Perspective 2020: Transform Business, Transform India

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Perspective 2020 Transform Business, Transform
India
February 11, 2009
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PERSPECTIVE 2020 KEY MESSAGES
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PERSPECTIVE 2020 KEY MESSAGES
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THE TECHNOLOGY AND BUSINESS SERVICES INDUSTRY HAS
HAD AN UNPARALLELED IMPACT ON THE INDIAN ECONOMY
50
1
Growth of Indian technology and business services
exports
Total export revenues as a percentage of
nominal GDP Based on FY08 performance Tec
hnology and business service exports as a
percentage of total exports (merchandise exports
and service exports) Source RBI Annual reports
1998 to 2008 WMM (Global Insight)
5
THE INDUSTRY HAS HAD A RESONATING IMPACT IN THE
BROADER SOCIETY
8.7
2
Incremental jobs created

• Contribution to education 6-7x fold increase
  in tertiary education capacity in states that
  account for 90 of exports

• Diversity and global exposure proportion of
  women in the workforce estimated to be 30 in
  2008 and increasing around 30 of delivery
  outside India

• Offset oil imports Industry exports offset
  close to 65 per cent of Indias cumulative net
  oil imports over past decade, strengthening
  foreign reserves

Total urban jobs in FY 1994 amounted to 81.8
million and 90.5 million in FY 2005 High
multiplier effect for every direct job created
2.6 additional jobs created in indirect
employment Source Institute of Applied Manpower
Research The Rising Tide Employment and
Output Linkages of IT-ITES February 2007
Indian IT/ITES Industry Impacting Economy and
Society 2007-08
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THE GLOBAL ECONOMIC CRISIS WILL HAVE A
FAR-REACHING AND AS YET UNCERTAIN IMPACT ON THE
INDUSTRY
4.2
US EXAMPLE
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Historic data indicates a moderate impact
IT spend as per cent of GDP
IT intensity peaked in 2000
Current IT intensity is much less than at peak
levels
Source BEA McKinsey analysis
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PERSPECTIVE 2020 KEY MESSAGES
Demographic shifts will fuel the growth of new
sectors, markets and service lines
5
The promise of technology to create new
opportunities needs to be balanced by the risk of
erosion in core markets
6
India can become a global innovation hub and own
business systems in at least three areas
7
ICT-enabled solutions can drive socio-economic
inclusion of 30 million citizens each year
8
8
ASIA (INCLUDING JAPAN) WILL BYPASS EUROPE IN THE
GLOBAL ECONOMY BY 2020
5
Regional share of global GDP
Per cent
Estimates Brazil, Russia, India, China
Source McKinsey Global Forces research
9
54
WORK FORCES WILL DECLINE AND AGEING POPULATIONS
INCREASE IN SELECT DEVELOPED COUNTRIES
5
Current offshore base in India 1.6 million
Source UN population prospects, 2004 McKinsey
Global Forces research
10
TODAYS CORE SERVICE LINES ARE AT RISK OF
SHRINKAGE
11
6
Includes specialised voice Source NASSCOM
data McKinsey analysis expert interviews
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THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING
TECHNOLOGY TO ENABLE INCLUSIVE GROWTH
8
Potential of ICT solutions
Areas
Source Expert interviews McKinsey analysis
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PERSPECTIVE 2020 KEY MESSAGES
The industry landscape will be fundamentally
altered
9
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2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (1/2)
9
Past decade
2020

• Concentrated footprint
• 75 with Fortune 500
• 80 from US/UK
• 75 from BFSI, Telco, Manufacturing
• 60 from IT services

• Significant opportunity outside todays core
  markets
• SMB
• BRIC, GCC, Japan, ROW
• Public sector and Healthcare

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2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (2/2)
9
Past decade
2020

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THERE ARE MULTIPLE STEP-OUT BUSINESS MODELS FOR
PROVIDERS TO CONSIDER
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NOT EXHAUSTIVE
Independent verification and
validation Source McKinsey analysis
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PERSPECTIVE 2020 KEY MESSAGES

• Success will rely on concerted action by industry
  stakeholders (companies, NASSCOM, government)
  anchored on a five-fold vision
• Catalysing growth beyond todays core markets
• Establishing India as a trusted global hub for
  professional services
• Harnessing ICT for inclusive growth
• Developing a high caliber talent pool of over 4
  million people
• Building India as a preeminent innovation hub

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COMPANIES CAN EMERGE AS WINNERS THROUGH 4 ACTIONS
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Source McKinsey analysis
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AN AGENDA FOR ACTION ANCHORED ON A 5-FOLD VISION
20
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PERSPECTIVE 2020 PAINTS THE WAY TO TRANSFORM
BUSINESS, TRANSFORM INDIA
Report release in March
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BACKUPS
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THERE IS AN INCREASING NEED TO ADDRESS CLIMATE
CHANGE AND ICT IS EMERGING AS A KEY ENABLER
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Social and environmental trends
BACKUP
6
ESTIMATES
Select ICT-enabled abatements
ICT can play a role in abatement of a potentially
dramatic rise in global greenhouse emissions by
2020
Greenhouse gas emissions GtCO2e
30
ICT enables at least 35 of global abatement
potential
8
Potential abatement
Emissions in 2020E
Incremental emissions
Emissions in 2002
Emissions in 2020 with abatement
Source McKinsey analysis
22
OPPORTUNITIES EXIST ACROSS A BROAD SET OF
APPLICATIONS AND ARE NOT LIMITED TO THOSE
TRADITIONALLY ASSIGNED TO ICT
0.14
Energy efficiency/climate change
NOT EXHAUSTIVE
6
BACKUP
Abatement potential, GtCO2e
Industrial motor optimisation
Efficient logistics and supply chain
0.68
1.52
Private transport optimisation
Industrial process automation
0.50
0.29
0.25
Dematerialization
0.16
Efficient vehicles
Traffic flow monitoring, planning simulation
0.10
Smart buildings
2.03
1.68
Smart grid
Combined heat and power (CHP)
Tele- commuting
0.40
0.26
Excluding telecommuting Source McKinsey
analysis