Description
This is a presentation including the Indian Information technology IT industry extensively.
INDIAN IT INDUSTRY
MARKET SIZE
2005
2006
2007
2008
2009
Contribution of IT industry to Indian GDP
2005
2006
2007
2008
2009
Number of employees in IT Sector (Direct employment)
2005
2006
2007
2008
2009
MARKET SHARE
Indian IT industry Revenue Break-up by company
ENVIRONMENTAL SCANNING
PESTLE ANALYSIS
Political Economic
Social
• Political stability: • U.S. Government • More IT projects to Indian IT companies
• • • • •
IT spending Currency fluctuation Real estate prices Attrition Economic attractiveness
• Language spoken • Education • Working age population
Continued…
• Telephony • Internet Backbone • New IT technologies
Technological
Legal
• • • •
IT SEZ requirement Contract / Bond requirements IT Act Software Technology Park (STPI) scheme
Environmental
• Energy Efficient processes and equipments
SWOT ANALYSIS
STRENGTH
•Cost advantage •Ease of scalability •Breadth of service offering •Quality and maturity of process •Global and 24/7 delivery capability
WEAKNESS
•Excessive dependence on USA for revenues •Excessive dependence on BFSI sector for revenues •High rates of attrition •Decreasing competitive advantage
OPPORTUNITIES
•Greater scope for product innovation •Increased focus on high end work •Domestic demand for IT services •Greater scope to service domains
THREATS
•Global economic slowdown •US Govt. against outsourcing •Rupee-dollar movement •Increased competition from foreign firms •Increased competition from low-wage countries
PORTER’S FIVE FORCES MODEL
Threat of substitutes
•Other offshore locations •Price quoted for projects
Medium
Bargaining power of supplier’s
•Slowdown , jobcuts and layoffs •Demand and supply of IT professionals •Availibity of vast talent pool
Rivalry among firm’s
•Commoditized Offering •Low cost, little differentiation High •High industry growth To •Strong competitors
Bargaining power of customer’s
•Large no. of IT companies Very •Huge decline in IT High expenditure
low High
Threat of new entrants
•Low capital requirement •Large value chain •MNC’s
V.I.R.U.
Criteria for sustainable competitive advantage
Capabilities valuable TCS Brand Value Infosys Large client base Training facilities Wipro Cost management Largest third party BPO operator Leadership in emerging and domestic market IBM Brand value Innovations
Costly to imitate Employee strength Rare CMMi 5 certification
Footprint in 170 countries
Unique
Global network delivery model
End to end solutions
Sustainable competitive
Competitive parity
competitive parity
Sustainable competitive
Firm Infrastructure
Promoted by TATA group Utilisation 74%(163,700) , attrition 13%
TCS-Value chain
Human Resource Management
Technological Development
Broad based growth across all service lines
Procurement
40000 new recruitments(2010)
Service
Operations
Inbound Logistics
Marketing and Sales
Outbound Logistics
Aggressiv e cost managem ent
Global network delivery model
Business intelligenge,consulting , package implementation
Firm Infrastructure
Focus on profitability
Infosys value chain
Human Resource Management
Utilisation of 73%(114,822) Attrition 15.8 %
Technological Development
Procurement
6000 recruitments(QoQ)
Outbound Logistics Marketing and Sales Service
Inbound Logistics
Operations
Wide services offerings and deep domain depth
Onsite offices
Firm Infrastructure
Highest levels of corporate governance
14.9 % attrition(over 100,000)
Wipro
Human Resource Management
Technological Development
Infrastructure management projects 5300 new recruitments
Procurement
Inbound Logistics
Cutting non staff costs
Operations
Outbound Logistics
Fixed price projects
Marketing and Sales
Strong presence in emerging and domestic market
Service
Firm Infrastructure
SCM outsourcing
M & A integrations avoiding redundant costs
IBM
Human Resource Management
Technological Development
$6 b R & D spending
Procurement
Supply,logistics, manufacturing integrated
Inbound Logistics
Operations
Outbound Logistics
More flexible and power of decision making
Marketing and Sales
Service
Business performance management
BCG & GE
Business Level Strategies
TCS
? ? ? ?
Centers of Excellence Product Development Focus on CRM Cost leadership due to Knowledge Management Services
INFOSYS
?
? ? ?
Enhance Solution Set Client focused Strategy Commands Premium margins Increase business from new and existing clients
WIPRO
? ? ?
Service Line Expansion Investing in Human Capital Research and Development
IBM
? ?
Innovation Centralized support functions
CORPORATE LEVEL STRATEGIES
Core Strategies
•Global Delivery Model – Producing where it is most cost effective to produce & selling where it is most profitable to sell. •Moving up the Value Chain – Getting involved in a software development project at the earliest stage of its life cycle. • PSPD Model – “Predictability of Revenues, Sustainability of Revenues, Profitability, De-risking” for risk management.
Firm believer in “Organic growth” and acquire only those companies in line with strategic goals
Infosys
?
To maintain low-cost advantage they have opened offices in Czech Republic, Mauritius, Poland, Philippines, Thailand and Mexico
Infosys Consultancy established to provide high end services in value chain.
?
?
Has hedged currency for more predictability of revenues
(risk management)
?
Low cost Global delivery 24/7 Model
?
High differentiation in high end services of value chain
like software products and package solutions
TCS
?
Since last few years TCS is successfully leveraging labour cost in Eastern Europe, South America and China.
?
Getting big foreign names on board of directors is also one of the key strategies for TCS.
?
TCS was the first one to set up a delivery centre in China. Current Markets: USA and Europe Emerging Markets: India, Middle-east and Australia
?
?
?
The company’s operations are now divided into five units:
1. 2.
Industry Solutions (for vertical-specific services),
Major Markets (North America, Western Europe and the U.K),
3.
New Growth Markets (Latin America, Eastern Europe,
Middle East & Africa and India),
4.
Strategic Growth Business (TCS Financial Solutions,
SMB and Platform-based BPO)
5.
Organizational Infrastructure.
Wipro
?
Business from USA, UK, Japan, Germany, Singapore,
Canada, Netherlands, Switzerland.
?
Wipro is one of the largest product engineering and support service providers worldwide.
?
Wipro provides
? ? ? ?
Comprehensive research and development services, IT solutions and services (including systems integration) Information Systems outsourcing Software application development and maintenance services to corporations globally.
?
Since the margin of the service industry is declining Wipro wants to effect an additional service and prudency in their product portfolio.
IBM
?
IBM concentration on a single business strategy as well as a vertical integration strategy.
?
First develop marketing and product decisions in the United States and then transfer what they have done in the United States to other countries.
?
IBM operates in more than 150 countries worldwide and
derives more than half of its revenues from sales outside
the United States.
?
Since 2003 IBM has spent $11.8 billion on 54 acquisitions: 36 software and 18 service companies. Enter video game console market
?
?
MERGERS AND ACQUISITIONS
TCS M&A
Acquisition Date Company
Busineests
Country
Value
Remarks
8 October 2008
Citi Global Services Limited
Business Process Outsourcing
India
TCS acquired US$ 505 mn key BFS domain knowledge. Entry into Latin America; Access to payment processing platform
November, 2007
Comicrom
Banking BPO
Chile
US$ 23.7 mn
IBM M&A
Acquisition Company Date Business Country Value (USD)
September 20, 2010
Netezza
data warehousing and advanced analytics
USA
$1,700,000,000
August 13, 2010
Unica Corporatio n
Marketing planning software
USA
$480,000,000
Infosys M&A
?
Infosys acquired insurance BPO McCamish Systems for $38m in Nov 2009 Acquired 100% stake in Australia-based Expert Information Services Pty.Ltd. for approximately US$22.9 million in april 2008
?
Wipro M&A
?
Wipro Infotech acquired 3D Networks of Middle East SAARC operations for approx $23mn in 2009. Wipro Infotech acquired Yardley for $45.5mn in nov 2009
?
INTERNATIONALIZATION STRATEGY
Internationalization Strategy
oInfosys
•Infosys
Subsidiaries
BPO Limited •Infosys Technologies (China) Co. Limited •Infosys Technologies (Australia) Pty. Ltd. •Infosys Consulting, Inc
oInfosys
has 52 global development centers
IBM
? ? ?
Strategic objectives Baseline requirements Translation requirements
?
? ?
Worldwide availability
Worldwide translation availability Global Architecture Imperative (GAI)
Wipro
- In Europe: Strategic Partnership & Acquisitions
?
Partnership : IONA Technologies,Ireland; Compuware,Germany;ILOG,France and U.S
?
Acquisitions: Enabler,Portugal;Saraware,Finland;
Newlogic,Austria
- Main Motives
TCS
?
Five years ago, TCS was a $1 billion business employing 20,000
people.
?
Today TCS is a $5.7 billion business, employing 111,000 people in Global Delivery Centres in India, the US, Mexico, Brazil, Uruguay,
the UK, Hungary and China.
? • • • •
TCS is now No 10 in its industry by sales. Strategy. Synergies. M&A. Operating culture.
THANK YOU !!!
doc_977646831.ppt
This is a presentation including the Indian Information technology IT industry extensively.
INDIAN IT INDUSTRY
MARKET SIZE
2005
2006
2007
2008
2009
Contribution of IT industry to Indian GDP
2005
2006
2007
2008
2009
Number of employees in IT Sector (Direct employment)
2005
2006
2007
2008
2009
MARKET SHARE
Indian IT industry Revenue Break-up by company
ENVIRONMENTAL SCANNING
PESTLE ANALYSIS
Political Economic
Social
• Political stability: • U.S. Government • More IT projects to Indian IT companies
• • • • •
IT spending Currency fluctuation Real estate prices Attrition Economic attractiveness
• Language spoken • Education • Working age population
Continued…
• Telephony • Internet Backbone • New IT technologies
Technological
Legal
• • • •
IT SEZ requirement Contract / Bond requirements IT Act Software Technology Park (STPI) scheme
Environmental
• Energy Efficient processes and equipments
SWOT ANALYSIS
STRENGTH
•Cost advantage •Ease of scalability •Breadth of service offering •Quality and maturity of process •Global and 24/7 delivery capability
WEAKNESS
•Excessive dependence on USA for revenues •Excessive dependence on BFSI sector for revenues •High rates of attrition •Decreasing competitive advantage
OPPORTUNITIES
•Greater scope for product innovation •Increased focus on high end work •Domestic demand for IT services •Greater scope to service domains
THREATS
•Global economic slowdown •US Govt. against outsourcing •Rupee-dollar movement •Increased competition from foreign firms •Increased competition from low-wage countries
PORTER’S FIVE FORCES MODEL
Threat of substitutes
•Other offshore locations •Price quoted for projects
Medium
Bargaining power of supplier’s
•Slowdown , jobcuts and layoffs •Demand and supply of IT professionals •Availibity of vast talent pool
Rivalry among firm’s
•Commoditized Offering •Low cost, little differentiation High •High industry growth To •Strong competitors
Bargaining power of customer’s
•Large no. of IT companies Very •Huge decline in IT High expenditure
low High
Threat of new entrants
•Low capital requirement •Large value chain •MNC’s
V.I.R.U.
Criteria for sustainable competitive advantage
Capabilities valuable TCS Brand Value Infosys Large client base Training facilities Wipro Cost management Largest third party BPO operator Leadership in emerging and domestic market IBM Brand value Innovations
Costly to imitate Employee strength Rare CMMi 5 certification
Footprint in 170 countries
Unique
Global network delivery model
End to end solutions
Sustainable competitive
Competitive parity
competitive parity
Sustainable competitive
Firm Infrastructure
Promoted by TATA group Utilisation 74%(163,700) , attrition 13%
TCS-Value chain
Human Resource Management
Technological Development
Broad based growth across all service lines
Procurement
40000 new recruitments(2010)
Service
Operations
Inbound Logistics
Marketing and Sales
Outbound Logistics
Aggressiv e cost managem ent
Global network delivery model
Business intelligenge,consulting , package implementation
Firm Infrastructure
Focus on profitability
Infosys value chain
Human Resource Management
Utilisation of 73%(114,822) Attrition 15.8 %
Technological Development
Procurement
6000 recruitments(QoQ)
Outbound Logistics Marketing and Sales Service
Inbound Logistics
Operations
Wide services offerings and deep domain depth
Onsite offices
Firm Infrastructure
Highest levels of corporate governance
14.9 % attrition(over 100,000)
Wipro
Human Resource Management
Technological Development
Infrastructure management projects 5300 new recruitments
Procurement
Inbound Logistics
Cutting non staff costs
Operations
Outbound Logistics
Fixed price projects
Marketing and Sales
Strong presence in emerging and domestic market
Service
Firm Infrastructure
SCM outsourcing
M & A integrations avoiding redundant costs
IBM
Human Resource Management
Technological Development
$6 b R & D spending
Procurement
Supply,logistics, manufacturing integrated
Inbound Logistics
Operations
Outbound Logistics
More flexible and power of decision making
Marketing and Sales
Service
Business performance management
BCG & GE
Business Level Strategies
TCS
? ? ? ?
Centers of Excellence Product Development Focus on CRM Cost leadership due to Knowledge Management Services
INFOSYS
?
? ? ?
Enhance Solution Set Client focused Strategy Commands Premium margins Increase business from new and existing clients
WIPRO
? ? ?
Service Line Expansion Investing in Human Capital Research and Development
IBM
? ?
Innovation Centralized support functions
CORPORATE LEVEL STRATEGIES
Core Strategies
•Global Delivery Model – Producing where it is most cost effective to produce & selling where it is most profitable to sell. •Moving up the Value Chain – Getting involved in a software development project at the earliest stage of its life cycle. • PSPD Model – “Predictability of Revenues, Sustainability of Revenues, Profitability, De-risking” for risk management.
Firm believer in “Organic growth” and acquire only those companies in line with strategic goals
Infosys
?
To maintain low-cost advantage they have opened offices in Czech Republic, Mauritius, Poland, Philippines, Thailand and Mexico
Infosys Consultancy established to provide high end services in value chain.
?
?
Has hedged currency for more predictability of revenues
(risk management)
?
Low cost Global delivery 24/7 Model
?
High differentiation in high end services of value chain
like software products and package solutions
TCS
?
Since last few years TCS is successfully leveraging labour cost in Eastern Europe, South America and China.
?
Getting big foreign names on board of directors is also one of the key strategies for TCS.
?
TCS was the first one to set up a delivery centre in China. Current Markets: USA and Europe Emerging Markets: India, Middle-east and Australia
?
?
?
The company’s operations are now divided into five units:
1. 2.
Industry Solutions (for vertical-specific services),
Major Markets (North America, Western Europe and the U.K),
3.
New Growth Markets (Latin America, Eastern Europe,
Middle East & Africa and India),
4.
Strategic Growth Business (TCS Financial Solutions,
SMB and Platform-based BPO)
5.
Organizational Infrastructure.
Wipro
?
Business from USA, UK, Japan, Germany, Singapore,
Canada, Netherlands, Switzerland.
?
Wipro is one of the largest product engineering and support service providers worldwide.
?
Wipro provides
? ? ? ?
Comprehensive research and development services, IT solutions and services (including systems integration) Information Systems outsourcing Software application development and maintenance services to corporations globally.
?
Since the margin of the service industry is declining Wipro wants to effect an additional service and prudency in their product portfolio.
IBM
?
IBM concentration on a single business strategy as well as a vertical integration strategy.
?
First develop marketing and product decisions in the United States and then transfer what they have done in the United States to other countries.
?
IBM operates in more than 150 countries worldwide and
derives more than half of its revenues from sales outside
the United States.
?
Since 2003 IBM has spent $11.8 billion on 54 acquisitions: 36 software and 18 service companies. Enter video game console market
?
?
MERGERS AND ACQUISITIONS
TCS M&A
Acquisition Date Company
Busineests
Country
Value
Remarks
8 October 2008
Citi Global Services Limited
Business Process Outsourcing
India
TCS acquired US$ 505 mn key BFS domain knowledge. Entry into Latin America; Access to payment processing platform
November, 2007
Comicrom
Banking BPO
Chile
US$ 23.7 mn
IBM M&A
Acquisition Company Date Business Country Value (USD)
September 20, 2010
Netezza
data warehousing and advanced analytics
USA
$1,700,000,000
August 13, 2010
Unica Corporatio n
Marketing planning software
USA
$480,000,000
Infosys M&A
?
Infosys acquired insurance BPO McCamish Systems for $38m in Nov 2009 Acquired 100% stake in Australia-based Expert Information Services Pty.Ltd. for approximately US$22.9 million in april 2008
?
Wipro M&A
?
Wipro Infotech acquired 3D Networks of Middle East SAARC operations for approx $23mn in 2009. Wipro Infotech acquired Yardley for $45.5mn in nov 2009
?
INTERNATIONALIZATION STRATEGY
Internationalization Strategy
oInfosys
•Infosys
Subsidiaries
BPO Limited •Infosys Technologies (China) Co. Limited •Infosys Technologies (Australia) Pty. Ltd. •Infosys Consulting, Inc
oInfosys
has 52 global development centers
IBM
? ? ?
Strategic objectives Baseline requirements Translation requirements
?
? ?
Worldwide availability
Worldwide translation availability Global Architecture Imperative (GAI)
Wipro
- In Europe: Strategic Partnership & Acquisitions
?
Partnership : IONA Technologies,Ireland; Compuware,Germany;ILOG,France and U.S
?
Acquisitions: Enabler,Portugal;Saraware,Finland;
Newlogic,Austria
- Main Motives
TCS
?
Five years ago, TCS was a $1 billion business employing 20,000
people.
?
Today TCS is a $5.7 billion business, employing 111,000 people in Global Delivery Centres in India, the US, Mexico, Brazil, Uruguay,
the UK, Hungary and China.
? • • • •
TCS is now No 10 in its industry by sales. Strategy. Synergies. M&A. Operating culture.
THANK YOU !!!
doc_977646831.ppt