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Global ServicesLocal Opportunities
Randeep Sudan Geneva April 23, 2007
Global ICT Department
IT & ITES Industry: Trends
• IT industry contributes $2.78 trillion in global revenues• BPO was a $128.8 billion market in 2005 and is forecast to be a
$191.3 billion market by 2010 (Gartner).• $300 billion global addressable market for offshoring of IT and IT
enabled services (McKinsey & Co.)– Only 10% realized
• Growth– Offshore IT industry growing at 21%– IT enabled services at 49%
Global ICT Department
Blurring of Onshore, Nearshore and Farshore Locations
• Automobile manufacturer in Europe with suppliers across the EU• Outsourcing of accounts payable
– Provider receives invoices from suppliers at a central location in Spain
– Invoices scanned and sent to facilities in India and the Philippines for processing payment
– Payment to suppliers facilitated by delivery centers in Spain and the UK
Global ICT Department
Global Delivery Locations
• Genpact, India – US, Mexico, Hungary, Romania and China
• IBM, US– China, India, Malaysia, Australia, Costa Rica and the Philippines
• ACS, US– China, India, Fiji and Ghana
Global ICT Department
Thinking Global
“Invest where you get maximum returns, source talent from where it is best available, produce where it is most cost-effective, and sell where the markets are, without being constrained by national boundaries.”
Narayan Murthy, Infosys
Global ICT Department
Gartner’s Cool Vendors in IT Sourcing and Services 2007
• Epitome Mumbai, India– Complex quantitative analytics research for hedge funds, risk
management and compliance settlement, fund accounting administration
• Kio Networks, Mexico City, Mexico– World class data centers
• Procuri, Atlanta, Georgia, US– Strategic sourcing, contract negotiation, supplier management, and
spend analysis• Protiviti, Menlo Park, CA
– Independent risk management (Sarbanes-Oxley Act audits)
Global ICT Department
Estimated addressable market in global offshore IT industry 2005(USS$ billion)
150-18014-173-430-36
30-36
70-85
020406080
100120140160
Traditional IT Applicationdevelopment
andmaintenance
Systemintegration
Consulting(includingnetwork
consulting)
R&D sevices Total
2 31 5 10 30 11CurrentPenetration %
Includes hw/sw maintenance,network administration andhelp desk
Global ICT Department
Estimated addressable market for global offshore BPO(US$ billion)
120-15020-25
10-154-58-10
10-1210-12
35-40
25-35
0
20
40
60
80
100
120
140
Insurance RetailBanking
Travel &hospitality
Auto mfg Telecom Pharma Others F&A/HR Total
6 9 3 9 9 9 9 88Current penetration %
Global ICT Department
Worldwide BPO Forecast 2005-2010 (Gartner November 2006)
Global ICT Department
Potential Across the Value Chain
Source: NASSCOM-KPMG 2004
Finance and Accounts
Product Development
Human Resources Management
Technology ServicesIn
boun
d Lo
gist
ics
Man
ufac
turin
g / O
pera
tions
Out
boun
d Lo
gist
ics
Mar
ketin
g an
d S
ales
Cus
tom
er
Ser
vice
Human Resources• Payroll Processing• Recruitment and
selection support• HRIS
IT Services and Support• Custom development• Systems integration• Hosting / maintenance• Customer help desk /
support
Operations / logistics• Order tracking• Order / claims /
application processing• Payments processing
Sales / Marketing and Customer Service
• Tele-sales• Order Processing• Customer services and
Complaints• Help-desk
Finance and Accounting• Back-office• Accounts
payable/receivable• Financial reporting• Finance accounting• Revenue accounting
Research / Design and Development
• Clinical research• VLSI design• DSP chip design• Avionics research• Engineering design
services• Legal research
Global ICT Department
Most Vulnerable?Source: ‘Pain from Free Trade Spurs Second Thoughts’, WSJ March 28, 2007
Selected occupations ranked by Princeton economist Alan Blinder as “highly offshorable” (total: 8.2 million workers)
Occupations Number of US workers
Computer programmers 389,090
Data entry keyers 296,700Actuaries 15,770
Film and video editors 15,200
Mathematicians 2,930Medical transcriptionists 90,380
Occupations Number of US workers
Interpreters and translators 21,930
Economists 12,470Graphic designers 178,530Bookkeeping accounting and auditing clerks 1,815,340
Microbiologists 15,250Financial analysts 180,910
Global ICT Department
ITO and BPO Industry Size in Outsourcing Destination Countries 2004
Source: neoIT
Global ICT Department
AT Kearney’s Global Services Location Index 2007
Global ICT Department
India’s IT/ITES Performance ($ billion)
Sector FY 2004 FY 2005 FY 2006 FY 2007E
IT services 10.4 13.5 17.8
7.2
5.3
30.3
23.6
ITES-BPO 3.4 5.2
23.7
9.5
6.5
39.7
Engineering Services, R&D, Software Products 2.9 3.9
Total 16.7 22.6
31.3Exports 12.9 17.7
Global ICT Department
Andhra Pradesh
Population: 80 million
Area: 275,000 sq kms
Per capita (2006): Rs.25,625
~$580
Global ICT Department
Andhra Pradesh
0.014
0.450.65
0.821.12
1.84
2.84
0
0.5
1
1.5
2
2.5
3
1995 2001 2002 2003 2004 2005 2006
IT/ITES Exports from Andhra Pradesh
Source: STPI, Hyderabad
Global ICT Department
Key Factors
Infrastructure Talent Pool Government policies
Promotion Smart marketingSuccess stories
Global ICT Department
Key Factors
Infrastructure Broadband IT Parks
International Airport Urban infrastructureElectricity
Global ICT Department
Key Factors
Engineering grads Talent Pool Management training
International Linkages
Vocational trainingCompany focusedtraining
Global ICT Department
Key Factors
Incentives Deemed clearances Government policies
Self Certification Exemptions from certain laws
IT/ITES as essential services
Global ICT Department
Key Factors
APFIRST Consultants Coordination withHYSEA
Promotion MediaWorld EconomicForum
Global ICT Department
Key Factors
Microsoft GECIS Dell
Computer Associates
Hyderabad Cleanest City
Success stories
Global ICT Department
Key Factors
Smart marketing
Global ICT Department
Randeep SudanSenior ICT Policy Specialist
Global ICT DepartmentThe World Bank
email: [email protected]