Global Sourcing of IT-based Services and Developing Countries - OECD.org
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Global Sourcing of IT-based Services
and Developing Countries
The Market
• Between 2004 and 2008,
the global sourcing market
grew three times to reach
$89 to $93 billion
• Addressable market likely
to increase from $500
billion in 2008, to $1.5 -
$1.6 trillion by 2020
Source: (i) NASSCOM, Perspective 2020: Transform Business, Transform India, April 2009.
(ii) NASSCOM ‘Industry Trends’ available at http://bit.ly/19tr6j.
2
Selected occupations ranked by Princeton economist Alan
Blinder as “highly offshorable”: 8.2 million workers
Number of US
Occupations
workers
Interpreters and translators 21,930
Number of US Economists 12,470
Occupations
workers
Graphic designers 178,530
Computer programmers 389,090
Data entry keyers 296,700 Bookkeeping accounting and
1,815,340
auditing clerks
Actuaries 15,770
Microbiologists 15,250
Film and video editors 15,200
Mathematicians 2,930 Financial analysts 180,910
Medical transcriptionists 90,380
Source: ‘Pain from Free Trade Spurs Second Thoughts’, WSJ March 28, 2007
Global distribution of offshore IT and ITES
markets
IT services market ITES market
Source: Tholons 2006 Source: NASSCOM-Everest 2008
Exports of IT-based Services from India ($ billion)
Source: NASSCOM, Perspective 2020: Transform Business, Transform India, April 2009.
5
Industry Impact in India
• Economic
– Direct employment of 2.23 million, indirect ~8 million
– 5.8 percent of GDP
– Has offset close to 65 percent of India’s cumulative net oil
imports
• Social
– Over 30 percent of employees are women
• Educational
– Top 7 states that account for 90 percent of industry exports
have founded six to seven times more colleges than other
states
Source: (i) NASSCOM, Perspective 2020: Transform Business, Transform India, April 2009.
(ii) NASSCOM ‘Industry Trends’ available at http://bit.ly/19tr6j.
6
Source: NASSCOM-Deloitte, ‘Indian IT/ITES Industry: Impacting Economy and Society’, 2008. 7 Available online at http://bit.ly/1iWSoZ.
The Future? Black Swans?
“But in all my experience, I have never been in any
accident…of any sort worth speaking about. I have seen but
one vessel in distress in all my years at sea. I never saw a
wreck and never have been wrecked nor was I ever in any
predicament that threatened to end in disaster of any
sort.”
E.J.Smith, 1907
Captain, RMS Titanic
Source: Nassim Nicholas Taleb, ‘The Black Swan, The Impact of the Highly Improbable’, Random
House, 2007
8
The Crisis Resilience of Services Trade
U.S. Monthly Imports and Exports of Year-on-Year Growth Rates of U.S.
Goods and Services, Monthly Imports of Goods and Services,
January 2006–February 2009 January 2007–February 2009
Source: Ingo Borchert and Aaditya Mattoo, ‘The Crisis Resilience of Services Trade’, World Bank PREM note,
April 2009. Available at http://bit.ly/H4CF3.
9
The Crisis Resilience of Services Trade
Year-on-Year Growth Rates of U.S. Quarterly
Imports of “Other Private Services”
January 2006–December 2008
Source: Ingo Borchert and Aaditya Mattoo, ‘The Crisis Resilience of Services Trade’, World Bank
Policy Research Paper, April 2009. Available at http://bit.ly/4Dxx5q. 10Sub-Sectors of “Other Private Services” Source: Ingo Borchert and Aaditya Mattoo, ‘The Crisis Resilience of Services Trade’, World Bank Policy Research Paper, April 2009. Available at http://bit.ly/4Dxx5q. 11
India has about 30% of global supply of low-wage labor for IT/ITES Likely to have a talent shortfall of 0.8 million to 1.2 million by 2012
Total Addressable Market for Global Sourcing and
Domestic Outsourcing, 2020 ($ billion)
Core markets Growth in New New Outsourcing
2008 Core markets verticals in customer market in
developed segments new
Countries • SMBs geographies
• Public sector • Brazil
• Healthcare • Russia
• Media • China
• Utilities • India
Source: NASSCOM, Perspective 2020: Transform Business, Transform India, April 2009.
1314 Source: McKinsey on Business Technology, Number 16, Summer 2009
Gartner’s Hype Cycle for Business Process
Outsourcing, 2009
15Skills Development Components
Companies CMMi COPC
6 sigma
Mangmt
TSP/PSP Training
Domain
R&D
Training
Software Developer Foundational BPO
Certification/CERT Training
Universities
Knowledge Hub Skill assessments
IT Services IT Enabled ServicesBroadband
• Finland has become
the first country in
the world to make
broadband internet
access a legal right
• South Korea will
provide access to
1Gbps bandwidth to
citizens by 2012
• New submarine cable
systems for Africa
17New Parks
• 22@Barcelona
– 115 blocks at Poblenou
– 4000 housing units
– 145,000 square meters of facilities
• South Korea’s Digital Media City
– Located at Sangamdong (135 acres)
– Experimental video 40’X20’
• Parque de Investigación e Innovación
Tecnológica (PIIT) Monterrey
– Multidisciplinary approach
18Policies
• “Thousand – Hundred – Ten” project launched in October 2006.
Ten cities expanded to 20 in November 2008
• Taxation: From January 2009 to December 2013, outsourcing
providers charged only a 15% tax rate
• Training Subsidies: IT services providers receive 4,500 yuan
(US$658) for every college graduate hired
• Guaranteeing benefits: Encouraging banking and insurance
companies to create loan products and insurance packages to
guarantee an outsourcing company's benefits
• Capital injection: China has allotted 370 billion yuan (US$54
billion) for technology advancement in 2009
Source: Gartner, ‘Analysis of China as an Offshore Services Location’, October 2009.
19Fast Movers
20Holistic approach: ITIDA’s Strategy Framework
Local market Export growth
demand In-sourcing and
National education system and
mega companies
(FDI)
Multinational support
Enterprise capacity building
research centers
Innovation, research and development
Human capital development
IT industry Real estate
Legislative
intelligence (infrastructure)
environment
Telecommunications infrastructure Unique focus
placed on ensuring
vibrant links with the
Source: ITIDA education system
21Andhra Pradesh
State with 80 million people
Cyberabad 1995
The New Face of Cyberabad
IT Parks:
200,000 SFT in
1998, now 40
million
25Imagine there’s no heaven
Increasing competition
Pressures mounting for better, faster, cheaper service deliveryIt’s easy if you try
We will support you
Rebate on cost of land (~$450 per job per acre)
Free infrastructure for power, water, sewerage, and roadsNo hell below us
No red tape, no bureaucracy
APFIRST will be single point of contact
Time bound clearancesAbove us only sky
March March
Exports of IT/ITES in million dollarsImagine all the people
23% of India’s software engineers from Andhra Pradesh
32 engineering colleges in 1995, now 527
8,000 graduating engineers in 1995, now 173,032 every yearLiving for today
Entry level agent salary: Less than $2,000 a year
Software developer: Less than $7,000Imagine there’s no countries
World class education
Indian School of Business: Faculty from Wharton, Kellogg,
London Business School, Stanford, Chicago, Duke and TexasIt isn’t hard to do
Microsoft’s largest Development Center outside the US is in
HyderabadNothing to kill or die for Enough talent available Lowest attrition rates
And no religion too Software development Engineering design Business Analytics Animation Financial services, Call centers…
Imagine all the people 350,000 graduates every year 140,000 English speaking
Living life in peace
Dedicated workforce
IT Enabled Services declared essential services
No strikes or labor unrestYou may say I’m a dreamer Andhra Pradesh has a Vision 2020 for the State
But I’m not the only one The people of Andhra Pradesh share the vision
I hope some day you’ll join us In celebrating Andhra Pradesh’s success
And the world will be one
High speed links to the world
SEA ME WE: South East Asia to Western Europe
FLAG: Fiber Link Across the Globe
I2I: Chennai to SingaporeImagine no possessions Real Estate Developers: Offices as per your specifications Third party service providers: Nipuna, 24X7, Firstsource, Deloitte, ADP Wilco…
I wonder if you can
Co-brand training programs with us
Participate in industry – linkage program with Universities
Provide us with your wish listNo need for greed or hunger
Andhra Pradesh is Power Surplus
Hyderabad is the cleanest city in India
Cyberabad: Asia’s new IT hubA brotherhood of man
Hyderabad has the lowest crime rate among metropolitan cities
Growing expat community
Hyderabad a truly cosmopolitan cityImagine all the people
Private sector training institutions available:
NIIT, APTECH, Hero Mindmine, QAI…
Head hunting agencies like MafoiSharing all the world
New International Airport at Hyderabad
Flights to Amsterdam, Bangkok, Colombo, Dubai, Kuala
Lumpur, London, New York, Sharjah, Singapore
Hyderabad is the national hub for Air SaharaYou may say I’m a dreamer We hope to make Hyderabad a major Technology hub in Asia.
But I’m not the only one
CSC
Honeywell HSBC HDI
Microsoft FranklinTempleton
IBM Infosys
TCS Bank of America
Oracle Verizon
Computer Associates Wipro
Visualsoft UBS
Convergys Analog Devices
Keane Infotech
Intelligroup Cognizant Tech
Cordys Cadence
Motorola Sierra Atlantic
Polaris Connexant
Nokia Invensys
NVIDIA Mentor Graphics
Qualcomm Synopsis
Intergraph Patni
Kanbay NCR
Google SonataI hope some day you’ll join us We look forward to having you with us.
And the world will live as one
Geography is History!Randeep Sudan
Lead ICT Policy Specialist
Global ICT Department
The World Bank
Email: rsudan@worldbank.org
54You can also read
