Post on 10-Apr-2018
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A Passage To India
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A dedication
To India which prepared me for the world And, America which opened the world
- A personal guide to offshoring in India by Atul Vohra
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India: The recent beginnings
McKinsey Quarterly Report, 2001
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India: The rest of the story
A history that is 3000 years old, and, one in the making.Western man is semitic in religion, greek in philosophy, roman inpolitics, saxon in morality and Aryan (Indian) in language ( MaxMueller circa 1850)By 1500 A.D. Emperor Aurangzeb s revenues in India were 10x thoseof his contemprary,Louis XIV of France
By 1900 India was still a top 5 economy with the third largest railnetwork and 2.5% of world tradeBy 1990 India was a bottom 5 country with 90 years of zero/negativeper capita income growth, the largest number of poor and illiterate, amixed up economic model, rampant intellectual and capital flight and,near insolvency.2004 India is on fire among the fastest growing economies, theworld s back office and a strong influence in the arts, culture andfashion. As Tom Friedman says, India is now giving the world ZippiesIndia Shinning is not just a slogan but the reality
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India: The rest of the story ,continued
The Indian paradox continues-for everything you can say, theopposite also holds true it is like wonderland: everyone seems mad and everything is bizarre, upside downThe promise comes with unending frustrations of population,pollution, public apathy.
Yet India can not be ignored for economic, political and spiritualreasons. It is like Hotel California-you can check out, but neverleave.And, therefore you need a guide to understand India and profit from it.
This presentation is about understanding the potential and ways to mine it.
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India: Offshore Potential
High Quality In IT 50 of world s 70 CMM5 Companies
are in India Cost of Quality ranges from 20-60% of
IT application budgets Similar data emerging for contact centers
and business processing outsourcing (BPO) units Lower cost $5000 - $8000 pa starting salaries Advantages in service and
manufacturing sectors Quality in services related to vedic
heritage,not physical infrastructuredependant.Predictable 90% + of IT projects on-time v/s 30%
industry average #1 Pressure point for Operation &
Technology Managers/Enterprise Users
Rapid Scalability 3 Mn+ Graduates each year Depth in Legacy & leading edge
technologies Estimate Indian users a generation
ahead of US mainstream Enables corporations to become more
nimbleFlexibility Vendors more flexible than employees
variable cost models Rewarded by the markets
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The India Advantage
Scale 300 Million EnglishSpeaking Middle Class by2010
Educational System &Focus on Quantitative AbilityWork ethic in the IT/ITESindustry
Powerful Demonstrationeffect of successfulIndians in India andoverseas
Commitment to QualityIntellectual PropertyProtection & EnforceabilityGovernment Support Eco system & Industrymomentum from $11 bn in2002 to $70 bn in 2008(McKinsey Estimates)
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India s Strategic Advantage is based on three key factors
Str a tegic Advan t a ge
Govt. Support
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Overall
People Factor Infrastructure Factor Environmental Factor
Skill BaseAvailabilitySkills mix
Work attitudeCost AdvantageEmployee cost Productivity
Institutional Support Training Labor Laws
TelecomIPLC Costs Skills mix
Speed of deployment PropertyTransportationPowerBanking and Finance
Govt fiscal incentives Simplicity of tax structure
FDI policyPolitico-Legalenvironment Economic environment
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As a result, India present a compelling outsourcing case
Firms in the US cansave between 30%-60% of their
processing costs byoutsourcing to India
Long Term Econ
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The talent pool in India gives it a significant edge . . .
Placed second to US in size &availability of skilled and Englishspeaking manpower
Availability of a large pool of DataEntry Operators and Accounting Professionals for back officeoperations
Availability of a large number of IT Professionals to provide ITsupport
Presence of over 11,000recognized educational institutions apart from other unrecognized andother vocational training institutes
Manpower
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India Offshore Opportunities
IT-Application development and maintenanceIT Infrastructure monitoring and hosting IT Product development BPO Contact centers BPO Processing-payments, claims, applications BPO Administration-transcription, digital assets management BPO Content-research, animation, graphics, analytics BPO Engineering, design, and Project Management BPO Healthcare-radiologists, drug testing, and researchManufacturing-generic drugs, autos
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India: Challenges &Resolution
R esolution
Develop US strengths andbuild in the offshore team
Domain Expertise
Challenges
Loss Of Control Transparency andprocesses including ePMO
Tools and interpersonal ties.
Managing USpolitical, labor and
social issues
Invest in retraining, higher value activities, ownership of
Indian firms andcommunities. Enable opening
of Indian market.
Fear Of Workingwith Overseas Mgt.
Understand and build Indo USpresence ands capability.Learn to manage offshore
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The BPO industry is critical for Indian economy from amacro economic perspective
Currently, IT and BPO services together account for 2% of theIndian GDPShare of GDP expected to go up to 7% by 2008IT and BPO sectors expected to contribute 20% of the GDPincremental growth between FY2002 and FY2008
Share of foreign exchange inflows expected to grow from 8% in2002 to 30% by 2008Will employ over 2 million people directly by 2008Will generate indirect employment for an additional 2 millionpeople
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OFFSHORING-A Mega trend for our times
O- Offshore or OssifyF- Fit and Feel (of the partner)F-Friend not Foe (or vendor)S-Start Smart( Real commitment, not an invisible pilot)H-Hi Tech and Hi touch (Processes and teams)
O-Oversight not out-of sight ( Transparency)R-Risk Management not eliminationI-Incentivize collaboration (goal and reward alignment)N-Nimble( flexibility and speed the greatest pay-offs)G-Globality for greatness!
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Offshoring-Doing the right thing and doing it right
Develop key supplier relationships-look for compatibility andchemistryBuild internal buy-in, champions and visibilityBuild a roadmap which shows real commitment while managing the risks of knowledge, critical dependency, sovereign risk etc.
Work as One team-goals, systems, rewards and recognitionLook at onsite-offshore as an integrated model. Monitor theratio and reinvest in both.Establish multi level relationships not a single point salesperson/purchasing officer face-off.
Strategically assess the buy vs. build issue. Revisit every 2-3years.
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Thank YouThank You
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The Government has also shown commitment to promote the sector
100% income tax exemption (up to 2010)100% FDI Permitted
Setting up of Software Technology Parks (STP) to facilitate/support Infrastructure requirements
Repatriation of income permittedDuty free imports of goods
Exemption from payment of excise duty
Capital gains on VC investments exempt from tax
Task forces set up for BPO services
Govt. Role
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and Telecom infrastructure, which was cited as a weakness in thepast, is no longer an issue
Bandwidth supply will shortlyoutstrip demand (Q2FY04)
-Huge network build outs byprivate operators
Prices for domestic and internationalbandwidth have halved in the last 12months
Private Operators are expected todrop prices further
Domestic Connectivity Pl ay ers S ystem C apa cit y
SEA-ME-WE-2 1 Gbps SEA-ME-WE-3 20 Gbps FLAG 10 Gbps SAFE 80 Gbps
Network i2i 8.4 Tbps Dishnet DSL 7.86 Tbps
International Bandwidth
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The remote future-estimates of $50-70 billion by 2008(BEST IN A GRAPH)
Segment
IT Applications and SystemintegrationProducts and technology
BPO
Estimate $ billion ( SourceNasscom)
30
10
25