software sector analysis report

8/9/2019 Software Sector Analysis Report

1/8

Software Sector Analysis Report

Aluminium

Auto Ancillaries

Automobiles

Banking

Beverages, Food & Tobacco

Cement

Construction

Consumer Products

Energy Sources

EngineeringHotels

Investment & Finance

edia

Paints

Petroc!emicals

P!armaceuticals

Po"er

#etailing

S!i$$ing

So%t"are

Steel

Telecom

Tetiles

T"eet '' [Key Points | Financial Year '14 | Prospects |

Sector Do's and Dont's]

Global IT spending !"ic" pic#ed $p in %Y1& is epected to (aintain a decent gro!t" in %Y14 ast"e econo(ic sit$ation in t"e )S and *$rope contin$es to i(pro+e, Discretionary spending on ITb$dgets by large global corporations "as tic#ed $p co(pared to last year b$t is li(ited to t"e ne!digital tec"nologies, In ter(s o- ind$stry +erticals .an#ing Financial Ser+ices and Ins$rance/.FSI0 and *nergy are t"e gro!t" dri+ers,

Indian IT co(panies "ad a good year in ter(s o- -inancial per-or(ance dri+en by -actors li#e s$c"as t"e i(pro+e(ent in t"e $ality o- ser+ice o--erings stable pricing en+iron(ent and t"edepreciation o- t"e Indian r$pee, Indian IT -ir(s contin$e to (o+e $p t"e +al$e c"ain by pro+iding(ore end2to2end sol$tions and engaging (ore closely !it" clients, T"ey are also increasinglyrelying on internal cost opti(isation (eas$res to i(pro+e pro-itability,

India's IT ind$stry can be di+ided into -i+e (ain co(ponents +i3, So-t!are Prod$cts IT ser+ices*ngineering and 5D ser+ices IT*S6.P7 /IT2enabled ser+ices6.$siness Process 7$tso$rcing0and 8ard!are, *port re+en$es pri(arily on pro9ect based IT Ser+ices contin$e to dri+e gro!t"!it" IT Ser+ices, T"is acco$nts -or :4,;< o- total re+en$es -ollo!ed by .P7 and *ngineeringser+ices at 1=,:


2/8

co((oditised,

Babo$r arbitrage "as been t"e co(petiti+e edge o- t"e Indian so-t!are sector o+er t"e last -e!years, 8o!e+er t"e -oc$s "as no! s"i-ted to pro+iding +al$e to clients beyond cost sa+ings,

So-t!are ser+ices are being increasingly de(anded by global >C%s !"ic" can boost sales as!ell as i(pro+e internal e--iciency,

Increasing co(petition press$re on billing rates o- traditional ser+ices and increasingco((oditi3ation o- lo!er2end ser+ices are a(ong t"e #ey reasons -orcing t"e Indian so-t!areind$stry to (a#e a -ast (o+e $p in t"e so-t!are +al$e c"ain, T"e co(panies are no! pro+iding"ig"er +al$e2added ser+ices li#e cons$lting prod$ct de+elop(ent 5D as !ell as ne! digitaltec"nologies li#e social (edia (obility analytics and clo$d co(p$ting /S>?%0,

T"e ne! Indian go+ern(ent is e(p"asi3ing on better tec"nology enabled deli+ery (ec"anis(s-or a ($ltit$de o- go+ern(ent pro9ects, F$rt"er !it" t"e ne! digital India initiati+e being la$nc"edt"e do(estic (ar#et -or so-t!are ser+ices loo#s -or!ard to a brig"t -$t$re,

Key Points

Supply

?b$ndant s$pply across seg(ents (ainly lo!er2end s$c" as ?D>, Bo!ers$pply in "ig"er2end areas li#e IT6.$siness %ons$lting b$t co(petition is+ery to$g",

Demand

T"e global do!nt$rn "ad p$t considerable press$re on global IT spendingb$t t"e sit$ation is no! i(pro+ing,

Barriers to entry

Bo! partic$larly in t"e ?D> 5 .P7 seg(ents as t"ese are prone torelati+ely easy co((oditi3ation, It's "ig" in +al$e2added ser+ices li#eIT6.$siness %ons$lting and 5D !"ere in2do(ain epertise creates abarrier, T"e si3e o- a partic$lar co(pany6scalability and brand2i(age alsocreates barriers to entry@ as s$c" -ir(s "a+e b$ilt $p long2ter( relations"ips!it" (a9or clients,

Competition

%o(petition is global in nat$re and stretc"es across bo$ndaries andgeograp"ies, It is epected to intensi-y d$e to t"e atte(pted replication o- t"eIndian o--s"oring (odel by >C% IT (a9ors as !ell as s(all start$ps,

Substitution of ITservices andproducts

IT contin$es to be a dri+ing -orce to!ards all aspects connected !it" o$rli+es, "ile a partic$lar tec"nology (ay beco(e obsolete and a partic$larco(pany speciali3ing in it (ay s$--er t"e obsolete tec"nology can only gets$bstit$ted by a ne!er tec"nology o--ered by t"e sa(e6di--erent player in t"eIT6IT*S ind$stry,

TOP

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3/8

Financial Year

'14

T"e Indian IT6IT*S ind$stry earned re+en$e o- o+er )SE 1= bn d$ring FY14, 7$t o- t"is eportsacco$nted -or =,H< o- t"e ind$stry's re+en$e,

In ter(s o- gro!t" by ind$stry +erticals .FSI Teleco( >an$-act$ring and all e(erging +erticalsare epected to gro! at 14


4/8

.illing rates are epected to re(ain $nder press$re in t"e s"ort ter(, T"ere-ore co(panies areepected to preser+e t"eir (argins t"ro$g" e--ecti+e cost contain(ent (eas$res li#e s"i-ting(ore !ore !or# o--s"ore and i(pro+ing e(ployee $tilisation, Bessons learnt d$ring t"e global-inancial crisis can bene-it t"e( in t"e long r$n,

.illing rates are epected to re(ain $nder press$re d$e to co((oditi3ation o- traditional ser+ices,T"ere-ore co(panies are epected to preser+e t"eir (argins t"ro$g" e--ecti+e cost contain(ent(eas$res li#e s"i-ting (ore !ore !or# o--s"ore i(pro+ing e(ployee $tilisation and t"e increasing$se o- a$to(ation so-t!are,

TOP

Related Links for Software Sector $arterly es$lts C* | Sector $ote | 7+er T"e Years

!I"#S O$ $"#S

C$cle$s So-t!are *portsJ Cot reali3ing -$ll potential /%ool 8and B$#e0

(Mar 20, 2014)

B$#e erg"ese disc$sses t"at C$cle$s So-t!are *ports re(ains dor(ant

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https://www.equitymaster.com/research-it/sector-info/software/Software-Sector-Analysis-Report.asp#tophttps://www.equitymaster.com/research-it/company-info/latest-sector-results.asp?sector=softwarehttps://www.equitymaster.com/research-it/company-info/latest-sector-results.asp?sector=softwarehttps://www.equitymaster.com/research-it/company-info/latest-sector-results.asp?sector=softwarehttps://www.equitymaster.com/stockquotes/sector.asp?sector=0%2CSOFTLhttps://www.equitymaster.com/stockquotes/sector.asp?sector=0%2CSOFTLhttps://www.equitymaster.com/stockquotes/sector.asp?sector=0%2CSOFTLhttps://www.equitymaster.com/research-it/sector-info/Software/archives.asphttps://www.equitymaster.com/research-it/sector-info/Software/archives.asphttps://www.equitymaster.com/detail.asp?date=03/20/2014&story=3&title=Nucleus-Software-Exports-Not-realizing-full-potential&utm_source=bottomviews&utm_medium=website&utm_campaign=related-articles&utm_content=articlelinkshttps://www.equitymaster.com/outsideview/archives.asp?cat=25&title=Cool-Hand-Luke&utm_source=bottomviews&utm_medium=website&utm_campaign=outside-view&utm_content=red-linkhttps://www.equitymaster.com/research-it/sector-info/software/Software-Sector-Analysis-Report.asp#tophttps://www.equitymaster.com/research-it/company-info/latest-sector-results.asp?sector=softwarehttps://www.equitymaster.com/stockquotes/sector.asp?sector=0%2CSOFTLhttps://www.equitymaster.com/research-it/sector-info/Software/archives.asphttps://www.equitymaster.com/detail.asp?date=03/20/2014&story=3&title=Nucleus-Software-Exports-Not-realizing-full-potential&utm_source=bottomviews&utm_medium=website&utm_campaign=related-articles&utm_content=articlelinkshttps://www.equitymaster.com/outsideview/archives.asp?cat=25&title=Cool-Hand-Luke&utm_source=bottomviews&utm_medium=website&utm_campaign=outside-view&utm_content=red-link


5/8

ipro Bi(itedJ ? !ell (anaged co(pany /%ool 8and B$#e0

(Mar 13, 2014)

B$#e erg"ese disc$sses t"at ipro Btd is a -inely (anaged co(pany

Lensar Tec"nologiesJ Financially !ell r$n /%ool 8and B$#e0

(Feb 13, 2014)

B$#e erg"ese disc$sses t"at Lensar Tec"nologies is a !ell (anaged b$siness

>indtec# IndiaJ Bac#l$stre -inancial per-or(ance /%ool 8and B$#e0

(Jan 10, 2014)

B$#e erg"ese disc$sses t"at >indtec# India's -inancials are not great

Tec" >a"indraJ Good ti(es to roll /%ool 8and B$#e0

(Nov 18, 2013)

B$#e erg"ese disc$sses t"at Tec" >a"indra is !ell geared to capitali3e on de(and

>ore ie!s on Ce!s

%OST POP&L'R

.$sting a -e! (ore real estate (yt"s /T"e Daily ec#oning0

(Jan 21, 2015)

T"ose !"o (a#e t"eir (oney o$t o- real estate !ill al!ays try to 9$sti-y "ig" prices one !ay or ot"er,

?n A< c"ance -or a (ar#et declineM /T"e : >in$te rap$p0

(Jan 24, 2015)

Going by t"is it see(s t"e Indian (ar#ets are abo$t to enter t"e -rot"y 3one,

iproJ Good botto(line per-or(ance

(Jan 16, 2015)

ipro "as reported a ;,&< o increase in t"e topline and an increase o- :,;< o in t"ebotto(line -or t"e $arter ended Dece(ber ;14,

T"e i(pact o- S!iss c$rrency on India Inc, /%"art 7- T"e Day0

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6/8

(Jan 17, 2015)

ill t"ere be a rise in repay(ents -or India co(panies on S!iss loansM

"y -oc$sed in+est(ent !or#sM /"at e're eading0

(Jan 16, 2015)

8ere is today's reco((ended reading list -ro( *$ity(aster,,,

>ore

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7/8


8/8

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