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Perspective 2020: Transform Business, Transform India

Perspective 2020: Transform Business, Transform India. Perspective 2020:. Perspective 2020:. Transform Business,. Transform Business,. Transform India. Transform India. PERSPECTIVE 2020: KEY MESSAGES. 1. An unparalleled impact on the Indian economy in the last 10 years.

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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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