By 1900 India was still a top 5 economy with the third larg

1
A Passage To India

2
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

3
India The recent beginnings
McKinsey Quarterly Report, 2001
4
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 in politics, saxon in morality
  and Aryan (Indian) in language ( Max
  Mueller circa 1850)
• By 1500 A.D. Emperor Aurangzebs revenues in
  India were 10x those of his contemprary,Louis XIV
  of France
  
• By 1900 India was still a top 5 economy with the
  third largest rail network and 2.5 of world
  trade
  
• By 1990 India was a bottom 5 country with 90
  years of zero/negative per capita income growth,
  the largest number of poor and illiterate, a
  mixed up economic model, rampant intellectual and
  capital flight and, near insolvency.
• 2004 India is on fire among the fastest growing
  economies, the worlds back office and a strong
  influence in the arts, culture and fashion. As
  Tom Friedman says, India is now giving the world
  Zippies
• India Shinning is not just a slogan but the
  reality
  

5
India The rest of the story ,continued

• The Indian paradox continues-for everything you
  can say, the opposite also holds trueit is like
  wonderland everyone seems mad and everything is
  bizarre, upside down
• The promise comes with unending frustrationsof
  population, pollution, public apathy.
  
• Yet India can not be ignored for economic,
  political and spiritual reasons. It is like Hotel
  California-you can check out, but never leave.
  
• 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.
  

6
India Offshore Potential

• High Quality
• In IT 50 of worlds 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 infrastructure dependant.
  
• 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 Dept
h in Legacy leading edge technologies
Estimate Indian users a generation ahead of US
mainstream Enables corporations to become more ni
mble Flexibility Vendors more flexible than empl
oyees variable cost models Rewarded by the market
s
7
The India Advantage

• Scale 300 Million English Speaking Middle Class
  by 2010
  
• Educational System Focus on Quantitative
  Ability
  
• Work ethic in the IT/ITES industry
• Powerful Demonstration effect of successful
  Indians in India and overseas

Commitment to Quality Intellectual Property Prote
ction Enforceability Government Support Eco sy
stem Industry momentum from 11 bn in 2002 to
70 bn in 2008 (McKinsey Estimates)
8
Indias Strategic Advantage is based on three key
factors
Long Term Economics
Manpower
Strategic Advantage
Govt. Support
9
Overall
People Factor
Infrastructure Factor
Environmental Factor
Skill Base Availability Skills mix Work attitud
e Cost Advantage Employee cost Productivity In
stitutional Support
Training Labor Laws
Telecom IPLC Costs Skills mix Speed of deployme
nt Property Transportation Power Banking and F
inance
Govt fiscal incentives Simplicity of tax str
ucture FDI policy Politico-Legal environment

Economic environment
10
As a result, India present a compelling
outsourcing case
Long Term Econ
Firms in the US can save between 30-60 of their
processing costs by outsourcing to India
11
The talent pool in India gives it a significant
edge . . .
Placed second to US in size availability of
skilled and English speaking manpower
Availability of a large pool of Data Entry
Operators and Accounting Professionals for back
office operations Availability of a large number
of IT Professionals to provide IT support
Presence of over 11,000 recognized educational
institutions apart from other unrecognized and
other vocational training institutes
Manpower
12
India Offshore Opportunities

• IT-Application development and maintenance
• IT 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
  research
  
• Manufacturing-generic drugs, autos

13
India Challenges Resolution
Challenges
Resolution
Understand and build Indo US presence ands
capability. Learn to manage offshore
Fear Of Working with Overseas Mgt.
Develop US strengths and build in the offshore
team
Domain Expertise
Transparency and processes including ePMO Tools
and interpersonal ties.
Loss Of Control
Managing US political, labor and social issues
Invest in retraining, higher value activities,
ownership of Indian firms and communities. Enable
opening of Indian market.
14
The BPO industry is critical for Indian economy
from a macro economic perspective

• Currently, IT and BPO services together account
  for 2 of the Indian GDP
  
• Share of GDP expected to go up to 7 by 2008
• IT and BPO sectors expected to contribute 20 of
  the GDP incremental growth between FY2002 and
  FY2008
  
• Share of foreign exchange inflows expected to
  grow from 8 in 2002 to 30 by 2008
  
• Will employ over 2 million people directly by
  2008
  
• Will generate indirect employment for an
  additional 2 million people
  

15
OFFSHORING-A Mega trend for our times

• O- Offshore or Ossify
• F- 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 elimination
• I-Incentivize collaboration (goal and reward
  alignment)
  
• N-Nimble( flexibility and speed the greatest
  pay-offs)
  
• G-Globality for greatness!

16
Offshoring-Doing the right thing and doing it
right

• Develop key supplier relationships-look for
  compatibility and chemistry
  
• Build internal buy-in, champions and visibility
• Build 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
  recognition
  
• Look at onsite-offshore as an integrated model.
  Monitor the ratio 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 2-3 years.
  

17
Thank You
18
The Government has also shown commitment to
promote the sector
Govt. Role
100 income tax exemption (up to 2010)
100 FDI Permitted Setting up of Software Technol
ogy Parks (STP) to facilitate/support
Infrastructure requirements Repatriation of incom
e permitted Duty free imports of goods Exemption
from payment of excise duty Capital gains on VC
investments exempt from tax Task forces set up fo
r BPO services
19
and Telecom infrastructure, which was cited as
a weakness in the past, is no longer an issue
International Bandwidth
Domestic Connectivity
Bandwidth supply will shortly outstrip demand
(Q2FY04) -Huge network build outs by private oper
ators Prices for domestic and international bandw
idth have halved in the last 12 months
Private Operators are expected to drop prices
further
20
The remote future-estimates of 50-70 billion by
2008 (BEST IN A GRAPH)

• Segment
• IT Applications and System integration
• Products and technology
• BPO

• Estimate billion ( Source Nasscom)
• 30
• 10
• 25