Executive summary

The IT Bpm (business process management) sector grow at CAGR of 25% from
2000- 2013. Three times of global IT Bpm spend. In next 5 years it is expected to
grow at 9.5% till 2020

Worldwide It- BPM spend $2.3 billon(April 2014)

Worldwide hardware spend $ 1 trillion

Current Indian market size $ 146 billon ( April 2015)

Exports (incl. hardware) are likely to record a 12.3 per cent growth to reach over USD
98 billion, up by ~USD 11 billion from 2014.

Domestic IT-BPM market at USD 48 billion is set to grow faster than exports market
at 14 per cent, driven largely by the addition of e-commerce into the picture.

IT services is the largest segment, with a share of ~47 per cent followed by BPM with
share of ~18 per cent.

Ranks fourth in total FDI share

Indian It Firms Saved around $200 billon in last ten years that is roughly about 9 % of
Indian G.D.P

The industry currently employs >3.5 million Indias largest private sector employer.
It is also playing a key role in promoting diversity within the industry women
employees (>34 per cent share), 170,000 foreign nationals and a greater share of
employees from non-Tier I Indian cities

Reason for growth trend in Indian IT- BPM

High growth demand for exports from new vertical

Rapidly growing urban infrastructure has fostered several It centres in the country

Expanding economy to propel growth in local demand

It firms having large number of delivery centres in the various parts of the world

Market
India is jumping the technology maturity curve and is already a well-established digital
economy a trend driven largely by consumers. >75 per cent of the population is mobile
enabled, 278 million internet users (overtaking the US) and a rapidly multiplying online
population, and a USD 14 billion e-commerce market, which is growing at an average of >30
per cent.
A further push in this direction is coming from the governments Digital India campaign which
envisages a USD 20 billion investment covering mobile connectivity throughout the country,
re-engineering of government process via technology and enabling e-delivery of citizen
services. The domestic IT-BPM market is rapidly approaching the USD 50 billion mark. In
FY2015, the market is expected to be a little over USD 48 billion, an annual growth of 14 per
cent. This is faster-than-industry growth that is largely being driven by the growth in ecommerce segment.
IT services (>USD 13 billion) and software products (>USD 4 billion) segments are the next
fast growing segment at 10 per cent and 12 per cent respectively. IT services is being driven
by SMAC-cloud enablement, custom developing application for mobile; with the return of
focus on infrastructure projects (largely in later half of 2014), there is an uptick in demand for
SI and IT consulting. SMEs are also increasingly opting for managed and datacentre services
as a cost saving measure.

Key highlights

The contribution of the IT sector to Indias GDP rose to approximately 8 per cent in
FY13 from 1.2 per cent in FY98

TCS is the market leader, accounting for about 10.1 per cent of Indias total IT & ITeS
sector revenue

The top six firms contribute around 36 per cent to the total industry revenue

Growth in export revenue CAGR 13.1%

Approximately 85 per cent of total IT-BPM exports from India is across four sectors:
BFSI, telecom, manufacturing and retail.

With introduction of new policies for healthcare and retail, these sectors are expected
to grow at a faster pace in coming years, thus accelerating revenue of IT enabled
services for the sectors

BFSI is a key business vertical for the IT-BPM industry. It generated export revenue of
around USD31 billion during FY13, accounting for 41.0 per cent of total IT-BPM
exports from India

The SMAC (social, mobility, analytics, cloud) market is expected to grow to USD225
Billion by 2020

Growth in Export Revenue

80
70
60
43.9

50

39.9
33.5

40
30

25.8

27.3

12.4

14.1

9.9

11.7

8.8

10

10.4

FY 2008

FY 2009

FY 2010

22.2

20
10
0

15.9

17.8

11.4

13

14.1

FY 2011

FY 2012

FY 2013

Software products and engg services

BPM

IT - Services

Sector Wise export Break Up

Software products and engg services

BPM

IT - Services

Foreign Game changers

US has traditionally been the biggest importer of Indian IT exports; over 60 per cent of
Indian IT-BPM exports were absorbed by the US during FY13

Non US-UK countries accounted for just 21.0 per cent of total Indian IT-BPM exports
during FY12

Europe, one of the fast growing IT markets in 2012, is expected to emerge as a potential
market as higher inclination towards offshoring firms would increase demand for IT
services

Porter five forces of Industry Analysis

Competitive Rivalry (HIGH)

Intense competitive rivalry exists due to low switching costs

Most of the bigger Indian firms offer same services and there is little

Threat of New Entrants(MEDIUM)

Easy entry as the capital required is low

Large players, however, toughen prospects of small and medium players to win large
deals

Threats
of new
Entrants

Bargaining Power of
Customers

Competitive
Rivalry

Bargaining
power of
suppliers

Substitute
products

Substitute Products (MEDIUM)

Threat is medium as new centres, such as Philippines and China, are fast gaining ground
among investors due to their low cost advantages

Bargaining Power of Suppliers (LOW)

Bargaining power of suppliers is less as most of their businesses come from the same
geographies

Price taker rather than price maker

Bargaining Power of Customers (High)

Bargaining power is high as many IT firms fight for a similar project

Firms are mostly dependent on same geography, which increases customer power

REFERENCES
Economic Times (WWW. ETCIO.COM)
Nasscom IT-ITES Industry Report (Apr -2015)
IBEf Report on IT Industry (Mar 2015)