Archive for the ‘India’ Category

IT Company Metrics

July 26, 2009

July 26, 2009, Business Line

Wipro sees an increase in demand for shared services for software application management from its package implementation clients (13.4% of Wipro’s revenue is from Package imp) – such projects reduce cost of application management by 20-25%. Wipro currently has a 300-people team for this business, known as FlexDelivery. Strong demand from Manufacturing, Retail and High-tech customers. This model is available for one package currently and is part of Wipro’s non-linear strategy.

July 19, 2009, Businees Line

TCS results…quarter ending June 2009

  • Offshore revenue: 50.4%
  • Utilization 71.3%
  • employees: 1,41,642; Attrition level: 11.5%
  • SGA 21% (as of Mar 30, 2009 quarter)

July 14, 2009, Business Line

Wipro has launched 5 new service lines aimed at helping customers in overcoming business challenges and achieve cost savings:

  1. WipMap to address issues such as IT transformation
  2. WipMigrate to help customers and vendor migration
  3. WipSave helps them reduce IT costs
  4. WipMerge helps customers address IT integration issues post M&A and
  5. WipOptima helps them rationalise IT assets.

Through these new service lines, Wipro is assuring its customers an upfront cost savings of some 25 per cent over the current costs.

Feb 8, 2009, Business Line
BL reports the revenue contribution of top 5 and top 10 accounts of some IT companies.
Top accounts Contribution (BL Feb 8, 2009)

Nov 13, 2008 Economic Times
New clients and SGA expenses acquired by top IT services in the first 3 quarters (Jan – Sep) of 2008.
• TCS – 138; 19-20% of revenues
• Infy – 129; 12-13%
• Wipro – 107, 10-12%
• CTS – 182, 23-24%
• Satyam – 99, 18-19%
Oct 29, 2008 Business Line
Debtor Days / time it takes to collect payments from their clients, @ Q2 2008.
• TCS – 90 days (Q1 2008 92 days)
• Infy – 60 days (69; Q3 2007 – 61)
• Wipro – 67 days (67, 70)
• Satyam – 88 days (93, 92)
• HCL Tech – 80 days (79, 77)

Gartner 2007
SWITCH share of global IT services… It was 1.9% in 2006, which increased to 2.4% in 2007.
• Rank 28, TCS, 0.6% (2006), 07.% (2007)
• 37, Infy, 0.4, 0.5%
• 40, Wipro, 0.3%, 0.5%
• 63, CTS, 0.2%, 0.3%
• 69, Satyam, 0.2%, 0.3%
• 76, HCL, 0.2%, 0.2%

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India – Multiple Sources

July 26, 2009
November 22, 2008
CIA has released a new report just about when Obama is set to become the 44th president of USA titled “Global Trends 2025 – A Transformed World”. For those who are following the rise of China and India after the “BRICs and beyond” in Nov 2007 from Goldman Sachs – this report includes the Next 11 as well, the CIA report offers more interesting insights.

Key messages from the report are:

  • Global multipolar system is emerging with the rise of China, India etc. However, US will be the single most powerful country but less dominant.
  • Transfer of global wealth and economic power from West to East due to rising oil and commodity prices; shifting of locus of manufacturing and services industries to Asia.
  • Demand for food will rise by 50% by 2030 due to rising popultion; middle class; affluence etc.
  • Terrorism is unlikely to disappear, but its appeal will diminish.
  • Climatic changes and their impact – when rather than if; resource issues will gain prominance – food; oil etc. New technologies could provide a solution.1

     

     

     

     

     

Since, the last report was published by CIA “Mapping the Global Future – 2020” in 2004, China and India have grown from strength to strength. In that report, there was a fictional letter of WEF happening in China instead of Davos – In September 2008, China gave a glimpse by hosting the “Annual meeting of New Champions”.

India Business Year book, 2008
India, a country of 28 states and 7 union territories – Life expectany is 68.59 yrs
Age structure of 1.03B people, of which UP accounts for 166.2M

  • 0 – 14 yrs: 31.8%
  • 15 – 64: 63.1%
  • 65+ – 5.1%

Literacy Rate: 64.84%
India’s GDP accounts for 6% of world’s GDP – it is pojected to grow to 11% by 2025. The GDP in 2006 was 906.3B, growing at 9.2%. Avg. income is Rs.2500 / month; inflation was 5.3%.Time required to start a business in India is 35 days.

India Economist

Fortune 2008BW Infotech 2008

BCG 2008 New Global Challengers

The Next Urban Frontier – 20 Indian cities to Watch

NCAER has published a recent report (mid 2008) on 20 Indian cities to watch. Grouping them into 3 categories are:

Megactities (8) (10% of population and 30% of income)
• Mumbai
• Delhi
• Kolkatta
• Chennai
• Bangalore
• Hyderabad
• Ahmedabad
• Pune

Boomtowns (7)
• Surat
• Kanpur
• Jaipur
• Lucknow
• Nagpur
• Bhopal
• Coimbatore

Niche Cities (5)
• Faridabad
• Amristar
• Ludhiana
• Chandigarh
• Jalandhar

The cities at 1st glance are concentrated in the Northern India, West, South and just 1 Kolkatta in the East. (Just this morning, newspapers blared that Tatas have pulled the Nano project out of Singur. Tatas were investing Rs. 1500 crore and the dupute was over the 1000 acre land given to them at subsidized rates from farmers. At the time of this writing Tatas and its vendors had made significant investment inside the area; trained people etc. etc.)

Under this study, 30% of Indian population lives in Urban areas and contributes to 44% of India’s income. The average household income is the highest in Surat at Rs. 4.5L; Chandigarh at Rs. 4.2L and Mumbai at Rs. 4.0L. More than 50% of India’s population will be middleclass by 2016 and this mean that 300+Mn population will move towards the cities and towns.

In the megacities, 57% of middleclass people own cars; 47% motor cycles; 73% mobiles; 91% TVs; 63% DVDs; 17% Computers; 90% Refrigerators; 66% washing machines; 14% microwave ovens and 10% A/Cs. Even in the Boomtowns and Niche cities, over 43% middle class owns a car; 89%+ refrigerators; and 55%+ washing machines.
• Credit Card penetration inthe 20 cities is about 8%
• The surplus income in the megacities is about 47% or so while the national surplus income is about 25%. For the cities, 60% of the people keep the surplus in banks.
• The % of spend on household expenditure is interesting (mega cities)
• Food, Beverages & Tobocco – 35%; Transporation – 20%; Housing & Utilities – 10%; Healthcare – 7%; Apparel – 6%; Eduction & Recreation – 5%; Household & Personal Products – 14%; Communication – 3%.

2007 – 2008 estimates put Mumbai at 20+M population, Delhi 15.5M; Kolkatta 13.8 Mn; Chennai 6.9 Mn and Bangalore 6.3Mn.

India's Share of Wallet of Basic & Discretionary items

Composition of Household Exp. (NCAER, 2008)

Oct 2008

Forbes has identified the following Indian companies in its “Fab 50”.

  • Bharti Airtel
  • BHEL
  • HDFC Bank
  • Infosys
  • ITC
  • L&T
  • Mahindra & Mahindra
  • Reliance Ind
  • Tata Steel
  • Wipro

LinkedIn Network… Indians and Chinese returning home?

July 26, 2009

9 Jan 2010

Recd. a group email today from LinkedIn country manager that the network has 4M members in India (5M – Mar 2010) and 55M (60M+ – Mar 2010) across the world! Great going!!

7 March, 2009
Vivek Wadhwa of the Harvard Law school and his collaborators have published their findings recently on Immigration workers in the US. http://www.globalizationresearch.com/

  • 1 out of 4 engineering and Technology companies founded between 1995 and 2005, had an immigrant founder. They employed .45M people and generated $52B revenues in 2006.
  • Indian immigrants founded more companies than the next 4 groups combined – UK, China, Taiwan and Japan. 80% of the immigrant found companies were in the field of Software or Innovation / Manufacturing.
  • Foreign nationals residing in the US were inventors / co-inventors for 25.4% of the patents filed in the US in 2006. 16.8% of overall patents had a Chinese name and 13.7% had an Indian name in 2006. Chinese inventors tended to live in Californai, New Jersey and New York while a large number of Indian inventors were in California, New Jersey and Texas.
  • US issues 65,000 H1B visas every year and an additional 20,000 visas for individuals who had an advanced degree in the US. While a number of well known individuals in the industry including Reid Hoffman of LinkedIn have called for increase or reviewing the immigration laws –
  • The authors tracked down 1,023 Indians and Chinese through the LinkedIn network who had worked or received advanced degrees from the US for the study. 51% of Chinese had Masters and 41% had Ph.D’s. 66% of Indians had Masters and 12.1% had Ph.D’s. (Chinese were receiving lot more Ph.D’s!)
  • A strong factor in returning home for 79% was there was a growing demand for their skills in their countries. They also said that they enjoyed a better quality of life, though they were making less money.
  • Indians who returned complained of Traffic and congestion; lack of infrastructure; excessive bureaucracy and Pollution. Chinese complained of Pollution; reverse culture shock; inferior education for children; frustration with government bureaucracy and quality of healthcare. China clearly has more fundamental issues to tackle.
  • In 2006, there was a backlog of over a million applications for permanent resident visas against an yearly grant of 120,000 – 10 times over.

4 February, 2009
I have been using LinkedIn for over 8 months now and watched my connections grow to about 130+. I have connected to some very old friends and recommended it to others. Founded by Reid Hoffman, LinkedIn has 35M members, compared to 120M+ in Facebook and Myspace.com. According to Hoffman, a typical 30-year old should have 50 – 100 contacts. LinkedIn, incredibly was profitable in 2007 and 2008. It was valued at $1B+ in June 2008 (in contrast Microsoft valued Facebook at $15B and invested $240M in it, a while ago). It expects to get about 30% from ad revenues ($75Mn+); another 30% from recruiting and rest from sales of premium subscriptions. BusinessWeek mentions that the average age of a LinkedIn member is 41 with a median salary of $109K.

Nasscom Strategic Review

July 26, 2009

Indian IT Industry FY2009E

March 7, 2009

Nasscom has recently released its Strategic Review for FY 2009. Some key mesages from the report…

• Worldwide IT spending in 2008 was $1.6T: SW and Services = $967B; HW = $594B; (FY 2012E: SW and Services = $1.2T; BPO = $181B; IT Operations = $275B)

• Indian IT will be a $71.7B industry in FY 2009E; of which SW and Services (inc. BPO and Products) are $59.6B; while HW will be $12.1B.

• US accounts for 60% of the exports and UK 19%.

• On the vertical side, BFSI accounted for 41% of the revenues;Hitech / Telecom 20%. Manufacturing 17%; Retail 8%

• Direct employement in the IT-BPO sector was 2.2M. (IT Services = 947K; BPO = 790K; Domestic IT industry = 500K). HW employement not available.

• IT-BPO sector will contribute 5.8% to India’s GDP.

Indian ERP Market

July 26, 2009

Financial Chronicle Sep 24 2008, says that SAP India has acquired 600 – 700 customers in the 1st HY 2008 of which majority are in the SME space. DataQuest estimates that SAP India revenues in 2007 were about Rs. 1260 crores. IDC estimates that SAP has 27% of the Indian SME market. SAP is partnering with firms like Viceocon this year so as implement SAP for their partners and suppliers.

LiveMint, dt March 17 2008, based on a Frost and Sullivan analysis reports that the India ERP India market is dominated by SAP at 48.3%, Oracle 24.9% and MS 12.2%. MS is expanding and has the potential to take the No. 2 slot in 3 – 5 yrs. Separately, SAP India 2007 performance report says it has 3024 customers in India (up from 1350 in 2006). Among Indian IT companies TCS and Wipro use SAP. Worldwide 46,100 customers run SAP – in a recent interview, ex Microsoft CIO said MS uses SAP and Siebel CRM internally.

“We are Like that Only” by Rama Bijapurkar

July 26, 2009

December 06, 2008
Anyone willing to do retail / consumer related business in India, should go through Rama Bijapurkar’s “We are like that only”. A well known consultant, she breaks down the NCAER data to segregate the market. By now, a number of authors have said, Don’t treat China as one country of 1.3B people, Rama Bijapukar argues the same for India. Rama argues that Indian market is rebellious!
– Honda (wins) Vs Mercedes (struggles)
– Nokia (wins) and Cola majors (struggle)
– Levis lags; Nike limp and star TV rethink?
– Why did Toyota’s Innova work?
– how did LG and Samsung buy market shares; GE appliances doesn’t
– what did Nokia or MTV do to get it right? ; Kelloggs still struggles; Heinz did not catch on

Corporates have to develop a mental model of “my target India” and translate it to a well defined construct of consumer India.. The Winners are who are able to make a “Made for India” product…. She classifies India into a diversified country – 62 socio-cultural regions; 23 languages; 29 states; diverse food habits; climatic conditions and cultural orientations… and

  • Multiple demand segments….
  • agricultural and non-agricultural
  • Government employees and self employed etc.
  • five economies (agriculture, manufacturing, government, services, IT).
  • NCAER’s five consumer categories – the rich, the consuming class, the climbers, the aspirants and the destitute (destitue – live a hand-to-mouth existence and are insignificant as consumers; aspirants- acquire the most basic consumer durables – bicycles, fans and radios – and learn to aspire for more; climbers – is hooked, but find that their desires far outrun their income, so they buy the cheapest goods; consuming class – is of inveterate buyers, they weigh the price against what they get for it; rich- they buy the best without looking at the price)

Taking 250M Indian middleclass as one entity is recipe for disaster. 60 million people have high purchasing power. 100 million who are well on the road to consumption and below that, another layer of 100 to 150 million consumers who have just begun their consumption journey.

250 Million are at the very botton of the pyramid, it will be difficult to intgrate them into the main stream. On per capita, she says China 2005 = India 2015!

In early 2000, Hindustan Lever (now Hindustan Unilever) realised that consumer spends were going up, but it possibly did not bargain for the fact that people would not spend on soaps and shampoos, but would direct their earnings towards mobiles, home loans and automobiles. Bijapurkar points out that US-style malls located far away in the suburbs don’t work in India and that Subhiksha-style 1,000 square feet chains are more successful. Wal-Mart may have succeeded in the US, but it has been a failure in similarly developed markets like Germany and Japan. CK Prahalad, who she says is her teacher always in the forward mentions GDP per capita is not always a good measure of the capacity to consume!

The reason Rama says she wrote the book was while many consultants used the supply chain data and what has happened in other countires; she feels P&L is about consumer choices and not supply-side economics… she also disagrees with the magic number of per capita income after which the market will take off!

  1. The nature of emerging market economies are different.. Made for India rather than Global standards! In the context of India, what do we mean by Global standards? Where is the Centre of Gravity!
  2. Emerging markets need not be virgin markets… e.g. Fashion Street in Mumbai sellss export surplus socks; or they have exact replicas of jans in Bangkok… she says consumer India is like a lateral hire into an org; Consumer China is like a fresher!
  3. Today’s emerging markets are not like what the deelopmed markets were in their infancy… Indians have not take to Cola as others, because in India Water is loaded with cultural meanings; giving water to someone in Summer or brewing tea / cofee at home etc…

India is a market that has more cell phones than bank accounts! More TVs than toilets!! Like one consumer said, though the buying power has increased – it is going to fridges and cars which are status symbols as well than increasing the pie for shampoo… similarly, consumers were using better paints for the walls and distempuer for the ceiling which no one would see or cheaper paint for the bedroom!!

Rama says of China – where the long term stability and continuity of policies of a non-democratic regims are in doubt but the short term economic growth is steady and encouragin… But in India, an executive said “while long term will be fine, I will have to first survive in the short run!”