Evolution of Software Services in India

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Evolution of Software Services in India
Faculty of Management Amrita Vishwa Vidyapeetham

• Kris Gopalakrishnan
• Chief Operating Officer and Deputy Managing
  Director

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New York Times March 24th 2004

• Who else has such a global supply chain today?
  Of course Al Qaeda. Indeed, these are the two
  basic responses to globalization Infosys and Al
  Qaeda.
• Infosys said all the walls have been blown away
  in the world, so now we, an Indian software
  company, can use the Internet, fiber optic
  telecommunications and e-mail to get
  superempowered and compete anywhere that our
  smarts and energy can take us. And we can be part
  of a global supply chain that produces profit for
  Indians, Americans and Asians.
• Al Qaeda said all the walls have been blown away
  in the world, thereby threatening our Islamic
  culture and religious norms and humiliating some
  of our people, who feel left behind. But we can
  use the Internet, fiber optic telecommunications
  and e-mail to develop a global supply chain of
  angry people that will superempower us and allow
  us to hit back at the Western civilization that's
  now right in our face.
• From Origin of Species
• By THOMAS L. FRIEDMAN

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Growth Evolution of IT in India
Pre 1991
Post 1991
Reforms

• Import restrictions
• Punitive taxes
• Forex controls
• Distrust among policy
• makers
• Underdeveloped capital
• markets
• Capital shortage for
• infrastructure
• Poor telecom
• infrastructure

• A number of initiatives
• and innovations
• GDM
• ESOP
• Globalization and
• information revolution
• India becomes the
• premier offshore
• destination for offshore
• services

• Reforms increased the
• velocity of decision
• making
• Decentralized power to
• regional and state
• centers
• Abolishing of licenses
• Rationalization of taxes
• Export incentives
• Rationalization of tariffs
• Forex reforms

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What drives India?
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Marching ahead and proactively meeting changing
market requirements
What next
70s to early 90s
94-98
99-2001
Mainstream today

• Skill shortage
• Lower costs

• Legacy Migration
• Enterprise wide IT
• Y2K deadlines

• New capabilities
• ERPs
• Faster time to market
• Bus Continuity

• Lower cost
• Business alignment
• Maximize leverage
• Innovation
• Scale

Total Outsourcing
IT StrategyBPO / ITO
ERP/CRM e-Business
Value to Customer
Medium Large Application Projects
Large Scale Application Dev.
Y2K
Large ScaleMaintenance
Integration Newand Legacy
Legacy Maintenance
Staff Augmentation
Scale Complexity

• Quality excellence
• RD investments
• Business Continuity
• Project Management
• Stable companies
• Investments into Domain Consulting skills
• World class Infrastructure

• Domain / consulting expertise
• Innovation
• New Technologies
• Project Mgmt. Excellence
• End-to-End Services
• World Class Companies
• World class Infrastructure

• Skilled workforce
• Cost advantage
• Legacy platform skills

• Wider range skills
• Legacy platform skills
• Strong execution frameworks
• Committed delivery

Offshore IT Companies
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Indian IT Industry maturity is the result of two
decades of evolution..there are no short cut for
this

• Pioneered the Global Delivery Model - right
  skills at the right price at the right time, with
  managed risk.
• Increased focus on clients business results,
  modularized offerings, consultative strategies,
  selective strategic alliances and tighter
  relationships leading to customer satisfaction
• Mature understanding and pursuit of quality and
  business excellence initiatives like CMM
• Investments into world-class infrastructure and
  business continuity procedures
• Indias offerings remain high-quality and yet
  cost-competitive against other outsourcing
  nationsnew countries join but not yet grown
  through these phases
• Success requires specific IT and project
  management skills which cannot be build overnight

Global Systems Integrators now want to part of
global sourcing wave and to start with become
part of Indian IT industry
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leading to industry convergence..

• - IBM
• Accenture
• CGE Y

Imperative to Create and Integrate GDM
Capabilities
Imperative to Create A Solution Focus To Services
Solution Focus v/s Service Focus
Tier-1 Indian Firms- Infosys- Wipro- TCS
Tier-2 Indian Firms- Satyam- HCL- MPhasis
Extent of GDM in Service Delivery
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AMR Report
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Potential Challenges of global sourcing from two
groups of vendors

• Inadequate mind share at CXO level
• Acceptability by market of higher value services
• Integration of various skills towards common
  goals
• Potential pressures of price wars in near term

• Lack of experience with remote offshore model
• Fundamental change in model
• Inadequate processes to seamlessly integrate
  onsite and offshore activities
• Potential to treat offshore based facilities as
  contractors lack of integration with main line
  business
• Potential differentials in employee careers and
  opportunities may lead to employee attraction
  and retention problems in the long run
• India based companies overheads are also offshore
  driven unlike the US majors overheads will
  continue to be high
• Enhance scale of operations will continue to be a
  challenge

Indian IT Industry
Global System Integrators
Global Sourcing remains a high opportunity some
insights for effective leveraging
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From a Country Perspective, India is Best
Positioned to Capitalize on the GDM
China will not effectively address its
challenges until 2007 through 2010. Despite
near-term challenges, India will be the second
largest exporter of IT services by 2005. By
2005, four or five Indian companies will become
dominant IT service providers on a global
scale. - Gartner
Human Sophistication Quality of Workers, labor
cost, and worker skill level
Skills surplus
Buyers of technology services
Regional Hubs
Data Source Nasscom-McKinsey
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Design of the Firm

• Recruitment
• Education and Training
• Systems and Processes
• Scalability
• Structure of teams
• Compensation and benefits
• Benchmarking
• Corporate governance
• Value Selling
• Repeat business
• New Service additions
• Overseas listing
• World class across

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What have we demonstrated?

• We can create world class companies in India
• We can create wealth by remaining in India
• It is possible to dream big
• It is possible to conduct business legally and
  ethically

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Impact of this industry

• Revenues of 12 billion in FY 2003
• Expected revenues of 16 billion in FY 2004
• Estimated 800,000 employees
• Still less than 3 of global software services
  business
• LONG WAY TO GO!

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Challenges ahead for the Indian IT Industry

• Moving up the value chain
• Indian companies have to continuously move up the
  value chain from being a programming-shop to
  being patent creators and mission-critical,
  end-to-end solution providers.
• Must increase global presence and diversify in
  global marketplace
• Create multicultural workforces
• Supply of knowledge workers
• Scaling up across the country

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Questions
Faculty of Management Amrita Vishwa Vidyapeetham
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Thanks
Faculty of Management Amrita Vishwa Vidyapeetham

• Kris_sg_at_infosys.com