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India IT Services
NASSCOM Forum 2011: The going is still good
Customer satisfaction has improved in most segments of IT
Services, resulting in increased traction with clients. We believe
global locations for contracts require adding value to the business,
besides lower prices. Hence, we see outcome-based models
gaining further ground which will help Indian IT companies scale
up non-linear revenues. We remain positive on the sector in terms
of growth.
Partnering your client – The right way ahead. Flexible operating
models, improving resource productivity via usage of cloud
computing etc. would ensure sticky and enduring client
relationships. Outcome-based models where service providers bank
on their understanding of the client’s industry and business will
increasingly be used going forward. Global delivery models
(GDMs) enable risk management, multi-lingual support, customer
proximity and business continuity.
RIM services to see growth on the back of smart devices.
Smart devices would be ‘put up’ on the network going forward.
Such devices would give real-time feedback. From the IT Services
perspective, this would offer huge opportunities for remote
management services.
Virtualization. Telepresence is among the technologies that will
make a significant difference in the way companies operate. With
growing sophistication of technology and economic considerations,
business travel is bound to decrease.
NASSCOM India Leadership Forum ’11
Companies are becoming more customer-relevant to ensure sticky
and enduring customer relationships. Building GDCs across
countries is an effort to do so. Remote Infrastructure Management
(RIM) services would see growth on the back of smart devices.
Among technologies, telepresence would change the way companies
operate. Based on the aforementioned factors, the future of Indian
IT Services looks bright.
Drivers of the decade
Harsh Manglik – Chairman, NASSCOM – mentioned that the Indian
IT-BPO industry has had a phenomenal run in the past decade,
contributing immensely to India’s growth. A bright future lies ahead and
the industry has much to look forward to in this decade. The industry
vision for ’20 includes building a US$225bn industry and lead the way in
transforming business globally and transforming India.
Som Mittal – President, NASSCOM – stated that while the global
economic environment continues to be uncertain, businesses recognize
that technology is the enabler for cost efficiency, transformation and new
product development. This has led to an increase in global sourcing of IT
Services and BPO, with India increasing its share in the overall market.
- Demographic shifts will fuel the growth of new sectors (healthcare),
markets (BRIC, Japan, Germany) and service lines (process transformation
for productivity improvement).
- Innovation will be the key differentiator. Companies will create
solutions for developing markets such as India. Climate change and
healthcare will increasingly leverage technology; transformation in
businesses of existing customers will lead to the emergence of new
business models.
- Collaboration between countries, customer-provider, and governmentindustry-
society will increase. Innovative solutions from small companies
will integrate with offerings of larger ones to tap the domestic opportunity.
- Trade re-balancing will lead to a change in global business dynamics.
Growth of Asia is likely to exceed that of Europe.
- Inclusion will be a key driver across economies; e.g., by utilizing the
local kirana/grocery shops that will function as micro-ATMs and
dispense/distribute cash.
Key facts
- Exports grew 18.7%, with transformation driving business
efficiencies.
- Software and services revenues (ex Hardware) of US$76bn
comprise over 86% of total sector revenues.
- The domestic segment, accounting for 33% of the sector, grew
21% to reach US$28.8bn.
Partnering your client – The right way ahead
Rajesh Nambiar – VP & GM, Global delivery at IBM – mentioned
that companies used nimble operating models, improving resource
productivity through usage of cloud etc to become a true partner with the
customer. Outcome-based models where service providers bank on their
understanding of the customer’s industry and business will increasingly be
used going forward.
Matt Idle – Credit, Operations Director, British Gas – presented a
view point from the buy side and spoke about partnerships. Some
attributes in a partner that companies would look for are flexible operating
models, working right alongside the company, and being ready to be paid,
based on outcomes.
N Chandra – CEO, TCS – mentioned engaging with customers better
and, more importantly, understanding how TCS could become more
customer relevant. He explained that doing this right and in a sustained
way was a difficult proposition. A deep understanding of the customer’s
business and understanding how IT can drive efficiencies as well as
growth are key to maintaining sticky and enduring customer relationships.
He added that the Indian IT large-caps handled the recent downturn
better (compared with ’01) mainly because they had become more
customer-relevant and were, in many cases, the strategic outsourcing
partners.
Companies are expanding their global delivery centers (GDCs) to offer
customers access to global talent. There are +500 delivery centers across
60 countries that provide flexibility/scalability to clients as well as access
to new customer segments. Risk management, multi-lingual support,
customer proximity and business continuity are enabled by GDMs.
RIM to see growth on the back of smart devices
Mr Arroyo – CIO, AT&T – mentioned that, going forward, smart
devices will be ‘put up’ on the network. Hence, not only an iPhone switch
on the car, but various devices would give real-time feedback going
forward.
For IT Services, this could open up huge opportunities for RIM services;
e.g., hospitals (which could be remotely managed and controlled) and
hotels (which could use smart devices to improve services), both of which
could be remotely managed and controlled.
Virtualization
“The future is all about virtualization”, stated Mike Rogers, futurist in
residence at New York Times. In his opinion, more interactions will be
virtual in the near future. Among technologies that would make a
significant difference to the way companies operate, telepresence would
be the frontrunner. Rogers was convinced that with the growing
sophistication of technology and economic considerations, business travel
is bound to significantly reduce, sooner than expected. He talked about
smart phones that could project a virtual keyboard on any flat surface and
also function as a projector.
Our View
1. The IT Services sector saw a strong recovery in ’10. The contracts in
the market now, to be bagged for the outsourcing industry are more
of end-to-end solutions contracts that would favour companies having
a wider gamut of services.
2. All service providers are offering platforms and not projects to their
customers. We believe service providers want to offer a complete
business solution that would help them partner with their clients.
3. There is a clear focus on multinational delivery sites – real
globalization of services, rather than just offshoring IT to the lowest
cost location. We believe locations pitching for contracts require
demonstrating a value add to the business, besides lower prices, and
hence see outcome-based models gaining further ground, which will
help Indian IT companies scale up non-linear revenues.
The mood at the conference was considerably buoyant. We remain
positive on the sector, in terms of its growth aspects.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India IT Services
NASSCOM Forum 2011: The going is still good
Customer satisfaction has improved in most segments of IT
Services, resulting in increased traction with clients. We believe
global locations for contracts require adding value to the business,
besides lower prices. Hence, we see outcome-based models
gaining further ground which will help Indian IT companies scale
up non-linear revenues. We remain positive on the sector in terms
of growth.
Partnering your client – The right way ahead. Flexible operating
models, improving resource productivity via usage of cloud
computing etc. would ensure sticky and enduring client
relationships. Outcome-based models where service providers bank
on their understanding of the client’s industry and business will
increasingly be used going forward. Global delivery models
(GDMs) enable risk management, multi-lingual support, customer
proximity and business continuity.
RIM services to see growth on the back of smart devices.
Smart devices would be ‘put up’ on the network going forward.
Such devices would give real-time feedback. From the IT Services
perspective, this would offer huge opportunities for remote
management services.
Virtualization. Telepresence is among the technologies that will
make a significant difference in the way companies operate. With
growing sophistication of technology and economic considerations,
business travel is bound to decrease.
NASSCOM India Leadership Forum ’11
Companies are becoming more customer-relevant to ensure sticky
and enduring customer relationships. Building GDCs across
countries is an effort to do so. Remote Infrastructure Management
(RIM) services would see growth on the back of smart devices.
Among technologies, telepresence would change the way companies
operate. Based on the aforementioned factors, the future of Indian
IT Services looks bright.
Drivers of the decade
Harsh Manglik – Chairman, NASSCOM – mentioned that the Indian
IT-BPO industry has had a phenomenal run in the past decade,
contributing immensely to India’s growth. A bright future lies ahead and
the industry has much to look forward to in this decade. The industry
vision for ’20 includes building a US$225bn industry and lead the way in
transforming business globally and transforming India.
Som Mittal – President, NASSCOM – stated that while the global
economic environment continues to be uncertain, businesses recognize
that technology is the enabler for cost efficiency, transformation and new
product development. This has led to an increase in global sourcing of IT
Services and BPO, with India increasing its share in the overall market.
- Demographic shifts will fuel the growth of new sectors (healthcare),
markets (BRIC, Japan, Germany) and service lines (process transformation
for productivity improvement).
- Innovation will be the key differentiator. Companies will create
solutions for developing markets such as India. Climate change and
healthcare will increasingly leverage technology; transformation in
businesses of existing customers will lead to the emergence of new
business models.
- Collaboration between countries, customer-provider, and governmentindustry-
society will increase. Innovative solutions from small companies
will integrate with offerings of larger ones to tap the domestic opportunity.
- Trade re-balancing will lead to a change in global business dynamics.
Growth of Asia is likely to exceed that of Europe.
- Inclusion will be a key driver across economies; e.g., by utilizing the
local kirana/grocery shops that will function as micro-ATMs and
dispense/distribute cash.
Key facts
- Exports grew 18.7%, with transformation driving business
efficiencies.
- Software and services revenues (ex Hardware) of US$76bn
comprise over 86% of total sector revenues.
- The domestic segment, accounting for 33% of the sector, grew
21% to reach US$28.8bn.
Partnering your client – The right way ahead
Rajesh Nambiar – VP & GM, Global delivery at IBM – mentioned
that companies used nimble operating models, improving resource
productivity through usage of cloud etc to become a true partner with the
customer. Outcome-based models where service providers bank on their
understanding of the customer’s industry and business will increasingly be
used going forward.
Matt Idle – Credit, Operations Director, British Gas – presented a
view point from the buy side and spoke about partnerships. Some
attributes in a partner that companies would look for are flexible operating
models, working right alongside the company, and being ready to be paid,
based on outcomes.
N Chandra – CEO, TCS – mentioned engaging with customers better
and, more importantly, understanding how TCS could become more
customer relevant. He explained that doing this right and in a sustained
way was a difficult proposition. A deep understanding of the customer’s
business and understanding how IT can drive efficiencies as well as
growth are key to maintaining sticky and enduring customer relationships.
He added that the Indian IT large-caps handled the recent downturn
better (compared with ’01) mainly because they had become more
customer-relevant and were, in many cases, the strategic outsourcing
partners.
Companies are expanding their global delivery centers (GDCs) to offer
customers access to global talent. There are +500 delivery centers across
60 countries that provide flexibility/scalability to clients as well as access
to new customer segments. Risk management, multi-lingual support,
customer proximity and business continuity are enabled by GDMs.
RIM to see growth on the back of smart devices
Mr Arroyo – CIO, AT&T – mentioned that, going forward, smart
devices will be ‘put up’ on the network. Hence, not only an iPhone switch
on the car, but various devices would give real-time feedback going
forward.
For IT Services, this could open up huge opportunities for RIM services;
e.g., hospitals (which could be remotely managed and controlled) and
hotels (which could use smart devices to improve services), both of which
could be remotely managed and controlled.
Virtualization
“The future is all about virtualization”, stated Mike Rogers, futurist in
residence at New York Times. In his opinion, more interactions will be
virtual in the near future. Among technologies that would make a
significant difference to the way companies operate, telepresence would
be the frontrunner. Rogers was convinced that with the growing
sophistication of technology and economic considerations, business travel
is bound to significantly reduce, sooner than expected. He talked about
smart phones that could project a virtual keyboard on any flat surface and
also function as a projector.
Our View
1. The IT Services sector saw a strong recovery in ’10. The contracts in
the market now, to be bagged for the outsourcing industry are more
of end-to-end solutions contracts that would favour companies having
a wider gamut of services.
2. All service providers are offering platforms and not projects to their
customers. We believe service providers want to offer a complete
business solution that would help them partner with their clients.
3. There is a clear focus on multinational delivery sites – real
globalization of services, rather than just offshoring IT to the lowest
cost location. We believe locations pitching for contracts require
demonstrating a value add to the business, besides lower prices, and
hence see outcome-based models gaining further ground, which will
help Indian IT companies scale up non-linear revenues.
The mood at the conference was considerably buoyant. We remain
positive on the sector, in terms of its growth aspects.
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