 3 • Domain expertise • Vertical specialist • How to compete (competitive advantage) • Customer-centric approach 2 • Customer intimacy • Customer specialist • Delivery/technical approach 1 • Delivery excellence • Lean factory • BRIC specialist • Large enterprises (Fortune 1000) • SMBs • Large enterprises • SMBs • Developed markets • New geographies (BRIC) • Where to compete (customer segments) PROVIDERS CAN CONSIDER MULTIPLE “STEP-OUT” BUSINESS MODELS TO CAPTURE FUTURE OPPORTUNITIES • NOT EXHAUSTIVE * Independent verification and validation Source: McKinsey analysis

  13. PERSPECTIVE 2020: KEY MESSAGES 1 An unparalleled impact on the Indian economy in the last 10 years Demographic shifts will fuel the growth of new sectors, markets, and service lines 2 80% of incremental growth will be driven by opportunities outside the current core markets, verticals and customer segments 3 4 Business services will account for 60% of the total opportunity in 2020 80 per cent of incremental growth cannot be captured solely through the current “offshore and low-cost” proposition. Need for new business models 5 12 The exports component of the Indian industry is expected to expand three-fold and reach USD 175 billion and the domestic component will grow to USD 50 billion by 2020. Additional USD 150 billion at risk 6

  14. AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (1/2) 175 Business services Growth multiple CAGR USD billion 7.7x 18.6% • 135 • 225-310 4.4x 13% 175 40 India’s technology and business services export market in 2020 – scenarios* • FY 2008 • FY 2020-Current Initiatives • FY 2020-Focused Initiatives and Innovation - driven grow • Slow pace of reforms in education (talent pool of 10 million) • Limited development of Tier II, III cities • Continued trust as a sourcing hub • Continued government support • Limited lash back from protectionism • Expedited reforms in tertiary education • 10-15 Tier II cities with world class infrastructure • Adoption of new business models by the industry • India among the top 3 innovation hubs of the world • Talent pool of 13.5 million 110-150 87 11

  15. AN OPPORTUNITY OF UP TO USD 150 BILLION COULD BE AT RISK IN 2020 (2/2) 65 Business services Growth multiple CAGR USD billion 5.4x 15% 4.2x 12.6% • 15 65 50 Indian domestic technology and business services market in 2020 – scenarios • FY 2020 - Current Initiatives • FY 2020 - Focused Initiatives and Innovation Led Growth • GDP CAGR of ~5.5% • Moderate IT adoption across verticals • Significant government thrust on IT adoption including broadband rollout • Reinvented business models • GDP CAGR of ~7% • Significant IT adoption across verticals 12 32 24 2 • FY 2008

  16. Intellectual property framework • Centres of Excellence • Entrepreneurship • Winning through the downturn • Reinvented business models • New verticals, geographies, customer segments • Robust domestic demand Building a preeminent innovation hub in India Catalysing growth beyond today’s core markets 1 5 Five themes Establishing India as a trusted global hub for professional services • Infrastructure • Corporate governance • Risk management and security • Global branding Developing a high calibre talent pool of over 3 million people • Quality scale of tertiary education • Curriculum and faculty quality 2 4 3 Harnessing ICT for inclusive growth • ICT solutions for healthcare, education, financial services, public services • Connectivity and access • Soft infrastructure SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A FIVE-FOLD VISION 15

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