Vibrant Gujarat 2013

Opportunities in IT/ITeS Sector in Gujarat

Colonel Naveen Bhasin,CEO, Sai InfoSystems (India) Ltd

Contents –IT/ITeS

1 Overview – India Scenario2 Gujarat scenario3 Investment Opportunities

Overview

1Vibrant Gujarat 2013 • IT

GROWING INDUSTRYIT / ITeS industry is expected to be USD 320 billion by 2020. The CAGR for the decade (2011-2020) is pegged at 15% Domestic BPO market would increase to USD 2.5 billion by 2014The Indian electronics turnover is expected to be USD 400 billion by 2020.TRAI is targeting a 10-fold increase in broadband subscribers to 100 million by 2014 from existing 10.3 millionIndustry has also started to impact rural areas – rural BPO organizations employed more than 5,000 people in FY2009

India – IT/ITeS Scenario

LARGE INDUSTRYThe Indian IT industry is a USD 88 billion industry with 80% of the revenues coming from exports. It has been growing at a CAGR of about 17% in last 5 years (FY07-FY11).The Indian IT & ITeS sector employs over 2.5 million skilled people. Employment has been growing at a CAGR of about 20% in during FY07-FY11.The per capita GDP contribution of IT-BPO employees is about 80 times that of a person employed in the agriculture sector The IT-BPO industry currently contributes 14% to India‘s total exportsBetween 2000 and 2011, the IT/ITeS sector received cumulative FDI of USD 107 billionIndia is referred to as the back office of the world, with its strong cost advantages and skilled work force in providing ITeS.

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (e)

0

10

20

30

40

50

60

70

80

3140 46 50

5970

IT/ITeS exports in USD billion

Industry characteristics

• Major segments: 1. IT Services, 2. ITeS – BPO, 3. Software products and Engineering Services, 4. Hardware

Segment-size: IT services is the biggest in size (the revenue from IT services constitutes about 50% of the total industry revenues)

Segment growth: Software products & Engineering services are fastest growing (CAGR – 27.5%) and slowest growing segment is Hardware (CAGR – 17%)

• Larger companies depend more on export and smaller ones more on domestic market – hence, larger companies would prefer an SEZ over other IT space (such as an IT Park) because of export incentives provided in SEZs.

• In the future, domestic market would be the growth driver for the IT industry – even the top 10 companies’ revenue dependency on domestic market would increase.

India – IT/ITeS scenario

IT Services. 50%

ITeS - BPO. 20%

Software Products &

Engi-neer-ing Ser-

vices. 17%

Hardware. 13%P

ie

CAGR 21.8%CAGR 10.5%

CAGR 23.1%

CAGR 27.5%

Revenues of different components of IT/ ITeS Industry. CAGR for FY05 to FY 10.

IT services form the largest portion of IT/ITeS revenues

Top 1-10 Top 11-50 Top 51-1000%

20%40%60%80%

100%

67.20%40.80% 25.20%

32.80%59.20% 74.80%

Export and domestic % aggregate revenue of top 100 software vendors (FY10)

Export Domestic

Column Stacked 100 Percent

Source: NASSCOM

The total IT / ITeS industry in India should be USD 230 billion to USD 320 billion compared to about USD 90 billion today

Source: PwC analysis

Scenario DescriptionProjected

CAGR (Exports)

Projected CAGR

(Domestic)

Scenario 1 If assumed that future growth will be same as last 5 years’ CAGR (FY07-FY11)

17% 15%

Scenario 2 (Base case) If NASSCOM projections are used 13% 14%

Scenario 3 (Optimistic) If CAGR is 2% more than NASSCOM projection 15% 16%

Scenario 4 (Pessimistic) If CAGR is 2% less than NASSCOM projection 11% 12%

• We have projected the Indian IT sector demand for four different scenarios as tabulated below.

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

-

50

100

150

200

250

300 Export Revenue Projections in billion

USD

Scenario 2 Scenario 1 Scenario 3 Scenario 4

Line

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

-

20

40

60

80

100

120

Domestic Revenue Projections in billion USD

Scenario 1 Scenario 2 Scenario 3 Scenario 4

Line

Future outlook

Top 10 Sectors in India – FDI Inflows in 2010-11

SN Sector Net FDI1 Services (Financial and Non-Financial) $26.67 b2 IT (Hardware and Software) $10.82 b3 Telecom $10.61 b4 Housing & Real Estate $ 9.65 b5 Construction (Roads & Highways) $ 9.49 b6 Automobile $ 6.19 b7 Power $ 6.15 b8 Metals and Metallurgy $ 4.28 b9 Oil & Natural Gas $ 3.16 b

10 Chemicals (Other than Fertilizers) $ 2.92 bSource: FDI in India, 2011 Report

29

59

Growth drivers-National Policy on IT 2011

100

200

Domestic Exports

Current revenue in USD billion

in 2011

Targeted revenue in

USD billion by

2020

Enabling IT Policy

2011

Strategies formulated in the Policy to achieve targets• Creating ecosystem for a globally competitive IT/ITeS Industry • Human Resource Development • Promotion of Innovation and R&D in IT Sector • Enhancing productivity and competitiveness in key sectors

through ICT • Creating an ecosystem for Internet and mobile driven Service

Industry • Enabling Service Delivery through e-Governance • Mobile based Value added Services • Development of Language Technologies • GIS based IT Services • Security of Cyber Space

AIMS AT MAKING A CHANGE

To increase revenues of IT and ITeS Industry from USD 88 Billion at present to USD 300 Billion by 2020

To expand exports from USD 59 Billion at present to USD 200 Billion by 2020.

To create a pool of 10 million additional skilled manpower in ICT.

To make at least one individual in every household e-literate.

To provide fiscal benefits to SMEs and start-up ventures in key industrial verticals

To gain big global mkt share in cloud-based services & mobile-based value-added services

To leverage ICT for key Social Sector initiatives

To strengthen the Regulatory and Security Framework for ensuring a Secure Cyberspace ecosystem

To attract investments in IT in Tier-II & III cities

Source: Department of Electronics and Information Technology, GoI

Gujarat scenario

2Vibrant Gujarat 2013 • IT

The stretch between Ahmedabad and Gandhinagar is now being developed as a knowledge corridor. Land has been allotted and several IT parks and centres of excellence are taking shape here.

IT/ITeS – Gujarat scenario

2006-07 2007-08 2008-09 2009-10 2010-110

200

400

600

800

1000

1200

1400

564681

1268

10351150

IT exports from Gujarat in Rs. crore

Ahmedabad

Vadodara

Valsad

Gandhinagar

14 Special Economic Zones have been planned specifically for IT/ITeS – 7 are notified and 7 have secured formal approval

More than 1,000 ICT & BPO companies are operational in Gujarat.127 new companies are registered with the Commissionerate of Information Technology. More than 1,250 companies are registered with Gujarat Electronics & Software Industries Association (GESIA)IT units in Gujarat are spreading their markets from the US to other regions like Europe, Middle East and AfricaInfrastructure available at Infocity - Gandhinagar, GNFC Infotower - Ahmedabad, Astron IT Tech Park - Ahmedabad and another one is coming in Baroda

Source: http://www.gnr.stpi.in, GIL; Gujarat Electronics & Software Industries Association (GESIA), Commissionerate of Information Technology

Business friendly governance and investor friendly IT Policy & initiatives

Land Bank availability and relatively lower real estate

Skilled human resource advantage and lower cost of manpower. Lowest BPO attrition rate

Robust Physical, Social and industrial infrastructure

Lowest start-up and operational costs

Why Gujarat?

Investment opportunities

3Vibrant Gujarat 2013 • IT

Urban Living and Emergency Management Services

Cloud based services and solutions

E –Governance Initaitives

Video Telephony and Unified Communications

Urban and rural planning – using GIS, remote sensing

Knowledge Process Outsourcing

IT based education and trainings

During the Vibrant Gujarat Investment Summit 2011, 115 MoUs were signed for the IT/ITeS sector as against 20 MoUs in the 2009 Summit.

The proposed investment amounted to Rs. 68,565 crore and could provide employment to 320,000 people.

Foreign Investments proposed in the sector by USA were about Rs. 5300 crore employing 14000 people.

Investment opportunities

Investment in Rs. crore

Employment0

50000

100000

150000

200000

250000

300000

350000

46507

142992

68565

320000

2009 VG Summit 2011 VG Summit

Smart CitySmart Grids

Dis

aste

r

Man

agem

ent

SensorsSurve

illance

Das

hboa

rds

Intelligent Buildings

Homeland Security

Automation

Analytics

Urban Living – Products and Services

Disaster ManagementEOC, Alert and Messaging, UC, Planning etc.

Smart GridsPower, Water, Communication, Public Safety etc.

Intelligent BuildingsEnergy Mgmt, Home Automation, security etc.

Smart CityAggregation of all modules

Homeland SecurityTurnkey projects involving command and control centres, info gathering, analytics etc.

HLS Spend Forecast: Break-up

Source: “Homeland Security Assessment – India; Expansion and Growth” by ASSOCHAM; June 2011

Data Centres / Cloud Services – Market Size and Potential

Data Center Capacity in India (‘000 sft)

Colocation & Hosting Revenue (USD Millions)

• Current data center capacity in India at approx. 2.8 million sq. ft. (Service Providers have 55% Market Share and Captive has 45%). The same capacity is projected to increase to 6.6 million sq. ft. (Service Providers capturing 70%)

• Median Data Center size today is 2500 – 3000 sq. ft.; the industry may see consolidation of space in near future

• PUE of 2.0 may become industry standard• Outsourcing will drive growth rather than captive data centers

• Current Revenue streams from Colocation (for space and Power only) and Hosting stands at $487 million. Out of this, hosting and managed services account for < 25%. The revenue from these streams is expected to cross $1.3 billion by 2016 (Hosting and managed services to have 35% Market Share)

• Disaster Recovery could become a must have service for organizations• Hosting / Managed service will experience higher growth trajectory (26% CAGR)• Growth in Internet and online content will leverage Hosting services

Source: Gartner Research

2010 2011 2012 2013 2014 2015 20160

1000

2000

3000

4000

5000

6000

7000

Service Provider Captive

2010 2011 2012 2013 2014 2015 20160

200

400

600

800

1000

1200

1400

Colocation Hosting / Managed Services

14%22%

Healthcare Segment – Products / Services

EMRsHospital

Applications

Info

Exc

hang

eTele-M

edicine

Mobile Applications

Info. ExchangeBringing all the stakeholders in one open exchange

Hospital ApplicationsHMIS, Custom Development, Other Enterprise Level Software

EMRInter-operability, Database development etc.

Tele-MedicineSoftware, Physical Infra etc.

Mobile AppsPortable EMRs, NFC enabled interfaces, QR etc.

Energy Segment – Products / Services

SCADADistrib

ution

Franchise

Smar

t Met

ersSm

art-Grid

Sensors

Smart MetersHeavy demand projected, can be for captive use or for B2B selling

Distribution FranchiseWould provide the basic know-how and operational experience

SCADAInherent part of any distribution operations

Smart GridIT systems, turn key deployment and operations

SensorsNiche Market, usage in multiple verticals

SCADA: Supervisory Control and Data Acquisition

Agriculture Segment – Products / Services

Mobile Apps

Soil Mgmt.

Services

GIS

Map

pingG

PS solutions

Sensors

GIS MappingGIS Mapping services, land records and databases

Soil Mgmt. ServicesBased on sensors, advisory services for seeds, fertilizers, farming etc.

Mobile ApplicationsFor farmers, market, govt. agencies etc.

GPS SolutionsGPS solutions to government and private agencies

SensorsData capturing devices for all applications

Sum-up – Products and Services

Health•Hospital Applications•EMR•Mobile Applications• Information Exchange•Tele-Medicine

Energy•SCADA•Smart-Grid•Distribution Franchise•Smart Meters•Sensors

Education•E-Learning• ICT Solutions•Devices• Information Exchange•Cloud Services

Agriculture•Mobile Applications•GPS Solutions•GIS Mapping•Sensors•Soil Management Services

Urban Living•Disaster Management•Homeland Security•Smart City•Smart Grids• Intelligent Buildings

Enablers

Data Centre / Cloud Services

IP Surveillance

Event Management System

IP Communications

IT Hardware

Block No. 18, 2nd Floor, Udyog Bhavan,Sector 11, Gandhinagar, 382 017, Gujarat, INDIA

Phone: 079-23256009, 23250492/3Fax: 079-23250490

E-mail: indextb@indextb.comwww.indextb.com

Visit us at www.vibrantgujarat.com