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Cross-Border Supply of IT Services. A Private Sector Perspective. www.tcs.com. WTO Cross-Border Supply Symposium . Presentation by:- Ajoyendra Mukherjee Vice President, TCS. 28 April 2005 • Geneva. Agenda. Indian IT Industry Cross-Border Service Delivery

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Presentation Transcript
slide1

Cross-Border Supply of IT Services

A Private Sector Perspective

www.tcs.com

WTO Cross-Border Supply Symposium

Presentation by:-

Ajoyendra Mukherjee

Vice President, TCS

28 April 2005 • Geneva

slide2

Agenda

  • Indian IT Industry
  • Cross-Border Service Delivery
  • Opportunities – As Supplier & Consumer
  • Challenges
  • Conclusion
slide3

Indian IT Industry

Services Spectrum

  • Application Development & Maintenance
  • IT Enabled Services
  • IT Infrastructure Management
  • Engineering, R&D
slide4

Indian IT Industry

Includes IT Services & Software, ITES-BPO and Hardware

Source: NASSCOM, Strategic Review 2005

slide5

Indian IT Industry - Exports

Includes IT Services & Software, ITES-BPO and Hardware

Source: NASSCOM, Strategic Review 2005

slide6

Indian IT Export Destinations

Excludes hardware exports

Source: NASSCOM, Strategic Review 2004

slide7

Cross Border Service Providers

India - the largest

“Cross-border”

IT Services Provider

Estimated Value of Offshore Sourcing (US $ M) – CY 2004

Source: neoIT, NASSCOM

slide8

TCS – Largest Indian IT Service Provider

  • Created Indian IT Industry and have led it since 1968
  • Operate in 47 countries
  • 33 Delivery Centers - 15 in India, 18 Overseas
  • Growing at a rate of > 40% annually
  • Global Employee Strength of 43000+
  • 60% Revenue from North America, 23% from Europe
  • Enterprise wide CMMi, PCMM L5
slide9

Agenda

  • Indian IT Industry
  • Cross-Border Service Delivery
  • Opportunities – As Supplier & Consumer
  • Challenges
  • Conclusion
slide10

Cross-Border Service Delivery – Genesis

Client Office, Onsite

TCS Office, India

1970s

  • Small, dedicated team stationed at client site
    • Development
    • Maintenance
    • Testing Support

“Movement of Natural Persons”

slide11

Cross-Border Service Delivery – Genesis

Office Setup in the same country as client

  • Sales & Marketing
  • Account management

Client Office, Onsite

TCS Office

“Commercial

Presence”

TCS Office, India

1980s

“Movement of Natural Persons”

slide12

Cross-Border Service Delivery – Genesis

Client Office, Onsite

“Cross Border Supply”

Remote Service Delivery (Offshore)

  • Design & Coding
  • Testing
  • Documentation
  • Maintenance

TCS Office

“Commercial

Presence”

TCS Office, India

1990s

“Movement of Natural Persons”

slide13

Cross-Border Service Delivery – Genesis

Delivery Centers across the globe to establish a near-shore presence

Client Office, Onsite

Multi “Cross Border Supply”

TCS GDC

TCS Office

Local Recruits

“Commercial

Presence”

TCS Office, India

2000+

“Movement of Natural Persons”

slide14

Cross-Border Service Delivery – Summary

“Cross Border Supply”

Offshore Delivery Centers established in India to service overseas customers remotely with a cost-effective, scalable model

“Consumption Abroad”

People sent overseas for specialized Training

“Movement of natural persons”

Dedicated team stationed at client site &

People moving between Vendor offices in different Countries

“Commercial Presence”

Global Delivery Centers setup to address regulatory & language requirements, 24x7 service delivery windows, BCP & DR

slide15

Agenda

  • Indian IT Industry
  • Cross-Border Service Delivery
  • Opportunities – As Supplier & Consumer
  • Challenges
  • Conclusion
slide16

Opportunities – As Consumer

  • Cost Saving
  • High Quality
  • Faster Time to Market
  • 24 Hour Service Window
  • Better Utilization of Internal Workforce
  • Address Aging Demographics of Western economies
slide17

Opportunities – As Supplier

Potential for Indian IT Industry by 2008

  • By 2008, IT and ITES Services will generate an employment for 1.1 M and 1 M respectively
  • In addition the Parallel Support Services will create employment for another 2 M people

Source: NASSCOM, McKinsey Report, 2002

slide18

Agenda

  • Indian IT Industry
  • Cross-Border Service Delivery
  • Opportunities – As Supplier & Consumer
  • Challenges
  • Conclusion
slide19

Challenges – “Movement of Natural Persons”

  • Immigration & Visa Issues
  • Universal Recognition of Qualifications, Experience and Training
  • Employment laws enforcing local hiring directly or indirectly e.g. USA (recruitment attestation / displacement attestation), UK (TUPE)
  • Wage Parity Insisted upon
  • Social Security Tax
  • Tax Withholding
slide20

Challenges – “Commercial Presence”

  • Structure of Entity (Branch, JV, Fully owned Subsidiary etc.)
  • Restrictions on Foreign Investments & Local equity participations
  • Remittance of foreign exchange
  • Staffing & Management conditions
  • Restricted Access to certain market segments based on the structure
slide21

Challenges – “Cross-Border Supply”

  • Data Security / Data Protection
  • IP Protection & Software Piracy
  • Language & Cultural Differences
  • Deduction of Withholding Tax
  • Double Taxation
  • Geo-political Stability & Government support
  • Offshore Management
slide22

Agenda

  • Indian IT Industry
  • Cross-Border Service Delivery
  • Opportunities – As Supplier & Consumer
  • Challenges
  • Conclusion
slide23

Conclusion

  • Cross-Border IT Services is a growing necessity and opportunity
  • Visa & Immigration, Taxation, Protectionist Law and Uniformity in Qualification are some of the key challenges still faced by a service provider like us…
  • A uniform GATS framework and commitment will provide the right impetus to the growth of Cross-Border IT Services