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Japan: Business Opportunities
Experience of Indian Companies
FICCI JETRO DIPP
Tata Consultancy Services02 November, 2007
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Japan: Key Business Trends in IT
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Global/Japan IT Services Market SIze Global/Japan IT Services Market SIze
IT Services Market Size
Japanese IT Services Spend expected to grow at CAGR of 3.2% from 2005 through 2010
624
81 95
827
-50
50
150
250
350
450
550
650
750
850
Worldwide Market Japan
(in
US
D B
illio
ns
)
2005
2010
Source: Gartner 2005
Worldwide IT Services market is expected to grow at a healthy Rate of 5-6% with Japan keeping its momentum at 3-4% CAGR between 2005 and 2010
13% of Worldwi
de IT Market
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Japanese Outsourcing Market
Market size is $32B - Manufacturing and Financial Services companies expected to continue leading the outsourcing bandwagon
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02468
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Man
ufact
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gTra
nspor
tatio
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Finan
cial S
ervic
esSer
vice
sHeal
thca
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il Tra
deEdu
catio
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Comm
unica
tions
Gov
ernm
ent
Whol
esale
Tra
deUtil
ities
(in
US
D B
illi
on
s)
2005 2010
Source: Gartner 2005
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Japan Offshoring DestinationsChina and India are preferred destinations for Japan offshoring Offshore volumes are likely to reach $5B by Year 2010
Japan Offshoring = $1.4B
YoY +40%China - $1.1B
YoY +43%
India - $0.29B
YoY +24%Other APAC - $0.03B
Embedded Appl.Dev.
100%
Source: Gartner 2006, TCS GCP Research Desk
TP, Others5%
Enterprise Appl. Dev.
65%
Embedded Appl. Dev.
30%
Transaction Processing
20%
Enterprise Appl. Dev.
20%
Embedded Appl. Dev.
60%
Offshoring - Current Growth Engines
• Embedded Appl. Dev• Enterprise Appl. Dev.
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Japan Offshoring Trends across Services segmentInfrastructure operations likely to be the next offshoring
growth engine
High
High
Offshoring Maturity
(History Adoption)
Low
LowAffinity
(Language – Culture - Knowledge)
CallCenter
App Dev& Maint
PackageImplementation
BPO
Appl.Mgmt
Infrastructure Operations
TP
NegativePromising
Positive
EmbeddedR&D
QA
Note: Size of the circle indicates market size
Source: Gartner, 2006
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Key Emerging Technology Trends
Key emerging technology trends are driving opportunities for enterprises to gain competitive advantage
Service Oriented
Architecture (SOA)
Service Oriented
Architecture (SOA)
• Today, more than 70% of large enterprises and 50% of SMBs adopt some form of SOA in their organizations
• By 2008, SOA will provide the basis for 70 percent of new development projects
Infrastructure VirtualizationInfrastructure Virtualization
• Its use is well under way in financial services and in pharmaceutical firms
Web 2.0 and SAAS
Web 2.0 and SAAS
Open SourceOpen Source• Through 2010, open-source products will account for 10 percent of the overall software portfolio in Global 2000 companies. This catalyst will restructure the industry, producing higher-quality software at lower cost.
• The intent of SaaS (Software as a Service) is to deliver a service that has the attributes of an application utility (on-demand and one-to-many). It helps clients forgo customization for speed to implementation, agility and greater control of ongoing costs
RFIDRFID• RFID will enter broad use in business processes during the next 20 years because of continuous reductions in cost, improvements in performance and the development of standards
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Experience of TCS in Japan
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Everyone agrees that …
India* Brilliant SW Engineers* Among Developing World’s Largest Market
Global “Win-Win” PartnerIndia (SW) + Japan (HW)
Japan * Need for SW Cost Reduction* Strong in HW
* Language, Culture* Business Rules * Requirements, Contracts* Time, Distance etc.
Constraints
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Source: Gartner 2006 (CIO Survey of 550 Organizations in Japan)
• 70-80% of IT budget spent on Operating Expense
• High Cost Structure – Low ROI on projects
• Skills Shortage – Severe Supply-Demand gap
• Lack of Internal Project Management Skills
• Disintegrated IT – Too many isolated applications
Japan CIO Challenges
Optimizing Operational costs and investing in Business Transformation programs are key focus areas of Japan CIO’s
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Challenges faces by Indian IT Industry in JapanJapanese projects tend to pose special challenges to IT project managers primarily due to:
Cultural Gap - Different business etiquettes, long working hours, process of collective
decision making leads to delay
Communication – Understanding what is NOT told in words, shortage of bilingual
technical persons
Unclear Scope – the initial statement of requirements from customers is not adequate,
scope tends to increase as the project continues.
Changing Requirements – requirements do not get finalized till the very end, some new
requirements are found during UAT
Ambiguous contracts (warranty clause, work locations, etc..) – typical Japanese
contracts have lot of implicit assumptions
Language Dependency – Documentation, testing, integration, change in DB, UI
Maturity of Onsite-Offshore Model – most Japanese customers are not familiar or
comfortable with the onsite offshore model
Extended UAT (High expectation of quality) – it is quite usual to have multiple rounds
even at UAT
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Learning: Do it differently – Example of modified SDLC
Customized Software Development Life Cycle for Japan
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TCS Network Delivery Model for Japan
J-ODCHub,Kolkata
Yokohama
Shanghai
Pune
Bangalore
JapanCustomers
J-ODCSatellite Sites
J-ODCSatellite Sites
• Centralized Japan Delivery Organization• PMO – Planning and Key Initiatives• Nihongo KM Portal• Language Training/ Cultural Initiatives• Japan Delivery Training
Single Japan Delivery Owner
Better encapsulation of Japan specific learnings - leading to improved Service Delivery & Customer Satisfaction
Better encapsulation of Japan specific learnings - leading to improved Service Delivery & Customer Satisfaction
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TCS Japan – An Overview
Setup Operations in 1987 – 1st Indian IT Services firm
Near-shore facility setup in 2002 at Yokohama
Currently 1600 associates serving Japanese clients,
including 300+ associates onsite in Japan 200+ Bilingual associates (English & Japanese),
including 100+ Native Japanese
J-ODC (Japan Offshore Development Center) Hub at
Kolkata, India satellite sites at Bangalore, Pune,
Hangzhou, Shanghai (China)
Customers include leading Investment Banks,
Automotive major, Manufacturing and Insurance
Corporations.
Enhancing value for Japanese Corporations through Global Network Delivery ModelTM and Global Best Practices customized for Local needs
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BPO• Back Office Support• Engg, DB Services• Clinical data management,
statistical analysis
TCS Products• Financial Solutions• Insurance,• Manufacturing• IT Productivity Tools
Consulting• IT Consulting• Business Consulting• Quality Consulting
Business Intelligence• Data Warehousing• Enterprise Application Integration• Knowledge Management
Engineering & Industrial Services
• Product & Process Engineering• Embedded Systems• Plant Automation Services• Enterprise Asset Management
Enterprise Solutions• ERP, CRM, SCM• Mobile Computing, eCommerce• eLearning
Infrastructure Services• Assess (Consolidation, ITIL,
ESM, Security…)• Manage (DC Facility, DB Services,
Middleware, Server, Network, Telecom, Helpdesk Services…)
• Build, Migration/ Upgrade, ESM
Application Development, Maintenance & Assurance
• Application Development• Maintenance & Support• Migration/ Re-Engineering• Testing & Performance Engg.
ERP
CRM
SCM
TCS Japan - Our Services
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Talent Management in TCS for Japan• Talent Retention & Experience sharing
• Effective Recruitment & Training– Academic Japanization Program– Hiring from Japanese & American Universities– Japanese Language, Business, Culture training
• Global Workforce– 23% Onsite associates Japanese– Dedicated Japanese staff at J-ODC, Kolkata
• Up-skilling– Program Management
– Domain Competencies
– Certification (including JLPT & JETRO)
• Structured Leadership Development– Customized Project Leaders Training Program for Japan market
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Arigato Gozaimasu Thank You