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India Vision 2010: What Driveth IT ?. Keynote Address By Dr. Lakshmi Mohan School of Business, SUNY at Albany (e-mail: [email protected] ) February 3, 2007. 1. Based on my research of global business trends What is the impact on IT in India? Where are the latent opportunities?

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india vision 2010 what driveth it
India Vision 2010:What Driveth IT ?

Keynote Address

By

Dr. Lakshmi Mohan

School of Business, SUNY at Albany

(e-mail: [email protected])

February 3, 2007

1

my perspective
Based on my research of global business trends

What is the impact on IT in India?

Where are the latent opportunities?

… Apart from the 4 Key Areas

To Be Presented by Leading Experts

My Perspective

2

globalisation is here to stay for example
Medical Tourism: $2B by 2012

- Apollo Hospitals: 7 locations

Caters to international visitors

with foreign language interpreters,

specific regional meals and

travel arrangements down to the airport transfer

Antwerp’s Diamond Industry

- Cutting & polishing diamonds outsourced to Surat

- Big diamond traders in Surat outsource, in turn,

the low-value diamonds (worth Rs 10,000 crore)

to small units in villages surrounding Surat,

Saurashtra and north Gujarat

Globalisation is Here to Stay- For Example

3

a telling example cited by shashi tharoor
Employment in Indian curry houses in England is greater than the combined employment in iron and steel, coal and shipbuilding industries.

Source: Times of India, 28/1/07

A Telling Example- Cited by Shashi Tharoor

4

the game changes
Ver. 1.0 – Body shopping model of the 1990s

Ver. 2.0 – Global Delivery Model

Ver. 3.0 – Move Up the Value Chain

… Grow without adding pro rata bodies

& costs

… Reduce the linearity between

revenue and employee numbers

The Game Changes

5

the linear business model revenue growth in direct proportion to people employed
Revenue/EmployeeProfit/Employee

FY02FY06FY02FY06

The Linear Business Model- Revenue Growth in Direct Proportion to People Employed
  • Decline in Productivity

Wipro 36L 20L 9.2L 3.9L

Infosys 24 18 7.5 4.7

TCS 21 20 5.7 4.5

Source: Business Today, Feb 11, 2007

6

implications
Assumes that the supply of cheap and skilled labour is endless

2. Can lead to a crisis should a downturn occur

– Not just a loss of productivity due to benching

– Actually, a loss due to salaries to be paid to bloated workforce

Implications …

7

implications8
3. Managing a huge workforce (> 100.000)

– “ There will come a tippling point when

handling scale itself will become an issue.”

– Global IT Giants Have Vast Workforces

IBM – 190,000; Accenture – 133,000

– An Important Difference:

EBIT: Low-to-Mid $20,000 (Rs 9L) vs $10,000 to $12,000 (Rs 4.5 – 5.4L) for TCS, Wipro & Infosys

Implications …

8

where is the money in implementation consulting services
“ For every $ spent on ERP software, Andersen Consulting made $4 - $10 in services to implement the software in a company.” – CEO George Shaheen

i-flex Plans to Grow Services Business

– Accounts for over 40% of revenues

– Wants to become a full-service player in the financial

services space … Solutions, IT Services & BPO

Infosys Investment to Grow High-Margin Consulting Business

– $20M (Rs 90 crores) to jump-start the consulting arm

– “We needed to get the ear of CXO-level executives.”

Sources: Businessworld, Aug 28, 2006 & Business Today, Feb 11, 2007

Where is the Money ?… In Implementation & Consulting Services

9

the domestic market smb a gold mine waiting to be tapped
India Prized in the Global Economy

Will overtake the U.S. by 2050 – Goldman Sachs Report

Foreign exchange reserves: $176B

S&P’s “Investment” Grade Rating – first time in 14 years

IT Market ($ billion)

FY03FY07

Domestic 6.3 15.9

Exports 9.8 31.9

SMB Segment: Fast Growing

1.7M strong; spend Rs 3,400 crore in IT

Supply chain of large enterprises

SAP & Oracle are targeting this segment

The Domestic Market- SMB: A Gold Mine Waiting To Be Tapped

10

microsoft is already there microsoft dynamics erp crm solutions
Saw the Value in Application Software

Acquired Great Plains, Vendor of Accounting Software for SMBs in U.S.

Next: Navision, a Dutch ERP Vendor

Developed Microsoft CRM

$800M in Revenues & 275,000 Customers by 2006

400 Customers in India

Asian Paints Subsidiaries in 9 overseas markets

Orient Ceramics: Initially considered J.D. Edwards

Microsoft Is Already There !- Microsoft Dynamics ERP & CRM Solutions

11

the aviation sector ripe for it solutions
JetBlue Airways Case Example

Low Cost … Like Southwest

But High Touch … Unlike Southwest

Skies Ahead of Competition

JetBlueAmericanSouthwest

Airlines

Revenue 1.2B 18.50B 6.4B

Gross Margin 36.62% 21.18% 29.01%

Operating Margin 9.46%-0.09%7.56%

The Aviation Sector- Ripe for IT Solutions

12

a late arriver and an early adopter
A Late Arriver and an Early Adopter
  • “Last-Mover” Advantage
    • Costs and risks of adopting technology decline over time
    • Systems are integrated from the start
  • Aggressive and Early Adopter of IT
    • Innovative IT is the key to JetBlue’s low cost strategy
    • Voice over Internet Protocol (VoIP)

for Customer Support

VoIP interacts seamlessly with other Internet-based data and systems. As a result of not requiring a dedicated line for telephone service and the hardware used for the same, VoIP telephony is much cheaper.

13

jetblue low cost high touch how high tech
JetBlue: Low-Cost, High Touch – How? High Tech!
  • CEO’s mandate to CIO: “automate everything”
    • Focus with IT is not ROI,

but reducing Cost Per Available Seat Mile

  • Paperless cockpits
    • Pilots get laptop computers,

reducing time for pre-flight load

and balancing calculations

also eliminates costs of printing updates to flight manuals

  • 100% Ticket-less Travel

14

jetblue low cost high touch how high tech15
JetBlue: Low-Cost, High Touch – How? High Tech!
  • Home-based reservation agents using VoIP
    • 600 home-based reservation agents

use VoIP lines

    • Travel agents cost $14 per ticket;

JetBlue reservation agents cost $4.50;

Website reservations cost $0.50 per ticket.

  • Highly automated back-office processes
    • Flight planning and reservation systems
    • Maintenance software tracks spare parts and parts life
    • Other digital processes: expense reports, payroll processing, training management

15

pharma contract research manufacturing
Pharma Contract Research & Manufacturing
  • Projected Growth by Assocham

20052010

CRAM $532M* $900M

Clinical Trials $100M $1B

* Manufacturing – 84%

  • Outsourcing by MNCs of Clinical Trials
    • Cost is almost half of that of U.S.
    • Abundance of genetically diverse patient pool in India who is “drug naive” (not taken other drugs for their condition in the past)
    • Many qualified doctors available with expertise to supervise and conduct clinical trials according to “Good Clinical Practice”

16

finally automated decision technologies
Finally … Automated Decision Technologies
  • Expert Rule-Based Systems
    • To “manage by wire”
    • To extract “ news” from data
  • Capital One Credit Cards
    • Intelligent Call Routing
  • Birla Sun Life Insurance
    • Automated Underwriting & Risk Analysis
  • Premier U.S. Universities Set Up Dedicated Schools to Meet Growing Demand
    • Berkeley School of Information Studies
    • Pittsburgh School of Information
    • Penn State School of Info Science & Technology

……….

17

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