Industry Analysis IT and ITES

1. Industry AnalysisIT and ITES Prabhdeep Singh Pradeep Sangatramani

2. Introduction • IT : fastest growing sectors • Key segments : software and services

3. Evolution • IT • 1968: The Tata industrial conglomerate forms software services unit Tata Consultancy Services. • Mid-1970s: IBM exits India. Import duties of 150 percent or more mean that VCRs cost $3,000 and TVs cost $6,000. Wipro starts to create India's first homegrown PC. • 1994: Telecom liberalized. • 1995: TCS determines that its CasePac tool developed for IBM can be used to scan software for Y2K problems. An industry is born. • 1999: Y2K contracts pile into India. • 2002: Indian companies expand hiring. Massive layoffs in US • 2003: Led by service conglomerates such as Wipro and Infosys, India becomes a primary destination for offshore outsourcing as foreign companies seek to lower cost. • ITES • First Phase : MNCs establishing units in India (Pre 1997) • Second Phase : Entry of established software co. (1997 – 2002) • Third Phase : Geographical dispersion of Activities (2002-2004) • Fourth Phase : Move towards acquisitions ( 2004 - )

4. IT : Primary factors • Cost • Labor cost • Infrastructure costs • Exchange rates • Labor competitiveness • Size • Level of education • compatibility • Other Factors • Business and political risks • Geographical location • Regulatory considerations

5. Global Comparison….

6. Global Comparison

7. Major Players Top 4 companies have 80% market share

8. Future Trends

9. Future Trends • Increasing Labor costs • Moving up the value chain • Consolidation • Manpower Shortage • Outsourcing Backlash • Engineering Services Outsourcing (ESO), Avionics and other opportunities

10. THANK YOU…