A Passage to Atul V. India-KMO Feb 2604

A Passage To India

A dedication

To India which prepared me for the world And, America which opened the world…

-‘A personal guide to offshoring in India’ by Atul Vohra

India: The recent beginnings‌

McKinsey Quarterly Report, 2001

India: The rest of the story • •

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A history that is 3000 years old, and, one in the making Western man is “semitic in religion, greek in philosophy, roman in politics, saxon in morality and Aryan (Indian) in language” ( Max Mueller circa 1850) By 1500 A.D. Emperor Aurangzeb’s revenues in India were 10x those of his contemporary, Louis XIV of France By 1900 India was still a top 5 economy with the third largest rail network and 2.5% of world trade By 1990 India was a bottom 5 country with 90 years of zero/negative per capita income growth, the largest number of poor and illiterate, a mixed up economic model, rampant intellectual and capital flight and, near insolvency 2004 India is on fire… among the fastest growing economies, the world’s back office and a strong influence in the arts, culture, and fashion. As Tom Friedman says, India is now giving the world “Zippies” India Shinning is not just a slogan but the reality

India: The rest of the story, continued • The Indian paradox continues-for everything you can say, the opposite also holds true…it is like wonderland: everyone seems mad and everything is bizarre, upside down • The promise comes with unending frustrations…of population, pollution, public apathy • Yet India can not be ignored for economic, political, and spiritual reasons. It is like Hotel California-you can check out, but never leave.

• And, therefore you need a guide to understand India and profit from it • This presentation is about understanding the potential and ways to mine it

India: Offshore Potential

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High Quality – In IT 50 of world’s 70 CMM5 Companies are in India – Cost of Quality ranges from 20-60% of IT application budgets – Similar data emerging for contact centers and business processing outsourcing (BPO) units Lower cost – $5000 - $8000 pa starting salaries – Advantages in service and manufacturing sectors – Quality in services related to vedic heritage,not physical infrastructure dependant.

Predictable – 90% + of IT projects on-time v/s 30% industry average – #1 Pressure point for Operation & Technology Managers/Enterprise Users

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Rapid Scalability – – – –

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3 Mn+ Graduates each year Depth in Legacy & leading edge technologies Estimate Indian users a generation ahead of US mainstream Enables corporations to become more nimble

Flexibility – –

Vendors more flexible than employees variable cost models Rewarded by the markets

The India Advantage

• Scale – 300 Million English Speaking Middle Class by 2010 • Educational System & Focus on Quantitative Ability • Work ethic in the IT/ITES industry • Powerful Demonstration effect of successful Indians in India and overseas

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Commitment to Quality Intellectual Property Protection & Enforceability Government Support Eco system & Industry momentum from $11 bn in 2002 to $70 bn in 2008 (McKinsey Estimates)

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Strategic Advantage

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India’s Strategic Advantage is based on three key factors

Govt. Support

Overall People Factor

Infrastructure Factor

Environmental Factor

•Skill Base •Availability •Skills mix •Work attitude •Cost Advantage •Employee cost •Productivity •Institutional Support •Training •Labor Laws

•Telecom •IPLC Costs •Skills mix •Speed of deployment •Property •Transportation •Power •Banking and Finance

•Govt fiscal incentives •Simplicity of tax structure •FDI policy •Politico-Legal environment •Economic environment

India Offshore Opportunities • • • • • • • • • •

IT-Application development and maintenance IT Infrastructure monitoring and hosting IT Product development BPO Contact centers BPO Processing-payments, claims, applications BPO Administration-transcription, digital assets management BPO Content-research, animation, graphics, analytics BPO Engineering, design, and Project Management BPO Healthcare-radiologists, drug testing, and research Manufacturing-generic drugs, autos

The BPO industry is critical for Indian economy from a macro economic perspective • Currently, IT and BPO services together account for 2% of the Indian GDP • Share of GDP expected to go up to 7% by 2008 • IT and BPO sectors expected to contribute 20% of the GDP incremental growth between FY2002 and FY2008 • Share of foreign exchange inflows expected to grow from 8% in 2002 to 30% by 2008 • Will employ over 2 million people directly by 2008 • Will generate indirect employment for an additional 2 million people

India: Challenges & Resolution Challenges Fear Of Working with Overseas Mgt.

Resolution Understand and build Indo US presence ands capability.

Learn to manage offshore

Domain Expertise

Develop US strengths and build in the offshore team

Loss Of Control

Transparency and processes including ePMO Tools and interpersonal ties.

Managing US political, labor and social issues

Invest in retraining, higher value activities, ownership of Indian firms and communities. Enable opening of Indian market.

Offshoring-Doing the right thing and doing it right • Develop key supplier relationships-look for compatibility and chemistry.

• Build internal buy-in, champions, and visibility.

• Build a roadmap which shows real commitment while managing the risks of knowledge, critical dependency, sovereign risk, etc.

• Work as One team-goals, systems, rewards, and recognition.

• Look at onsite-offshore as an integrated model. Monitor the ratio and reinvest in both.

• Establish multi–level relationships, not a single point salesperson/purchasing officer face-off.

• Strategically assess the buy vs. build issue. Revisit every 2-3 years.

OFFSHORING-A Mega trend for our times • • • • • • • • • •

O - Offshore or Ossify F - Fit and Feel (of the partner) F - Friend not Foe (or vendor) S - Start Smart (Real commitment, not an invisible pilot) H - Hi Tech and Hi touch (Processes and teams) O - Oversight not out-of-sight (Transparency) R - Risk Management not elimination I - Incentivize collaboration (goal and reward alignment) N - Nimble (flexibility and speed the greatest pay-offs) G - Globality for greatness!

Thank You