Mega Trends and Implications to Business, Society and Cultures

1. Mega Trends and Implications to Business, Society and Cultures Executive Summary

2. Definition of a Mega Trend Impact of Mega Trends on Key Organizational Functions Definition: What is a Mega Trend? • Mega trends are global, sustained and macro economic forces of development that impact business, economy, society, cultures and personal lives thereby defining our future world and its increasing pace of change. • Mega trends have different meanings and impacts for different industries, companies and individuals. Analysis of these mega trends and their implications forms an important component of a company’s future strategy, development and innovation process, and impacts product and technology planning. • The following document sets the stage for visionary thinking by identifying the most important global mega trends, potential scenarios of specific trends in 2020, and the implications of these mega trends in transforming society, markets and cultures. These mega trends can be used as a base for strategic decision-making by understanding their impact on organizational functions such as marketing, Research and Development (R&D) budget spending , product planning and development, human resource management, technology planning and innovation scouting. Why Do Mega Trends Matter?

3. Research Methodology This document follows a four stage research process S1 S T A G E S S2 S3 S4 * Not covered in this document but in separate Frost & Sullivan’s 360 industry studies

4. Summary of Top Megatrends Urbanization: Increasing pace of urbanization will lead to integration of core city centre with suburbs and daughter cities resulting in expanding city limits. This will have massive impact on the future of mobility, working life and societies. Three concepts of urbanization will emerge: megacities, mega regions and mega corridors. Mega Cities : Integration of core city with suburbs and housing over 5 million people Mega Regions: Integration of two or more cities or expansion of city to join with adjoining daughter cities to form Mega Regions housing over 15 million people Mega Corridor: UrbanizationCorridors Connecting Two or More Mega Cities or Mega Regions Converging to form Mega Corridors. These can be 100 km plus n distance and having population of over 25mn living within the corridor Women Empowerment and Women CEOs : Around 25 of the Fortune Global 500 Companies will be headed by women in 2020. Constituting of over 40% of future labour force in US, India and China , women will have more decisive power over finance and business development thereby gaining more prominence in the boardroom and at the family front. Salaries of women will be equal if not higher than men in most countries, signalling a definite break in the glass ceiling. Goods, services and advertisements will be specifically targeted to women. Legislation in future will push this trend . ‘S” Governance ‘S’ Citizen ‘S’ Business ‘S’ City Planning ‘S’ Buildings Power to the Middle Class : With over 1 billion coming from India and China alone in 2020, the middle class income group will have the greatest impact on products and services and the biggest purchasing power as compared to other classes. In countries like South Africa this middle class is already nicknamed the “black diamond”. SMART Cities and SMART Infrastructure: With the advent of technology and infrastructure development, there will be a shift from “GREEN” to “SMART” concept. Some of the SMART initiatives will find its way into elements of Energy, Technology, Grids, Cars, Buildings, Utilities and Infrastructure . Energy efficiency and zero emissions will be the basic premise of such initiatives. ‘S’ Energy ‘S’ Mobility ‘S’ ICT Generation Y: Most educated, affluent, assertive and IT literate generation in history, these digital natives between 15 – 35 years will have distinct values, beliefs, attitudes, lifestyle and behavioural patterns influencing product, technology development and marketing strategies in 2020. Constituting 34% of global population in 2020, Generation Y will be the most adaptive to change, ready to experiment with new technologies with high purchasing power. Particularly in emerging markets, these young people provide a huge opportunity Reverse Brain Drain and CXO Positions in Developing Economies Mostly evident in countries like India and China, reverse brain drain as a concept implies a massive reversal of highly educated and skilled workers back to their homeland. This trend will also see proliferation of non-resident population filling up CXO jobs and salaries and benefits in these countries will eventually outstrip the Western World. Many Europeans and Americans will seek jobs in these developing countries in the future.

5. Summary of Top Megatrends Geo-Socialization: The next platform of social networking will rely on geographic services and capabilities such as geocoding and geotagging . These collaborative web mapping techniques will result in new trends of networking, digital marketing and innovative ways of socializing furthering the evolution of interaction between individuals and organizations. New Trade Zones: Governments are entering into new trade agreements which will spur the development of new trading hubs and increase in trade volume in 2020. These trade agreements will also lead to zero tariff rates and favourable prices for goods in 2020, particularly for countries in Asia, Africa and Latin America. SMART Clouds: The Next Trend in Cloud Computing: The next paradigm shift in cloud computing will be the advent of SMART Clouds. These flexible customized clouds can address a particular business (or personal) need for a specific period of time and can be integrated with existing on-premise IT infrastructure base - seamlessly and securely. This new cloud momentum is expected to throw open new business models leading to a confluence of new technological applications and opportunities for software vendors. Beyond BRIC: The Next Game Changers: The next big Game Changers will be the future economic engines of growth – signalling a shift in economic power in 2020 from BRIC countries to nations of Mexico, Argentina, Poland, Egypt, South Africa, Turkey, Indonesia, Philippines, Vietnam and possibly Iran. New Shores: Emerging Outsourcing Hotspots : The future outsourcing markets in 2020 will not be defined by overall labour cost or productivity but by specialization in niche areas like business analytics, software application development, product development and software testing. Most of these emerging hotspots will be located in Eastern and Central Asia and in Latin America. SPACE JAM: Future of Satellites: With the launch of GALILEO, and around 900 new satellites by 2020, new navigation and communication technologies will be enabled, leading to multiple innovations in Machine-to-Machine (M2M) communications, Mobile Satellite Services (MSS), and increase in broadband speed. Virtual World: Digital networking, online communities and computer-simulated environments will govern businesses, healthcare, education, mobility and even personal relationships in 2020. 3D virtual environments and avatars will interact and simulate real-life situations enabling users to experience and interact in virtual reality. Future Fortune Global 500: Companies in developing economies, particularly Asia will wield greater commercial progress in 2020. We will see around 30% increase in the number of Asian companies in the Global 500 Companies list signalling a shift of economic growth from Europe, United States to developing countries.

6. Summary of Top Megatrends Innovative Technologies of the Future: The next emerging technologies to watch out for will be in areas of nanomaterials, flexible electronics, lasers, SMART materials and so on, These technologies will drive multiple applications and present a potentially high ROI for companies in 2020. RoboSlaves: Robotic technology combined with Artificial Intelligence will assist humans in manufacturing, space, military, civil security and transportation sectors. Additionally, robotics will soon enter into the realm of personal relationships acting as a slave, companion and even a decision maker in 2020. Future of Consumer Electronics: Wearable Computing, 3D HDTV, Video Calling, E-Paper, Mind-Control Video Gaming are some of the future technologies which will hit the mainstream market by 2020. These will change the way people think, interact and work resulting in greener, smarter and technology-savvy lives in the future. • Future Global Power Generation: By 2020, nearly half of world electricity will be produced in emerging regions. Shifting regional and fuel balance will see renewable and nuclear energy increasing to 36% in 2020 of the total power generation. Wireless Intelligence: Wireless technology enabled by advancement incellular networks, satellite networks, RFID, Wi-FI and WiMax will lead to IT infrastructure and other services to be 80% wireless on a single integrated platform in 2020. With real-time video surveillance, virtual Monitoring and secure, high-speed, wireless data networking, this intelligence will be managed by a central server which commands different emergency services to detect, react, prepare, respond and even predict events. • Innovating to Zero! : “Zero Concept” World with zero emissions, zero accidents, zero fatalities, zero defects, zero breaches of security can now be a reality in the future. Companies will shift focus and develop products and technologies that “Innovate to Zero” such as zero emission technologies (such as wind power, Travelling Wave Reactor (TWR), Solar PV, Third Generation Bio Fuels) . Future Broadband Applications: Around 50 billion devices will be connected by broadband in 2020 with innovative applications in healthcare, business, education and entertainment sectors. Evolving Artificial Intelligence (AI) and broadband technologies will lead to sophistication of major applications resulting in virtual companies, business conferences, defense simulation, virtual classroom and even virtual space tours to name a few. • E-Mobility: : Over 40 million electric 2 wheelers and 4 wheelers will be sold annually around the globe in 2020. E-Mobility, from electric cars to electric aircrafts, will usher in a new set of players with new business models offering innovative and customized set of infrastructure and technology solutions.

7. Summary of Top Megatrends Infrastructure Development: Power, Water and Transport: With around $41,000 billion expected tp be pumped globally for infrastructure projects (2005-2030), there will be a tremendous improvement in the quality and operational efficiency of sectors such as transport, power and water. Emerging transportation corridors (eg. Trans Siberian Rail, High Speed Rail Corridors n the United States) will lead to mushrooming of economic and technology clusters along these corridors. These integrated hubs will be the future centres of innovation, R&D and technical excellence attracting massive investment and government support. From Fat to Fit: Health, Wellness and Well Being (HWW): Health and Well being are increasingly being viewed as an integral part of improving quality of life. As HWW is increasingly gaining more priority in personal life, companies are now considering this factor whilst strengthening their brand value and repositioning their products in the market. Many future strategic innovations and technological development will be built on this premise. (Eg. 2007 Toyota RiN) Factory of the Future: SMART and GREEN: Fully automated factories are now approaching reality. Sophisticated machines, intelligent robots infused with future technologies will soon allow a plethora of machinery to rapidly manufacture and fabricate products on-demand, without any human intervention. The entire production line will be configured with artificial intelligence allowing direct access and control to different machinery in the manufacturing process. New Business Models: Next Generation Business models will redefine future business propositions and influence future technology and product development . These business models will not only reshape the landscape of business environment and but also influence industry dynamics. Some of these evolving models are Personalization, Car Sharing, “Pay by the Hour”.

8. Summary of Industry-Specific Trends Healthcare: With Smarter Drugs, Virtual Hospitals, Cyber Docs – the healthcare industry is poised for a radical change with IT taking the forefront in R&D, diagnostics and monitoring. Healthcare spending will account for 20-30% of GDP in some economies by 2050 with a marked shift in spending toward predicting, diagnosing and monitoring – away from traditional treatment. In future, diagnostics will become less invasive, preventative, and image based and medicines will be marketed as molecular and personalized drug cocktails. Environment and Water: Increasing water stress and concerns on water management cycles will lead to sustainable water & wastewater treatment solutions in 2020. The value chain of the water industry will soon witness a strong integration between engineering procurement and construction companies, water & wastewater treatment system assemblers and original equipment manufacturers thereby leading to innovations in chemical free water & wastewater treatment solutions, bio-gas generation from wastewater treatment and recovery of material resources. Additionally trends such as Smart Water Grids and Water Trading are set to capitalise on the overall sustainable drive and become the mainstream by 2020. Chemicals and Materials: Nanomaterials, Smart Materials and Organic Electronics are just some of the materials of the future that will impact new product development, applications and technologies. These materials will possess revolutionary features (including tailored responses to external stimuli such as stress, temperature, moisture and pH) and will impact on future innovations in all avenues of life, such as green building materials, fuel efficient vehicles and next-generation personal care products such as nutraceuticals. However, the biggest change will be the shift to genuinely sustainable feedstocks that will impact plastics, [bio]fuels and cosmetic ingredients. Automotive: With the increasing urbanisation and formation of mega cities across the globe, there is a growing need for de-congestion and consequently, green personal mobility solutions (Hybrids, EVs and Alternate fuels) are expected to account for around 30% of global vehicle sales by 2020. With consumers being offered new options such as car-sharing and vehicle manufacturers offering integrated, door to door mobility, the shifting dynamics in the automotive industry will lead to emergence of new players called “mobility integrators”. The automotive industry will soon witness a paradigm shift in product differentiation (new features such as Health, Wellness and Well Being) with non-automotive suppliers entering the market with new competencies, value propositions and business models. Automotive App Store type concepts will grow • Energy and Power: Global Electricity generation is slated to reach 26,620 TWh in 2020: with renewable energy, and nuclear power accounting for more than a third of power generation by 2020. Rapidly accelerating need for cleaner, sustainable power will lead to resurgence of nuclear power, rampant clean coal commercialization and improved power storage solutions. Smart grids will be at the forefront of efficiency and management of energy, both for users of power as well as the utilities integrating the multitude of new supply points onto the grid.

9. Summary of Industry Specific Trends Aerospace and Defence: The Aerospace & Defence industry is characterized by early adoption of innovative technologies and globalisation. Technological advancements in SATCOM and wireless technologies will enable the development of capabilities such as Network centric operations in defence and improved in-flight communication in commercial aviation. Information management, particularly the ability to collect, analyse and disseminate information will also see unprecedented growth thereby driving innovations in the field of information security. The A&D industry will see increased need for integrating and managing information more effectively to improve capabilities and reduce costs. Measurement and Instrumentation : Self-powered” wireless sensor technology supporting energy harvesting are expected to spur innovations in occupancy sensors, window sensors, key card switches, CCD sensors, gas and humidity sensors and temperature sensors by 2020. As complexity and speed of chips, buses and systems increases in the electronics industry, Test and Measurement (T&M) vendors will increasingly shift from traditional to embedded instrumentation. Additionally, innovations in material technologies will lead to development of light substitute materials such as composites, smart materials, etc. and impact sectors such as aerospace, space tourism, electronics, healthcare, military applications, information technology, This is expected to give rise to a myriad of innovations in the fields of material testing, inspection and monitoring, to ensure quality and reliability of components used in such safety critical applications. , Information and Communication Technologies :The next step of technology evolution will see the high speed interaction between the physical and the online world through interconnection between mobile devices, sensors, probes and machines and objects digitally connected to the network. This will led to various sub-trends such as: convergence of virtual and physical payments, convergence of on-line and mobile applications, convergence between the various levels of realities, virtual, augmented, and physical, networked cities and intelligent spaces. Other interesting futuristic trends in the ICT space that will have multiple cross-sectoral impacts are: wearable computing, widget based User Interfaces (UIs), 3D Video on Demand (VoD), and cloud portability. Electronics and Security: Improvements to broadband infrastructure coupled with  advancement in wireless technology will lead to seamless integration and real-time interaction of disparate security systems enabling state-of-the-art security solutions with real-time video surveillance, virtual monitoring, and secure, high-speed, wireless data networking and wireless video servers. Furthermore, with the evolution of smart technology in buildings, grids, and cities, enterprise security solutions will soon be based on IP-based technology.  This seamless convergence of IT and physical security will lead to truly “intelligent” and interoperable systems by 2020 which will be developed on an open-IT platform. Building Technologies: Future advances in building automation systems will lead to integration of data, voice and video with security, HVAC, lighting and other controls on a single IP-network platform. These developments combined with “green” and “eco-friendly” elements will lead to the growth of “SMART, Green and Intelligent” Buildings by 2020. Additionally, open architecture and integrated hardware and software tools will soon enable the whole city to attain a new level of inter-connectivity.

10. Key Strategic Conclusions