IT-BPM Sector in India 2019 DECODING DIGITAL
STRATEGIC REVIEW The IT-BPM Sector in India: Strategic Review 2019
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NASSCOM is the industry association for the IT-BPM sector in India. A not-for-profit organisation funded by the industry, its objective is to build a growth led and sustainable technology and business services sector in the country. NASSCOM Research is the in-house research and analytics arm of NASSCOM generating insights and driving thought leadership for today’s business leaders and entrepreneurs to strengthen India’s position as a hub for digital technologies and innovation. NASSCOM Research, the most credible source of technology insights in India publishes an annual edition of its Strategic Review which analyses the key trends in IT-BPM industry and disseminates the latest status of the industry performance.
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Strategic Review 2019 : Decoding Digital The IT-BPM Sector in India: Strategic Review 2019
Foreword
At NASSCOM, we have been researching the Strategic Review for over two decades now. For those of us who are closely involved, it provides an opportunity to go back and corroborate various data points, ideas and of course, the overall relevance of these. In a shifting landscape this becomes an imperative. In the financial year 2019, the IT-BPM industry grew at a shade over 6% and by year-end the overall revenue in reported currency is expected to touch USD 177 billion; and, it employs about 4.1 million people directly. For 2019, we have suggested a cautious outlook for the global economy, what with emerging challenges doing rounds - trade wars leading to policy uncertainty, volatility in currency, possibility of a No-Deal Brexit, weakening financial market sentiments, among others. And yet, the Indian economy grew at a healthy 7.3% and is among the fastest growing large economies. To be sure, the advanced economies and the emerging ones grew at 2.3% and 4.6% respectively. For Indian IT-BPM industry, FY2019 was the year of growth in ways more than one – digital revenue grew at a remarkable 30+% to reach USD 33 billion, 8 unicorns were added, over 2,500 patents were filed in digital technologies alone, presence of >400 AI startups and counting, and the National AI Strategy was announced. All of these and more have contributed substantially towards India’s positioning as an Innovation Hub. Obviously, the journey continues but I am indeed happy to say that the Indian IT-BPM industry today has 600,000 digitally skilled people, as part of the workforce. NASSCOM is working closely with the government and industry stakeholders to ensure that we have a fresh talent supply of 1 – 1.5 million people (in digital tech) in the next 4 – 5 years. To add here, digital revenue is currently at one-fifth of the total industry revenue. Primarily there are six technologies from the suite which are driving this phenomenal growth – Intelligent Automation, Robotics, Cloud, IoT, Immersive Media & Blockchain. Companies have now included several new measuring metrics to track their digital businesses, including yardsticks like client mining, IP monetization and patents filed, which are fast gaining ground across the industry. On all four major counts – innovation, competitiveness, entrepreneurship and talent & security, the industry performed quite favorably and rose in rank (rather appreciably) in some areas. So what are the key trends that’s changing the rules? • Product/Services centric business model shifting to ‘Experience First’ model • Rise of the ‘Collaborative Economy’ • 3 D’s : Data, Domain, Digital- disrupting the landscape • And of course, the pace of change is unprecedented So, here’s the annual report card of the industry. It’s an engrossing story of how the world is changing and Indian IT-BPM industry continues to be the preferred transformational partner. As equal stakeholders, let us join hands to nurture India’s innovation capabilities, foster the right ecosystem and be constantly on the lookout for new growth opportunities.
“Changes call for Innovation, And Innovation leads to Progress”
Happy reading. Debjani Ghosh President, NASSCOM
Strategic Review 2019 : Decoding Digital The IT-BPM Sector in India: Strategic Review 2019
Acknowledgements
The IT-BPM Sector in India report is NASSCOM’s annual flagship publication that analyses the performance of the industry, traces its continual evolution and highlights key trends that are influencing and driving this sector forward. The NASSCOM Research team relies heavily on both primary and secondary research, internal and external research reports, and reaches out to stakeholders across the board – industry, government, research firms, etc. – for their inputs that add value to the report. We would like to thank all these stakeholders for their valuable contributions, without which this report would not have been possible We would like to thank NASSCOM member organisations, who provided relevant data and insights about various industry trends and developments. We would like to acknowledge the inputs and insights from all our research partners, government bodies specifically MeitY, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, STPI, RBI and other departments/ministries of Government of India and state governments who, as always, willingly provided us with relevant information. A special acknowledgement to Zinnov Research who helped us build the content for the section on “Digital@scale: Deriving value from digital” and Infoholic Research who assisted us in our secondary research for the report. All sources and participants have been listed in the appendix section.
Strategic Review 2019 : Decoding Digital The IT-BPM Sector in India: Strategic Review 2019
Table of Content
Industry Segmentation chart 01
Chapter 1 IT-BPM: The year that was! Performance Overview 03 IT Services 20 Business Process Management 33 ER&D 47 Software products & Start-ups 62 eCommerce 99
Chaper 2 Digital@scale: Deriving value from digital 123
Chapter 3 Emerging technologies-Hype Vs Reality Cloud Computing 143 Intelligent Automation (IA) 150 Internet of Things (IoT) 156 Industrial Robotics 163 Immersive Media (AR/VR) 170 Blockchain 177
Chapter 4 Talent: Skilling for Digital 183
Appendix Glossary 192 Acronyms 197 Sources & Contributors 201
Strategic Review 2019 : Decoding Digital The IT-BPM Sector in India: Strategic Review 2019
IT-BPM Industry Segmentation
IT-BPM
IT services Project Oriented Outsourcing Support and Training
Services BPM Horizontal Specific Vertical Specific
Engineering R&D ER&D Embedded software
PES (incl. OSPD)
Software Products
System Enterprise Vertical Software Applications Applications Hardware
Robotics
eCommerce Cloud Computing Immersive Media (AR/VR) Intelligent Automation (IA) Technologies Blockchain Internet of Things (IoT)
NOTE: The continual evolution India’s IT-BPM landscape and an in-depth analysis of its segments has necessitated a more relevant segmentation and re-classification of the industry: 1) ER&D: Now includes product engineering services (PES) of both third-party firms (earlier termed as OSPD) and MNC GICs 2) eCommerce has been analysed separately and isn’t included in total IT-BPM market
Strategic Review 2019 : Decoding Digital 1 IT-BPM Sector in India 2019 IT-BPM: The year that was!
STRATEGIC REVIEW IT-BPM Industry: At a Glance
Global spend USD 1.4 trillion Growth 4.9%
As-a-Service deals USD 21.8 billion Global Growth 45% 2018
Revenue Key Trends USD 177 billion Growth 6.1% Industry growth increases as software-led digital penetration Exports increases USD 136 billion Growth 8.3% Digital revenue is currently one-fifth of the total industry Domestic revenue ` 2.9 trillion India Growth 7.9% FY2019 ER&D, the fastest growing segment at >11 per cent Employees 4.14 million Six digital technologies primarily Growth 4.3% driving growth of the industry – industrial automation, robotics, cloud, IoT, AR/VR, blockchain
Key metrics that companies are No. of GCCs tracking for digital business – 1,250+ digital revenue, investments in digital, automation, client mining, IP monetization/patents filed, Patents filed skilling and C-SAT 4,331 nos. India: Digitally skilled emps Hub of 600,000 innovation
Digital revenue 22-24%
Strategic Review 2019 : Decoding Digital 3 The IT-BPM Sector in India: IT-BPM Performance Overview Global IT-BPM: Shift towards software and digital driving growth
2018: Growth in ER&D spend outpacing software & services
USD billion 11+% • IT services grew at a slightly slower rate vis-à-vis 2017; growth was led by demand for application Growth 4.9% $1.4 trillion 1.6% development & management services • RPA playing a key role in BPM growth as 3.2% customers look to automate low-hanging fruit 7.4% 1,954 and shift their focus to more strategic work 4.5% 1,113 • Software spend driven by rapid adoption of 694 SaaS, esp. CRM, (focus on better customer 515 198 experience); renewed interest in security and IT services BPM Packaged Hardware ER&D privacy solutions software
APAC: Fastest y-o-y growth at 5.7%
% share
• Fastest growing among technology segments 28% Americas was ER&D – 11.4% growth; increasingly 100% software-led engineering and digital = $1.4 APAC technologies (IoT, analytics) driving demand trillion 56% EMEA • In terms of geographies, APAC grew fastest 16% (5.7% y-o-y), Americas (5.3%) and EMEA (3.6%)
Global digital revenue growing at over 20% CAGR
Global revenue from digital is Vendors are making agile and Cloud adoption is one seeing a 20+% CAGR growth cloud the central themes in their key growth driver; also, over 2017-19 and is applications business, thereby manufacturing sector’s estimated at USD 267 billion shortening sales cycles and implementation of in FY2019 ramp up new app work Industrial IoT, robots, etc.
Source: Everest Group, Gartner, IDC, Zinnov, NASSCOM
Strategic Review 2019 : Decoding Digital 4 The IT-BPM Sector in India: IT-BPM Performance Overview By total contracts awarded, 2018 was the most bullish year since 2015
2018: ACV grew 18% over 2017 2018: As-a-Service saw a 45% growth over 2017
USD billion USD billion 2016 2017 2018 47.8 20.0 36.4 40.5 19.2 17.3 21.8 15.8 15.2 12.2 10.7
6.9 7.0 6.1 6.0 6.0 24.2 25.3 26.0 4.5 4.5
2016 2017 2018 ITO BPO SaaS Iaas Traditional Sourcing As-a-Service
APAC: 30% growth; As-a-Service, key driver Healthcare: Fastest growing ACV
% share, 2018 % share, 2018
14% BFSI 22% 27% Business services Americas 100% = 100% = Manufacturing $47.8 EMEA $47.8 billion 52% billion Healthcare 34% APAC 9% 17% Telecom & Media 10% 15% Others
Outsourcing contracts in 2018 grew a While Americas’ share BFSI, business robust 18 per cent largely driven by a in total ACV stood at services, 45 per cent growth in As-a-Service 52%, APAC was the manufacturing, contracts fastest growing at 30 accounted for ~55% per cent: of total contact value: • As-a-Service contracts were worth USD 21.8 billion in 2018 • Driven largely by • Top verticals As-a-Service leading adoption of • 72 per cent of these contract were contracts (~63 per As-a-Service – for IaaS and the balance for SaaS cent share) with y-o-y business services, • Traditional contracts stood at USD growth of 55 per cent financial services 26 billion (77 per cent ITO; 23 per and manufacturing cent BPO)
Notes: ACV: Annual Contract Value; * Contracts with ACV ≥ $5M Source: ISG Index 2018
Strategic Review 2019 : Decoding Digital 5 The IT-BPM Sector in India: IT-BPM Performance Overview India: Setting itself up as a global investment and innovation destination
77th th 57 World Bank’s Ease of Doing Business 2018 INSEAD’s Global Innovation Index 2018 30th
WEF’s Global 36th Manufacturing Index (2017)
Global IP Center’s Annual International Intellectual 58th Property (IP) Index 2018 WEF’s Global Competitiveness Index 2018
Innovation Competitiveness
68th 60th
GEN’s Global FM Global’s Global Entrepreneurship Index Resilience Index 2017 2018
rd 11th 53
A.T. Kearney’s FDI IMD Talent Rankings Confidence Index 2018
Entrepreneurship Talent & Security
Strategic Review 2019 : Decoding Digital 6 The IT-BPM Sector in India: IT-BPM Performance Overview India value proposition: A digital solutions’ destination
8,100+ firms offering 2,000+ digitally 22-24% share of India home to Digital Partner digital solutions focused startups digital revenue 125+ GCC CoEs
Skills >4 million direct employees ~600,000 digitally skilled
eCommerce Government initiatives - Digital India, Make Domestic Market market in India, Skill India, Startup India, Aadhar, USD 43 billion GSTN, Smart cities, etc.
760+ ODCs Presence in 80+ 50 Indian cities as Service Delivery worldwide countries location centres
~18,000 firms (incl. startups) across IT Near-shore hub for Business Partner services, BPM, Products, ER&D, eCommerce APAC region
Entrepreneurial 7,200-7,700 startups 210+ active Incubators/Accelerators Culture
Diverse Sourcing: Near-shore, Pricing: FTE, T&M, Risk-reward, Business Models on-shore, off-shore, local Outcome driven operating model
As-a-Service, New age CX models, Differentiated IP, open Digital Solutions Platforms, cloud- strategic partner networks, innovation, joint enabled services energized GTM strategies innovation with partners
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 7 The IT-BPM Sector in India: IT-BPM Performance Overview Indian IT-BPM: USD 177 billion market; digital business driving growth
Revenue1: Forex volatility bringing down $ growth
USD billion 6.1% eCommerce
Bolstering the Indian economy
167 177 7.9% 38.5 43 Highest relative share FY2018 FY2019E in national GDP
ER&D: Fastest growing among all segments
USD billion; FY2019E 43 91 36 35 15 177 ~USD 15 billion FDI investment (Upto Sep-2018)
ER&D, IT Service Products BPM Hardware Total eCommerce
Developing intelligent solutions
Digital Solutions Partner IT Services
BPM Intelligent Operations Partner
Innovation and R&D Hub GCC
ER&D Digital Engineering and Connected Solutions
SaaS and Deep Tech Solutions Products
Start-ups Disruptive products and services
1 Calculated as per reported currency; E: Estimate Source: DIPP, RBI, World Bank, NASSCOM
Strategic Review 2019 : Decoding Digital 8 The IT-BPM Sector in India: IT-BPM Performance Overview
IT-BPM exports closing in on USD 140 billion
FY2019E: ER&D, steadily increasing share
USD billion
74 31 31 .04 136
IT Service BPM ER&D, Hardware Total Products
FY2019E: APAC, fastest growing region Hi-tech & telecom, retail growing fastest
% share % share 2% 5% 10% 8% BFSI USA Hi-tech/ Telecom 11% UK 10% 41% Manufacturing Continental Europe 62% Retail 17% APAC 16% Healthcare ROW 18% Others1
100% = USD 136 billion 100% = USD 136 billion
Indian IT-BPM industry’s exports for FY2019 While all regions growing at an average 8.3%, APAC estimated to reach USD 136 billion, an 8.3% y-o-y is the fastest growing at 8.5% growth Top three verticals account for ~75% share of global • USD 10 billion added over last year revenue • ER&D once again leading growth (11%), followed Emerging verticals (retail, healthcare, etc.) growing by BPM (8.3%) and IT services (7.3%) at 8.4%
Notes: Geographic and vertical split excludes hardware exports; 1. Others incl. travel & transportation, construction & utilities, MPE (Media, Publishing and Entertainment), etc. Source: NASSCOM
Strategic Review 2019 : Decoding Digital 9 The IT-BPM Sector in India: IT-BPM Performance Overview Domestic IT-BPM: `2.9 trillion market, growth of 7.9%
FY2019E: Software products, the fastest growing segment
` billion 21% 7.9%
3,008 6.3% 2,482 7.4% FY2018 ~15% FY2019E 954 1,025 1,097 1,166 7.7% 335 385 265 286
eCommerce Hardware IT services Software products BPM
Key contracts 2018 Tech M has signed a Atos supports Indian TCS helps Voltas Infosys to develop the 5-year, `270 crore government in its National implement Industrial next-gen income tax filing deal to enable digital Supercomputing Mission IoT to improve customer system transformation for service operations • Won a major 3-year • The project worth Coal India Limited. contract with C-DAC to • Using TCS’ IoT `4,241.97 crore will cut • Objective is to set supply its BullSequana framework and Intel’s down processing time for up an integrated supercomputers - create IoT gateway, Voltas returns to one day from 63 ERP system, supply a network of 70+ jointly developed a days and expedite refunds & implementation high-performance centralized system • Project to be completed in of HIMS (Hospital supercomputing that could remotely 18 months and will be Information facilities for various monitor chillers launched after three Management academic and research across different sites months of testing System) institutions across India in India
2018: M&As across industry spectrum; non-tech companies also in the fray as they seek to implement digital solutions
Access Tanla Mahindra & One97 Acquirer L&T Tech Ceat Ola Healthcare Solutions Mahindra Communications
Graphene Acquired Pacific BPO Tyresnmore Karix Carsense Ridlr TicketNew Semiconductors
Mobile VAS Online market Online Services Segment BPM Semicon Sw. Products IoT (Traffic place for tyres (Ticketing) Information)
100% stake 6.67% stake 100% stake USD 48.7 USD 0.9 Remarks - for USD 12.9 for USD 1 for USD 25 USD 40 million million million million million million
E: Estimate Source: Venture Intelligence, Secondary sources, NASSCOM
Strategic Review 2019 : Decoding Digital 10 The IT-BPM Sector in India: IT-BPM Performance Overview
Indian Start-up base growing at 12-15% y-o-y
Start-up Key Start-up Segment Focus Ecosystem Segments
# of start-ups Fintech 7200-7700 incepted (2013-18) Top Verticals New applications and alternative lending start-ups
50% start-ups # of start-ups belong to enterprise Deeptech 1200+ added in software, Fintech, 2018 Healthtech and Analytics, AI, IoT, Blockchain saw marketplace high acceptance across industries
120% funding Highest growth for AI Healthtech addition in a start-ups 8 unicorns single calendar Lack of healthcare facilities & year ever funding growth to drive this market
Increase in no. Agritech of advanced 50% tech start-ups Funding saw a sharp rise in 2018 - since 2017 Advanced Analytics increased investors interest
1200+ advanced tech start-ups from EdTech New direct 2013-18 40,000 jobs created High funding and increase in AI based individual learning to drive market Data analytics, IoT and AI gaining momentum across Active the industry Cybersecurity 210+ Incubators / Accelerators Big rise in number of cyber security companies in India
Source: NASSCOM-Zinnov-Indian Start-up Ecosystem-Approaching Escape Velocity – 2018 report
Strategic Review 2019 : Decoding Digital 11 The IT-BPM Sector in India: IT-BPM Performance Overview
GCCs: India home to over 1,250 GCCs
GCCs: 21% share of total exports
USD billion • GCCs are upping the Innovation agenda by 8.7% building new age technology CoEs around AI/ML, Cloud, IoT, etc. • GCCs increasingly leveraging India for shared 28 services specific to IT, F&A, HR, and 26 Procurement • Ahmedabad, Thiruvananthapuram, Vadodara and Coimbatore are the emerging Tier-II locations in India FY2018 FY2019E
Number of GCCs1
ER&D 1567 • ER&D GCCs: Digital transformation & global product ownership, key focus areas • IT GCCs: Application development & maintenance, system integration and IT 766 infrastructure management services – top workloads • BPM: Working on cutting edge analytics and automation to improve overall business process efficiency BPM 829
GCC – Top Verticals (Number of MNCs) GCC presence and work intensity AI/ML Software & Internet 519 IoT
Data Analytics Telecom & Networking 82 Cloud Cyber Security
Enterprise Mobility Professional Services 70 RPA
Note: 1. Total won't add up to 1,250 GCCs as there would be overlaps Source: NASSCOM-Zinnov GCC report 2019
Strategic Review 2019 : Decoding Digital 12 The IT-BPM Sector in India: IT-BPM Performance Overview
India: A fast growing internet economy
India Internet eCommerce Subscribers1 USD 43 billion 560.01
Wireless (2018) Mobile Value million App store (Cell phone) Added Service downloads 1 subscribers (MVAS) Revenue 165% 1,169.29 CAGR (2016-2018 growth) million 26%
Tier 2 Mobile internet eCommerce subscribers1 2 market 538.76 51% y-o-y million India’s per Broadband growth Wireless user per day subscribers1 Teledensity1 video consumption 481.7 89.51% 190 million minutes
Note: 1) As of Sep-2018; 2) Estimated for 2018 Source: App Annie, IBEF, TRAI, NASSCOM
Strategic Review 2019 : Decoding Digital 13 The IT-BPM Sector in India: IT-BPM Performance Overview
Strategy Pillars for Digital Service Providers
Organization Offerings and Streamlined Capabilities Restructuring Solutions GTM
Rewriting the Comprehensive Consulting-led Talent Narrative Digital Portfolio Approach
Innovative Federated Enterprise Digital Engagement Partnerships Structure Platforms Models
Alternate Deal Verticalized Sourcing Separate Digital Use-case Specific M&A Channels Incubation IPs Access to Newer Stakeholders
Leveraging Divestment from Platforms to COEs Focussed Non-Core Create Solutions Account Strategy
FY2017 FY2018 FY2019E
Digital revenue CAGR (USD billion) 16 25 33 44%
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 14 The IT-BPM Sector in India: IT-BPM Performance Overview Six digital technologies primarily driving growth of the industry
Shift from experiment centric to business case India leads developed countries like the US, the UK centric model resulting more projects moving to and Japan in deployment of AI- and RPA-based production phase technologies About 50% states in India involved in various Going forward, combining cognitive technologies blockchain initiatives would allow bots to work within more complex scenarios BFSI at 55% leads adoption; opportunities in retail, logistics, healthcare, manufacturing BFSI, retail, CPG - key sectors driving IA adoption
Blockchain Intelligent Automation
Immersive Media Robotics
Indian Immersive India industrial media market to grow robotics market 85% CAGR to reach growing at 20% USD 6.5 billion (2022) CAGR Partnerships and Factory automation: collaborations key Digital Automotive, drivers for ecosystem Technologies electronics – leading players verticals 70+ AR/VR focused Warehouse start-ups in India, automation: growing at 25+% Transport & Logistics, retail/eCommerce – leading verticals
Internet of Things Cloud
India IoT marked to touch USD 28 India cloud marked estimated at USD 7.1 billion by 2020 billion by 2022 1,250+ IoT start-ups in India, ~10X IT-BPM, eCommerce, communication & growth since 2014 media – leading in cloud adoption Industrial manufacturing, Cloud services by Indian firms: cloud automotive, retail driving IoT advisory & strategy, migration support, investments cloud architecture, managed security, etc.
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 15 The IT-BPM Sector in India: IT-BPM Performance Overview Services companies tracking key metrics for digital business
IP Monetization / Patents Filed Wipro filed over 400+ Service Providers showcasing patents in 2017-2018 with increased focus on creating majority of them across products / platforms on new emerging technologies such age technologies as AI, IOT, Robotics
TCS launched plan to reskill Digital Skilling around 200K employees as Re-skilling existing employees a part of their in-house at all time high across the development program Service Providers ecosystem
Customer Satisfaction Wipro actively monitors Measuring customer its Digital customers satisfaction emerges as a key and interacts with them metric for Service Providers to regularly to measure measure Digital growth client experience
TCS to start disclosing Digital Digital Revenues / Margins Revenue starting 2019 to Service Providers have started highlight monetizing businesses to measure and disclose from new age technologies Digital revenues publicly
Investments in Digital HCL invested USD 100 Service Providers are actively million in digital platforms investing into building since 2018 and intends to capabilities on Digital spend additional USD 100 platforms and services million till 2020
Mindtree actively using bots Driving Automation Internally since two years and has over IT Firms actively looking to 350 bots working 24/7 to deploy automation internally automate core organization to boost productivity processes
Client-related Metrics Accenture lays high focus on Large Client Mining driving majority of their Digital Service Providers actively mining revenue from large enterprise targeted clients to drive Digital clients (>55% of the Digital revenue (E.g. Targeting clients based revenue) driven by clients with on spending propensity & industry) USD 10+ billion revenue
Client Mining Metrics TCS highlighted that it Actively measuring Digital provided Digital services to engagements with existing over 55% of its existing clients and initiatives to clients and plans to increase convert non-digital customers it even further
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 16 The IT-BPM Sector in India: IT-BPM Performance Overview India: Largest source of digital talent for the world
FY2019E: Crossing 4 million direct employees
million numbers
4.3%
4.14
3.97
FY2018 FY2019E
600K - Digitally skilled employees Digitally Skilled Employees by Skill Level Top Practice Areas in Demand
% share % share 5-10% 2-5% Big Data & Analytics 10-12% 25-35% Cloud Computing Awareness Mobility 25-30% Intermediate 12-15% 60-65% Machine Learning Expert Cyber Security 15-18% 12-15% Others
Reskilling Initiatives
Internal Hackathons, Partnership University and CoEs on new Learning Gamification, with MOOCs NASSCOM tech domains Platforms Virtual Labs providers Partnerships
Source: Experis IT Employment Outlook, Apr–Sep 18, Han Digital Solution, NASSCOM
Strategic Review 2019 : Decoding Digital 17 The IT-BPM Sector in India: IT-BPM Performance Overview M&As: 2018 saw four multi-billion dollar deals
Technology convergence & digital driving M&As1,2
nos. 10% (USD billion) 253 230
Domestic 137 133 (1.83) Outbound (0.79) 54 Inbound 48 (1.64) (0.57) 49 62 (4.46) (6.65)
2017 2018
2018: ~36% share of digital deal in total (nos.)
(% share; n = 90 nos.)
31% 21% 11% 10% 9% 9% 9% 100
Mobility Cloud Digital Payments Analytics IoT Others Total Marketing
2018: 166 M&As in IT-BPM segment 2018: Prominent deals
3 Amount (% share; n = 304 nos. ) Acquirer Acquired (USD mn.)
Walmart Flipkart 1,600 19% IT-BPM Atos Origin Syntel 3,400 55% Internet & eCommerce HCL Tech IBM 1,800 26% Startups (select products) Intelenet Teleperformance Global Services 1,000
KPIT Technologies BirlaSoft 716
1 Incl. Internet & eCommerce, start-up transactions; 2 Cumulative disclosed value excl. Walmart-Flipkart and HCL-IBM deals; 3 n >253 nos. as there are overlaps between startups and Internet & eCommerce segments Source: Venture Intelligence, NASSCOM
Strategic Review 2019 : Decoding Digital 18 The IT-BPM Sector in India: IT-BPM Performance Overview
Over 4,300+ patents filed by Indian firms in the US during 2015-18
Number of patent families filed by Indian Companies in the US Out of the total 4,331 patent families over 2015-2018: • Digital and computer technology patents had a ~55% share • 40% of all patent families were granted 2,558 2,073 Top five Indian firms filing patent in the US in digital and computer tech include Wipro, Tata Group, HCL Technologies, Intel and Infosys Top five application areas include software Non-Digital Digital and Tech computer tech applications, health & medical devices, electronic devices, testing (software and hardware) and telecom / optical communication
~50% of patent families filed are in the digital space
Computer Tech 20% Communication Tech • Within digital technologies, leading areas for 4% 33% AI patents filed include AI, image processing, cyber
6% Image Processing security and IoT – together, these account for 30% share 7% Cyber Security • Others include patents for cloud, AR/VR, robotics, 17% IoT 13% drones, etc. Others
Note: Analysis is only for the patent families published in the public domain; for 2017-18, the total number published would be smaller as there is usually a lag of 18 months bet. the filing and publication date Source: Questel Orbit Patent Database, NASSCOM
Strategic Review 2019 : Decoding Digital 19 IT services: At a Glance
Key Trends
Global spend Every enterprise is reimagining USD 694 billion multiple aspects of its business, leveraging digital technologies Growth 3.2% Business transformation driven by top line concerns, and the need to participate across multiple Global segments 2018 Global sourcing Cloud platforms driving growth in managed services for security and USD 113-115 billion data platforms Growth ~4% US tax reforms and increasing interest rates drive growth in BFSI and retail; healthcare and telecom catching up soon
Revenue Customers increasingly moving USD 91 billion from point deployments to Growth 5.4% enterprise-wide adoption of automation
Larger proportion of clients adopt Exports digital at scale and modernize USD 74 billion legacy systems Growth 7.3% India Increased spending by customers FY2019E in next-generation customer experience, re-architecture of data Domestic for delivering insights and micro ` 1,166 billion services Growth 6.3% Companies invest higher in products, platforms, M&As to build digital capabilities
Strategic Review 2019 : Decoding Digital 20 The IT-BPM Sector in India: IT Services
Global IT services: Large scale spending on digital to modernize legacy systems
IT Spend growth remains moderate IT Consulting and CADM key growth drivers
USD billion 5.2% 3.2% 4.2% 7.7% 3.1% Y-o-Y Growth 2.5% 3.0% 3.0% 694 7.7% 2% 16% 673 12% % Share 19% in 23% revenues 29%
2017 2018 Support & IT Training ISO SI Consulting CADM
Global sourcing growth steady IT TCV1 deals sizes grew driven by digital services
USD billion USD billion ~4% 3.8% 109-111 113-115
92.2 95.7
2017 2018 2017 2018
Key Highlights
Global sourcing and Overall ITO demand remained moderate APAC region driving growth at ~5%; IT spend grows at with market characterized by shift from leveraged the most for digital services 3.7% and 3.2% traditional services to digital technologies, delivery; growth mainly driven by respectively in 2018 DevOps, and as-a-service models tier-1 cities in India and Singapore
CADM- highest growth BFSI and manufacturing : TCV deal sizes grew by segment driven by mobile and more than ~60 per cent of nearly 4% driven by digital transformation services vertical spending digital deals
Source: Everest Group, Gartner, IDC, ISG, NASSCOM
Strategic Review 2019 : Decoding Digital 21 The IT-BPM Sector in India: IT Services
Indian IT services: Matured segment focusing on growing digital capabilities & driving digital at scale growth
IT services, the largest, most matured segment for the industry
USD billion Revenues
5.4%
91
86
FY2018 FY2019E
Key Highlights
Improving profitability and New technology platforms, Customers increasingly moving from productivity remains the key focus analytics, cloud, mobility point deployments to enterprise-wide for service providers and customers the key enablers for growth adoption of automation
Matured clients Customer demand Cross vertical sell, Building deep moving towards gain driven by design deeper client mining, contextual knowledge sharing, outcome thinking, automation, adding local talent of customers based pricing; though innovation centres and and increasing businesses to deepen FTE model continues cognitive computing onshore presence-key relationships and to dominate capabilities focus for providers gain share
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 22 The IT-BPM Sector in India: IT Services Indian IT services exports: Digital projects gaining scale and driving business value
Growth across segments driven by digital adoption Growth driven by the US market
FY2019E: 100%=USD 73.9 billion FY2019E 2% CADM 3% 11% 7% USA 3% ISO 12% UK 7% Testing Continental Support & Training 8% 47% Europe 17% 62% System Integration APAC IT consulting 21% ROW Others
Retail and healthcare high growth drivers
FY2019E BFSI Hi-tech/ Telecom 4% 11% 2% Manufacturing 3% Healthcare 4% Retail 6% 54% Construction & Utilities 16% Travel & Transportation
Key Highlights
Focus on transforming core business and ISO and software testing Emerging vertical-healthcare, creating business value for the client growth segments retail-growth drivers
Increased spending by customers in Rise in AI adoption to compensate for Cloud migration, next-generation customer experience, lower maintenance spending in terms cyber-security services re-architecture of data for delivering of new use-cases through consulting and cloud brokerage insights and micro services and system integration services to create new demand
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 23 The IT-BPM Sector in India: IT Services Indian GCCs playing an active role in investment priorities for their parent firms
Priorities have shifted from just cost excellence…..
Invest in high quality leadership Be an owner of key enterprise and become a world-class talent priorities, including market-sensing hub with deep domain expertise, and customer-facing core functions, Business Talent hub exporting talent to the rest of the with clear influence on profitability accountability enterprise
Adopt Agile ways of Be at the heart of the working and use the organization for DevOps paradigm to digital, while ensuing ation increase collabor Traditional IT traditional IT is ready and fast-track value Ways of working and digital for the digital age creation
Continue to be the center of Become the analytics center efficiency by being at the of excellence that generates vanguard of productivity sustainable competitive enhancements (automation, Sustained cost Data/analytics advantage for the enterprise AI, cognitive) excellence the functions owned by GCCs
….towards creating business impact
Market Global Industrial Automation firm’s GCC is developing Holistic view of Rol & Time reduction Customer connection mobile applications that go value. Helps invest beyond providing IT services to justifiably, allocate Market expansion Margin improvement internal customers resources effectively and influence behavior of workforce American financial Competency development Metrics are being services major’s India defined to measure Revenue per employee Globalization impact GCC encourages revenue influence managers to report Intellectual property creation Workforce alignment and impact on business benefits of customer Improve human capital index their work
Research & Engineering Fortune 500 data storage firm has a major focus on Improve engineering tools Thought leadership innovation and field around 10 patents from Creating inventions Ecosystem enablement it’s India IT GIC
Source: Deloitte, Everest Group, Zinnov, NASSCOM
Strategic Review 2019 : Decoding Digital 24 The IT-BPM Sector in India: IT Services IT services industry focusing on digital enterprise transformation, new metrics coming into play
Enterprise Evolution: From pure computing to AI driven services
Computing Enterprise Digital Enterprise Intelligent Enterprise (1970 - 2000) (2001 - 2016)) (2016 - Today)
• First commercially available • Mobile Computing • End to End offerings (Devices Microprocessor (Smartphones, Tablets) + Services) • Personal Computer • Cloud (IaaS, PaaS, SaaS) • Sophisticated Interconnection based on IoE (People, Objects, • Local Area Networks • Web Centric Architecture Locations and more) • Client Server Architecture • Software Defined (SDx) • Context-economy based on • Enterprise Computing • Internet of Things ( IoT) Data & Knowledge • Software & Applications • API Economy • AI-defined World (Smart/Intelligent • WWW & Internet • Interconnection with Environments) Integrated Ecosystems • Web Browser • Social Media • e-Commerce
Introducing IT in organizations High degree of interconnection Platform based and AI driven
Evolution of IT Services
High Third Generation metrics Second-generation metrics Nascent concept: mostly being piloted; limited Maturing concept; increasingly seen as KPIs within coverage within current outsourcing contracts outsourcing contracts-select occasions where the metrics are linked with commercials (through SLAs) Metrics focused on specifically measuring either Currently used as supplementary metrics to track • Impact on business outcomes includes productivity improvement delivered using discrete levers composite metrics cutting across functional beyond traditional labor arbitrage tasks (eg. DevOps) Strong correlation with business/user productivity and • Impact of advanced service experience automation/cognitive/NLP deployments
Traditional metrics (input based) Traditional metrics (output-based) Well established concepts; being increasingly Well established concepts; continue to remain highly phased out from mature outsourcing relevant within outsourcing contracts (widely used for contracts (second/third generation contracts) designing SLAs) Primary focus on measuring/optimizing cost Designed for output-based/managed services constructs per unit effort expended by service provider Primary focus on measuring the efficiency and
Alignment with business objectives Alignment with business Most enterprises still have these; however, effectiveness of services delivered they do not define these as critical for Meaningful correlation with business/user productivity success of the relationship with the service (reactive/retrospective), although one-to-one causality is provider hard to establish
Low Current adoption levels / relevance within enterprises Limited High
Source: BCG, Everest Group, Rene Buest, NASSCOM
Strategic Review 2019 : Decoding Digital 25 The IT-BPM Sector in India: IT Services Expanding portfolio from pure services to ‘Platform +Services’
Platforms of top Indian IT service providers Illustrative
Deployment & platform Key focus Area Stated dominant use cases overview
• End-to-end Infra services • Plug & play deployment such as requiring customization – Infra blueprint, Infrastructure and learning Ignio services • Standalone platform for – Self healing
TCS core infrastructure – Deployment services – Predictive maint
• Plug & play deployment requiring customization • Digital Virtual Assistants Broad based and learning • Prediction systems (BPO focus) • Standalone platform offering a menu of • Robotics & Drones
Wipro Holmes Wipro multiple cognitive services
• Bespoke Deployment • Engineering (aircraft floor • AI capabilities bolt-on to Broad-based beam development) (incl. engg, ADM & BPO) existing automation architecture (IIP, IKP, IAP • Forecasting as a service
Infosys Nia Infosys framework)
• Bespoke deployment • AI modules bolt on to • Detect and correct Infra Broad Based existing automation and App issues (Infra services focus) platform; collaboration • Watson power chat agent with Watson, S-Now, HCL DryICE Dynatrace, Splunk
• Bespoke deployment • Tool chains get standardized and • Customized automation rationalized Integrated Services platform with unified (entire IT ecosystem) DevOps, Agile with (RPA), • Brings transparency at machine learning and test management layer into
Mindtree CAPE Mindtree automation working value streams
Source: BCG, NASSCOM
Strategic Review 2019 : Decoding Digital 26 The IT-BPM Sector in India: IT Services Investing in building digital capabilities and services
Investments in digital Iluustrative
Acquisitions Partnerships
DevOps automation AWS cloud Cloud, Technology and Enterprise Start-ups automation tools partners
• Partnerships and • TCS and • Mphasis collaborations with Singapore investing over End-to-end BPM and CRM solutions cloud service Airlines, ` 4.5 crore to using Pega platform providers, technology launches a incubate 26 and automation tool jointly non-profit providers developed start-ups over 3 solution that years in transforms partnership Platform implementation services airlines’ with N/Core ground operation • Wipro Ventures • HCL has set a $100 million up a joint Design studio focused on digital fund has robotics marketing invested in 11 development start-ups in the center with areas of AI, one of its cybsersecurity, banking testing clients in Salesforce advisor and consulting automation etc India
Talent Enablers
• Trained over 292,000 • 20 Design Studios & Labs employees in Digital • 150 Distributed Agile Development • Over 318,000 employees Centres on Agile methods. • 11 Innovation centres
• 9000+ certified & 20,000+ trained agile professionals • 80+ Engineering Labs • 500+ Devops experts • 100+ client development centers and CoEs in industrial design, niche high-performance computing • 90,000+ trained in digital skills • 2 ‘Digital Pumpkin’ innovation hubs • 3,000+ trained and certified in AI/ML • 28 Centers of Excellence
Source: Company Annual Reports. NASSCOM
Strategic Review 2019 : Decoding Digital 27 The IT-BPM Sector in India: IT Services Infrastructure services: Digital taking centre-stage
Service providers creating valuable Illustrative IS: Automation disrupting the traditional model impact on customer environment
USD billion
8.4% Core Experience modernization transormation Infosys consolidated LTI worked with UTC to create 15.8 India’s Department of a 24x7 unified command Posts’ core systems center for monitoring IT 14.6 onto its Finnacle operations and preventing and platform across a resolving issues across a nationwide network of hybrid, multi cloud FY2018 FY2019E post offices environment
The “automation-delivery model” interplay
Output based Current level of maturity “Conscious” infrastructure infrastructure Input-based management As-a-service Cognitive infrastructure management service Focus on meeting Autonomics/Smart Self-aware/alive IT of neural automation constructs pre-defined operational infrastructure setup; SLAs Business autonomics augmented by Limited focus on driving outcome-aligned services a seamless human-machine Reactive support to to productivity delivery; end-to-end interaction layer improvements business demands automated workflows Services contextualized to Managed services Characterized by Ability to centrally and real-time user/business extensive manual effort Scripting & run autonomously broker scenarios, underpinned by /limited automation book automation heterogeneous set of analysis of data streams Outsourcing services (internal & originating from varied services management human-to-machine and Manual effort external)
Evolution of IT infrastructure Evolution machine-to-machine interfaces Evolution of IT infrastructure delivery model Infrastructure outsourcing Infrastructure-as-a-code
Key Trends
Cloud and As-a- Software - defined Automation tools Service models DevOps models infrastructure
Automation cutting Cloud becoming an DevOps model enables Will revolutionize across infrastructure integral part of the collaboration between datacenter operations as provisioning and enterprise IT discrete business functions it enables tighter management, IT security, infrastructure services for managing rapid coupling and interlinkage and workplace services strategy application delivery and among infrastructure operations at scale technology stacks Enterprises investments As-a-service (AaS) driven to “self-learning”, models are gaining DevOps model continues to Will reduce human “self-correcting”, and traction as they boost demand for intervention, thus “zero-touch” support enhance service agility containerized and cloud improving overall mechanisms and flexibility based infrastructure services efficiency of operations
Source: Everest Group, NASSCOM
Strategic Review 2019 : Decoding Digital 28 The IT-BPM Sector in India: IT Services Software Testing: Rise in specialized testing, automation and testing in agile development
Software Testing: Key growth segment for the industry Shift to specialised high-end automated services
USD billion 8.6% 10%
30% 15% 40% 2010 20102020 75% 6.2 5.7
30%
FY2018 FY2019E Functional testing Specialized Services New offerings
1 Increase in automation of testing services Illustrative
Test Automation services: End-to-end automation engineering consulting and services for strategy, tools, frameworks, Hyper automation with AssureNXT, Intelligent and cognitive 29% automation using IntelliAssure, powered by Wipro HOLMESTM 24% 24% Test Automation Centre of Excellence, 18% Test automation as a service, Tooling as a service, Test Automation Factory Number of respondents
5% Built automated functional testing with frameworks to mitigate the challenges of open source tools and linguistic 0% 1-25% 26-50% 51-75% 76-100% approach to localisation testing Level of automation
Quality Assurance Platform (QAP), AssurePrime™ SaaS model
Key Trends
Growth in agile Shift from Enterprises need Increasing Rise in testing and test agnostic testing for cost reduction business focus outsourcing and automation to industry and faster release on digital crowdsourcing of services specific testing of software transformation software testing
Note: 1 KPMG Survey Results Source: NASSCOM KPMG Report on Software Testing 2019
Strategic Review 2019 : Decoding Digital 29 The IT-BPM Sector in India: IT Services CADM: Shift to next-gen ADM, augmenting traditional services with digital technologies
CADM: Largest segment in terms of share at 47% Shift in focus to IP led high-end services
USD billion
7.1% IP Led High end services 34.7 78-80 32.4 76-78 Support Develop / Implement
FY2018 FY2019E 2010 2020
India remains the most cost effective location Operating cost per FTE for ADM Services 2018; USD ‘000 per annum
56-58
41-43 35-37
19-21 15-17 14-16
Singapore Beijing Kuala Lumpur Manila Bangalore Pune
Key Highlights
Development processes centered Projects focused on driving Quantum of traditional around a minimum viable product rapid innovation, experimenting development, customization (MVP), short feedback loops, and with new technologies and and implementation work test-driven development leveraging cloud services shifts to new generation apps
Vendors focusing on building Maintenance & support Customers looking India, continues capabilities around IP, automation budgets of enterprises shrink for innovative its lead as the high end services; partnering with while reinvestments in agile applications that most cost cloud service providers to offer development, DevOps, Big integrate all effective platform-based CAD services Data, RPA increases processes offshore location
Source: Everest Group, HfS, ISG, Offshore Insights, NASSCOM
Strategic Review 2019 : Decoding Digital 30 The IT-BPM Sector in India: IT Services Domestic IT services: Government’s digital transformation agenda driving growth
Digital transformation and Government initiatives driving growth
` billion FY2019E, (Share in revenues)
40% 30% 15% 10% 5% 100%
6.3%
1,166
1,097
FY2018 FY2019E Infrastracture IT CADM SI services consulting Others Total
Providers building and customising solutions specific to domestic market Illustrative
iON is a strategic unit of Tata Developing a blockchain Deployed Rolta Oneview a Consultancy Services focused on solution for vehicle ‘State Residential Data Hub’ manufacturing industries (SMB), registration and related for a State Government, educational institutions and activities where the buyer is collating and mapping examination boards. issued a registration information across multiple certificate and number for a state departments and UIDAI Offers end-to-end business solutions vehicle by the dealer at the to create a single trusted data using IT-as-a-Service model catering time of purchase hub to multiple industry segments
Key Highlights
Key growth driver: Digital spend Mobile payments, Adoption of technology Government driven by mobile online banking, for basic digitization by initiatives like migration from e-wallets and growing technology follower Digital India, Smart technology savvy trend of digital industries, such as Cities Mission and industries, such as branches among manufacturing, higher demand for financial banks in India other transportation and new technologies institutions, media key growth drivers healthcare
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 31 The IT-BPM Sector in India: IT Services
Outlook: Digital goes mainstream with larger projects and developing economies too joining the race
Digital to take the industry to the next growth phase
USD billion
135-140 CAGR 7-8% 90.6
FY2019E FY2025P
Key Highlights
Enterprises reimagining Customers demand for digital Growing demand for expansive multiple aspects of their transformation projects shifts cyber security services, digital businesses, looking to from pilots, proof of concepts consulting and transformational leverage new technologies to larger engagements analytic and AI projects
BFSI, Retail, Americas will continue Rise in demand for Strategic acquisitions, Telecom and to grow, APAC to pickup unique skills- partnerships and Healthcare to further while Europe to analytical and collaborations to build drive growth see a slight slowdown high-end technicians digital capabilities
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 32 BPM: At a Glance
Global spend USD 198 billion Growth 4.5% Transition to BPM 4.0
Re-engineer the value chain Global sourcing Change from services to solutions USD 81-83 billion Global • End to end solutions; streamline value Growth ~7% 2018 chain • Platforms, data, domain key levers • New business models – solution India share in global sourcing providers, specialists, platform developers Share ~38% • Diverse talent pool – domain, tech and business
Re-imagine the o erings Develop new markets & opportunities Revenue • Digital consulting, plug & play digital USD 34.8 billion solutions & services Growth 7.2% • Predictive analytics • Bots with intelligence
Exports USD 30.7 billion Re-define customer engagement Growth 8.3% India New engagement models; enhanced FY2019E customer relations and journeys Domestic • Anticipate customer needs ` 286 billion • Intuitive and pervasive experience Growth 7.7% • Focus on business outcomes and collaboration
Strategic Review 2019 : Decoding Digital 33 The IT-BPM Sector in India: BPM Global BPM: Growth remains positive, driven by innovation and emerging technologies
Global BPM spend records positive growth APAC the key growth driver for the segment
USD billion 6.5% 4.5%
4.4%
Y-o-Y Growth 3.0% 198 17% 190 7.7% 62% % share in 21% revenues
2017 2018 EMEA AMERICAS APAC
BPM TCV1 deals sizes dropped, digital deals Global BPM sourcing growth remains positive gaining traction
USD billion USD billion ~7% -17%
81-83 76-78 28.4 23.6
2017 2018 2017 2018
Key Highlights
Global BPM spending recorded APAC region the key growth Sourcing market driven by positive growth of 4.5% in 2018 driver, though Americas digital and transformational compared to 3.4% in 2017, emerging and EMEA together account projects, creating business technologies creating larger impact for 83% of the market impact for customers
India’s share in global sourcing Enterprises preferences shifting TCV deal size dropped in 2018 even spend grew from 35% in 2012 to onshore and co-location as digital deals received an impetus to 38% in 2018, attributed to delivery with greater emphasis during the year as customers sought increase in customer trust on multi-skilled workforce business value and outcomes
Most BPM deals incorporate 'bots plus 2018 was marked by consolidations as large firms humans' as a standard requirement focused on strategic acquisitions to increase market share as automation becomes a norm and add new capabilities to their portfolio of services
Note: 1) Contracts with TCV ≥ USD 25 million Source: Everest Group, IDC, ISG, NASSCOM
Strategic Review 2019 : Decoding Digital 34 The IT-BPM Sector in India: BPM Indian BPM industry shifting from pure services to platform solutions and new revenue streams
Revenue records 7.2% growth, exports key growth driver
USD billion
7.2%
34.8
32.5
FY2018 FY2019E
Key Highlights
India remains the largest GCCs in India remains the growing Digital becomes BPM base in the world with hub for innovation and excellence a key component over 2,500 firms for global enterprises of all RFPs
Customers the key focus for Increase in number of digital Omni-channel, Analytics, providers, creating transformation deals; AI- creating new revenue experiences, elevating industry accelerates new client wins and streams while disrupting conversations scales existing clients traditional services
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 35 The IT-BPM Sector in India: BPM Exports growing at 8.3%; driven largely by automation-led high-end services
Analytics and automation-led services driving growth US and Europe remains the major markets
FY2019E, Share in exports FY2019E, Share in exports
13%1%1%2%22%22%40% 100% 62% 17% 12% 8% 2% 100%
Knowledge Procurement Vertical CIS F&A HRO Total USA UK Continental APAC ROW Total services & logistics Other Specific horizontals Europe
BFSI leading vertical; growth driven by emerging verticals
11% 2% 4% BFSI Retail 3% 4% Hi - tech/Telecom Construction & Utility FY2019E 54% 6% Manufacturing Travel & Transportation
16% Healthcare Others
Key Highlights
Automation-led services in F&A, CIS with 40% share remains BPaaS/cloud based services/ HR and analytics driving growth, the key service segment, analytics/RPA leading to a increasing adoption of RPA in with non-voice value added strategic shift in traditional high-volume, repeatable work services growing consistently verticals
Retail, healthcare, utilities– emerging US and UK largest geographies; APAC, verticals; to generate significant opportunities emerging regions driving growth
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 36 The IT-BPM Sector in India: BPM
GCCs in India moving towards digital maturity
Automation of Impact high-volume, repetitive tasks AI / ML Cross-industry Rapid growth, adoption especially in Big Data / BPS-focused GCCs Focused on testing Analytics services, device and Key focus area for platform large and mid-size management RPA GCCs; Early success GCCs with scaled operations and Mobility high-level of ownership
Service Offering Evolution
Case Examples of GCCs leveraging digital technologies Illustrative
GCC Technology Operations Project Intent Focus Impact/Outcome
Introduced new product for emerging AI, 2 million customers added in 18 months markets that enables customers to Chatbot, Global bank open an account in 90 seconds, is Onboarding done with a team of 15-20 Advanced totally paperless and includes employees as opposed to 300 without analytics features like QR code, UPI, MF the product
Built a smart forecasting system to ML-based system provided actionable Global have minimal manual intervention insights about sales, inventory, customer ML retailer and reduced errors related to profile, store dimensions, etc., to manage supply chain the supply chain efficiently
Automated quotes, reduced waiting Data and Transform India-based GCC from times and reconciliations Reinsurance text transactional services provider to a firm analytics, Technology-driven products offering knowledge hub ML better risk assessment and up-selling/ cross-selling opportunities
Achieved 20% incident reduction, 15% Address incidents raised by efficiency gains with resource internal employees for IT Computer optimization technology supported applications AI, NLP, ML Automated solution recommendation for enterprise Automate the processes to bring incidents with common resolution more efficiencies patterns
Source: Everest Group, Zinnov, NASSCOM
Strategic Review 2019 : Decoding Digital 37 The IT-BPM Sector in India: BPM Domestic BPM: Government initiatives continue to drive growth
Customer services continues to be the key Domestic BPM growing at ~8% in rupee terms growth driver
` billion FY2019E, Share in total 81% 8% 6% 3% 2% 100%
7.7%
286
265
Knowledge CIS F&A HR Procurement Total FY2018 FY2019E Services
Digital India an opportunity for BPM service providers
Total budget for Digital India: ` 1,13,000 crore till 2020
Schemes/projects with in Digital India initiatives that provide an opportunity for BPM services include
e-governance: Governance Information for all: Online through technology eKranti: Delivery of services electronically dissemination of information
• E-forms, form simplification • Healthcare: Online consultation, • Online, open data platform digitization of records an online medicine for hosting information and • Online applications and tracking, supply documents for citizens, in interface between departments all official languages • Education: Digital literacy program, wi-fi • Electronic databases and connectivity for all schools • Increased interaction repositories such as voter ID through social media, web cards, Aadhar cards, etc. • Others: Technology for justice, agriculture, based platforms such as financial, financial inclusion, etc. • Digitization of government records mygov.in
Budget for the above 3 schemes: ` 30,000 crore till 2020
Key Highlights
Market dominated by a few large ‘Digital India’ platform for domestic Government initiatives players (about 15-17) constituting BPM growth, hig demand from to digitize records to ~80% value share and 70% volume e-governance projects and other drive growth in (headcount) share welfare schemes non-voice processes
Telecom and BFSI eCommerce Demand from local Vernacular, local most mature sectors; the sunrise and small language services implementing large industry for businesses for better expected to give a huge scale Outsourcing the segment customer services boost to the sector
Source: ValueNotes Research, NASSCOM
Strategic Review 2019 : Decoding Digital 38 The IT-BPM Sector in India: BPM Providers focus on building digital capabilities for intelligent and efficient operations
Emerging technologies to Designing, transforming improve cost, regulatory and executing operations compliances and with digital technologies operational efficiencies
Enhanced customer Digital revenue streams value, experience and to augment traditional on-boarding Intelligent Enhance revenue streams Execution Efficiency
Customer Explore New Value Revenue Streams
Intelligent and Efficient Operations
Building Digital Capabilities
Leverage CoEs in New Low-code Technologies Platforms
Up-skill for Acquire Establish CoEs to align Digital Competencies Low-code platforms to automation and digital support processes practices with BPM required to achieve strategy digital transformation Up-skill and re-skill the Focus on strategic workforce to tap into acquisitions and technology augmented partnerships to acquire employment digital competencies
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 39 The IT-BPM Sector in India: BPM Digital all pervasive, automation becoming more intelligent
Digital pervasive across all functions and operations Back-office Core mid-office Market-facing front-office (e.g., Procurement, F&A, HR) (e.g., such as Operations & Production) (e.g., Sales and Marketing)
Digital for Efficiency (DfE) Digital for Growth (DfG) 47% 24% of digital spend Digital Enablement of digital spend Reduce costs Engage the customer Improve productivity 29% Spawn new businesses of digital spend Transform supply chains Scale existing business Make digital secure Make IT agile Automation maturity in BPM Robotic process Deep learning Predictive analytics Artificial intelligence automation (RPA) Supervised and Rules-based Fully autonomous Programmed unsupervised Programmed, Data processing, Pattern recognition Cognitive decision trigger-based primarily through using advanced NLP, making via clustering automation built to predefined programs regression, and and anomaly detection handle structured data and algorithms classification techniques techniques and standardized Lower levels of human Both supervised and Adaptive, self-learning, processes intervention unsupervised learning and intuitive machines Higher levels of human without explicit need for that do not require intervention (re)programming human intervention
Automation of Predictive demand Customer service Machine-to-machine rules-based transaction planning chatbots purchasing processing Maturing: Emerging: Over-the-horizon: Matured: Available and trending to Industry players Requires “fuzzy logic” Advanced rules-based sophistication; still not developing technology (vs. binary true/false process for improving broadly implemented with deep learning rules) to interpret accuracy and due to constraints in its algorithms and artificial context and supplement compliance; generally abilities to access and neural networks to human decision-making unable to handle interpret data handle response authority unstructured data and complexity dynamic processes High Level of maturity Low
Illustrative
Launched social Deployed analytics tool for a Transformed FAO services with its media monitoring and telecommunication provider to AI-enabled EXACTO tool, offering engagement support measure customer sentiment, solid domain expertise, optimizing for its client operating emotions and behaviors across business processes and achieving in retail sector an omni-channel environment better business outcomes for clients
Source: AT Kearney, Everest Group, Genpact, NASSCOM
Strategic Review 2019 : Decoding Digital 40 The IT-BPM Sector in India: BPM F&A: A key growth driver for the industry, shifting to new value creation levers
India continues to be the most cost effective F&A the second fastest growing segment location for F&A work
USD billion Operating cost per FTE for Transactional F&A 2018; USD ‘000 per annum 68-70 8.3%
6.7
26-28 25-27 25-27 6.2 13-15 11-13
FY2018 FY2019E U.S Tier II Shanghai Bucharest Kuala Manila Bangalore Lumpur
Value creation levers for differentiation
AI-based smart matching Intelligent invoicing Smart analytics to Artificial Intelligence for real-time unapplied solutions to predict optimize financial & Analytics cash reconciliation accuracy and outcomes planning
Cloud-based end-to end SaaS solution provides reduced need for Platforms intensive manual and technology investments
Potential for RPA in F&A processes: Automation Procure to Pay: Order to Cash Record to Report 40-70% 50-70% 65-70%
Smart contracts in Order to Cash to eliminate billing errors and Blockchain dramatically speed payments
Key Highlights
Evolution of technology-led, Increasing adoption of RPA RPA, AI, Analytics, Platform, judgment-intensive processes with for F&A operations, Blockchain–new value creation an end-to-end process-driven deployment of AI gaining levers to disrupt legacy F&A approach traction services
Demand for vertical specialization, strategic Shift from transaction intensive processes to leadership, value creation and technological digital-first model to eliminate human effort innovations from outsourcing partners and improve efficiency
Source: Everest Group; HfS Research, WNS, NASSCOM
Strategic Review 2019 : Decoding Digital 41 The IT-BPM Sector in India: BPM Customer Services: Digital services disrupting the traditional service models
Traditional customer service moving to Illustrative case examples enhanced self service channels
USD billion
Provided enhanced user Activated social media 7.8% experience, reporting and as a support channel to analytics for broadcasting improve CX for a global 12.1 company using RPA bots automotive OEM
11.3
FY2018 FY2019E Activated omni-channel and automation to optimize revenue and enhance CX for a technology and e-commerce company
Key Highlights
Focus on new digital customer service models, supported by India represents ~11% of the global technologies such as cloud, NLP, ML, analytics and RPA customer services delivery market
Use of AI-powered cognitive chatbots & India value proposition moving from virtual assistants to drive self-service agent scalability to digital customer channels and reduce dependency on voice experience center of excellence
Next-generation technologies and solutions creating enhanced customer value
Artificial Intelligence Analytics Automation and Others
ML/Deep learning Prescriptive analytics RPA Text to speech conversions, fluid Set-up hot fixes for contact Automate highly repetitive tasks to CX delivery, diagnose broken CX centres, identify and optimize improve productivity, scalability, processes, identify root causes faulty steps in the customer quality, compliance and CX spending and recommend optimizations. journey Omni-channel platforms NLP Predictive analytics Provide flexibility to add, modify and Identify and classify requests, Segment the customer base integrate new channels, apply segment customers, optimize and identify target groups for analytics and automation and deploy self-service options and improve proactive campaigns business rules across locations contextual understanding
Source: Everest Group; HfS Research, WNS
Strategic Review 2019 : Decoding Digital 42 The IT-BPM Sector in India: BPM Upward trend in building IP-led platform services leveraging automation and new age technologies
Illustrative
Key focus areas: Key focus areas: Key focus areas: Key focus areas: Actuarial, Airlines Customer experience Bill entry process, Customer complaints KYC documents management
Technology: Technology: Technology: Technology: Advanced Analytics Analytics, Advanced Analytics, Advanced Analytics, AI/ML/NLP, RPA AI, RPA AI
Actuarial platform Cora AI-based Freight Billing as a FirstAnalytics: automates file platform transforms Service applies AI-based analytics generation process, customer experience domain expertise, platform, processes creates a central – front to back – advanced analytics, large data volumes at repository of using automation, OCR and advanced high speed freeing up rule-based asset files analytics, and AI automation to resources to focus on for actuarial transform the bill core competencies modelling software entry process Neural Intelligence Platform harnesses FirstResolve a Verifare PlusSM is a the power of RPA and Leveraged Digital customer complaint fully-automated, AI to mine Intelligence platform management web-based fare audit large-scale datasets, powered by AI and solution delivers solution that offers automates advanced claims handling airlines revenue continuous learning, automation; methodology that protection and leverages expanding from includes a portfolio of predictive analytics a KYC and exits claims management and sentiment management tool to services analysis an end-to-end CLM solution
Process Technology Analytics Domain Expertise Business Outcomes & Customer Value
Source: Company websites
Strategic Review 2019 : Decoding Digital 43 The IT-BPM Sector in India: BPM Year marked by strategic acquisitions changing the service provider landscape…
Consolidation in the contact centre business Illustrative
USD 2.43 billion USD 1 billion acquisition USD 230 million acquisition acquisition Key benefits to Key benefits to Concentrix Teleperformance Key benefits to Aegis
• Strengthen digital • Augment capabilities in • Created a combined capabilities solution design, digital business of revenues integration and exceeding USD 700 • Adding new clients and operational excellence million as of 2017 complement delivery footprint • Complement delivery • Enable re-entry into US presence in high growth market and reduce client markets of Asia concentration
Adding digital capabilities: Analytics, RPA
PE firms acquiring controlling stake in BPM firms
100% stake 100% stake 55% stake
Source: Everest Group, NASSCOM
Strategic Review 2019 : Decoding Digital 44 The IT-BPM Sector in India: BPM …simultaneously investing in building capability Centres of Excellence
Customer Digital & Analytics Experience Automation
• Build the right skill-set • Design thinking and UX • Enabled to develop and for advanced analytics- skills with enhanced use run advanced Data scientist, Data of analytics automation architects, analytics technologies, such as consultants • Expertise in new OCR, NLP, NLG and ML. customer service • Building partnerships technologies • Building partnerships with analytics tech with different RPA tools players and platforms • Assisting shift to digital and platforms CX and enhanced • Multiple engagements customer journey • Solutions and with customers and capabilities built on prospects • Expertise in & ability to multiple systems build services based on • Building domain cloud-based platforms, • Enable large scale expertise and cross NLP, analytics, RPA, & implementation and sector capability machine learning ML deployments of BOTs for existing and new clients • Collaborating with • Expertise in ability to startups and enterprises build services using • Integrating digital self-service, chat (mobile marketing and digital and chatbots, cognitive) services for clients
Technology Customer Partnerships Digital Skills New Services & Innovation Engagement & Collaborations and Markets
Source: Company websites, NASSCOM
Strategic Review 2019 : Decoding Digital 45 The IT-BPM Sector in India: BPM
BPM 4.0: Changing dynamics of the industry
To reach revenues of USD 50-55 billion by 2025 industry fast tracking to BPM 4.0
USD billion
CAGR 9-10%
55.0
30.8
FY2019E FY2025P
Industry fast tracking to BPM Focus on new revenue streams: Adoption of advanced 4.0 to achieve revenue target digital services, plug and play analytics, RPA and AI reaches of USD 50-55 billion by 2025 platforms, digital consulting next level
Digital transformation not a Talent upskilling and Strategic investments in building technology but business opportunity reskilling top priority capabilities both organically and with real outcomes for the industry inorganically to continue
Source: NASSCOM Mckinsey Perspective 2025
Strategic Review 2019 : Decoding Digital 46 ER&D: At a Glance
Global spend USD ~2.0 trillion Global R&D investments saw significant Growth 11.4% growth in 2018 across industries
Firms increasingly leveraging digital technologies for delivering customer Global Innovation value & experience, leading to: 1000 - Business models shifting to platforms, USD 782 billion Global data monetization, di erentiated Growth ~11% market: go-to-market strategies 2018 Global sourcing continues to grow as firms look to improve productivity and Global sourcing overcome political & economic USD 93 billion challenges Growth 6.4%
Revenue USD 30 billion Growth 10.0% India ER&D: A mature segment, fastest growing, accounting for one-fifth of total exports
Exports Changing landscape: Conslidation USD 28 billion (Altran-Alten), PE investments India (GlobalLogic-Partners Group), etc. Growth 11.3% ER&D: FY2019 GCCs: Driving productisation, innovation, collaborative agility, digital for parent Projections-2022 firms 2022 USD 42 billion Growth 14.0% Emerging industrial startups playing key role in developing innovative solutions
Strategic Review 2019 : Decoding Digital 47 The IT-BPM Sector in India: ER&D
Global ER&D: R&D spend at USD 1.8 trillion: 2018 saw big growth in R&D investments
Growth % of R&D spend: 3.6x over 2017 Global sourcing: ~5% of total ER&D spend
USD billion ~11% USD billion 1,954 6.4% 1,754 100%= 88 ~93
1,173 1,053 RoW 72% 70%
1 7021 782 India $25 bn $28 bn 30%
2017 2018 2017 2018
Healthcare, software: Sustained growth in China leading APAC ER&D spend R&D spend
% share % share Computing & Electronics 2% Healthcare 23% 8% North America 2% Automotive 7% Europe 3% Software & Internet 3% 22% Industrials 15% 42% Japan 4% 2018 2018 Chemicals & Energy China 11% Aerospace RoW 16% Consumer 16% 27% Telecom Others2 100% = $782 billion 100% = $782 billion
Key Trends
Global ER&D spent upto 11.4% in R&D intensity R&D spend in automotive, Semicon firms 2018 reflecting broad-based at 4.5% in focused on electronics, software diversifying into growth across regions & industries 2018 and autonomous vehicles AI, IoT and cloud
Software-led engineering: Focus shifting from Healthcare: R&D for ER&D spend by hardware to software & services personalized medicines, AI and Chinese firms focused analytics in drug discovery, on auto, software & Apple’s deals with Samsung and Amazon for cognitive computing to improve Internet, computing & streaming services on Samsung smart TVs and patient outcomes, etc. electronics US Amazon Echo smart speakers, respectively
GLOBAL SOURCING Global sourcing market for ER&D India’s share grew 6.4% to USD 93 billion increased to 30%
1 Represents the 1,000 public corporations worldwide that spent the most on R&D of products, software & services 2 Includes Construction and Industrial Automation Source: Everest Research, R&Dmag, Strategy&, NASSCOM
Strategic Review 2019 : Decoding Digital 48 The IT-BPM Sector in India: ER&D Digital impacting business models; potential to boost revenue, cut costs, enhance UX
Business Model Transition
Sales and R&D Procurement Production Service Distribution
Digital Connected product workforce Digital cataloguing Reality Digitally Next enhanced generation Segmented products; production New Monitoring S&M Big Data Product of usage, methods; business and AI development failure automation models based on patterns & of certain based on better optimized tasks; M2M, data consumer spending augmented 3 insights reality Internet Autonomous of Things 1 2 delivery with real-time tracking
Advanced Key Digitization Trends Digitization Key Robotics
Protecting Protection of Protection of infrastructure in-house data consumer data Cyber data Security
Better Digitally service using enabled mob apps Mobile field force 4 Applications
1 2 3 4
New product innovation FinFET architecture, Shared service Glucose monitors and insulin pumps has given green solutions embedded processor, platforms are are now integrated with an app that such as electric vehicles, automation, ML and changing the identifies patterns in eating habits full hybrids, plug-in miniaturization are new trends ownership and usage and customizes meal plans and hybrids, etc. in the semiconductor industry pattern of consumers insulin intake in real time
High digitisation opportunity Low digitisation opportunity
Source: Strategy& analysis
Strategic Review 2019 : Decoding Digital 49 The IT-BPM Sector in India: ER&D
Technology,Also disrupting platform traditional & application product developers and systemengineering integrators value most chain mature ecosystem players in India
Product Engineering – Value Chain & Digital ER&D Applications
Step Focus Activity Digital ER&D Application
• AI/ML & Big Data Analytics help in Concept understanding the customer’s needs Requirement Analysis Dev. and streamline product conceptualization
• Design Support Detailed • CAD, 2D/3D Modeling • Digital reality can be used in virtual /3D product modeling and product Engg. • Engineering Analysis performance simulations • Sustenance Engineering
• Digital reality and advanced robotics • Design Support allow creation of virtual/3D prototypes minimizing cost and time Prototype • Prototyping & Product Testing • IoT enables real-time planning in • Product Styling production including manufacturing execution system introductions
• Prototyping & Product • AI/ML increases product reliability Testing/ Testing by predicting failures • Reliability Engineering • Mobile apps integrate customer Value Chain Value Verification feedback into production and & Validation • Dimensional & Tolerance testing stage for continuous Analysis improvement
• Manufacturing & • IoT enabled connected supply chain Engineering Support and production is making production • Packaging & Ergonomics more transparent and efficient Production • Contract Manufacturing • Advanced Robotics augment human workforce to unlock efficiencies in • Supplier Development production
• Mobile Apps. substantially increases customer outreach allowing Post • Documentation & Technical feedback, customer support, product Introduction Publication upgrades, etc. • Intelligent bots for automatic grievance handling of customers
Source: Strategy & analysis
Strategic Review 2019 : Decoding Digital 50 The IT-BPM Sector in India: ER&D ER&D spend growth outlook – most development happening in software
Sector Comments Key themes driving ER&D
Technologies such as cognitive Accelerated spent growth will be computing, AR/VR, natural driven by the need for enterprises Software language processing, containers, to continuously explore and invest products microservices and blockchain in new use cases for emerging technologies Software security and as-a-services business models
Investments in efforts to enhance Electrification, connected vehicles, autonomous driving capabilities autonomous driving and and electric powertrains will drive Automotive compliance with environmental and growth, but the effort to bring safety regulations (in addition to existing innovations to mass regular R&D actives for launch of production may limit growth new product models)
Additive manufacturing, simulation-based design, real-time Revenue growth will accelerate in monitoring, predictive maintenance Aerospace this sector in both the commercial and drone technology and defense and defense areas, driving higher R&D investment Efforts to leverage automotive tech for fleet visibility, advanced meterials, computer vision, etc.
Development of sensors and Spend will grow as enterprises components with a small physical seek further improvements in chip footprint, low energy consumption Semiconductors size, energy efficiency, and and high responsiveness responsiveness for IoT applications in mission-critical areas Other areas include components for 5g and AI applications
Spend growth will accelerate as IoT, 5G, Machine to Machine (M2M) enterprises realize that innovation communication, Software-Defined Telecom is the only way to address Everything (SDx) and Over-the-Top declining margins (OTT) services
Spend growth will be sustained by Next-generation user experiences, Consumer enterprise efforts to make their AI and IoT electronics products intelligent and ready to Co-innovation of products based on plug into the connected ecosystem market feedback
Investments for various “Industry Innovation in connected industrial Industrial, energy, 4.0” initiatives, including ecosystems will be the primary chemicals and connectivity enablement, AI, driver for spend growth in this natural resources additive manufacturing, sector autonomous robotics and sensors
Source: Everest Group: Leading the Pack: Trends for the Top 200 ER&D Enterprises
Strategic Review 2019 : Decoding Digital 51 The IT-BPM Sector in India: ER&D India ER&D: Rapidly maturing segment; one-fifth share in IT-BPM exports
ER&D total revenue at USD 30 billion Software-led ER&D driving growth of PES
% share USD billion
10% 25% PES1 43% FY2019E ER&D 27 30 Embedded system
32%
FY2018 FY2019E 100% = USD 28 billion (exports)
Uptick in offshoring from Europe
% share; FY2019E 100%
54% 30% 10% 6% North Europe Japan RoW Total America 100% = USD 28 billion (exports)
Key Trends
Increased value chain Global enterprises facing ER&D efforts focused on GCCs: Driving integration: Not just margin and cost driving efficiencies in design, Productisation, engineering, but also reduction challenges – development, testing using Innovation, manufacturing, supply ER&D offshore play to automation, analytics and Collaborative agility, chain, markets, customers further increase design thinking Digital for parent firms
Industry-specific technologies - 5G, Software-Defined Everything CASE2: Going beyond automotive (SDx), electric automotive powertrains, additive manufacturing – emerging as an industry-wide gaining significant traction trend incl. aerospace
Software-led ER&D Increasing A sharp rise in software-led ER&D Cyber-security: Getting Growing demand platformisation contracts and IoT deals have increasing embedded into for hybrid skills – leading to a growing helped ER&D business grow products and services as software + As-a-Service economy faster than traditional IT services inter-connectivity increases technical + domain
Numbers include engineering R&D, embedded systems, product R&D of GCCs and offshore software product development (OSPD) 1 Product engineering services offered by both GCCs and third-party players; 2 Connectivity, Autonomous, Shared mobility, Electrification Source: NASSCOM
Strategic Review 2019 : Decoding Digital 52 The IT-BPM Sector in India: ER&D Share of digital spend varies across industries; much higher activity in automotive and energy (1/2)
% share 3% 4% Telecom Energy 6% 22% 6% Semicon Aerospace 6% Automotive Cons. Elec. FY2019E
7% 18% Computing sys. Medical devices 11% Machinery Others1 16%
100% = USD 28 billion (exports)
Increasing penetration of software and greater application of digital technologies across industries is seeing a steady shift from legacy ER&D to digital ER&D. This shift is also driving a move towards a more as-a-service model and enabling additional revenue stream from analytics, AI/ML, data monetisation, etc. Across the ER&D sector, six digital technologies are making a significant impact:
As connectivity across machines, equipments and IoT is enabling sensorisation Digital reality products increase, the role of cybersecurity is becoming on the shop floor thus ensuring (AR/VR) enabling more and more crucial. Cybersecurity is now emerging predictive and preventive enhanced user as the underlying technology for all products & services maintenance of machinery experience
Mobile apps: Enabling remote Analytics/AI/ML: Predictive analytics Robotics: Autopilot operations, monitoring, infotainment on the go and service personalisation autonomous driving, etc.
Numbers include engineering R&D, embedded systems, product R&D of GCCs and offshore software product development (OSPD) 1 Includes construction, industrial automation industries Source: NASSCOM
Strategic Review 2019 : Decoding Digital 53 The IT-BPM Sector in India: ER&D
Share of digital spend varies across industries; much higher activity in automotive and energy (2/2)
Sector CAGR Key digital trends Outsourcing trends
Connected: Cloud, connected home, infotainment, cyber security, V2V
Autonomous: Driving, lane Software integration, platform monitoring, road safety, route customizations optimization, motion sensors, Crash testing and data analytics 9.1% telematics Auto Shared: GPS, payment integration, Enhance overall customer experience cyber security, app development Product localization to adhere to local laws Electric: EV design, power train, & benefit from tax breaks charging & battery technology, power electronics, material design
Technologies for wireless connectivity and increased range Connected, autonomous, AR/VR & AI/ML form the major digital trends Sourcing drones configured for custom Construction 7.6% in this segment needs & Heavy Telematics in Off-highway is Complex project planning with AR/VR Equipment expected to grow at 8% CAGR Testing of autonomous vehicles under different navigation scenarios
SI services to integrate software & hardware in upstream value chain Digital Oilfield market expected to grow to $27 bn by 2022 Big Data Analytics 7.0% Energy Digital technologies can cut Cloud solutions for real-time smart production costs by up to 20% metering SCADA for monitoring cyber security
Connected: Wearables, connected hospital/ambulance, remote monitoring AI/ML & Analytics: Medical Development and integration of medical imaging, chronic disease devices with ML capabilities management, advanced wearables Secure flow of medical data between 7.8% Medical Blockchain: Drugs/device patient, doctor & hospital key focus area Devices traceability, autonomous Incorporating traceability in devices monitoring, data encryption e-Commerce – the new retail channel Digital marketing: Mobile apps, integrated devices, advanced analytics
Higher variety of components driving Driven by digitization, increase in capacity; thus driving offshoring communications to be the biggest 3.1% segment Increased variety of components call for higher number of skilled engineers Semiconductors EUV lithography & bigger wafer size (450mm) to help reduce feature size Fabrication and packaging being offshored
Source: Strategy&, NASSCOM
Strategic Review 2019 : Decoding Digital 54 The IT-BPM Sector in India: ER&D PES: Increasing software penetration driving demand
Accounts for 43% of ER&D global revenue
USD billion
10%
10.7 11.8
FY2018 FY2019E
Key Trends
Consulting: Increasing as New business models: Enterprises: Beyond Digital: Automation, IoT, AI customers implement Cloud based products ISVs are building their enabling competitive advantage new age technologies driving non-linear pricing own products & and enhanced customer and transition from (outcome-based, platforms, driving experience, thus impacting legacy to digital risk-reward, on-demand) demand for PES customers’ business outcomes
IP deals: Service Increasing software Firms investing in Growth strategy of providers partnering penetration leading to labs, CoEs, studios, PES firms focused on with ISVs to take full demand for testing, innovation centres, strengthening ownership of IP and product sustenance etc. for demonstrating partnership upgradations and support industry solutions ecosystem and M&As
Examples
Pricing models IP deals Partner ecosystem Innovation
Altran has one of the Persistent in Tech M collaborating with L&T Tech: As of highest percentage product takeover 20-30 startups a year under its Q3FY2019, patent total revenue from partnerships TechMNext program - primarily portfolio stood at 363 - outcome-based pricing with IBM, Citrix, in the networking, 264 co-authored with models Intel (Aepona communication technology customers Holdings) and VR Mindtree is working TCS’ R&D spend in with a US-based data HCL invested Schneider, with its OT domain FY2018 grew >17 per cent management firm in USD 1.8 billion expertise and Microsoft (cloud to Rs 15 billion: Rs 2.98 revenue share model in buying some capabilities) create commercial billion spent on R&D; Rs for complete ownership of IBM’s IoT solutions in energy 12.02 billion directed of EOL products software assets management and automation towards innovation centres
Source: HfS, NASSCOM
Strategic Review 2019 : Decoding Digital 55 The IT-BPM Sector in India: ER&D ER&D GCCs: Driving productisation, innovation, collaborative agility and digital
New GCCs set up in India Key Trends
Currently, India has Top 3 verticals: Software & about 1,250 GCCs Internet, Telecom, Automotive
Platformization and Automotive, aerospace & digital transformation defence, semiconductors – major drivers for – hiring actively for hiring digital talent design engineering roles
Digital transformation and global product ownership – key focus areas
Innovation Collaboration Digital Productisation
India R&D Centre focused on Partnered with Rocket Software has Established a R&D product design to expand current Tech M to presence in Bengaluru center in Hyderabad, to organization gradually by local design and and Pune in India build software-based product manufacturing and develop a solutions in areas like Building AI/ML and data development of technologies such remote patient AI, cameras, charging, science capabilities for as AI and robotics from India for a monitoring 5G, smartwatches, and its IBM ecosystem based global platform system IoT offerings
Source: Zinnov, Secondary sources, NASSCOM
Strategic Review 2019 : Decoding Digital 56 The IT-BPM Sector in India: ER&D Domestic ER&D: Going beyond the Proof-of-Concept stage
Getting closer to USD 2 billion mark
USD billion
>8%
1.5 1.7
FY2018 FY2019E
Key demand drivers Illustrative examples India’s Central Railway has developed an Smart factory AI-powered robot, USTAAD, to check faults in Digital twin trains. It would take pictures and videos of the Ind 4.0 Smart products under-gears of trains and send them to engineers for repair and maintenance Apollo Hospitals (Navi Mumbai) launched Mazor Smart buildings Robotic Spine Surgery Systems, an advanced Smart transportation minimally invasive robotic system that helps in Smart Cities Smart energy increasing accuracy ithrough 3D mapping of the area to be operated
Using 3D printing to build prototypes in its e-Procurement research and development facility in Pune GPS, handheld devices, IoT The 3D-printed support structures occupy ~30% of Public Utilities a part’s weight vis-s-vis double or triple earlier; also Predictive maintenance generates less build failures
Offset requirements Mahindra Electric recently launched a VR based Auto, aero & defence drive expearience for its e2oPlus small electric car electronics Make in India Innovatively communicate all the features through Healthcare automation an immersive experience
Key Trends
India’s R&D spend: USD 83.3 billion Focus areas: Big data India Inc. expected to focus on technology (2018; incl. government & academia) analytics, AI/ML, Industrial integration, backward integration and – 3.8% share in global R&D IoT, industrial robotics, etc. innovation to increase competitiveness
Enterprises in India actively seeking startup R&D efforts now moving from collaboration for product/service differentiation the PoC stage to PoD stage
Source: PwC, R&DMag, NASSCOM
Strategic Review 2019 : Decoding Digital 57 The IT-BPM Sector in India: ER&D ER&D: Investment in innovation through collaboration, platformisation, CoEs
Platformization and digital transformation
Signed a USD 20 million deal Shift from asset-based to with ExxonMobil to enable As-a-Service models rapid conversion of historical TCS’ Engineering Environment as Geoscience content into a Service framework enables digital by leveraging anytime-anywhere development sophisticated automation and test environment to product utilities engineering teams across the globe, through self-service portal
Increasing university Upping collaborations Innovation for research and agenda through incubation new age initiatives technology CoEs
QuEST Global has launched QuEST Digital CoE in Pune to house IIoT CoE at New Horizon College of key technology stack incl. Engineering (NHCE), Bengaluru to IIoT, AR, AI/ML, PLM, MES provide training to students in Focus on cutting-edge apps cutting-edge engineering for shop floor digitization technology streams and platforms including IIoT. This will also help bridge the technology gap between academia and industry
Verticalisation focused on Startup engagement through accelerators, new opportunities co-creation & vendor engagements on a rise
Set up a new ‘Video Integration and Partners with WebNMS for its IoT platform and Engineering’ (VIE) BU to cater to heavy Cyient’s proficiency in operations and network demand of video services in the 5G management in order to enable effective operations ecosystem of multiple cell towers from a single point
Source: Zinnov, NASSCOM
Strategic Review 2019 : Decoding Digital 58 The IT-BPM Sector in India: ER&D Emerging industrial startups playing key role in developing innovative solutions
Customer Impact Stories
Intelligent robotics for supply chain automation
Pipeline integrity at high temperatures
Monetizing process sensor intelligence in Energy & Engineering industries
Disrupt underwater critical infrastructure inspections
Bring space within In stealth mode with everyone's reach early adopters
Autonomous vehicles Early private beta
$2 million rocket Early private beta
Source: Zinnov, Secondary sources, NASSCOM
Strategic Review 2019 : Decoding Digital 59 The IT-BPM Sector in India: ER&D M&As: Key to capability development, access to design capabilities
2018 saw 22 M&As in ER&D segment Sector-wise split: 2017 & 2018
N = 42 nos. 1,385 % share USD billion = 882 15% Semicon 24% Eng. & Design 5% IoT Nos. = 20 22 10% Ent. Software Embedded 17% 12% PES Others 17% 2017 2018
Largest deals Top three reasons for M&As $ million Acquirer Acquired ~49% Capability 720 PE Firms development
716 Geographic ~22% expansion
343 Vertical ~12% specialisation 283
Key Trends
M&As saw a 10% y-o-y Top three reasons for M&As: ~38% of M&As were of non-tech growth in 2018; 57% Capability development, geographic companies taking over start-up: growth in valuation expansion, vertical specialisation Carsense, CoveIoT, Resson, Teleena, etc.
Per deal value up from USD Building design capabilities emerged as one of the key drivers for M&A: 44 million in 2017 to USD Cyient-B&F Design, Quest Global-Engicom, Tech M-Inter-Informatics, UST 63 million in 2018 Global-Sevitech Systems
* Cumulative value for which the deal amounts have been disclosed Source: Venture Intelligence, NASSCOM
Strategic Review 2019 : Decoding Digital 60 The IT-BPM Sector in India: ER&D ER&D outlook: Market size to cross USD 40 billion by 2022
ER&D: 14+% CAGR expected by FY2022
USD billion
14%
42 28
FY2019E FY2022P
Key Growth Drivers
India’s rising capability across Automotive and Industry consolidation as firms seek to fill C&HE market is going to drive ER&D growth capability gaps and offer end-to-end propositions
Domestic market get boost from smart cities, IoT, Growth factors include Ind 4.0, 5G, EVs/ defense; future demand from EVs, smart cities and autonomous/connected vehicles, smart products/ semiconductors services and automation
Source: R&Dmag, FT, NASSCOM-McKinsey Perspective 2025 report
Strategic Review 2019 : Decoding Digital 61 Software Products: At a Glance
High demand for structure management data software Acquisitions in cloud computing and enterprise software businesses USD billion increased, Adobe to acquire Marketo, a marketing automation company 7.4% SaaS to contribute USD 129 billion (7%) of the total software & services market 515 Global software by 2022 spending Global cloud computing to grow at a 479 continues to CAGR of 16.5% to reach USD 345 billion see a rise by 2022 2017 2018 Global Enterprise software market to grow at 8% till 2023 to reach USD 634 billion Americas lead the software spending followed by Asia Pacific and EMEA
Focus on security, marketing product Revenues: (Exports + Domestic) businesses for many firms, HCL USD billion acquisition of IBM product business is the biggest example 6.8% More than 50% of the total software market spending is done on Applications followed by Application Design & 8.2 Indian Software Development and System Integration product market continues to For the period till 2022, ERM, content 7.7 maintain a good workflow and management, collaborative growth applications and CRM will be the major drivers FY2018 FY2019E SaaS contribution in India market to reach USD 3.4 billion by 2022
Strategic Review 2019 : Decoding Digital 62 The IT-BPM Sector in India: Software Products & Start-ups
Indian Software Product Industry
Indian product market continues to Indian software market (1H 2018): Applications grow and mature attracted lot of interest in the market
USD billion 6.8% 8.2 7.7
2.7 17.8% Applications 2.5 23.5% System Domestic Infrastructure Software Export 5.2 5.5 Application 58% Development & Deployment
FY2018 FY2019E
Indian software product market is maturing and continues DevOps to be the important infrastructure related focus for to be the fastest growing within Asia Pacific region large organizations (excluding Japan)
Indian product start-ups growing due Growth Segments to improving support structure
Number of start-ups
12-15% Collaborative Enterprise Resource Applications Management
7200 6100 - - 7700 6600 Content Workflow Customer and Management Relationship FY2018 FY2019E Applications Management
Adoption of advanced technology in B2B start-ups are With focus towards business process efficiency, high driving growth in the Indian start-up ecosystem, growth market looks to be the emphasis Freshworks turned unicorn in 2018
Source: IDC, NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 63 The IT-BPM Sector in India: Software Products & Start-ups Indian product companies featured Indian Software Product Industry globally in 2018
Illustrative
Gartner Supply Chain Magic Quadrant
Gartner Magic Quadrant for Enterprise Asset Management Software
Hype Cycle for Retail Technologies (Algorithmic Merchandise Optimization)
Magic Quadrant for Content Services Platform
Named to Forbes 2018 Cloud 100
Collaboration Solution of the year Award (UK Cloud Awards)
Positioned in Chartis Credit Risk Solution Quadrant
Gartner Magic Quadrant for Industrial IoT Platform
Global Grain Award for Digital Commodity Management Platform
Source: Company Websites, Gartner
Strategic Review 2019 : Decoding Digital 64 The IT-BPM Sector in India: Software Products & Start-ups
Diverse product landscape
Illustrative Global Product MNCs
Indian Product MNCs
Indian Product Firms Indian Product Start-ups
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 65 The IT-BPM Sector in India: Software Products & Start-ups Enterprise software to see continued growth in India with double digit spending increase
Business Intelligence and Analytics leading to growth in global Enterprise software market
USD billion Business Highlights 8% Global enterprise software market to reach 431 USD ~634 billion by 2023 with CAGR of 8%
Microsoft’s acquisition of GitHub for USD 7.5 billion, 399 showcases the rising interest towards software development businesses
2017 2018
Key Trends
High demand in USA, China and growing popularity in Asia Pacific is anticipated to witness high growth due India make North America, Asia Pacific an attractive to increasing number of start-ups and presence of market large number of small scale industries
Increasing Enterprise Applications lead to a rise in Indian enterprise software market
USD billion Business Highlights With more than 1,100 start-ups, increasing digitization is driving growth in the Enterprise software market 9% India enterprise software spending to reach USD 4.1 2.5 billion in 2018 with an increase of almost 20% from 2017 3.8 Content management, open source, customer FY2018 FY2019E relationship management and business intelligence are the most interesting enterprise applications in India Key Trends
SaaS market which is Enterprise software increasingly AI applications like expected to triple by 2020 is used in analytics dashboards, automation frameworks for giving a huge boost to analysis of customer behavior, data integration, dashboards Enterprise software market providing insights on revenue for visualization etc
Source: Grandview Research, Marketresearchfuture, Reuters
Strategic Review 2019 : Decoding Digital 66 The IT-BPM Sector in India: Software Products & Start-ups Data analytics and development platforms most attractive verticals in the enterprise software market
Illustrative Top Enterprise Software Sub Verticals (2018)
7% 5% 6% Data Analytics /AI/ML Platforms 39% Customer Service Development Platforms % Cloud Infrastructure sales / Marketing Solution Others 14% Productivity Application... 16%
Data Analytics/AI/ML Platforms Sales/Marketing Solutions Analysing user’s history and providing Resource management, lead generation recommendations, data extraction solutions, and feedback platform web scrapping and screen automation iAlign enable collaborative sales planning through AI and analytics platform for enterprise analytics platform autonomous decision-making for retail and consumer businesses Workforce productivity technology platform for businesses Help enterprises by automating processes using enterprise data Provides Sales development representative automation Platform AI based algorithm mine deep insights from visual and textual data Online SaaS platform to measure how your users feel about your Ads, Offers RPA based process Trailers, Products and User Experience automation techniques
Development Platforms Productivity Applications Web application framework, APIs and Real time monitoring and performance tracking application deployment Enables enterprises to adopt cognitive automation through Provide ERP on cloud platform to seamless integration with Google improve business processes Deals in compliance management Rapid application delivery platform software for corporates for building customized apps An intelligent voice interfaces Provides platform to that can deliver human like create mobile apps understanding of spoken queries
Automating processes, deriving insights, rapid and customized application development, technology platforms, tracking customer experience etc. have seen a good push in the enterprise software segment
Source: Company Websites, NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 67 The IT-BPM Sector in India: Software Products & Start-ups Customer Relationship Management and Business Analytics expected to drive the market growth
Illustrative Customer Relationship Business Intelligence / Management Analytics ~$700 Million (2018) ~$304 Million (2018)
Customer Relationship Business Intelligence / Analytics Management
Increasing adoption High usage of analytical Massive availability Large organizations of machine learning tools for data cleaning of data and its and SMEs to play a for managing data and structuring analysis lead to a rise key role in driving in CRM usage demand
Corporate performance Data management management (CPM), market to reach CRM software on Rise of social CRM Analytic applications, data USD 950 mn in mobile and due to the increasing science platforms, modern 2018 with a growth increasing cloud usage of social and traditional BI platforms of over 13% YoY based CRM solution media and its impact are the major segments saw high adoption
Emerging Segments
Collaborative Enterprise Resource Applications Security Software Management Applications CAGR 47.8% (2017-22) CAGR 15.7% (2017-22) CAGR 25.3% (2017-22)
Provide Also offers Rising government initiatives for productive enterprise digitizing sector segments and Indian banking sector to adopt communication messaging processes in the field of healthcare, ERP in a big way services for applications BFSI, education etc. organizations
Security operations, incident Many organization wants to deploy India’s large number of SMB response network and data center state of art information technology enterprise will drive this market security being the major focus area. system
Source: Gartner, Telegrpahindia, NASSCOM Fintech Report
Strategic Review 2019 : Decoding Digital 68 The IT-BPM Sector in India: Software Products & Start-ups Indian majors looking at acquisitions, partnerships and developing enterprise specific analytics based products for business expansion …. Illustrative New Market Expansions
Launched Jile, an Agile DevOps product Launched Digital Engagement Suite for –on-cloud to plan, deliver and track Agile banks to onboard, sell and service customers programs within the enterprise with customized experiences
Partnerships
Launched machine learning models on Amazon Partnered with Tookitaki Decision Support System to help Web Service marketplace across variety of domains business take smarter decisions using Artificial Intelligence
Acquisitions
Instead of launching a new product HCL acquired 6 InMobi acquired Persistent Systems acquired products of IBM (Appscan, BigFix, Unica, Commerce, Adtech firm to create hospital data management Portal, Notes & Domino and Connections) mediation platform start-up Herald Technologies
Ebix acquired Mile software, Nutanix (leader in enterprise Software AG acquired leading provider of asset & cloud computing) acquired built.io for hybrid and wealth management software Botmetic maker Minjar cloud integration
HCL expanded it’s business portfolio by adding legacy products of IBM, whereas other big players partnered or developed new products in-house
Source: Company Websites
Strategic Review 2019 : Decoding Digital 69 The IT-BPM Sector in India: Software Products & Start-ups …partnering with global firms and expanding to global locations
Illustrative
Cloud Data Protection Major Enterprise Cloud Software Specialist New facility in Pune with 1000 employees for Extended relationship with PHI which will be upgrading its handling growing international demand commercial aviation business
Data Driven Business Supply Side Mobile Marketing Intelligence Software Platform Company Solution Provider Provider Sold its commerce business to Partnering with global airline Partnered with Indonesia mobile marketing company Allegiant Air Partners and publisher to create media Affle Bangkok Airways marketplace
Global leader in Global Cloud-hosted customer Adtech Firm help desk solution engagement software Partnered with Launching new data center in Microsoft to offer Mumbai for its cloud based Expansion in Africa with investments marketing solutions customer engagement product in Kenya & Nigeria
Customer Relationship Leader in Cloud Telephony Management tools Customer Solution provider Support Software Provider Expansion in Vietnam, Philippines and Kayako acquired by private Acquires Sunoray solutions to Turkey equity firm ESW Capital increase customer base
Increasing Indian workforce and expanding business in new countries have been the target of software product firms
Source: Company Websites
Strategic Review 2019 : Decoding Digital 70 The IT-BPM Sector in India: Software Products & Start-ups SaaS - A key segment of the software product business
SaaS demand enhanced by continuous development of world-class solutions
USD billion
~15.3% 5.2% Increasing focus towards vertical Of total IT SaaS companies, majority funding in Industry 129 last 2 years towards vertical SaaS Growing interest in new 73 Global technologies like AI, Machine Trends learning and IoT
2018 2022
India is one of the fastest growing SaaS market in the world
USD billion
Shortage of legacy software making enterprises to move towards advanced software on cloud ~36% 3.4 Increasing number of start-ups using SaaS solutions for business India >50% of SaaS spending is majorly in 0.97 Trends IT-BPM, telecom & media, manufacturing and Government FY2018 FY2022
Source: Economic Times, IDC, Transparency Market Research, NASSCOM
Strategic Review 2019 : Decoding Digital 71 The IT-BPM Sector in India: Software Products & Start-ups Adoption across multiple sectors driving demand for SaaS
Illustrative Banking, Financial Services & Insurance SaaS Implementation Areas
Digital Solutions Cyber Security Customer Experience Data Analytics
Use Cases Highlights Cloud based solutions are seen mainly in lead management, email services and human capital
Manufacturing SaaS Implementation Areas
Capacity Quality Job Tracking & Defect Reduction & Planning & MRP Management BoM Tracking Compliance Management Use Cases Highlights Automation and adoption of digital technologies to improve operations ensuring lower costs, high throughput
Retail SaaS Implementation Areas
Point of Sale Digital Inventory Distribution Management Payments Management Management Use Cases Highlights Centralization of inventory and inter-store fulfillments as a part of enhanced customer service
Digitization push, lending platforms, financial marketplace have seen a substantial rise in recent years driving usage of SaaS in BFSI. In manufacturing, reducing cycle time/lead time, improving product quality/traceability driving growth in SaaS adoption
Source: Economic Times, IDC, Transparency Market Research
Strategic Review 2019 : Decoding Digital 72 The IT-BPM Sector in India: Software Products & Start-ups
SaaS Success Story
SaaS strengths Key market drivers
• Changing customer behavior • Market accessibility and growth IT services behemoths • Availability of talent Strong Enterprise, GTM expertise • Cost advantages
DIFFERENTIATED GTM Scale in talent FASTER FEATURE ROLLOUT Easy adaptability to new technologies Uniqueness
Frugal innovation SAAS+MARKETPLACE Business model & pricing FRUGAL INNOVATION for Indian customers
Lower cost base Longer staying power, Faster feature development Targeting Cost
Pioneers as role models SERVICES HEAVY ONBOARDING Lot of pioneers in SaaS companies that attained scale SAAS+OPERATIONS in revenues & valuation
Massive rise expected from Chennai based SaaS firm SaaS based logistics small and medium raised over USD 500 management solutions have businesses (SMB) million grown a lot in 2-3 years
Clocking close to USD 500 mn in revenue Crossed USD 100 mn ARR per year and 250,000 customers with 100,000+ customers
SaaS market has developed strongly in recent years and its success is clearly visible by the exponential growth of start-ups like ZOHO, freshworks and funding raised by Chennai based SaaS firm etc.
Source: Company Websites, NASSCOM Report: Product Opportunities Driving 1 USD 10 Trillion Economy
Strategic Review 2019 : Decoding Digital 73 The IT-BPM Sector in India: Software Products & Start-ups With over USD 50 billion deals by major global firms indicating the interest towards SaaS based services globally, Indian firms following similar route Illustrative Global
Acquired Qualtrics, the pioneer in Acquired GitHub, leading experience management software software development category for USD 8 billion platform for USD 7.5 billion
Acquired MuleSoft, leading platform Acquired Duo Security, a unified Focus on building provider for building application access security provider using innovative products: networks for USD 6.5 billion cloud for USD 2.4 billion experience management, application network, open source platform key interest areas Acquired SendGrid, leading email Acquired Vocado, that offers student API platform for USD 2 billion to centric, cloud based financial aid solution drive customer base for higher education institutions
India
Acquired iTeknika, SaaS based Nutanix (leader in enterprise cloud end to end recruitment and computing) acquired Botmetic assessment management system maker Minjar
Acquired Kayako, SaaS based SaaS provider for ecommerce and customer service software company supply chain logistics companies SaaS accounts for acquired Dipper Technologies, an more than 10% of internet-of-things (IoT) platform the total M&A deals in India with focus towards customer service businesses
Acquired Exaxe, SaaS provider of Acquired Torqus, SaaS based restaurant software solutions that helps life management software platform and pensions companies
Source: Company Websites
Strategic Review 2019 : Decoding Digital 74 Start-ups: At a Glance
Indian start-up 2018 ecosystem – Approaching escape velocity
# of Start-ups incepted during 7,200 - 7,700 2013-18, overall base growing at 12-15%
# of Start-ups added in 2018; steady and sustained growth 1200+ in new Start-ups
# of Start-ups incepted 8 during 2013-18, overall base growing at 12-15%
Total funding received by Start-ups in 2018; More than $5.6 Bn 100% YoY growth
40,000 New Direct Jobs 40,000 created; Total base 1.6-1.7 lakhs; 2.5-3.0x Indirect Jobs
Start-ups incepted outside the main metros, rising from ~40% ~35% in 2017
Active Incubators/ 210+ Accelerators in 2018, with a YoY growth of 11%
Note:; A unicorn refers to privately held tech start-up valued at $1 Bn or more Source: NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 75 The IT-BPM Sector in India: Software Products & Start-ups Start-up ecosystem regained momentum after the slowdown in 2016 & 2017
Unicorns in 2018
India continues 8 Unicorns 50% Growth in Bengaluru ranks 5-7 years time India to be the 3rd added in 2018, Advanced Tech among top 3 required to turn Business largest Start-up the most in a Start-ups cities globally for a start-up into a ecosystem in the single calendar launch of tech unicorn in India Highlights world year Start-ups2
Funding Total funding Funding in 2018 More than 70% Top 5 deals Late Highlights reached up by 108% from of the funding garnered stage funding USD 5.6 bn last year went to late ~50% of the increased by (2018) stage total funding more than 250%
Top 5 Deals in 2018
1GII ranking published by Cornell University, INSEAD, World Intellectual Property Organisation; 2Based on the list of top global start-up ecosystems compiled by Small Business Prices Note: Unicorn Data is based on CB Insights Database Source: NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 76 The IT-BPM Sector in India: Software Products & Start-ups
Enterprise software, FinTech, Marketplace and HeathTech together comprise nearly 50% of total start-ups
Top Industry % Share Growth Rate Key Growth Drivers Verticals (2018) (Number of Start-ups)
Horizontal and vertical SaaS 15 - 17% based start-ups solving enterprise Enterprise Software HIGH problems (incl. SMB)
Govt. push on financial inclusion and 13 - 15% innovative tech accelerating the pace FinTech HIGH of payments, lending & banking
Increase in internet penetration 11 - 13% (500 Mn users), better infrastructure Marketplace MEDIUM for digital transactions
Tech platforms to connect doctors 7 - 9% and patients, low cost medical HealthTech HIGH devices, and tech enabled diagnostics
Increasing adoption of technology; 5 - 6% young population (Median age < 29) EdTech MEDIUM
Rapid growth in consumer software, media 42 - 45% & entertainment and travel & tourism Others
Source: NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 77 The IT-BPM Sector in India: Software Products & Start-ups Adoption of Advanced Tech increasing rapidly with 50% YoY growth
Advanced Tech Analysis (2013-2018)
12% 5% 27% Data Analytics AR/VR 6% Others includes 3D Printing, IoT Blockchain Drones, Autonomous AI Others Vehicles, RPA, etc. 24% 26%
5 year CAGR Advanced Tech (Number of Start-ups) Key Segments
Data Analytics 18 - 20% Enterprise FinTech RetailTech
Internet of Things 15 - 17% Industrial Home HealthTech Automation
Artificial Intelligence 54 - 58% Enterprise FinTech HealthTech
AR/VR 26 - 28% EdTech RetailTech Real Estate
Blockchain >100% FinTech Enterprise AgriTech
Data Analytics, Artificial Intelligence and IoT start-ups 120% funding growth for AI Start-ups are witnessing fastest adoption across Industry verticals (Over USD 150 Mn invested in 2018)
Source: NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 78 The IT-BPM Sector in India: Software Products & Start-ups India is rapidly developing into a global start-up hub
Illustrative B2C Indian start-ups are expanding globally B2C start-ups from India have started expanding to other markets
Travel & Hospitality Transport EdTech Other Examples
Malaysia, Indonesia, Sri Lanka, Bangladesh, US, UK, Australia China, UK, Japan Australia, UK
400+ B2B Start-ups expanded globally Build in India, built for the world
US Singapore Singapore US US Funding: Funding: Funding: Funding: Funding: $24 Mn $10 Mn $3 Mn $3 Mn $20 Mn
Global start-ups entering India for market and talent
US Singapore Indonesia China US
14 + International Start-up Exchange Missions
Source: NASSCOM Tech Start-up Report 2018
Strategic Review 2019 : Decoding Digital 79 The IT-BPM Sector in India: Software Products & Start-ups A Deep Dive into key Start-up Segments in India
START-UP SEGMENTS
AgriTech
FinTech
EdTech DeepTech
HealthTech Cyber Security
Strategic Review 2019 : Decoding Digital 80 START-UP FinTech
Fintech Outlook
Larger funding rounds becoming more frequent globally
USD billion Intelligent automation could add USD 512 billion to the global revenues of financial 22% services firms by 2020 Natural Language Processing (NLP) and RPA are the majorly adopted technologies in Fintech sector 13.5# Blockchain and Distributed Ledger 10.5# Global Technology (DLT) are emerging and Trends gaining lot of traction Large players acquiring companies with complementary capabilities 2016 2017 Continued growth of niche solution providers and players serving local needs
Lending and Digital Payments are the key focus areas in India Fintech funding FinTech Start-ups 900+ USD million
Other than digital payments new Fintech applications like Robo Advisory, Bot enabled conversational banking, 100% automation of underwriting and e-KYC are emerging as some leading use cases 574 Alternative lending start-ups are using advanced tech like data analytics and AI to 287 India determine creditworthiness of potential Trends borrowers According to NPCI, BHIM Unified Payment 2017 2018 Interface (UPI) transaction rocketed to (Jan-Sep) (Jan-Sep) ` 1 trillion while volume of transaction reached 910 million
# Series B+ Funding Source: Capgemini Report 2018, Start-up Genome Report 2018, NASSCOM Tech Start-up Report 2018, Business Insider
Strategic Review 2019 : Decoding Digital 81 The IT-BPM Sector in India: Software Products & Start-ups
FinTech India Major Segments
Illustrative
Lending 31%
Capital financing, SME lending, P2P lending, consumer and credit lending
Digital Payments 25%
Mobile wallet, POS terminals and online payment gateways for billings, bookings and recharge transactions
Wealth Management 18%
Robo-advisory tools, platform for investment in small funds schemes
Trading Platform 7%
Trading of mutual funds, unlisted and listed securities and stocks and thematic investments
Blockchain 7% PIVOTCHAIN Finance apps, order tracking apps, smart contracts, Solutions ethereum, hyperledger etc
KYC/ Regulations 5%
Data integration, transaction monitoring, identity management, financial scoring and credit rating solutions
Source: Deloitte Outlook 2018
Strategic Review 2019 : Decoding Digital 82 The IT-BPM Sector in India: Software Products & Start-ups With transaction value to reach USD 73 billion by 2020, FinTech is set for high growth
Funding Highlights
Popular Funding Areas Indian Tech Startup Funding Q1 2018
21.47% Fintech Mobile Payments Payments Lending 6.55% Others 4.85% Transport 5.53% Ad-tech Banking Tech Insurance Tech 9.07% Real Estate 0.24% Hardware and IoT Top funded FinTech companies 0.21% AI and Big Data 8.74% Entertainment and Tech 2.55% EdTech 17.91% Enterprise Applications 5.05% Enterprise Services 2.83% Consumer Services 5.65% Ecommerce 9.37% Healthtech
Growing end market making FinTech attractive
Blockchain Payments Banks
India blockchain Need for the integration Mobile wallet industry Several banks launching technology market of blockchain expected to reach USD their own digital wallets projected to grow at technology for more 183 million by 2019 to leverage IMPS CAGR 58% till 2024 secured transactions platforms
Robo-advisory Biometrics
Expected to grow at Robo advisory firm Biometric market to High adoption to be a CAGR of 68% till Upwardly has built grow at a CAGR of 31% seen in healthcare, 2022 assets over ` 400 till 2021 education and other crores in just 2 years sectors
Source: Business Wire, Techinasia, Techsciresearch, NASSCOM
Strategic Review 2019 : Decoding Digital 83 The IT-BPM Sector in India: Software Products & Start-ups Expansion is on the cards for many India Fintech firms
Illustrative Focus Areas
Barcode Based Smartphone Digital Offline Merchant Payment Service Insurance Solution
Wholesale Investment Lending Platforms
Expansion Plans
Expanding to Japan To enter Entering into digital To enter healthtech To enter Australia as with Softbank to institutional lending insurance business segment a part of expanding launch digital payment after raising fresh allowing users to overseas business service Paypay funding buy digital insurance Expansion through M&A
Acquired Acquired personal Acquired wealth Acquired TOOTL, an hyperlocal finance management management firm infotainment app which point-of-sales start-up Walnut for Clearfunds, an online offers personalized content company $30 million mutual fund platform using predictive tools
Source: EconomicTimes, Techninasia
Strategic Review 2019 : Decoding Digital 84 START-UP DeepTech
Data analytics and IoT start-ups continue to find growth across all sectors
Data Analytics
Key Trends Key Industries Affected
Data analytics continues Sector saw 5 years Enterprise Fintech Industrial to be the most widely CAGR of 18-20% adopted advanced tech among start-ups HealthTech RetailTech
Applications Emerging / Mature Start-ups
Enterprise Software FinTech Emerging Start-ups Analytics dashboards, Suggest relevant analysis of customer products/services based on behaviour, providing financial history of insights on revenue, etc. consumers
Industrial RetailTech Mature Start-ups Tracking assets, Predictive Evaluate customer behaviour maintenance and and provide personalised optimising supply chain recommendations
Note: Illustrative list of start-ups included Source: NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 85 The IT-BPM Sector in India: Software Products & Start-ups Increase in data generation and storage has led to penetration of AI across industries
Internet of Things
Key Trends Key Industries Affected
Enterprises are looking for Sector Industrial Home Automation HealthTech IoT solutions to address witnessed 5 gaps in internal capabilities, years CAGR of and create unified IT, R&D 15-17% and digital organizations Enterprise Wearables
Applications Emerging / Mature Start-ups
Industrial and Automotive Sector Monitor and control the performance of machinery; they Emerging Start-ups are using the data for predictive maintenance of machines
Home Automation HealthTech Mature Start-ups Connect and control devices Analyse medical information and home appliances remotely, manage personal through smartphones health through wearables
Artificial Intelligence
Key Trends Key Industries Affected
With most of the Sector Enterprise Fintech Marketplace enterprises adopting digital witnessed 5 strategy, the AI applications years CAGR of solving enterprise problems 54-58% have a strong global market HealthTech EdTech
Applications Emerging / Mature Start-ups
Enterprise Software Marketplace HRTech Automation frameworks Personalised For AI based Emerging Start-ups for data integration, shopping experiences talent search dashboards for visualisation for online buyers platforms
FinTech HealthTech Mature Start-ups Conversational platforms to offer Patient engagement, credit solutions, credit assessment task automation and and handle financial queries disease diagnosis
Note: Illustrative list of start-ups included Source: NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 86 The IT-BPM Sector in India: Software Products & Start-ups Blockchain and AR/VR are steadily gaining momentum
Blockchain
Key Trends Key Industries Affected
75% of all Telangana govt. launched a Fintech Enterprise Security Blockchain Blockchain tech. incubator, start-ups have and Niti Aayog started using emerged in the Blockchain to maintain last 3 years land/health records HealthTech AgriTech
Applications Case Studies
FinTech InsuranceTech Real time data Real-time insurance data, claim Funding round: Seed validation and storage management solutions etc.
Blockchain-based analytical AgriTech HealthTech solutions for risk modelling, Improving food supply chain, Tracking integrity of PIVOTCHAIN price optimization, credit increase food safety and data collected from SOLUTIONS scorecards etc. authenticate agri products IoT devices (2017)
Augmented Reality/Virtual Reality
Key Trends Key Industries Affected
AR/VR adoption in start-ups has EdTech RetailTech Real Estate Media & Ent. HealthTech grown at 5 year CAGR of 26-28%
Applications Case Studies
EdTech HealthTech AR based learning products Medical training using Funding round: Seed (Books, Training Videos) superimposed 3D models Platform for people to experience remote places Real Estate Others and events virtually through and Travel Visualisation of products such as (2016) AR/VR tools Virtual tours furniture, home decor, automobiles, etc.
Note: Illustrative list of start-ups included Source: NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 87 The IT-BPM Sector in India: Software Products & Start-ups Drone applications are expected to increase while 3D Printing may take more time
Drones
Key Trends Key Industries Affected
India is the fastest Drone start-ups Security AgriTech Real Estate growing market for have grown at Unmanned Aerial 5 years CAGR Vehicles (UAV) of ~35% Military Logistics
Applications Case Studies
Data collection and analysis for Military ISR, archaeological surveying, GIS and Border patrolling Funding round: Seed mapping, Remote sensing etc. and Surveillance
Manufactures Nano drones Aerial surveying for Consumer needs for educational and precision agriculture, such as photography, (2014) industrial applications. disaster response, etc. cinematography, selfies etc.
3D Printing
Key Trends Key Industries Affected
There are 80+ Industries like Automotive Manufacturing 3D printing Automotive and start-ups in India HeathTech are adopting the technology fast Industrial HealthTech
Applications Case Studies
Manufacturing Manufacturing consumer Funding round: Seed commercial products such products such as mobile as automotive prototypes, accessories, fashion CNC machines, Laser products, sports products, marking machines etc. jewellery, etc. (2014)
Customized medical implants & patient Developing prosthetics and medical specific visualization solutions for surgical models for surgical procedures procedures
Note: Illustrative list of start-ups included Source: NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 88 START-UP HealthTech
High rates of innovation makes Healthtech highly attractive space for investors
USD billion
33% Due to falling infant mortality rate, life expectancy to reach 74.1 years by 2021 In developed countries aging factor will drive the spending, like in Western 10# Europe where 21% of the population will age over 65 by 2021 7.5 # Global Increase in M&A’s due to decreasing Trends margins and rising costs Current population of 7.6 billion expected to reach 9.8 billion in 2050 2016 2017
Investment in the entire healthcare value chain saw a strong growth HealthTech Start-ups 550+ USD million
55% Lack of adequate and high cost healthcare facilities are the major driver for HealthTech 357 Complex treatment, diagnosis and tech based monitoring are solutions built by 230 India start-ups Trends Medical practitioners proximity to patients increasing through these tech 2017 2018 start-ups (Jan-Sept) (Jan-Sept)
# Series B+ Funding Source: Capgemini Report 2018, Start-up Genome Report 2018, NASSCOM Tech Start-up Report 2018, Business Insider
Strategic Review 2019 : Decoding Digital 89 The IT-BPM Sector in India: Software Products & Start-ups
HealthTech Segments
Illustrative
Aggregator 22%
Online pharmacies, Aggregator platforms for doctors, clinics, etc.
Personal Health & 19% 19% Fitness Discovery
Wearable solutions for fitness tracking and coaching, Health monitoring applications, sleep monitoring devices
Health Information 17% Management
Electronic Health Records solutions to organisations, storing patient records, SCM applications for healthcare organisation
Tech-enabled Diagnostics 15% Services & Anomaly Detection
Diagnose and analyse medical conditions through image detection
Tele-health/Remote Consultation 13%
Doctor-patient platforms; remote consultation with doctors
Medical Devices 9%
Low-cost, easy to use and portable devices for applications like diagnosis, screening and ECG monitoring
Source: NASSCOM Start-up Report 2018
Strategic Review 2019 : Decoding Digital 90 The IT-BPM Sector in India: Software Products & Start-ups
Funding / Growth Trend
Funding Highlights
Top Funded Start-ups of 2018
Online Pharmacy Health and fitness Online Pharmacy raised USD 115 start-up raised USD raised USD 35 million 100 million million
USD 7 mn funding USD 7.2 mn funding USD 4.2 mn funding USD 1.1 mn funding from Pi venture, from Bessemer from Prime Venture from Nexus Venture Binny Bansal Ventures Partners Partners Partners
Prominent growing themes in the future
Home Remote health Patient doctor Healthcare and mobile health interaction
With the rise in Start-ups like DoctorInsta, a Mirai Health, a NCDs, geriatric Portea and Care24 video-medicine connected population and the are changing this consultation platform healthcare start-up lack of adequate space with which allows round is leaveraging hospital technology- the clock medical technology powered infrastructure, home enabled home consultation over solutions to improve healthcare is picking healthcare video through doctor and patient up in India services smartphones & web experiences
Source: Techninasia, NASSCOM
Strategic Review 2019 : Decoding Digital 91 The IT-BPM Sector in India: Software Products & Start-ups Expansion Models - Inorganic growth and entering in new areas of Artificial Intelligence, Medical IoT
Technology- Health Information Telehealth/ Consumer assisted Diagnosis/ Management Telemedicine Centric Solutions Surgery Solutions Artificial Intelligence and Medical IoT
AI and IoT-enabled Offers portable ECG Offers IoT solutions for Offers IoT solutions for comprehensive lifestyle machines with easy data remote diagnosis remote diagnosis tracking platform transfer to mobile phones
AI conversational mental POC solutions for cardiac health chatbot, also IoT-enabled remote Pen to text electronic care using AI and IoT connects to health apps to diagnosis of eye problems medical records solution approaches extract data for better analysis
Using deep learning and Deploys AI and big data to cloud computation to help End-to-end AI-based health content, offer doctors and patients physicians with data-driven health-monitoring consultation, networking access to clinical data for clinical insights to enable AI-enabled IoT platform platform better health management better care
Inorganic Growth
Acquired EClinic24/7, a Acquired healthtech Acquired Seraniti, mental Acquired online video telemedicine platform that start-up with B2B digital wellness service provider consultation app JustDoc connect its users with platform, Miljon Medi App doctors for a Video consult
Source: Deloitte Outlook 2018, NASSCOM Healthcare Report
Strategic Review 2019 : Decoding Digital 92 START-UP Agritech
Glogal Agritech capital inflow saw a big growth Global Agritech Start-ups
Biotech is expected to 834 improve crops performance 660 685 and output 303 Sensors based technology can gather lot more information 2014 2015 2016 2017 than sensing moisture content, scanning crops etc. Global Agritech Funding Global Key Agricultural robot market to USD billion xx% grow approx. 10% over the 29% Trends next 5 years Increasing corporate activity 10.1# in Agritech: Syngenta and 7.8 # Monsanto actively invested in agritech companies
2016 2017
India Agritech start-ups funding have risen since 2015
India Agritech Start-ups
117 109 With government’s target to 59 58 double farm income by 2020, Agritech sector is expected to 2014 2015 2016 2017 get a major boost. Hydroponics and Aquaponics India Agritech Funding techniques are expected to be USD million more visible India Key Agritech start-ups are 176% Trends receiving funding across all 43.6 stages with seed stage and early stage together accounting for more than 15.8 90% of total funding
FY2017 FY2018
# Series B+ Funding Source:Business insider, Capgemini Report 2018
Strategic Review 2019 : Decoding Digital 93 The IT-BPM Sector in India: Software Products & Start-ups
Agritech major segments
Start-ups by segment (2013-17) Illustrative
1% Supply Chain 8% 10% Farm & Data Analytics
Infrastructure 18% Information Platform 63% Finance
New high-end solution focus areas
Big Data Market Farming as a IOT Enabled Using farm data to Linkage Model Service Technology determine Helping farmers to Providing affordable Using IOT devices for opportunities and key keep abreast with the technology solutions remote monitoring, areas market prices and for efficient farming tracking scenario
Source: NASSCOM Agritech Report 2018, AgFunder, Inc.
Strategic Review 2019 : Decoding Digital 94 START-UP Edtech
High rates of innovation makes Global Healthtech highly attractive space for investors
USD billion
Asian countries are the major drivers due to rise in middle class population 19% which is expected to reach 3 billion
2.15# Annual expenditure on education is projected to grow at 8% yearly and will Global reach USD 8 trillion Advanced country’s school going 1.8# Trends population moving towards one device per student 2016 2017
Sector continues to lure the investors showcasing the maturity of this segment
Individual learning using Artificial USD million Intelligence has seen a substantial rise Online assessment has seen a high adoption in recent years which is expected 199 to reach USD 750 million by 2021 180 India 123 Drop in new start-ups but the sector Trends continues to lure investors showcasing 40 41 the maturity of the segment
FY2014 FY2015 FY2016 FY2017 FY2018
Source: Capgemini Report 2018, Business Insider
Strategic Review 2019 : Decoding Digital 95 The IT-BPM Sector in India: Software Products & Start-ups
Edtech Major Segments / Funding
Online Learning is the biggest segment under EdTech
Reskilling & Online Certification Higher Education Preparation 4% 32%
Test 12% Preparation
30% Primary & Secondary 22% Supplement Education Language & Casual Learning
EdTech sector now attracting investors interest Government has been active in promoting digital towards more established start-ups education by offering many platforms
Acquisitions/acquihires for portfolio diversification and sector attractiveness EdTech Funding Breakup (FY2018)
7% 10% Online Courses Technology 42% 18% Tutoring Text Preparation Personalized robots, AR/VR, cloud computing, 23% Others big data, biometrics are expected to be the next big thing in EdTech
Source: NASSCOM EdTech Report
Strategic Review 2019 : Decoding Digital 96 START-UP Cyber Security
Network security is the largest product segment: Data security is the fastest growing
USD billion 12.2% Rising incidents of cyber attacks, rapid adoption of cloud computing and IoT Due to rise in internet penetration, Asia’s cyber security market is growing 55 fastest 49 Global Major tech players spent nearly USD 5 Trends billion in cyber security related M&A transactions
2017 2018E Cyber security Product Market Size
Indian companies offering cyber security products generated a cumulative revenue of USD 450+ million in FY2018
USD million 450-500 32% 70% of cyber security companies 340-380 incorporated in last decade Identify & access management, network security, threat intelligence & security analytics and data security are the major India segments Trends Indian start-ups o ering cyber security products have seen revenue growth of ~120% from 2016-18
FY2017 FY2018
Source: India Cybersecurity Product Landscape Report
Strategic Review 2019 : Decoding Digital 97 The IT-BPM Sector in India: Software Products & Start-ups
Key Verticals/Funding
Focus verticals of Indian Cyber Security Product companies
Preferred Products Drivers Illustrative List
Digital India, smart city initiatives, e-gov and mission-made projects, state-level Government digitisation, app-based solutions, automation, heightened focus on & Defence national security due to concerns around state-sponsored attacks, focus Network on data confidentiality Security
Data Regulatory push; digitisation and Security automation; rising security awareness BFSI among mid-tier banks, Application NBFC's and fintech; adoption of fintech Security solutions I AM
Security IT-BPM - Driven by global compliance IT-BPM, Analytics Telecom, Telecom - Driven by local TRAI regulations Internet Internet Companies - A consumer driven Companies industry; need for competitive advantage
Indian Cyber Security Product sector is predominantly bootstrapped
Funding Status
Most founders have significant Bootstrapped experience in cyber security or IT and mostly have integrated businesses, 11% Angel offering both products and services. 70% 11% 8% VC Others It is because of this mature founder base that the landscape is self-sustainable, despite being largely bootstrapped.
Source: India Cybersecurity Product Landscape Report
Strategic Review 2019 : Decoding Digital 98 eCommerce - At A Glance
eCommerce Global eCommerce market witnessed USD 2.8 trillion strong growth in 2018, however, pulled down a bit due to slow growth of digital buyers
eCommerce penetration (sales as a mCommerce percentage of total retail sales) continued to expand to reach 11.9% USD 1.8 trillion Global market: Mobile with over 60% share continued to 2018 be the dominant purchase channel
Led by China, Japan, South Korea and Other channels India, Asia-Pacific remains one of the USD 1 trillion largest and fastest growing eCommerce markets in the world
eCommerce eTail surpassed eTravel to become the largest eCommerce segment USD 43 billion Online grocery and pharmacy emerged as new focus areas due to large ticket size and high repeat purchase
eTailing eCommerce players continued USD 21 billion acquisitions and investments in Indian technologies such as IoT, analytics, market: data science, AI, ML, etc. 2018 eTravel Government’s push for a cashless society, improved infrastructure and adoption of USD 19 billion digital instruments resulted in strong growth of digital payments
B2B eCommerce gained traction due to others growth in funding from global investors USD 3 billion
Strategic Review 2019 : Decoding Digital 99 The IT-BPM Sector in India: eCommerce The global eCommerce market grew an estimated 23% to reach USD 2.8 trillion in 2018
Global eCommerce Market Snapshot
Retail eCommerce Market Leading Markets in 2017
USD trillion USD billion (% of retail sales)
21% 23%
672 3.5 (15.9%) 2.8 2.3 340 99 79 73 (7.5%) (14.5%) (5.4%) (8.4%)
2017 2018E 2019F China US UK Japan Germany
Global retail eCommerce sales continued to grow in 2018, albeit at a relatively slower growth rate as compared to previous years. Going forward, the growth would remain positive, however, expected to slowdown a bit due to slow growth of digital buyers worldwide. The market is projected to reach USD 4.9 trillion in 2021, growing at 19.7% CAGR during 2018–2021. In 2018, eCommerce sales as a percentage of total retail sales exhibited an upward trend to reach 11.9%. Going forward, eCommerce share in retail sales is expected to increase further to reach 13.7% in 2019. According to Euromonitor, by 2021, eCommerce would become one of the largest retail channels in the world. Mobile or mCommerce has been a key contributor for this growth as consumers are spending increased time on their phones and to meet these expectations retailers continue to invest in mobile platforms. mCommerce accounted for about USD 1.8 trillion sales in 2018, and is expected to grow 28.6% in 2019 to reach USD 2.3 trillion. Asia-Pacific is one of the largest and fastest growing eCommerce markets in the world, led mainly by China, Japan, South Korea and India. Apparel and electronic products witnessed higher growth in 2018, as compared to other categories such as health and beauty, which consumers still prefer to purchase in-store.
Key Takeaways
Global retail eCommerce was Mobile is playing a key role in the eCommerce is expected valued at USD 2.8 trillion in growth of eCommerce; to become one of the 2018; expected to grow at mCommerce expected to reach largest retail channels 19.7% CAGR through 2021 USD 2.3 trillion in 2019 by 2021
Sources: eMarketer, Shopify
Strategic Review 2019 : Decoding Digital 100 The IT-BPM Sector in India: eCommerce Technology themes that became Illustrative significant in 2018
Social Shopping
Increasing number of customers are leveraging social media platforms such as Facebook, According to a survey Pinterest and Instagram for online shopping. In conducted by PayPal, social India, Facebook, WhatsApp and Facebook media platforms account for Messenger are used most by merchants than 79% of eCommerce in India anywhere across Asia (excluding China)
Voice Commerce
Voice emerged as one of the leading innovations in eCommerce (restricted not only to mobile) due Acquired Liv.AI, an AI-driven to increased popularity of Google Home and speech recognition start-up Amazon Echo. Use of these devices to complete to fuel consumer’s buying purchases has also grown. It is estimated that in propensity 2018 about 30% online buyers used voice technology to make a purchase
AI and ML assisted eCommerce
AI and ML became essential tools for eCommerce players to differentiate themselves Amazon India, Flipkart and in the marketplace. The tools are being used Paytm Mall are expected to primarily in the areas of product have spent about USD 2.5 recommendation, customer loyalty and retention, billion on AI and ML in 2018 gain operational efficiency, etc.
AR VR An eyewear eCommerce AR and VR are providing customers with platform leverages new ways to experience products outside immersive technologies and of a physical store enables users to try out frames in 3D Advent of Vernacular Tech Amazon launched its Hindi eCommerce companies have started focusing on mobile app and website to vernacular technologies as more and more tap Hindi speaking Indians from Tier 2 and 3 cities have started customers from small towns shopping online via smartphones and villages
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 101 The IT-BPM Sector in India: eCommerce
Increasing mobile and internet penetration, perfect ground for the growth of internet and eCommerce services
According to Google, India is adding ~10 million active internet users per month, higher than anywhere else in the world 9 out of 10 new internet users are exploring the online content only in their native language
Mobile Internet Users in India Online Shoppers in India
million million
120 456 478
108
2017 2018E 2017 2018E
With 59% mobile penetration, urban India is expected to witness a slowdown, while rural India, with 18% mobile internet penetration, would emerge as the next area of growth. Online communication remains the largest use case in urban areas, whereas entertainment is the biggest use case in rural areas.
Adoption of online transactions lags in India as compared to the US and China, especially paid digital media which is still in nascent stage as users are happy with free content.
Adoption of Online Transactions Among Internet Users (%)
USA 39%
DIGITAL China 6% MEDIA
India 0.7%
With rising internet penetration, greater digital maturity of users and growth in supporting infrastructure, adoption of digital transactions is expected to increase at a brisk pace to reach USD 100 billion by 2020.
Sources: Digital Consumer Spending in India a $100 Bn Opportunity, February 2018, eMarketer, Shopify, Secondary sources
Strategic Review 2019 : Decoding Digital 102 The IT-BPM Sector in India: eCommerce
Digital payments on the rise
Digital payments witnessed strong growth in 2018, as consumers moved away from cash and card transactions. While medium to large-value transactions continue to be made through digital banking channels, the low-value day-to-day transactions are carried out through mobile wallets. The growth is driven by government’s push for a cashless society, improved telecom and payment infrastructure, an increase in adoption of digital instruments by merchants and proliferation of UPI. Going forward, digital payments are expected to demonstrate even stronger growth due to RBI’s guidelines which allows interoperability of prepaid instruments including e-wallets, meal and gift vouchers, etc.
UPI Transaction Mobile Wallet Transactions Mobile Banking Transactions
million million million
83% 219% 527% 482 368 527
201 154 77
Oct-2017 Oct-2018 Oct-2017 Oct-2018 Oct-2017 Oct-2018
Illustrative
350 million 25 million 107 million 118 million User base (total active users) (monthly active users) (total active users) (total users)
Model of UPI, Wallet, payment Payments bank UPI Wallet, UPI Wallet, UPI
UPI payments, UPI payments, What all you UPI payments, UPI payments, DTH, wallet, mobile, DTH, wallet, mobile, can do with it mobile, DTH, fight, fight, movie ticket, electricity, gas, electricity, water, train, movie ticket food insurance insurance
Number of offline 9.5 million 1.2 million 143,332 300,000 merchants
Over 1.5 billion 860 million $3 billion gross $110 million Transaction transaction in a transactions in transaction value in transaction value in quarter 2017-18 FY 2017-18 August
Sources: National Payements Corporation of India, RBI, Secondary sources
Strategic Review 2019 : Decoding Digital 103 The IT-BPM Sector in India: eCommerce
Expanding eCommerce market in India
India’s eCommerce market is well positioned to reach USD 43 billion in 2018. Further, it is forecasted to reach USD 54 billion in 2019. eTail witnessed stronger growth in 2018 to surpass eTravel segment, a trend which would continue going forward. A major push to the eCommerce industry came from new offering such as online grocery, apparel and online pharmacy which witnessed increased focus from both demand and supply side of the value chain and more digital buyers coming onboard from Tier 2 towns and beyond. The growth was also fueled by rising internet and smartphone penetration, improved technology and logistics infrastructure.
Indian eCommerce Landscape
Indian eCommerce Market by GMV eCommerce Growth by Segment 2018
USD billion % growth 34% 54 31% 43 4 35 3 15% 2 27 21 16
22 17 19
2017 2018E 2019F
eTravel eTail Others*
Key Drivers
Increasing smartphone Flow of credit to Growing online penetration, rising consumers, population internet penetration and sellers and micro comfortable making decline in data costs enterprises online transactions
Evolution of robust payment Improved logistics Increasing number of solutions and consumers’ infrastructure with a online shoppers from enhanced trust using them focus on last-mile delivery Tier 2 cities and beyond
Key Takeaways
India’s eCommerce market registered Apart from infrastructure and technology an estimated growth of ~24% in 2018 improvements, the growth was driven by strong to reach USD 43 billion. Further, it is performance of online grocery, apparels, ePharmacy expected USD 54 million in 2019 and increasing demand from Tier 2 cities and beyond
Note: *Others includes financial services, consumer services and digital content Sources: Propelling India towards global leadership in e-Commerce September 2018; NASSCOM Analysis, Secondary sources
Strategic Review 2019 : Decoding Digital 104 The IT-BPM Sector in India: eCommerce As data consumption explodes, eTail expands into newer segments
Indian eTail Landscape
Indian eTail Market eTail Growth by Segment 2018
34% USD billion 27 % growth 5 33% 21 29% 4 16 7 3 5 4 15 12 9
2017 2018E 2019F
Electronics Fashion Others
India’s eTail market is expected to reach USD 21 billion in 2018, led by electronics and fashion segment. The market is forecasted to reach USD 27 billion in 2019, driven primarily by increased smartphone and internet penetration and low data prices, increasing demand from Tier 2 cities and beyond and proliferation of eWallets and easy payment options.
Indian eTravel Landscape
Indian eTravel Market eTravel Growth by Segment 2018
USD billion 22 % growth 25% 25% 19 2 1 20% 17 1 5 1 1 15% 1 4 4 3 11% 2 3 2 2 8% 2
7 8 9
2017 2018E 2019F
Domestic Air International Air Hotel Rail Bus Others
India’s eTravel market is expected to reach USD 19 billion in 2018. Further, it is forecasted to reach USD 22 billion in 2019 due to increasing online domestic air travel, growth of online booking of international travel and hotels, and maturing online cab and bus bookings, expected to gain traction in Tier 2 cities.
Sources: Propelling India towards global leadership in e-commerce September 2018; NASSCOM Analysis
Strategic Review 2019 : Decoding Digital 105 The IT-BPM Sector in India: eCommerce
Niche Segments witnessing high growth
Online Grocery – The Next Battleground Grocery is the largest consumer segment in India, accounting for about 60% of the country’s total retail market. Despite low online penetration as compared to other countries, online grocery has emerged as a must-capture area for eCommerce players mainly due to large ticket size, stickiness and high repeat purchase rate of essentials.
United Kingdom China US India
Online grocery as % of overall FMCG/grocery
6.9% 4.2% 1.4% 0.1%
USD 1 billion USD 5 billion Online Grocery Market (2017) (2020E)
On an average ~80% online orders are for about USD 20
Illustrative
2018 witnessed significant push into online grocery business by already established players BigBasket, Grofers and relatively new entrants/eCommerce giants such as Amazon and Flipkart. Going forward, the market is expected to be driven by technological advancements, push for private labels, same/next day delivery, and B2B food services.
Amazon re-branded its Flipkart forayed into online grocery Grofers forayed into the FMCG segment with online groceries service to segment with the launch of 'Supermart’. the launch of seven new brands under two Prime Now. It also expanded The company plans to invest USD 264 categories - Budget and Popular G-Brands. its service to include more million over next three years in the With this, Grofers’ private labels expanded delivery slots for customers business to 250 food and non-food products
Despite presence of players such BigBasket and Grofers, online grocery startups in Tier 2 cities thrive. Some of the startups that have mushroomed beyond Tier 1 cities include Flipfresh (Hubballi), ShopitDaily (Indore), PinkCityKirana (Jaipur), GharBaitheBazar (Lucknow) and Kada (Thiruvananthapuram).
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 106 The IT-BPM Sector in India: eCommerce Data and technology driving growth of new online sectors ePharma Gaining Traction Online medicine delivery represents a significant opportunity for eCommerce players. The market is expected to reach USD 1.2 billion by 2020, driven primarily by increased investments, ability to track and trace, abuse prevention and no sale of drugs without prescription.
However, there has been a lot of uncertainty after the Delhi High Court’s order that bans online sales of medicines across the country.
YTD funding ~USD 180 million
ePharma penetration stands at about ~1%, with an average frequency of one purchase a month
Leading ePharma companies handle ~25,000-30,000 orders/day
Illustrative The industry witnessed some big ticket investments in the online pharma start-ups
Raised USD 50 million in Series C round, Raised USD 35 million in Series C Raised USD 11 led by Eight Roads Ventures India, F-Prime round, led by Singapore-based Daun million in Series B Capital, Fundamentum Partnership, Think Penh Cambodia Group and existing round, led by SAIF Investments and existing investor Bessemer investors Sistema Asia Fund, and Partners, Nexus Venture Partners Tanncam Investment Ventures, and IL&FS ePharmacy Technology Focus
Working on technologies Acquired EClinic24/7 to Adopted inventory-based model, direct such as data sciences and AI offer e-consultation procurement, warehouse automation and to create ‘doctor assistant’ services, for both patients technologies such as data sciences, predictive that would make a doctor and doctors, through its modelling, etc., for maximizing profits and supply more productive platform chain efficiencies
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 107 The IT-BPM Sector in India: eCommerce
Expanding consumer base across the country eCommerce Goes Rural eCommerce players witnessed strong growth in customers from Tier 2 cities and beyond in 2018, driven primarily by millennial consumers in these cities who mimic those living in Tier 1 cities, slow deployment of physical organized retail and introduction of no-cost EMIs which has the highest penetration in Tier 2 and 3 cities.
According to RedSeer Consulting, online shoppers in Tier 1 cities will continue to dominate the customer base. However, online shoppers in Tier 2 cities and beyond will grow at a faster rate in 2018 to reach and estimated 56 million.
Online Shoppers Metro/Tier 1 vs Tier 2 and Beyond
million
61 Metro/Tier 1 53 56 37 Tier 2 and beyond
2017 2018E
Illustrative
eHaat, a subsidiary of Dhampur StoreKing, one of the Flipkart plans to target non-metros and smaller Sugar Mills clocks about 1,400 largest rural eCommerce cities to position itself as the “fashion capital” transactions per day. Besides Uttar players has 55,000 retail of the country. The company mentioned that it Pradesh, the firm also plans to outlets in 10 states. It is witnessing 100% YoY growth in the kids expand its operations to the states also registers 75,000 fashion category, driven by demand coming of Karnataka and Orissa in 2018-19 transactions a day from across urban cities and Tier 2 and 3 towns
Amazon recorded more than 80% LoadShare Networks, a Snapdeal Swiggy expanded its of its customers from small towns provider of services ranging witnessed a shift presence to 16 new Tier during the festival sale. More than from first mile, line-haul, in customers as 2 and 3 cities to meet the 50% sale of large appliances and last mile deliveries and 80% of new users strong consumer demand 63% sale of fashion products came modular logistics software on its platform that the company noticed from Tier 2 cities and beyond and solution, announced plans come from through thousands of app about 70% of its EMI customers to further strengthen its smaller towns downloads in cities where came from Tier 2 cities and beyond base in Tier 2 and 3 towns across India it was not present
Sources: RedSeer Consulting, Secondary sources
Strategic Review 2019 : Decoding Digital 108 The IT-BPM Sector in India: eCommerce
The Festive Season continues to spike demand
According to Redseer Consulting, festive sales have helped to grow the eCommerce market in India from 0.7% to 3.2% in the last five years and 2018 was no different.
Overall GMV During Festive Sales Segment Growth 2018
USD billion % growth 64%
43% 45 Consumer Electronics
2.3 1.4 70 Smartphone 1.0 78 Fashion
2016 2017 2018
Market Share During Festive Sales 2018
% growth
• Amazon India and Flipkart hired an estimated 120,000 32% Flipkart new temporary employees to service the anticipated demand surge during the festive season, twice the 51% Amazon number they hired last year during this time Others • Online retailers had spent an estimated USD 54 million on advertising to promote festive sales, a 10% jump 17% from last year
Illustrative
vs
More than EMI Purchases Private labels 40% customers for the EMI and Private brands 82% of its new grew to 12X; AmazonBasics private label brands other options portfolio grew customers Over 70% EMI and Solimao came from Tier 3 towns drove 60% of by 550X were from Tier users from Tier 2 grew 10X and and beyond, and over overall sales 2 and beyond and beyond 13X, respectively 12% of them were new
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 109 The IT-BPM Sector in India: eCommerce
Content is grabbing attention
Video streaming has been one of the most successful avenues in the Indian content consumption landscape, primarily due to increasing internet and smartphone penetration and ever-dropping data cost. According to research firm Media Partners Asia, India's online video market is expected to grow to USD 2.4 billion by 2023. The market witnesses intense completion between home-grown providers such as Hotstar, SonyLiv, Jio, Voot, etc., and global players such as Amazon Prime and Netflix. While Hotstar continues to be the leader in the content space, Netflix and Amazon Prime Video have steadily grown their market share at the expense of local firms.
Key Trends
Indian At 27.4%, Entertainment Texts and images Hindi remains the main smartphone users is the largest category in account for 88% of language, accounting for spend 1.1 hours mobile content all entertainment 69% of content, followed on an average on consumption, followed by content, whereas by regional languages content related to Sports and Lifestyle, video accounts for accounting for 25% entertainment which accounts for 18.6% ~11% of all content users. English content every day and 13.8%, respectively consumed accounts for ~6%
Market Share by Installations (Oct 2018) Market Share of Active Users Illustrative
% Others % Nov 2018 Nov 2018
Hotstar 40.18 Netflix 2.08
4% 9% Jio TV 17.60 Jio Cinema 1.86 6% 31% 7% 8% Amazon Voot 11.76 Prime Video 1.43 11% 24%
Airtel TV 4.59 Tatasky 0.89
SonyLIV 3.17 Alt Balaji 0.21
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 110 The IT-BPM Sector in India: eCommerce
2018, the year of eCommerce Unicorns
Customer Service Year of Unicorns and Experience
Subscription Models Seller Strategies and Loyalty programs
Top themes Private Labels for the New Offerings year
Strengthening Logistics and Delivery Global Commerce
Omni-channel Strategies Strategic Investments
Year of Unicorns 2018 was the year of unicorns for the Indian start-ups as eight new start-ups joined the unicorn club, including six retail eCommerce start-ups. While the number of Unicorns in India (18) does not match that of other countries such as US (126) and China (77), the investments do bring-in positive business sentiments.
Valuation - USD 5 billion Raised USD 1 billion led by SoftBank
Valuation - USD 3.3 billion Raised USD 1 billion led by Naspers and Tencent Holdings
Valuation - USD 2 billion Raised USD 450 million from SoftBank and Alibaba
Valuation - USD 1.1 billion Raised USD 200 million from Ant Small and Micro Financial Services
Valuation - USD 1.1 billion Raised ~USD 200 million from SoftBank and existing investors
Valuation - USD 1 billion With total funding of an estimated USD 666 million, Byju’s is the first Indian EdTech company to join the unicorn club
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 111 The IT-BPM Sector in India: eCommerce Personalization and Private labels driving demand
Subscription model/Loyalty program Subscription-based paid memberships and loyalty programs became a new rage among customers. Apart from offering rewards, benefits and exclusive and early access to members, these programmes help eCommerce companies to segment customers efficiently, cut customer acquisition cost, identify buying pattern, retain customers, reduce cash-burn and dependence on deals and discounts. Illustrative Fipkart made a second attempt at customer loyalty programme to launch Flipkart Plus to take on Amazon’s Prime subscription service. The company has set aside USD 173 million to spend on services under the programme for the next three years
Myntra launched loyalty program 'Myntra Insider' to increase the traffic and engagement on its website and mobile app. Myntra partnered with companies such as Zomato, TataSky, BigBasket, PhonePe, BookMyShow, EROS NOW, Zoom Car, Gaana, etc., for users to redeem points
Swiggy launched its new paid membership programme ‘Swiggy Super’ to increase order volumes and compete with rivals such as Zomato and Uber Eats. The programme allows customers to get free deliveries and order food without any surge pricing
Zomato launched a new reward programme ‘Zomato Piggybank’ for its select users based on their loyalty and the geographic availability of partner restaurants. Zomato’s existing programmes include ‘Zomato Gold’ and ‘Zomato Treats’
Private Labels Private labels gained popularity among eCommerce customers owing to good product quality and competitive price as compared to established brands. Private labels not only allow eCommerce companies to fill-in specific need gaps that are not being serviced but also offer new brands to differentiate from the competition. Most importantly, it allows companies to drive profitability.
Illustrative ShopClues launched a new private label 'Code Yellow' to expand its fashion and lifestyle business
Grofers announced its foray into the FMCG segment with the launch of seven new brands under two categories - Budget and Popular G-Brands
Private labels account for about 34% of BigBasket’s business which the company expects to reach about 40% in 2018, coming mainly from non-fruits and vegetables and non-staple
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 112 The IT-BPM Sector in India: eCommerce Offline-Online omni-channel model coupled with improved logistics
Logistics and Delivery The growth in eCommerce has resulted in brisk growth of eCommerce logistics industry, driven mainly by increasing demand for same/next day delivery, last mile connectivity and growth of omni-channel model. 2018 witnessed significant investments and expansions by eCommerce players and eCommerce logistics service providers. Illustrative
Amazon expanded its own delivery network in the North East to add the states of Arunachal Pradesh, Mizoram, Manipur, Nagaland and Sikkim to the existing states of Assam, Tripura and Meghalay. The company also opened its largest fulfilment center in Karnataka which is spread over around 350,000 sq ft
eCommerce logistics solutions provider Ecom Express expanded its services by 8,000 PIN codes in India to take the total to over 25,000 PIN codes
Rivigo announced to double its workforce to 3,200 in 2018, with a focus on hiring algorithm trading and AI talent to strengthen its technological capabilities and increase efficiency and lower operational expenditure
One of the largest eCommerce companies in India commands strong presence through 19 automated sort centers, 30 fulfilment centers, 44 hubs, 2,500+ direct delivery centers, 5,000+ partner centers and 14,000+ vehicles
Omni-channel In order to control high marketing and customer acquisition cost and cater to diverse customer needs, Indian eCommerce players continued expanding their platforms to brick-and-mortar outlets which ensures that the eTailers do not lose their customers in any space, either online or offline. At the same time, offline players have also started to launch omni-channel initiatives to tap tech savvy online buyers.
Illustrative Being Human announced its plans to launch eCommerce website and foray into Tier 2 and Tier 3 markets. The brand is already retailed across exclusive stores, shop-in-shops, distributor networks and eCommerce websites
Hero MotoCorp launched an eCommerce portal for its customers to enable them to purchase Hero Genuine Parts and Hero Genuine Accessories online directly from the company
Myntra announced its plans to set-up its first offline cosmetics store in Bangalore. The company plans to set up 100 offline stores over the coming two years
Online retail brand Jaypore expanded its offline presence by opening a store in Bengaluru. The company already has two offline stores in Delhi
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 113 The IT-BPM Sector in India: eCommerce Customer experience is king, Differentiated seller acquisition strategies
Customer Service and Experience Customer service and customer experience has been among the top priorities for eCommerce brands and is considered to be one of the biggest tools for customer loyalty, retention and revenue growth. Illustrative
Amazon and Flipkart rolled out a host of finance options including interest free credit up to ` 60,000, debit-card EMIs, no-cost EMIs and buy back guarantees to help more people make high-value purchases
In a bid to onboard the next wave of online shoppers and its first move in vernacular languages, Amazon launched a small pilot with a Hindi interface for its mobile website. Amazon has also set up captive centres in the NCR and Pune to handle some of its international and domestic customer and seller services
BigBasket entered into partnership with Xiaomi's operating software MIUI to enable its customers to complete their grocery purchases faster and with a better overall experience
Seller Strategies Strengthening seller ecosystem has been one of the key focus areas for eCommerce companies. Slashing seller fees remains a key strategy for eCommerce companies as it improves seller’s profitability and allows them to stock more products. In addition, eCommerce companies have also focused on streamlining sellers’ operations by providing technology tools and access to seller-specific marketplaces for product procurement, loans, etc. Illustrative
Azisst, an eCommerce sales acceleration company, launched an AI-driven promotional tool PPVisit for Amazon Sellers
Paytm Mall launched its connected PoS solution for retail stores to allow them to manage inventory, view their sales, pending orders, etc., on Paytm Mall's cloud
Snapdeal launched ‘Instant Seller Sign-up’ feature for sellers on its platform to facilitate a seamless on-boarding process
Swiggy launched ‘Swiggy Packaging Assist’, a marketplace for restaurant partners to access a variety of packing solutions that suit their menu needs at the right price points
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 114 The IT-BPM Sector in India: eCommerce Leverage capabilities and infrastructure to expand offerings
New Business Lines / Offering After making significant in-roads into categories such as fashion and lifestyle products, smartphones, etc., eCommerce companies are trying to expand their existing offerings and at the same time crack other segments such as pharmacy, insurance, etc. Illustrative
Swiggy announced its plans to diversify into carrying medicines and hyperlocal groceries to boost volume on its platform
OYO entered into upscale hotels category with ‘Palette Resorts' to offer premium accommodations. It also forayed into relatively untapped segment of serviced apartments. Branded as OYO SilverKey, these are aimed at corporate clients
Nykaa launched an eCommerce platform exclusively for men called Nykaa Man
Amazon announced its plans to sell life, health and general insurance products, in India. Earlier, Flipkart also secured a corporate agent license to enter into the insurance segment
Global Commerce According to KPMG, global cross-border B2C eCommerce trade is expected to reach USD 1.5 trillion by 2022, driven by increasing cross-border internet traffic, innovation in technologies enabling physical trade of goods, growing ease of cross-border payments, etc. Illustrative 400 Things launched design-led fashion and lifestyle eCommerce shop for the UK and India
Carlton London partnered with Ace Turtle, an omni-channel platform company to ramp up its eCommerce business in India
Dubai-based eCommerce and direct marketing company, Phygicart.com announced its entry into India with an initial investment of USD 14.5 million
OLA expanded its presence to the UK, Australia and New Zealand. OYO entered the UK, China, and the UAE market. OYO also announced plans to enter Indonesia with more than 30 hotels and over 1,000 rooms in three cities Jakarta, Surabaya and Palembang
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 115 The IT-BPM Sector in India: eCommerce Accelerated innovation on AI and ML solutions
Increasing Investments in Technology and Business Expansion eCommerce companies have been into fierce competition and are eyeing to capture a significant portion of consumer spending through investments in cognitive technologies and further expand their business operations. Illustrative
Amazon, Flipkart and Paytm Mall are expected to have spent about USD 2.5 billion on cognitive technologies such as AI and ML in 2018
OYO announced to hire more than 2,000 engineers over the next two years to build its own suite of technology product
MakeMyTrip announced to invest in emerging technologies such as AI, chatbots, voice and national language to reach out to customers in smaller towns and grow its hotel reservation business. It also invested in Bengaluru-based Bitla Software Private Limited, a travel focused technology provider with SaaS, Cloud and mobile-based solutions to help expand its businesses
Myntra opened an office in Palo Alto to focus in the areas of data sciences, computer vision, NLP, speech, and deep learning
Ola rolled-out AI- and ML-based real-time ride monitoring system to strengthen ride safety of customers
Paytm partnered with Alibaba to launch AI Cloud computing platform ‘Paytm AI Cloud for India’ to offer suite of business-centric apps for developers, start-ups and enterprises
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 116 The IT-BPM Sector in India: eCommerce M&A for scale and tech innovation Illustrative Acquirer + Acquired
M&A Deal Value The Deal of the Year
USD million 77 In the country’s largest acquisition and the world’s biggest purchase of an eCommerce company, Walmart acquired 77% stake in Flipkart for USD 16 billion. According to 16,000 Others analysts, the deal is expected to result in strong growth of eCommerce in India Walmart-Flipkart
72 No. of Deals
499 569 2017 2018
Technology-focused Acquisitions
Hospitality IoT Technology Fashion eCommerce Technology Start-up eCommerce AI Start-up Strengthen AI- and IoT-based Develop wearables for its in-house brands and Accelerate an end-to-end tech infrastructure for managing leverage the technology to drive innovation conversational shopping experience hotels and assets and enhance consumer engagement for its users
eCommerce Analytics Start-up Fashion eCommerce eCommerce Enablement Software Build advanced, data science-based intelligent solutions Boost eCommerce enablement capabilities and create and strengthen selection and pricing capabilities comprehensive eCommerce solutions
Business Expansion / Strengthening
Alcoholic Electronic eCommerce and Online Ticketing EdTech Learning Beverages Payment Platform Digital Wallet Platform Start-up Platform Target business growth through Strengthen its ticketing business Enhance and strengthen offerings eCommerce channel for K-3 learning programmes
Food Ordering Food-related Aggregator Hospitality Wedding Planning and Restaurant Discovery Start-up Expand its play field to real estate sector Expand into food at workplace segment
Sources: Venture Intelligence, NASSCOM Analysis, Secondary sources
Strategic Review 2019 : Decoding Digital 117 The IT-BPM Sector in India: eCommerce
Partnerships and JVs for Market Access
Illustrative
Customer Experience Financial Solutions
Online Furniture Hospitality Financial Services Branding Firm Provide ‘No-cost EMI’ Co-develop new hotel formats and financing for its customers enhance customer experience
eCommerce Services Marketplace Software solutions and Furniture Retailer eCommerce services
Furniture assembly service for Offer money exchange better customer experience services, to its users in India
eCommerce Payments
Software Payments
Deliver an enhanced digital Launched deferred payments service to experience for its customers allow users pay for products later
Technology Tie-ups Insurance-focused Products and Services
Retailer Transportation
Technology General Insurance
Provide in-trip insurance to its customers Strengthen AI and Cloud technologies
eCommerce
eCommerce
General Insurance Conglomerate Insure mobile phones to cover loss or Launch AI cloud computing platform Paytm AI damage to mobile phone upon Cloud for enterprises, developers and start-ups payment of premium of up to 10%
Sources: Secondary sources
Strategic Review 2019 : Decoding Digital 118 The IT-BPM Sector in India: eCommerce Walmart-Flipkart deal drove positive market sentiments and global investments eCommerce investment remained almost flat in 2018. Despite marginal decline in number of deals and investment, average ticket size increased marginally from USD 31 million in 2017 to USD 33 million in 2018. Interestingly, investment in the unicorns grew more than 250% in 2018.
Number of PE/VC Investments Total Investment
Nos. USD million
6,406 6,402
3,976 Unicorns 236 230 5,768 Others
2,426 638 2017 2018 2017 2018
Illustrative
Swiggy raised USD 1 billion from Naspers and Tencent. With this Swiggy became the fifth most valuable startup in the country
Alipay Singapore, along with its affiliates, invested USD 210 million in Zomato. Earlier, Zomato received an investment of USD 150 million from the payment unit of Alibaba
SoftBank Group and Alibaba invested USD 400 million and USD 45 million, respectively, in Paytm
Nykaa raised USD 11 million in fourth funding round led by existing investors
ShopClues raised about USD 16 million from its existing investors
UrbanClap raised USD 50 million in Series D funding led by Steadview Capital and existing investor VV Capital
Amazon led a USD 11 million investment round in Shuttl to incorpo- rate features such as booking a seat on a bus, hailing a cab and a host of other skills to Alexa, which would help it reach out to a new set of users
Sources: Venture Intelligence, NASSCOM Analysis, Secondary sources
Strategic Review 2019 : Decoding Digital 119 The IT-BPM Sector in India: eCommerce Backed by huge investments, B2B eCommerce is expected to gain traction in the country
B2B eCommerce is expected to witness a strong growth due to increasing investments and expansions by the stakeholders in the ecosystem. Most of the players operate on a marketplace model focusing primarily on SMEs and also large bussinesses to some extent. Majority of firms are highly verticalised, however, gradually expanding to other segments. Unlike B2C buyers, B2B buyers’ decisions are driven by profitability and price, buyers who are engaged primarily in rational purchase backed by multiple decision makers with high value and volum transcations.
B2B eCommerce Market Leading categories within B2B segment
USD million
Consumer Durables Mobile Accessories
700 500
Apparels Home Furnishing Healthcare
2017 2020F
Automotive Construction and Industrial Supplies
Key Developments Illustrative Business Expansion Both global as well as home-grown B2B eCommerce players are strengthening their existing capabilities and also expanding their reach across multiple sectors.
Walmart announced its plans to open 50 B2B stores across the country to support its B2B eCommerce plans and provide support for Flipkart
Zomato acquired online caterer and office canteen aggregator TongueStun for USD 18 million to help restaurant partners to cater to a larger corporate market
Moglix expanded its geographical operations to enter Kolkata in East India. The firm is already present in Delhi-NCR, Chennai, Mumbai, Pune and Ahmedabad. It also added two new centers in Aurangabad and in Pant Nagar to feed into the Western and Northern centers
Amazon Business expanded its Global Selling programme, allowing Indian B2B sellers, manufacturers and exporters to reach business customers across Amazon’s international marketplaces in the US, the UK, Germany, France and Japan
Sources: Business Line, Secondary sources
Strategic Review 2019 : Decoding Digital 120 The IT-BPM Sector in India: eCommerce Investment size relatively small as compared to B2C eCommerce
B2B Investment Scenario 2018 proved to be a great year for B2B eCommerce, especially from investment perspective. While the number of investments increased from 22 in 2017 to 28 in 2018, total investment grew over 140%, driven by huge investment in Udaan.
Numbers of PE/VC Investments Total Investment
Nos. USD million
171 28 Udaan 22 Others 225 162
2017 2018 2017 2018
Illustrative
Udaan raised USD 225 million from DST Global and Lightspeed Venture Partners to enter the unicorn club
NinjaCart raised USD 35 million in Series B round from Accel and Syngeta Ventures to expand its operations to 10 cities and open 200 distribution centres
Medikabazaar rasied USD 5 million in Series A funding led by HealthQuad and other investors, to strengthen technology and increase its team size including senior leadership
Shadowfax raised USD 22 million in Series C funding from NGP Capital, Qualcomm Ventures, Mirae Asset, and existing investor Eight Roads Ventures, to scale up and connect 400,000 delivery, business partners to its platform by 2021
ShopX raised USD 35 million from Fung Strategic Holdings to invest in its product and technology verticals and develop new offerings for small retailers
HungerBox raised USD 4.5 million from Neoplux and Sabre Capital to expand in India and Southeast Asia
Sources: Venture Intelligence, NASSCOM Analysis, Secondary sources
Strategic Review 2019 : Decoding Digital 121 The IT-BPM Sector in India: eCommerce
Strong growth to continue through 2022
The Indian eCommerce market is expected to grow Forecast - Indian eCommerce Market ~25% through 2022 to reach about USD 106 billion on the back of growing digital maturity, improved USD billion infrastructure and increasing business investment 106 With close to 60% market share, eTail is expected to 10 lead the growth and capture larger market share due to increasingly strong ecosystem of other companies including multiple start- ups in the areas of last mile 25% logistics, analytics, cognitive technologies, payment 62 e-Travel gateways, etc. e-Tail In addition, innovative push strategies adopted by 43 eCommerce players such as introducing private labels, 3 Others same day and next day delivery, subscription-based 700 21 models and loyalty programmes, resulting in customer 500 stickiness and cross-selling across categories would also 34 play a crucial role in this growth 19 With high frequency usage and the highest wallet share of a consumer’s budget, online grocery and food is likely 2018E 2022F to be stickiest category with the highest growth potential, followed by apparel and online content. Online travel and ride-hailing are expected to witness moderate growth, aligned with internet adoption and discretionary spending
Technology would play a pivotal role in the growth of eCommerce as it would help to:
Excel in vernacular technologies and Personalize offerings based on strategic offer regional languages and local individualization to structure interaction, dialects recognition capabilities to functionality, and content around onboard non-English speaking shoppers real-time needs of individual customers
Stay informed about Enhance customer service factors affecting the and experience by demand and predict leveraging AI-powered buyer trends to efficiently chatbots to resolve queries manage inventory and and help complete supply chain purchase
Offer dynamic pricing and deals that meet changing consumer preferences, Offer tailored subscription services and at the same time taking into account promotions for better customer the internal inventory, profit engagement and retention stickiness requirements and competitors' pricing
Sources: Propelling India towards global leadership in e-commerce Septmeber 2018, Secondary sources
Strategic Review 2019 : Decoding Digital 122 IT-BPM Sector in India 2019 Digital@scale: Deriving value from digital
STRATEGIC REVIEW Digital@Scale: At a Glance
Measuring digital growth
Enterprise Digital Digital Service Digital Adoption Engineering Providers (DSPs)
Current digital engineering Enterprise Digital Spend to spend of USD 293 million is Service Providers are grow from USD 575 billion expected to reach USD 566 leveraging 4 key strategic currently to USD 1.2 trillion million by 2022 with its share levers to scale in digital by 2022 increasing from 24% to 35% of overall ER&D spend Organization Strategy Offerings and Solutions As enterprises Focus on digital engineering mature in digital leading to large opportunities, Capabilities adoption, IT will increased globalization and Streamlined GTM give way to digital evolving maturity of GCCs
Global Capability India Product and Digital Centers (GCCs) Start-up Ecosystem Metrics
900+ MNCs have over 1200+ new tech start-ups Apart from metrics around the 3 1250 Global Capability added in 2018 pushing the total ecosystems of DSPs, GCCs and Centers in India number of start-ups to 7200+ Product & Start-up Ecosystems, other metrics point to growing digital maturity Bangalore continues to have the India has highest number of largest share of GCCs in India unicorn start-ups (18) after 1200+ Indian public listed large with 50% of total talent base India and China enterprises contributing ~35 to IT spending in India Global unicorns are driving Evolved product Over 3.5M developers platform engineering work companies have scaled present in India with 18 global unicorns by catering to Indian as having R&D centers well as global companies
Strategic Review 2019 : Decoding Digital 124 The IT-BPM Sector in India: Digital@scale Information Technology (IT) to give way to Digital
Operating Silos Classic IT Digital
Complex Systems IT Consulting Design Thinking
Bespoke Requirements Application Development Experience Design
Rigid SDLC Product Engineering Smart Connected Products
Manual & Script Based Testing Cognitive Test Automation
Enterprise Apps Led Enterprise Systems Integration Integration for Intelligence
Datacenter Led Infrastructure Management Software Defined Infrastructure
Disparate Processes Business Process Management Robotic Process Automation
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 125 The IT-BPM Sector in India: Digital@scale
View of the Modern Digital Enterprise
New Age Digital Digital Data & Digital Business Technology Outcomes Intelligence Infrastructure Models Foundation
Artificial Intelligence Data Lakes Business-as- Customer Better a-service Intelligence Customer Experience Automation
Security Infrastructure Big data
Platform Operations Play Intelligence
Enhanced IOT Operations (Empowered Sensors Workforce, Low & Devices Cost & Risk) Voice Interfaces Sharing Services Economy Intelligence Software AR/VR defined Infrastructure
New & Enhanced Blockchain Products/ Services Insights-as- Asset Cloud and a-service Intelligence Micro Services Additive Architecture Technologies
Adoption Maturity: Very Low/ Negligible Low Medium High
Notes: Asset Intelligence corresponds to both physical assets (plant, machinery, etc.) and human assets (workforce) Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 126 The IT-BPM Sector in India: Digital@scale Global Enterprise Digital Spend to touch USD 1.2 trillion by 2022
Global Enterprise Digital Spend
USD 1.2 trillion* (2022E)
+20% CAGR USD 270-290 USD 575 billion* billion USD 290-310 (2018) 2018 billion Hardware & Services Software
Global Digital Engineering Spend
USD billion
CAGR 18%
566
293
2018 2022E
Share of Total ER&D Spend 24% 35%
*includes investments in modern data driven technologies to help improve customer experience, drive higher order operational efficiencies and building new digital products & services; Includes R&D investments using digital technologies from both asset heavy & asset light industries (except Tech OEMs]; Digital technologies & tools such as AI/ ML, RPA platform, IOT platform, Data & analytics tools, software development platforms, Data & analytics tools, software development platforms; Portions of Datacenter required to support digital use cases; Investments in digital focused M&A and alliances; Setting up of COEs and digital labs; People cost (people employed to run digital initiatives) + stock options cost Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 127 The IT-BPM Sector in India: Digital@scale Digital@Scale being driven by 3 major ecosystems
Digital Service Providers (DSP)
I
I
II III
Global Capability India Product and Centers (GCC) Start-up Ecosystem
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 128 The IT-BPM Sector in India: Digital@scale Service Providers are leveraging 4 key strategic levers to scale in digital I
Organization Offerings and Streamlined Capabilities Strategy Solutions GTM
A B C D
Consulting-led Rewriting the Comprehensive Approach Talent Narrative Digital Portfolio
Innovative Engagement Models
Federated Enterprise Digital Partnerships Structure Platforms
Alternate Deal Sourcing Channels
Separate Digital Verticalized Use-case Mergers and Incubation Specific IPs Acquisitions (M&A)
Access to Newer Stakeholders
Leveraging Divestment Centers of Platforms to from Non-Core Excellence (COEs) Focussed Account Create Solutions Strategy
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 129 The IT-BPM Sector in India: Digital@scale
A Organization Strategy: Deep-dive I
Rewriting the Narrative
Outsourced Product Software 4.0 Professional Digital Solutions to Advance Development Enable Services Company Business Product engineering software-driven Help clients envision, Advancement to smarter products, and sell-with transformation build and run more exceptional customer experiences, partnerships with of enterprises innovative and product people, profitable ISVs efficient businesses processes and powerful systems
Federated Structure
Restructured its Industry Solution Units (ISUs), giving almost 200 employees control of them and quarterly target goals as it looks to free up senior executives to focus on long-term strategy “We actually doubled down on our earlier strategy of ISUs and have created sub-ISUs. We pushed it one level down. We now have about 150 sub-P&L (profit & loss) heads who have been set up the same way the old ISUs were set up” -Rajesh Gopinath, CEO (TCS)
Separate Digital Incubation
• Setup Lean Digital Innovation Center • Setup as a separate entity to focus on digital product portfolio by Persistent • Dedicated towards digital transformation across the customer journey • Major products offered include ShareInsights, Rovius Cloud, Concert, and Sentient • Program includes digital incubation program, co-innovation lab, and customer-focused design • Strategy includes acquired low profile thinking workshops solutions from large vendors
Separate Digital Incubation
Jan 2019 Oct 2017 Jun 2018 Divested from its Australia, Middle Announced India business Completed divestment East and India-based businesses reorganization with of hosted data centres to focus on its core markets of carving out of India PSU & business; 8 data centres USA, Europe and South Africa that Government businesses and ~900 employees makes up 98% of total revenue from IT services segment transitioned to Ensono
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 130 The IT-BPM Sector in India: Digital@scale
B Offerings and Solutions: Deep-dive I
Verticalized Leveraging Comprehensive Enterprise Digital Use-case Platforms to Digital Portfolio Platforms Specific IPs Create Solutions
Retail Customer Platform Engagement Partnerships for Customer-Specific Comprehensive digital Solutions offerings for clients, Retail PoS & including: Enterprise Device-as-a-Service • Accelerate: APIs, Digital Customer Legacy Experience Suite Modernization • Assure: Cyber Loss Prevention security, Validation Platform • Insight: Big Data, Internet of Things • Persistent systems AI, Analytics (IOT) partnered with IBM • Innovate: Digital Travel, Transport & to build solutions Product Logistics leveraging Bluemix Engineering, Vertical and Watson Platforms platforms TCS Connected • Experience: Digital Universe Platform • Dedicated 1000+ Marketing, Content, (TCUP) workforce for Personalization, TCS Cargo partnership to Omni-channel Monitoring Solution provide client (Supply Chain solutions Management) Artificial Intelligence Development of IPs PlanRight Solution leveraging Organized entire (Inventory platforms company portfolio into Management) 3 segments: Infosys NIA AI Platform • Mode 1: Traditional services Healthcare • Mode 2: Digital Patient Monitoring services Systems Intelligent • Mode 3: Products/ Automation platforms • Accenture jointly built the Intelligent BFSI Pipeline Solution with GE leveraging Predix platform Tron Smart Automation Telematics-based • TransCanada first Platform Insurance customer
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 131 The IT-BPM Sector in India: Digital@scale
C Capabilities: Deep-dive (1/2) I
Talent Partnerships
External Hiring Design Thinking Partnered with SAP to Hiring based on skills use design thinking instead of credentials, in along with SAP Leonardo some cases even for its clients without college degrees! Experience Design
Hackathons to assess Partnering with Adobe capabilities and recruit to help clients scale for different digital skills experience design
‘Train Before You Hire’ Smart Connected Products model to focus on training students on Partnership to jointly current technologies develop IOT solutions, and platforms connected products etc.
Test Automation Partnered with UiPath Reskilling to enhance its enterprise level capabilities for digital Genpact Risk Academy managed services to build talent for credit risk analytics in partnership with AIWMI Integration for Intelligence Integrated CAST’s 100,000 employees software intelligence in trained in digital tech various solution offerings through classroom and like ADPART-InDev online training Software Defined Infrastructure Partnered with General Assembly for Digital Partnership to extend Engineering Education VersaStack to hybrid Program cloud, software-defined infrastructure
Launched campaign “Botify” which trained Robotic Process Automation 90% of Tech M Partnered with Blue technical employees on Prism to help digital tech organizations automate wide range of business processes
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 132 The IT-BPM Sector in India: Digital@scale
C Capabilities: Deep-dive (2/2) I
M&A COEs
Niche Digital Consulting
Acquired Noah Consulting, a digital strategy provider for the oil & gas industry Industry Focused Technology & Innovation Hub (I) Design [Indiana (US), 2018]: Focus on insurance, healthcare and Acquired Idea Couture, manufacturing sectors company specialized in design, services and business models based on digital technology Use-case Focused Digital COE [Marseille (France), Big Data and Analytics 2018]: Developing skillsets to improve Warehouse operations using Infosys Acquired SCIO Inspire AI-NIA Holdings, providing healthcare analytics solution Technology Focused Technology & Innovation Hub (III) Internet of Things (IOT) [Arizona (US), 2018]: Focus on autonomous technologies, IOT, Acquired IOT services full-stack engineering, data science company Cuppola and cyber security Technology
Platform Focused Industrial IOT Center [Bangalore (India), Software Defined Infrastructure 2018] : Collaborated with PTCThingWorx IOT platform; Creating applications on Acquired SoftLayer for PLM, SLM & AR experiences solutions USD 2 billion
Market/ Geo Focused Robotic Process Automation Technology & Innovation Hub (IV) [North Carolina (US), 2018]: Launched Acquired Genfour a to better serve clients in North Carolina Wales based RPA related to Life Sciences, Advanced solutions provider in Manufacturing, Financial Services and 2017 Clean Technology sectors
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 133 The IT-BPM Sector in India: Digital@scale Global System Integrators and Advisory C firms focused on building capabilities in India I
Key Focus Areas
Transformation shift Increasing of India Centres into Investments and Innovation Centres Hiring High focus on leveraging India’s Start-up Ecosystem
• Accenture’s India unit is • Capgemini planning to hire creating Blockchain solutions over 20,000 resources in for Oil and Gas industry India • Established several COEs across digital areas such as • Accenture actively working AI/ML, Analytics, with Indian Start-ups as a Cybersecurity, etc. in India part of its innovation agenda • IBM investing around USD 6 • Worked with more than 50 billion in India to set-up new Indian Start-ups in creating research facilities and expand pilots for its global clients outsourcing centres in India • Partnered with Microsoft to • Capgemini has a high focus focus on B2B Start-ups in to leverage India talent base India as an Innovation hub to build valuable assets • E&Y adding over 2000 • Made several key Leadership employees in India to bolster team hires in India including its digital services offerings CEO for India unit • Capgemini actively taps globally to its clients local start-ups for solutions • E&Y mainly looking to hire and products and take them talent across areas of to their clients acting as a Analytics, Intelligent global distribution channel automation, AI, Blockchain • IBM hired Nipun Mehrotra as CDO, a first by IBM outside of US to head the DBG India unit which mirrors its global counterpart to oversee digital • IBM Engaging with Indian • PWC India planning to invest sales org, digital marketing, Start-ups through its Global ~USD 14 million towards company’s ecosystem and Entrepreneur Program by development of digital start-up groups providing access to IBM solutions and hiring 1,000 platform and cloud credits digital technology experts • Actively engaged with over over the next 4 years 1200+ start-ups in India. Launched a cybersecurity awareness program for clients through co-innovation • KMPG planning to hire activities with Start-ups 8,000-9,000 talent in India
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 134 The IT-BPM Sector in India: Digital@scale
D Streamlined GTM: Deep-dive I
Streamlined GTM Strategy
Focussed Consulting-led Account Approach Strategy
Innovative Access to Engagement Alternate Newer Models Deal Sourcing Stakeholders Channels
Consulting-le Focus on d Digital Growth of Out- Distributed Strategy HiPA (High come-based Influencer Networks ownership of Leverage of influencer networks, Potential revenue Account-entry digital and digital including analyst organizations, Accounts) models engagements deals and vendor advisory firms expected to Revenue orchestrated CEO-42% contribute for 20% Closed $50M+ of deals contribution of through of overall revenue HiPA consulting CIO-24% by next fiscal year FY2016: 18% assignments FY2018: 37% CFO-20% Online Marketplaces Leveraging Azure Marketplace to COO-13% sell digital services
Offerings such as cloud BU Heads-1% Focus on modernization roadmap listed out- come-based long term service Customer-targeted contracts Events Leverage of Organized a roundtable with automation for potential customers delivering efficiencies thought leadership and understanding customer pain-points
Source: Cognizant Research Center, Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 135 The IT-BPM Sector in India: Digital@scale Services companies tracking key metrics for digital business I
IP Monetization/Patents Filed Wipro filed over 400+ Service Providers showcasing patents in 2017-2018 with increased focus on creating majority of them across products/platforms on new emerging technologies such age technologies as AI, IOT, Robotics
TCS launched plan to reskill Digital Skilling around 200K employees as Re-skilling existing employees a part of their in-house at all time high across the development program Service Providers ecosystem
Customer Satisfaction Wipro actively monitors Measuring customer its Digital customers satisfaction emerges as a key and interacts with them metric for Service Providers to regularly to measure measure Digital growth client experience
TCS to start disclosing Digital Digital Revenues/Margins Revenue starting 2019 to Service Providers have started highlight monetizing businesses to measure and disclose from new age technologies Digital revenues publicly
Investments in Digital HCL invested USD 100 Service Providers are actively million in digital platforms investing into building since 2018 and intends to capabilities on Digital spend additional USD 100 platforms and services million till 2020
Mindtree actively using bots Driving Automation Internally since two years and has over 350 IT Firms actively looking to bots working 24/7 to automate deploy automation internally core organization processes to boost productivity
Client-related Metrics Accenture lays high focus on Large Client Mining driving majority of their Digital Service Providers actively mining revenue from large enterprise targeted clients to drive Digital clients (>55% of the Digital revenue (E.g. Targeting clients based revenue driven by clients) with on spending propensity & industry) USD 10+ billion revenue
Client Mining Metrics TCS highlighted that it Actively measuring Digital provided Digital services to engagements with existing over 55% of its existing clients and initiatives to clients and plans to increase convert non-digital customers it even further
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 136 The IT-BPM Sector in India: Digital@scale India has a base of over 1,250 GCCs setup by 900+ MNCs II
Bangalore continues BFS GCCs are getting APAC based MNCs Global Unicorns are to hold the lion’s into mainstream are joining the GCC driving platform share of the GCC platform ecosystem engineering work talent pool development from India
Global Unicorns Line of SPD APAC HQ with ER&D Business Intensity 74+ ER&D MNCS 18 centers in India Retail Aggregate Banking 35+ Japan $36B Valuation of ER&D GICs ER&D GIC ER&D Unicorns Talent Payments technology, Retail lending technology Increase in Unicorn ER&D 15+ Singapore 3X 37% 50% Centers between Corporate & 2014-2018 Investment Bangalore Banking 8+ China Electronic trading and 14% 12% Market data services 5+ Taiwan Delhi NCR Asset & Wealth Management South Korea 13% 11% 5+ Robo Advisory, Portfolio Management Pune
Commercial 12% 11% Banking Supply chain Financing, Hyderabad Cash Management
10% 6%
Mumbai
9% 9%
Chennai
Notes: GCC = Global Capability Centre Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 137 The IT-BPM Sector in India: Digital@scale Indian GCCs are driving innovation for Indian and Global markets II
Driving Innovation Reverse Innovation Effective Mobile Engineered to for global product for developing local only Productivity thrive in from India solution solution emerging
Vmware with over 5,000 Philips’ Efficia ECG100 Kaizala, a 'made in Uber launched its Uber employees in Bengaluru device for Healthcare India' app designed for Lite Mobile app which and Pune is driving its industry was developed large group was developed core product R&D end-to-end by the Philips communications and completely in India. function from India Innovation Campus, work management even The app was developed Bangalore for remote locations to support users with Product R&D with 2G optimisation. older phones and The idea was concepted • India operations consumed 85% lower from “Microsoft Garage” already help build resources and support every single product Post success in India, Development Process: built by the Kaizala is being The Uber’s Global company taken globally across • Philips identified Access Team executed emerging and Growth Plan the need for a extensive research to developed markets Plan to invest USD 2 frugal engineering understand customer approach to build billion in India over • 1000+ Indian Org expectations in various solutions for local users just under a emerging markets next five years markets such as year They aim to leverage India Current Status: three key areas in the • Commercially • A scalable solution available across • Uber Lite now ecosystem which can send 28 markets available across 14 ECG to any countries •Vendor partners off-the-shelf • Supports over 18 tablets/ • Available in 3 •Local universities languages smartphones languages •Local start-ups • Consistently • Developers from adding new • Already has 2.5 Mn+ •Acquisitions India and China features such as downloads team collaborated Me Chat, Voice • 1.6 Mn+ rides to build the Chat, Web App through the app in solution while support, etc. Manipal hospital first 6 months selected as a domain expert
Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 138 The IT-BPM Sector in India: Digital@scale A whole new breed of Unicorns emerging out of India III
India Start-up Ecosystem
2018 7200-7700 Start-ups
2017 12-15% 6100-6600 Growth Start-ups
2016 9-12% 5400-5900 Growth Start-ups 2015
2014 - 2018 2013
2013 - 2017 2012
2012 - 2016 2011
2011
1,200+ new Tech Start-ups added in 2018
Growth of Unicorns in India
• India has the highest number of unicorn start-ups after US and China with 18 unicorns out of 250+ total unicorns globally YoI: 2016 YoI: 2014
• 8 Indian start-ups turned Unciorn in 2018 (till Sep.), highest YoI: 2014 addition in a single calendar year YoI: 2011 • The Indian unicorn list is expected to add 10+ members by 2020. YoI: 2013 Some of the prominent names are Druva, Rivigo, Big Basket, YoI: 2011 Delhivery, Mobikwik and Practo YoI: 2008 YoI: 2009 YoI: 2010
YoI: 2010 YoI: 2008 YoI: 2010
YoI: 2010 YoI: 2010 YoI: 2012 YoI: 2008 YoI: 2000
YoI: 2007 YoI: 2008 YoI: 2011 YoI: 2011 YoI: 2008 YoI: 2014 2014 2015 2016 2017 2018 2019 E
Note: YoI is Year of Inception Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 139 The IT-BPM Sector in India: Digital@scale Evolved Indian companies building products for India and Global markets III
Inception Year 2005 Inception Year 2008 Inception Year 1992 Inception Year 2012 HQ - Chennai HQ - Bangalore HQ - Chennai HQ - Hyderabad
Pushing through Prime focus was Part of the Ramco The company campaign to address the Group, it was spun identified the “Made in India. biggest challenges off in 1997. whitespace that Made for the that consumer Provides occurred in brands were enterprise availability of a World“. facing and offer software in 3 solution able to Has over 40+ them a 360 categories - HCM, manage end-to-end applications under degree view of ERP and Aviation customer its Zoho One Cloud customer MRO engagement Suite
Relying heavily on AI Focus on US and Ramco’s HCM to enhance its European markets Launching new solution is being products for developed and has them locations solutions adopted globally global markets. actively enhance powered by AI/ML across geos such as Working with partners their product to expand into Australia, Europe, in specific vertical features (Live Chat, markets such as Middle East, etc. The segments and GDPR Compliance, Thailand, MRO solution is enabling them to Automation, etc.) Philippines and used by leading resell customized while adding Turkey. Launched private and public versions of Zoho integration “Store Sense” for sector organizations
Global Market Focus Global Market (Partnered with Kava capabilities with China market in US and other CRM, an Australian several other countries software company) solutions
India focus - India emerging as a major The product was focus area for Zoho initially tested out as a next potential in-house and on market for customer Focused on Indian clients with base expanding footprint an intention to in the CRM space in Customer such as Indian Airlines and support the entire Launched Zoho India. Bought GoAir for Ramco’s customer lifecycle Finance Plus, a GST minority stake in MRO software. of an SMB compliant solution Noida based 20% of Ramco’s customer. Post in 2017 to target Exclusife, a provider overall revenues product Indian businesses of mobile first CRM enhancement solution for SMB come from India
India Market Focus India Market through extensive Offer bundled retailers customer feedback solutions sessions, they (Payments) targeted started marketing to empower the it globally SMEs in India
Notes: HCM – Human Capital Management, ERP – Enterprise Resource Management, MRO – Maintenance, Repair and Overhaul Source: Zinnov Research and Analysis
Strategic Review 2019 : Decoding Digital 140 The IT-BPM Sector in India: Digital@scale Digital Metrics: India as market scaling towards Digital maturity
1,250+ GCCs in India with 50% of the GCCs focused on building and 1,200+ Public listed large enterprises enhancing enterprise digital in India capabilities Over $ 2B (13% of overall IT spending) 900+ MNCs have ER&D centres in spent on Digital Transformation India
Large Enterprises GCCs Transforming India into Driving Digital Spending a R&D and Innovation Hub
Ever-growing Service Growing Availability Providers and Product of Digital Talent Ecosystem
Presence of over 3.5 M 10,000+ Service Developers Providers in India ~0.5 M Digitally skilled India to become a developers growing at USD 10 billion SaaS 30% YoY revenue industry by India 2025 Market Digital Metrics 1000+ SaaS start-ups in India
Presence of an Evolving Government Start-ups Ecosystem Initiatives
7200+ Tech Start-ups in India Digital India initiatives launched to transform country into a digitally 1200+ Advanced powered society (Jan Dhan Yojana, Tech-Start-ups in India; 50% Indiastack, Make in India, etc.) growth in AI Start-ups Announced national program for AI while planning to open 9 COEs to take AI to the masses
Source: Accenture Survey, Zinnov GCC Report, Zinnov-NASSCOM Start-up Report, Zinnov Research and Analysis, NASSCOM
Strategic Review 2019 : Decoding Digital 141 IT-BPM Sector in India 2019 Emerging technologies- Hype Vs Reality
STRATEGIC REVIEW Cloud Computing
Global Cloud Computing spending to almost double Industry Trends by 2022 • 90% Fortune 500 using cloud • Growth of Cloud in Future Tech. (AI, ML etc.) • Edge Computing taking firm shape USD billion CAGR 354 IaaS Spending 17.5% • IaaS spending is estimated at USD 41 Bn. (2018) and 78 Others projected to grow at 25.5% p.a. to reach USD 102 Bn. in 2022 187 33 PaaS 106 IaaS 57 Preferred Delivery Mechanism 15 SaaS 41 137 • High-power solutions such as Big-Data, Analytics, Machine 74 Learning, Artificial Intelligence are emerging to be 2018 2022 delivered through Cloud • Agility in capacity enhancement as well as user licensing allowing businesses to deploy resources as required
MARKET ADOPTION GROWTH DRIVERS
• New age companies are driving cloud adoption by adopting cloud first • Newer data types like strategy and setting example for others to follow suit video, voice etc. require computing resources • Cloud adoption levels are high for few industry verticals e.g. IT/ITeS, near the end consumer Communications, Media & Internet enabled companies • Increased computing • Cloud systems is the obvious choice for handling large quantities of data capabilities allows hence drives adoption analysis of large • Distributed systems leading to higher demand for low/medium capacity quantities of data cloud computing resources like distributed ledger, crypto currency etc. • Higher computing • Hybrid cloud adoption saw a big rise in recent years, expected CAGR of 17% capabilities allows to derive insights and • Cloud security becoming priority to safeguard and protect application data, acquire capabilities to infrastructure forecast future actions
Source: Analyticsindiamag, EY Report, Businesswire, Gartner, techcircle, Zinnov Cloud Report
Strategic Review 2019 : Decoding Digital 143 The IT-BPM Sector in India: Cloud
Cloud Computing India Scenario
Indian cloud market dominated by SaaS (39%) and IaaS (39%), has IaaS Spending significant scope for growth • Indian IaaS spending is estimated at only USD 1 Bn. (2018), forecasted to grow at 25% p.a. to reach USD 2.3 – 2.4 Bn. in 2022
USD billion Government Support • GoI, NTP 2018 stated the vision for Cloud as ‘ Establish CAGR ~~30% India as a global hub for cloud computing
7.1 Emerging Areas • Growing opportunities from world IT outsourcing 2.5 market, increased awareness of cloud computing 2018 2022 benefits, consumerization of IT, requirement of agile IT spending, proliferation of start-up ecosystem
MARKET ADOPTION GROWTH DRIVERS
• Growing opportunities from world IT outsourcing market • Requirement of agile IT spending • Increased awareness of cloud computing benefits • Proliferation of start-up ecosystem • ~30% y-o-y increase in public cloud services market in 2019 • Mature customer service and the Government initiatives • Public cloud adoption is gaining momentum across leading verticals like IT/ITeS, Manufacturing, BFSI etc
Source: Analyticsindiamag, EY Report, Businesswire, Gartner, techcircle, Zinnov Cloud Report
Strategic Review 2019 : Decoding Digital 144 The IT-BPM Sector in India: Cloud
Demand Side Adoption
Cloud adoption levels are high for few industry verticals e.g. IT/ITes, Communications, Media & Internet enabled companies… Cloud Adoption Industry share (%) of Total Industry share (%) of Total Level (Scale of 1-5, Industry Verticals IT spend in India (2018) Cloud spend in India (2018) 5 being the highest)
IT-BPM 10% 22% - 27% 1 2 3 4 5
E-Commerce 2% 4% - 6% 1 2 3 4 5
Communication 4% 8% - 12% & Media 1 2 3 4 5
Telecom 8% 7% - 10% 1 2 3 4 5
Manufacturing 18% 18% - 22% 1 2 3 4 5
Government 15% 12% - 15% 1 2 3 4 5
Transport & 5% 3% - 5% Logistics 1 2 3 4 5
Retail 4% 4% - 6% (ex e-commerce) 1 2 3 4 5
BFSI 23% 4% - 6% 1 2 3 4 5
Others 1 2 3 4 5
Source : NASSCOM Cloud Report, Gartner Verticals_Forecast_WW_2018Q1, Deloitte Analysis
Strategic Review 2019 : Decoding Digital 145 The IT-BPM Sector in India: Cloud Cloud entering into Enterprise Business Operations
Processes
Finance and Supply Chain High Adoption Accounting and Logistics IT Management
Emerging Areas Customer Marketing Procurement Manufacturing Management and Operations
Cloud adoption is highly visible in multiple enterprise processes for faster and better management of workflow
Workloads
Development and Testing Storage / Backup Workplace Productivity Web Portals
Workloads on cloud consists of transactional, analytical, high performance and database which require complex handling and real time computing
Use Cases
A US-based pharmaceutical A third-party logistics service Manage and run the applications company with a presence in provider with more than 120 and infrastructure on AWS with more than 50 countries locations in 20 countries Wipro’s AWS Managed Services portfolio
Wipro’s MFTaaS SaaS Platform Unified cloud infrastructure Remote office backup and Enables Connected Digital enhances digital marketing recovery Enterprises on AWS
Infosys cloud platform ensure Integrated management of the BoundaryLess Datacenters 99.95% availability of the digital entire server backup and restore (BLDC) is a completely marketing infrastructure process across remote sites reimagined data center services framework to build, optimize, Reduce time-to-market for new Privacy controls to enable automate and manage data websites from six weeks to one compliance with regional data centers on AWS week protection regulations The Digital Services Hub Performance optimized for the enables enterprises to consume cloud with transferring of data an increasing diversity of Cloud efficiently with minimal network services from different impact technology providers
Source: Analyticsindiamag, Avasant Report, EY Report, Businesswire, Gartner, techcircle
Strategic Review 2019 : Decoding Digital 146 The IT-BPM Sector in India: Cloud
Some Cloud Service Offerings by Indian Firms
Illustrative
• ~30% per annum YoY cost saving using relevant cloud deployment Cloud Advisory • Developed a re-usable quantitative assessment and ROI model and Strategy • Create a re-usable framework for cloud assessment
• Increased productivity by moving to cloud Migration • Cloud hosting solution reduced operational costs by more than 30% Implementation • Cloud infrastructure enabled rapid provisioning/on-boarding of Support business applications
• Orchestration platform to better manage public cloud infrastructure Cloud • Reduce infrastructure cost by 40% by integrating virtual infrastructure Orchestration • 200% performance improvement by boosting life cycle of software applications
• Created unified services platform and ONE delivery pipeline
Cloud Native • Establish carrier-grade containerized and serverless adoption platforms • Setted up integrated data platform through agile analytics methodologies
• Choosing configurations that address their targeted requirements Cloud Based and preferences Architecture • Easier implementation and execution of disaster recovery services
• Offer unified control of distributed IT resources Managed Security • Combine multi-factor authentication protocols and role-based access control systems
• Select application for migration based on complexity, business value Workload and sensitivity Assessment • Select cloud destination based on application performance in different cloud environment
Source: Company Websites
Strategic Review 2019 : Decoding Digital 147 The IT-BPM Sector in India: Cloud Cloud Management Platforms: A focus area of major cloud system integrators globally
90% of Cloud System Integrators investing in Cloud Management Platforms
CMP Feature Offerings
Automated Predictive spend Metering and Contract provisioning analytics chargebacks management
Multi-cloud Cloud service Cloud Monitoring and SLA orchestration catalogs brokerage management
CMP Products by Cloud SIs
Developed in-house Developed in-house Cloud SI Cloud SI tools/platforms tools/platforms
Accenture Cloud Platform NTT Cloud (ACP) Management Platform
Cloud 360 TCS Cloud Exponence
Appirio Cloud MyCloud Management Center
IBM Cloud Brokerage Digi Hybrid Cloud Managed Services Store Service Platform
Hybrid Cloud Infosys IMS Suite Management Platform
Cloud SI acquisitions for cloud capabilities
Source: Avasant Hybrid Cloud Radarview Report
Strategic Review 2019 : Decoding Digital 148 The IT-BPM Sector in India: Cloud
Cloud Computing Outlook
Business Outlook Export Outlook
At an expected growth rate ~30%, India cloud • The IT Exports market of India is expected to be market is expected to touch USD 7 Bn.+ i.e. buoyed by the consistent growth of cloud adoption globally 3-times of current levels • Sectors such as SaaS are already driving the fastest growth in Packaged Software (Growth at 7.7%) • Cloud spending in India expected to touch USD 2.5 Bn. by end of 2018, and only 1.3% of global • Emergence of BPM products and services for Cloud spending the overseas clients of Indian IT Export firms, such as Robotics Process Automation, Chat • Additionally, in 2018, Cloud spending is Bots, Analytics etc. have created a surge in expected to be ~5% of the total IT Spending Cloud-based Solutioning as a preferred delivery • Growth rate of Cloud spending in India is 2nd mechanism highest in the world at 40.2% (CAGR) over • Key segments identified for growth of Indian IT 2016-18, second only to China Exports remain Cloud (and software driven • Over 13% of India’s workloads are expected to infrastructure) be moved to cloud driving up the adoption of • Transition of on-premise to on-cloud solutions cloud as a means for enhancing value-added delivery to overseas enterprises
Providers focus areas for strategic investments to drive growth in India
Investments for Infrastructure Talent Partnership Cloud Growth
With increased With increased CSPs are rapidly Investments in the demand for Cloud demand for Cloud investing in strategic sectors such as SaaS services in emerging services in emerging partnerships to acquire are leading to the markets, such as India, markets, such as India, next-gen digital hyper-rated growth of global and domestic global and domestic capabilities creating a the companies, backed CSPs are driving CSPs are driving focused COE and by a strong offering investments in R&D, investments in R&D, invocation hubs and customer base Data Center Setup in Data Centre Setup in focus areas etc. focus areas etc.
Source : NASSCOM Cloud Report, Deloitte Analysis
Strategic Review 2019 : Decoding Digital 149 Intelligent Automation (IA)
Shift from basic process automation to cognitive automation
Cognitive technologies are leading to a shift away from traditional drivers such as cost reduction and e ciency gains, towards value-centric drivers such as compliance adherence, improved customer experience, autonomous processes, etc. Intelligent Artificial automation intelligence (IA) (AI)
Computer vision Run book OCR Deep automation Machine learning learning Autonomics Robotic process NLP Intent engines Neural automation IT automation networks Predictive analytics Robotic desktop Chatboats Fractal automation sciences Digital virtual agents
Rules-based processes, Judgment-based processes, structured data unstructured data
Key Players Illustrative
• Enterprise-wide • Automation suite for • Suite of automation tools, data automation platform prescriptive incident resolution, science machine learning as-a-service and RPA solution AI-led virtual assistant, service platform, virtual assistant with desk self-learning tool natural language capabilities
• Neural automation platform for • Data intelligence and prediction engine • AI-based platform IT operations for enterprises for digital • Cognitive automation for document analysis transformation and • Tools for robotics and human • Real-time bot performance monitoring RPA platform collaboration
Source: Avasant
Strategic Review 2019 : Decoding Digital 150 The IT-BPM Sector in India: Intelligent Automation
Global enterprises’ investment in IA is on the rise with BFSI, Retail and CPG being the key driving sectors
IA Market on the Growth
USD billion
CAGR 48.6%
27.4
12.4
2018 2020F
Mature adaptors of RPA driving IA market 51% Artificial intelligence contribution to IA revenue is quite low as these projects are still in the experimention phase 16%
14% 44%
12% Banking
10% Insurance 5% 9% 9% 9% 8% 8%
<3% <3% <3% CPG and Retail Share of revenue Manufacturing Travel and Travel Telecom, Media Telecom, Life Sciences Life Transportation Financial ServicesFinancial Healthcare and Healthcare High Tech and Entertainmentand Non-Profits Government Utilities and Resources Utilities and
0-12 Months 12-45 Months 45+ Months Time since industry adoption started
Key Trends
Enterprises with mature RPA AI-enabled chatbots, Enterprises are On the other hand, service engagements have started virtual assistants, are building in-house providers are investing in AI-enablement of business being used widely, automation teams in-house automation and AI processes, with 40% of RPA while ML, predictive by creating new IA tools; as well as partnering adopters moving beyond analytics and roles to strengthen with RPA tool providers and experimentation with autonomics are moving their automation training resources on third AI-enabled processes up the maturity curve ecosystem party tools
Source: KPMG; Avasant
Strategic Review 2019 : Decoding Digital 151 The IT-BPM Sector in India: Intelligent Automation India on the growth trajectory to be a global leader in automation…
India leading the way in automation deployment IA Implementation by Country %
17%
13% 13%
11% 11% Global Average 10% 9%
7%
5% 4%
United India Kingdom Sweden United States Spain Italy France Germany Netherlands
Volume of Enterprises’ Robotized Process Activity
AI Intelligent chatbots RPA cognitive RPA traditional
Data analytics, Interaction with Manage Repetitive, rule insights, users (internal unstructured data based, high decision-making or external) through ML and NLP volume activities
<10% 10% - 15% 15% - 20% 60% - 70%
Interactions
According to a research conducted by Goldsmiths, University of London, and Automation Anywhere, India leads developed countries such as the US, the UK and Japan in terms of deployment of AI-based and RPA-based technologies, especially in BFSI and manufacturing sectors
Source: Automation Anywhere, Goldsmiths, University of London; EY, Capgemini (Automation in Financial Services Survey; 2018)
Strategic Review 2019 : Decoding Digital 152 The IT-BPM Sector in India: Intelligent Automation …with companies leveraging advanced analytics, computer vision and NLP for automation
Natural Language Advanced Analytics Computer Vision Processing
Personalized communication, Image based screening Localization and mixed customer content analysis, skill processes are increasingly language use cases key focus mix analysis among key focus used for faster and efficient areas for NLP solutions areas output and anomaly detection
To remove subjectivity in Implemented NLP to automate File suspicious transaction for physical quality standard check manual effort of processing fraud detection by using process, AI based inspection large information about unstructured data system was used for investible companies and pre-processing and similarity automated and strategic professionals, to manage analysis-based AI techniques outputs corporate governance issues
Provided an automated Created a NLP-based To reduce time between identification of defect type, Geocoding technique to code diagnosis and intervention, damage counts and severity addresses corresponding to used AI and ML concept to using drone images for route number, replacing the mimic what a cardiologist does casualty insurance sector to manual shipment processing after looking at an ECG scan access roof top damages which has a high error rate
Created a scalable and Created an image Created a NLP-based system to self-service platform to run classification, segmentation generate report and product analytics on connected technique to provide accurate heatmap on any company vehicles to understand vehicle damage estimates through under a minute, replacing the usage patterns and reduce images of damaged vehicles need for large team of analysts warranty claims
Source: Secondary sources
Strategic Review 2019 : Decoding Digital 153 The IT-BPM Sector in India: Intelligent Automation
Indian technology companies leveraging new investments as well as partnerships to strengthen IA capabilities
Innovation Labs Partnerships Intellectual and Academic Properties Collaborations
Partnering with RPA tool and Strengthening in-house Creating labs and collaborating other technology vendors as AI-based platforms by building with academic institutions to well as start-ups new technologies drive innovation
Illustrative Illustrative Illustrative
Indian tech companies Indian tech companies building Innovation labs - Creating partnering with RPA providers AI-based platforms solutions based on new technologies
IA lab focused on AI, OCR, text mining, process mining, chatbots and cognitive automation
Cognitive tool vendors, the Analytics and automation next level labs focused on proprietary platforms and tools
Collaborations with academic Investments to access niche institutions for R&D focused on technologies various IA technologies Start-ups for niche technologies
Source: Avasant; Secondary sources
Strategic Review 2019 : Decoding Digital 154 The IT-BPM Sector in India: Intelligent Automation
Going forward, value-centric activities to gain mindshare as cognitive technology deployments mature
Going forward, combining cognitive As RPA becomes a foundational tool for technologies would allow bots to work within digitizing processes, it is expected to deliver more complex scenarios that would typically higher business impact by coupling require human judgement or decision making automation with cognitive technologies
IA market is expected to witness continued growth driven by increasing application across sectors IA Market Forecast
USD billion
CAGR 53.3% 231.9
27.4
2020F 2025F
BFSI Retail and Food and Beverage Reconciliation management system Manufacturing AI-enabled classification and using machine learning for a bank Machine learning and resolution of high-volume IT computational linguistics to infrastructure tickets for a Automated service request framework automate the review and multi-location food service for seamless user on-boarding processing of transportation distributor experience for an insurance company contracts
Healthcare and Travel and Telecom, Media & Life Sciences Transportation Entertainment Automated medical Dynamic workflows and AI Robotics program delivering summarization using text across multiple business group assisted (SAP activation, analytics, machine learning and and functions workbench, order to activation NLP to improve accuracy of flows etc.) and unassisted Bots to manage client queries, clinical decision making and (order entry, provisioning and facilitate additional bookings medical information extraction cancellation) automation and special requests
Source: KPMG; Secondary Sources
Strategic Review 2019 : Decoding Digital 155 Internet of Things
Driving Business Value
Key Trends
Artificial Intelligence IoT Global Market size • Connected things market to reach • IT vendors to expected to double by 2022 USD 25 billion by 2021, >31 billion invest heavily in AI connected IoT devices in 2018 USD billion Technological Shift CAGR • Moving from centralized • New IoT user experiences 21.7% to cloud edge architecture requires new IoT designing
631 Sensor Applications 288 • Sensor market on the rise • A ordability due to worldwide is expected to grow drop in prices 2018 2022 at CAGR of 24% till 2025
Chip Advancements • Moving from • New chip to support conventional processor capabilities like data chip enabling new analytics with sensor and edge architecture speech recognition
MARKET ADOPTION GROWTH DRIVERS
• Spending in IoT Technology Services growing faster than IoT products • 5G roll-out and implementation • Cloud Service providers, analytics and infrastructure providers are driving the IoT solutions market • Technologies maturing platforms, edge • Only 30% of enterprises that have launched pilots for IoT products and computing, blockchain, services have taken it to the next level cyber security • Enterprises are implementing platforms that are compatible with • Focus on business technologies o ered by external partners value in key verticals • Security remains as the key concern for faster adoption of IoT solutions
Source: Analyticsindiamag, Businesswire , Gartner, Globalnewswire, Grandview Research, EY Report, Bain, McKinsey Forbes, Hiotron , Techcircle, Zion Market Research
Strategic Review 2019 : Decoding Digital 156 The IT-BPM Sector in India: Internet of Things Industrial Manufacturing, Automotive and Retail sectors are driving IOT investments
Peak sizes indicates
High IoT investments
Industrial
Use case maturity Medical Automotive Manufacturing Devices
Retail
Oil & Gas Transportation & logistics IoT Investments Pharma CPG Healthcare Internal capabilities Internal Providers
BFSI IoT assets Low Ecosystem Focus High Start-ups leverage Tech vendor partnerships Service provider leverage Mergers & Acquisitions
Healthcare Retail Connected Cars
• Remote patient monitoring • Optimization of logistics and • Connected infotainment supply chain systems that work with • Connected machine-to-machine smartphones (M2M) systems • Short-range sensors such as beacons to track shopper • Remote maintenance alerts • Hospital deployments of behavior intelligent facility management • Ability to lock and unlock systems • Using analytics to assess store vehicles remotely traffic by hours, days and • Wearables, mHealth (mobile) • Navigation, safety, weeks and other health tracking entertainment and more applications
Source: ISG Quadrant Report, Zinnov
Strategic Review 2019 : Decoding Digital 157 The IT-BPM Sector in India: Internet of Things India well poised to leverage the IoT opportunity
The IoT market in India expected to witness high growth
USD billion
CAGR 28%
28 9.2 25
2018 2020
Key Trends
20 billion devices Industrial IOT Enterprises are looking Perceptions on full predicted to be opportunity to surpass for IoT solutions to impact of IoT still connected to IoT consumer internet address gaps in internal nascent and connected by 2021 by 2020 capabilities to smartphones
IoT is growing at a rapid pace and its adoption is getting increased in various industries like telecom, automobiles, manufacturing, supply chain, service operations etc.
Narrowband Internet of Telecom Things (NB-IoT) network
Automobiles/ Cloud based connected Transportation vehicle technology
Smart Predictive maintenance of machines, Manufacturing testing and warning systems
Real tme inventory Supply Chain management, order processing
Service Data centre monitoring, machine Operations fleet monitoring, card payments
Technologies and Smart Cities connected data sensors
Source: Analyticsindiamag, EY Report, Businesswire, Gartner, IoTIndiaCongress, Techcircle, NASSCOM Analysis, VCCircle
Strategic Review 2019 : Decoding Digital 158 The IT-BPM Sector in India: Internet of Things Government, Industry and Startups catalyzing the IoT ecosystem
Network based Aligning IoT solutions Infosys offers easily Partnerd with Focusing on NB-IoT guided with the real-time flow of deployable solutions Samsung to roll (narrowband IoT) diagnostics user information, so that for enterprises that out India's first technology by platform Tele- companies can offer gather data from narrowband helping the Diagnostics for new types of services sensors to provide Internet of company tap into Remote based on innovative actionable business Things (IoT) new areas like solutions revenue models insights network agriculture Major companies developing IoT based solutions
Growing Enterprise Interest
Maturing Start-ups
IoT based start-up innovative Government continues products attracting investor’s to promote IoT attention NDPC Policy Government Support • National Digital Communication Improving Productivity of Policy (NDCP) target of 5 billion Construction Job Site by connected IoT ecosystem leveraging IoT & AI • Earmarking adequate licensed and unlicensed spectrum for IoT
Budget Allocation • Government allocated USD 480 Offering IOT system Identification of product million to promote Artificial capable of monitoring damage due to Intelligence, Machine Learning and pipeline integrity at mishandling and transit IoT under “Digital India” program high temperatures shock events Infrastructure Plan • 100 smart cities to be developed in the country Protects assets from Connect clients field and factory • Planned investment of USD 1 unsupervised assets to enable remote billion for smart cities access and theft assessment, diagnostics, prognostics, and edge intelligence
Source: Company Websitets, Inc42, Meity, Your Story
Strategic Review 2019 : Decoding Digital 159 The IT-BPM Sector in India: Internet of Things
Industry investing in IoT Platforms
Platforms allows usability, Platforms are specific to Platforms allows scalability, data security options, hardware, connectivity easy connectivity integration and interoperability or IaaS related
IoT Platform to Connected Devices IoT Cloud Platform Connect Data
Tech Mahindra’s telematics Leveraging Microsoft Azure and A robust cloud platform for data solution enables a leading its specialized services for IoT to storage and advanced analytics electric vehicle OEM in India to stores, manages and analyzes with easily scalable architecture offer engaging digital services telemetry data from equipment and inbuilt device management to its consumers and products capabilities
Use Cases Illustrative
A Finnish cargo handling Leading manufacturing A leading construction equipment manufacturer) company specialized in equipment manufacturer packaging films production
TCS and Cargotec co-create an Altizon’s Datonis MInt Wipro cloud based IoT platform IoT platform to collect, store, –Manufacturing Intelligence connect over 10,000 JCB India and analyze sensory data solution for analysis construction equipment machine
Data Lake and Big Data Analyze critical machines Allows remotely monitoring of platform, enabling storage and parameters settings and real-time health and reporting of data in large establish a correlation with film performance of JCB assets in the quantities production quality field Web portals and Business Correlate the process and Ensuring operational availability Intelligence (BI)-based reports machine data with different of the asset for KPIs types of quality failures Prevents misuse and theft of Cloud-based automation, Reduce quality degradation and assets, while allowing asset leveraging advanced Cloud achieve predictable quality owners to enforce contract PaaS services compliance
Source: Analyticsindiamag, EY Report, Businesswire, Gartner, techcircle
Strategic Review 2019 : Decoding Digital 160 The IT-BPM Sector in India: Internet of Things
Industrial IoT adoption increasing
IIoT is a strategic priority for manufacturing companies as it allows them to give more value to their customers as well as improve cost-efficiency of their internal operations
• Holistic sensing Offering connected platforms, diagnostics, monitoring etc. Digital/ • Asset health monitoring Connected • Remote factory monitoring Using Microsoft Azure cloud Factory • KRAs for managers capabilities to develop AI, advanced ML solutions
• Condition-Based Maintenance Alerts IoT-driven facilities • Remote Monitoring of optimization software Facility Facilities Management • Data-Driven Decision-Making Leveraging and integrating • Managing Energy intelligent solutions Consumption
Offering plant flow control • Reduced need for Maintenance Personnel automation providing Production connectivity • Reduced risk of Flow Environmental Accidents Condition based monitoring & Monitoring • Reduced Unplanned Predictive maintenance in Downtime Factory
Launch IoT based, • Real-time Asset Tracking asset-tracking, automation & Health Monitoring Inventory solution enabled by Tata • Predictive Maintenance Communications Management • Smart Service Automation RFID Labels, IoT Sensors to keep track of inventory
HCL’s IoT WoRKSTM, in • Plant safety collaboration with IBM developed worker safety Plant Safety • Cybersecurity Management solution and Security • Plant-wide Temperature Well-being of the workforce Data Sensing with safety wearables and analytics
Source: Company Websites, Economictimes, IoT Demand Supply Report, IoTIndiaCongress, VCCircle
Strategic Review 2019 : Decoding Digital 161 The IT-BPM Sector in India: Internet of Things
Maturing IoT Startup Ecosystem
Optimization, efficiency improvement and monitoring based start-ups are thriving a lot and lead the IoT market in India
Number of start-ups.
Rise in IoT start-ups ~10x IoT based start-ups increase 10 fold in 1250 past 4 years driven by a supporting ecosystem
126 2014 2018
Optimization and Monitoring Solutions
Connected Simulation Platforms Robotics and Modelling
Source: Company Website, Indiaweb2, inc42, Your Story
Strategic Review 2019 : Decoding Digital 162 Industrial Robotics
Total operational stock of robots [2017] 2.1-2.2M Expected to reach 3-3.2M by 2020 [~15% CAGR]
# of New industrial robots [2017 - annual] 380-390K Expected to reach 600-700K by 2020 [~15% CAGR] Global market
Industrial robotics market value [2017]1 $ 40-41 billion Expected to reach $59-60 billion by 2020 [~12% CAGR]
Total operational stock of robots [2017] 20.5-21.5K Expected to reach 37,000+ by 2020 [~20% CAGR]
# of New industrial robots [2017 - annual] 3,000-3,500 Expected to reach 7,500-8,500 by 2020 [~25% CAGR] India Market
Industrial robotics market value [2017] $ 0.4-0.5 million Expected to reach 0.7-0.9 million by 2020 [~15% CAGR]
Globally, Asia represents the biggest China is the biggest market for industrial market (~60% operational stock), followed robots with ~33% share of new industrial by Europe (25%) and Americas (15%) robots in 2017 Notes: 1. Market value excludes the cost of software, peripherals and systems engineering Source: International Federation of Robotics (IFR) Report 2017, Zinnov Analysis
Strategic Review 2019 : Decoding Digital 163 The IT-BPM Sector in India: Intelligent Automation (Robotics)
Industrial robotics in India: Key drivers
Reduced Cost of Industrial Robots Rise of Collaborative Robots (Co-Bots) Cost of industrial robots has gone down Collaborative robots allow sharing of and payback time is now around 1-2 years heavy payloads and improving cycle times TAL Brabo Robots are today available achieving optimal degree of automation at a cost of only ~ $ 8,000 Universal Robots are expected to sell 1000 co-bots within the next 5 years
Push from Original Growth of Equipment E-commerce Manufacturers Strong growth of (OEMs) to Suppliers e-commerce industry Automotive is one of in India and of the leading verticals logistics for industrial subsequently has Key Drivers robotics and recently pushed automation for Industrial demand has been to keep up with high Robotics driven by tier 1/ tier throughput 2 suppliers requirements OEMs are pushing E-commerce industry suppliers to invest in is expected to grow robotics to ensure at >30% y-o-y better quality and faster production
Government Schemes Increasing Labour Costs Government’s Make in India program is Cost of skilled labour has increased expected to drive industrial robotics, with substantially in India over the last few the 2nd phase having specific focus on years improving the cost viability of robotics robots in industries Various Small & Medium Business (SMB) focused schemes are driving technology uptake across small manufacturers
Source: Primary Interactions, Executive Interviews, News Articles, Press Releases, Zinnov Analysis
Strategic Review 2019 : Decoding Digital 164 The IT-BPM Sector in India: Intelligent Automation (Robotics) Industrial robotics: Use-case adoption across key industry verticals*
Industry Verticals
Segments Use-cases Automotive Retail/ E-commerce Transport & Logistics Electronics/ Electrical Metals Overall Focus
Overall Focus
Sorting
Put/Pick
Warehouse Weight & Volume Measurements Automation Packaging
Welding/ Painting Material FA Handling Factory Automation Assembly Finishing Operation
Illustrative Examples
E-commerce and Logistics Automotive leads in Welding/painting and Material driving usage of warehouse adoption of robots for Handling top industrial robotics automation systems factory automation applications
Robotics Adoption Intensity: Very Low/Negligible Low Medium High Very High
*Based on robotics implementation at ~50 firms across India Source: Company Websites, News Articles, Press Releases, Vendor Case Studies, Zinnov Analysis
Strategic Review 2019 : Decoding Digital 165 The IT-BPM Sector in India: Intelligent Automation (Robotics) Warehouse Automation: Use-cases & industry example
Warehouse Automation
Profiling (Barcode Invested ~$ 8M in automating 8 hubs; scanning, etc.) Installed a robotic sorter at its Delhi Sorting Sorting/ routing hub that sorts packages at a speed of 3,600 items an hour
Started using GreyOrange Butler to bring the Storage right order to the warehouse operator at the pick-put-station, increasing picking up Retrieval Put/Pick accuracy to 99% and pick-up rate by 6X compared to manual operations
Deployed Linear Sorters from GreyOrange with an in-built dimensioning and weighing Weight Check system where the real volume, box volume and dead weight of each packet is captured Weight & Volume Volume Measurements Dimensions • Reduced sorting processing time by 50% Measurement • Optimized warehouse space utilization with savings up to 2.5 times
Global Parts Centre (GPC), Neemrana built Packaging with automated storage and retrieval system, Unboxing/ automated packaging and sorting system, and Packaging un-packaging on-line tracking of parts through Warehouse Management System (WMS)
Factory Automation
Arc Welding Robots present at framing station of Spot Welding the car plant to join roof and body Welding/Painting Spray Painting sides using laser hybrid welding Plasma Cutting (brazing)
Palletizing Installed ~300 robots from Kuka on a single line in its Pimpri plant, including KR Pick and Place Material Handling 210 for material handling applications
Screwing Using industrial robots from Kuka Glueing/ at its manufacturing plant for Assembly Sealant Dispensing underbody sealing applications
Turning Installed 50 ABB robots at manufacturing Milling plants to do applications such as sealing Finishing Polishing and finishing processes, as well as Operations Glass Glazing handle high-temp. items
Source: Company Websites, News Articles, Press Releases, Vendor Case Studies, Zinnov Analysis
Strategic Review 2019 : Decoding Digital 166 The IT-BPM Sector in India: Intelligent Automation (Robotics) Top India industrial robotics start-ups: Overview
Illustrative
Start-ups Founded HQ Focus Verticals Offerings Designs, manufactures and deploys E-commerce, advanced robotics systems for 2011 Singapore Transportation & 1 automation in warehouses, Logistics, Automotive distribution and fulfillment centers
Transportation & An Indian OEM that is among the Top Greater Noida, Logistics, Retail/ 2004 20 global leaders in intra-logistics 2 India E-commerce, FMCG, and warehouse automation solutions Pharma, Automotive
Builds and delivers robotic solutions Automotive, for human-like automated functional Kochi, India Electronics/ Electrical, testing of real physical devices; being 2012 3 Aerospace & Defense used by OEMs and service providers to expedite test cycles and reduce time-to-market for their products
Retail/ E-commerce, Ahmedabad, Develops robotic products for 2007 FMCG, Pharma, 4 India defense and industrial applications Automotive
Automotive, FMCG, Offers turnkey industrial Bangalore, Pharma, Aerospace & 2007 automation systems and solutions 5 India Defense, Electronics/ with industrial robots Electrical, T&L
Developing products for revolutionizing man and material transportation with Retail/ E-commerce, Gurgaon, its Self Driving People Movers, Self 2004 T&L, Automotive, 6 India Driving Logistics Vehicles for material Aerospace & Defence handling and mobile robots for security & surveillance
Designs and manufactures industrial robots that are used for screw Aerospace & Defense, Trivandrum, fastening, soldering, electro chemical 1995 Transportation & 7 India deburring, dispensing, CNC machine Logistics tending, pick and place automation, palletizing, press tending, etc.
Designs and develops robotic exoskeletons with RC controlled Bangalore, Aerospace & Defence, 2015 humanoid robotic systems and 8 India Utilities artificial intelligence to find solution for social important issues
Retail/ E- Commerce, Industrial robotics company building Bangalore, Automotive, 9 2008 cutting edge next generation of India Transportation & robots for smart logistics Logistics
Developing robotic solutions for Industrial, Aerospace Pune, India service, defense, industrial, 10 2015 & Defense, Agriculture agricultural and many other sectors Notes: NIOT – National Institute of Ocean Technology, DAE – Department of Atomic Energy, HAL – Hindustan Aeronautics Limited, T&L – Transportation & Logistics, IgnisNova Robotics not included as products still under development Source: CrunchBase, LinkedIn, Company Websites, News Articles, Press Releases, Zinnov Analysis
Strategic Review 2019 : Decoding Digital 167 The IT-BPM Sector in India: Intelligent Automation (Robotics) Robotics-related work at IT-BPM firms and GCCs in India
Illustrative
ROBOTICS RELATED INITIATIVES
Indian Service Providers Multi-national R&D Centers
Conceptualized and developed the Robotic Artificial Intelligence Language – Integrated Product R&D center at India played major role in software Technology (RAILIPT) platform development of ABB’s collaborative robot, YuMi
New R&D center setup in partnership with Tata Elxsi Collaborating with the Institute of Industrial Science, to develop technologies such as artificial intelligence The University of Tokyo (liS, UTokyo), for technology and robotics research, commencing in the area of robotics
Setup COEs around industrial automation in Engineered assembly line automation using machine partnership with Gujarat government focused on vision based robotics; 140% increase in productivity technologies such as ASRS, PLC, AGV, vision and a 100% automated error-free production line inspection systems, etc. LTTS engineered a pick and place robotic system for a cheesy dip manufacturer that enabled $60,000 savings on each production line Bangalore center driving innovation in cyber/software industrial segment including initiatives in robotics and drone space
Setup Factory of the Future” lab, to showcase assets/solutions in areas of Robotics, Digital Manufacturing, Connected Machines, AI & Analytics, Robotics-related R&D for autonomous and connected Automation, Additive Manufacturing, and AR & VR cars at Mercedes Benz Research and Development India (MBRDI)
To be the SI by implementing and managing Setup India R&D center for enhancement of industrial robotics manufacturers like Fanuc Corp or YASKAWA’s robotics-related products & software Kuka and make these robots work with humans and ecosystem along with innovation focused on other non-robotic gear in a factory floor, such as industrial automation & smart factories cranes and conveyor belts
Notes: ASRS - Automatic Storage and Retrieval Systems, PLC - Programmable Logic Controllers, AGV - Automatic Guided Vehicles Source: Company Website, News Articles, Press Releases, Zinnov Analysis, NASSCOM
Strategic Review 2019 : Decoding Digital 168 The IT-BPM Sector in India: Intelligent Automation(Robotics) Intelligent The IT-BPM SectorinIndia: Strategic Review 2019 : Decoding Digital Decoding Review 2019 : Strategic Source: Company Website, PressReleases, News Professional Articles, Networks, Zinnov Analysis Notes: 1. ABBglobalrobotics was businessheadquarters moved to COE–CentreofExcellence Shanghai in2005,HQ–Headquarters, Robotics suppliers: Indiaoperationsoverview Articulated Robots,Articulated Parallel LBR iiwa, Agilus, Quantec,LBR iiwa, Agilus, Palletizing, Spot Welding Cybertech, 60, 2000, 40 40 2000, 60, Cybertech, Material Removal, Press Machine Tending,Machine Press Material Handling, Spot Extraction &Spray, etc. LWR, Titan, Jet, Fortec, Arc Welding, Handling, Welding, Arc Welding, Robots, Paint Robots, PA, 470 PA, 700PA Tending, Painting, Tending, DieCast UR3, UR5,UR10 Products YuMiv India Global HQ: Plastic &Rubber FMCG, Metals, FMCG, Metals Electronics/ Electronics/ Automotive, Automotive, Automotive, Automotive, Automotive, Electrical, Electrical, Vertical Metals Metals Metals Focus Pune, Manesar) Training Center HQ: Global - Zurich, Switzerland -Zurich, Global HQ: HQ: Global - Augsburg, Germany -Augsburg, Global HQ: HQ: Global - Kitakyushu, Japan -Kitakyushu, Global HQ: HQ: Global -Oshino-mura, Japan Global HQ: HQ: Global - Odense, Denmark -Odense, Global HQ: (Bangalore) (Bangalore, Technology COE/ R&D COE/ India R&D Corporate Service & Service Research Centers Center Center (Pune) Lab India -Gurgaon India India -Bangalore India India -Bangalore India India -Gurgaon India India -Bangalore India Controls India, AGIIT, Caveri Kawasaki Heavy Industries, Keepsake, Gudel, Infosys Actemium, Grind Master, Incite CAM, Sharp Tech, Semyung India, GI India Automation &Systems Metallizing Equipment, GI India Automation & GI India Automation & Modtech, Rhythmsoft, Partnerships Textronics Systems Systems Segments
Factory Illustrative Automation
169 Warehouse Automation Immersive Media
Globally and in India Immersive media market driven by enterprise adoptions
USD billion Global Immersive Media market estimated at AR USD 18.5 billion in 2018; to grow at 76% CAGR to reach USD 179 billion by 2022 VR USA market leader with ~1/3rd share. China, 3X Japan, Germany and UK to emerge as key spenders by 2022 Attracted over USD 7.5 billion funding during 26.6 Global 2013-17 Market Enterprises contribute to 2/3rd and consumers to rd 14.3 remaining 1/3 of spending 7.6 Automobiles, heavy industries, real estate and 4.2 6.2 2.9 training key enterprise verticals driving growth 2017 2018E 2019F
USD million Indian Immersive Media market estimated at USD 0.6 billion in 2018, to grow at 85% CAGR to AR reach USD 6.5 billion by 2022 VR Supply landscape comprises of large and small 4X players in Tech & Platform Development, App Development and System integrators 868 Partnerships and collaborations key drivers for India Market the ecosystem players e.g.. Facebook, Snapchat, Niantic foraging relationships with Indian firms 445 Challenges: Prohibitive costs of devices, limited content availability and low awareness about 222 165 the value 69 109 2017 2018E 2019F Key Drivers Mobile edge Higher Customer Artificial computing processing speed controlled Intelligence media Software Define 24X7 mobile consumption Rise of profitable Networking connectivity & production AR/VR developer ecosystem Source: NASCCOM Report on Immersive Media
Strategic Review 2019 : Decoding Digital 170 The IT-BPM Sector in India: Immersive Media
Technology, platform & application developers and system integrators most mature ecosystem players in India
Ecosystem Category Illustrative Suppliers India Maturity
Hardware Devices required to consume Immersive Media Technology varies by application
Tech. & Platform Developers Toolkits and Platforms to take vision to reality varying by technology
Application Developers Applications are platforms for rendering immersive content to users
Content Developers Studios, Organizations and Individuals producing/owning content for Immersive Experiences
System Integrators SI players span across the Develop-to-Deploy ecosystem
Maturity Source: NASSCOM Report on Immersive Media Organizations founded in India Low High
Strategic Review 2019 : Decoding Digital 171 The IT-BPM Sector in India: Immersive Media
Service providers playing the role of system integrators to industrialize services; start-ups growing in numbers
Illustrative
Field force training, Product Solutions in Marketing, IBM’s Watson division Developed content visualization, Manufacturing, Retail, Fashion, working with Unity game management portal, In-store experiences, Industrial training and engine creators on an Mobiliya AR360 to manage Product marketing, Remote maintenance, Utilities, open-source SDK to make AR content consumed by collaboration Medicine etc. video games smarter device applications
Indian start-ups focusing on AR/VR steadily gaining momentum
AR/VR focused Start-ups CAGR during 2013-18 70 + (2013-18) 26-28%
Working on production devices such as the Hardware creation of the world’s first pure VR camera
Tech. & Platform Delivering tools and platforms across the Developers sectors ensuring high-quality content
Application indigenously developed Development applications across industry sectors
Content Supporting a large volume of content demand; ARTIFICIAL Developers gaming and entertainment most lucrative REALITY
Key Investment Strategies
Co-creation Setting up Collaboration with Investments in start-ups of IP along centers of universities on joint for co-innovation & with clients excellence and research, skilling partnerships with large and partners innovation labs and recruitment technology firms
Academic Institutes Centre of Excellence (CoE) Illustrative
Bengaluru Centre of Unity Capgemini and Unity to Tech Mahindra gets India’s Excellence for Technologies PTC launch Center launch Center collaborates with first AR/VR AR/VR to be set and Tata of Excellence in of Excellence Unity Technologies academic up at IIT Elxsi launch Mumbai for smart in partnership to open centre of centre Bhubaneshwar Centre of connected with Veative excellence in Excellence products Labs Bengaluru
Partnership created to foster Partnership established in Tyroo’s platform to be used to innovation in areas of AR & late-2016 to launch generate higher ad-revenues across VR in 2018 AR-based game in India 9 million users in India
Source: NASSCOM Report on Immersive Media
Strategic Review 2019 : Decoding Digital 172 The IT-BPM Sector in India: Immersive Media Enterprises creating immersive experiences to improve and build customer access Illustrative
Enhancing Immersive Immersive Immersive Entertainment experience in experiences media in ways of through connectivity supporting education, experiencing immersive applications knowledge learning & skill an interest, technologies based tasks development purchase or location
Holo-Presence Medicine & Trainings Immersive Mobility Live Events Paramedical See-What-I-See Safety Compliances Travel & Hospitality Storytelling Manuals & Guides Do-What-I-Do Certification Augmented Gaming Design & Catalogs Remote Scribing Architecture Gaming Location-based Augmented Entertainment Social Field Service Behavioral Analytics Shopping 3600 Video Field Services Analytics & Big 3D Simulations Events & Data Conferences Entertainment Connectivity In-Store Experience Knowledge Education Whether Live Sports, Trade With access to Exploration manuals and In the Costs for Shows, Product guides in experience of trainings are Launches or any being ‘one with lower as other live multi-media Seat selections form, efficiency the data’, and to dependence on setting, be able to get a individuals and potential enhanced of the MRO choices for operation realistic conducting them engagement visualization of and costs for superior with the potentially experiences on increases. the data, the logistics are audience is the users are able to lower. Immersive the luxury airline ask of every explore virtually trainings are the were in standard participant limitless closest to reality, desktop and organization datasets and and a robust smartphone take methodology to offerings which action/decisions ensure learning the airline wanted to transform to enhance customer satisfaction
Source: NASSCOM Report on Immersive Media
Strategic Review 2019 : Decoding Digital 173 The IT-BPM Sector in India: Immersive Media Propensity to use immersive media in India focused on enhanced customer experiences and training… Illustrative
Propensity to Deploy Industry Illustrative Use Cases Immersive Media • Manufacturing operations Automobile • Car sales & service • Visualization of products
• HUD in military aircraft, vehicles and boats Defense • Special forces gear & training across AR & VR
• Learning through live-like systems Education • Learning/training in safe environments
• Mobile hand-held gaming using AR & VR Gaming • Console & computer gaming using VR
• Customer experience & revenue uplift Hospitality & Travel • Learning, training & development • Virtual tours
• Advertising & revenue generation Media & Entertainment • Media consumption
• Showcase of property/real-estate product, Real Estate • Virtual tour
• Shopping experience enhancement Retail • Product launches/support • Visualization of products
• Customer experience (electronic banking) BFSI • Learning, training & development
• Learning & training/education Healthcare • Surgery, patient care etc.
• Asset tracking/supervisory control Logistics & Supply Chain • Customer service/support
• Manufacturing Oil & Gas • Training & development
• Telecom/TowerCo setup/maintenance Telecom • Sales/customer service
Maturity Source: NASSCOM Report on Immersive Media Low High
Strategic Review 2019 : Decoding Digital 174 The IT-BPM Sector in India: ImmersiveMedia The IT-BPM SectorinIndia: Source: onImmersive Media NASSCOMReport ….creating positivebusinessoutcomes Strategic Review 2019 : Decoding Digital Decoding Review 2019 : Strategic Case examples Impact Applications Top AR/VR adopters like speed,turns etc. through HUD from R&D through manufacturing Support through ARand trainings Support Vehicle experience intheform of Guided repair and maintenance overlays ofspecific information product variations (AR),driving Across theproduct value chain Assisting drivers using digital Assisting drivers interactions creating product of vehicles for service staff of vehicles for service Enhanced CXthrough user Manufacturing Process Maintenance &Repair Product Experience to sales and support Automobile Sales &Marketing for crew members Driving Assists Value Creation experience (VR) differentiation Gamification and demonstrations retain pupil attention and interest Changing MethodsofLearning Entertainment-based Learning Entertainment-based Pupil’s Comprehensive Growth live environment isdangerous to learn in, trainings and education Change rote-based learning and immersive multi-media throughimmersive In specific scenarios wherethe learning through immersion Value Education and overall can be imparted using VR can beimparted using smart devices isan using smart effective wayeffective oflearning leading to safe learning Course materialCourse using Education Safe Learning Live Learning smart devices smart Paradigm accommodation within selected experience, increasing revenues Using technologies like Beacon, guests to experience whatthey Hospitality &Travel Aids in increasing footfall and Life-like interaction enabling Room experience for guests hoteliers enhance customer Enabling guided-tours using personal devicespersonal to attract Enhancing Experience Access to Information while booking a type of buy before they buy it Sales &Marketing Tourism Activities audiences Selection property revenue Illustrative 175 The IT-BPM Sector in India: Immersive Media Outlook: Disrupter of traditional and creator of new markets
Key Shifts Impact
• Focus on standalone/ • Advances in handheld smart devices untethered devices to increase mass-adoption of AR • Hardware ergonomics • Production of devices with to improve smartphone-based inserts, tethered Hardware devices sees positive shift in VR • Smartphone VR to take 0 lead in VR adoption • 360 cameras improving in form factor, resolution and data • Multi-sensory beyond transmission to ensure high quality sight and sound image capture
• Investment in SDK enhancements • Launch of major SDKs by leading to better quality which will Apple & Google Tech. & Platform drive adoption • Focus shifting to UX from Developers • Focus shifts to UI and UX from back-end performance device performance management
• Applications of AR to grow • Immersive applications to grow faster due to beyond Gaming, Real Estate, Media non-requirement of & Advertising, Social Media Application additional hardware • Snapchat and Facebook rendering Developers • Enterprise sectors will begin AR and VR for consumption, will development of highly drive exponential growth in number specialized immersive apps of consumers
• Rise in quality content with greater contextualization to drive growth • Content studios focusing on • Increasing adoption of VR in Media developing content for MR & Entertainment enabling its Content and VR larger role in Film & Broadcasting Developers • Media & Entertainment • Content producers and owners are showing most potential for delivering various applications content consumption in VR across Gaming, Retail, Education, Learning, Social Media etc. leading to a larger uptake
• Augmenting capabilities in • Rise in SIs designing and deploying content development; complex solutions for large working with device corporations System manufacturers • Developing internal capabilities Integrators • Acquisition of tools and across multiple functional areas technologies to enhance aiding growth for SIs delivery capabilities
SDK: Software Development Kit Source: NASSCOM Report on Immersive Media
Strategic Review 2019 : Decoding Digital 176 Blockchain
Globally and in India blockchain at different levels of maturity
50+ countries developing standards Traction 50+ countries working actively to develop standards to integrate blockchain in their economies
Europe Leads Leader Nearly half of the leading and enabling blockchain jurisdictions in the world are located in Europe
Investments surge in 2018 Investment A tipping-point year for investments with over $20 billion Global market raised from VCs and Initial Coin O erings (ICOs) Blockchain 3.0 and real business value Blockchain 3.0 Newer opportunities for blockchain to be deployed at scale and create real business value
Experiment-centric to business-case centric adoption Adoption Over 70% of enterprise implementations expect benefits of cost savings or operational e ciencies
Indian Public Sector driving interest in Blockchain Traction About 50% states in India are involved in various initiatives driving blockchain adoption
BFSI leads adoption at 55% Leader BFSI at 55% leads adoption; growth opportunities in retail, logistics, manufacturing and healthcare
Significant growth headroom for start-ups Start-ups With less than 0.2% of global investments, start-up ecosystem in India is yet to take o India Market Need for regulatory certainty Regulations India needs to adopt a proactive and consultative regulatory approach to bootstrap growth
‘Blockchain service providers to the world’ Investment Need to invest rapidly in talent development, IP and asset creation and process framework advancement
Strategic Review 2019 : Decoding Digital 177 The IT-BPM Sector in India: Blockchain
India’s promising Blockchain ecosystem
Illustrative
Community and Blockchain Adopting Enterprises Public Sector Solution Providers
Service Providers BFSI
Consortiums
Healthcare
Startups Manufacturing, Retail & Logistics
Investors Platforms & Academia, Research Frameworks Institutes and Industry Bodies
Institutional Investors Institutional Investors
Source: NASSCOM AVASANT India Blockchain Report 2019
Strategic Review 2019 : Decoding Digital 178 The IT-BPM Sector in India: Blockchain Service providers and start-ups form the crux of the Indian ecosystem
Service Providers
Focus Area BFSI Healthcare Manufacturing Telecom
• Trade Finance • Cross Border Payments Usecases • Supply Chain Management • Digital Asset Management
Mid and large service providers in India Collaborating with startups to jointly Trends have <5% projects in India vis-à-vis develop enterprise solutions through their projects in other geographies co-investment and co-innovation
Infosys automates trade IBM implementing supply chain solution in Examples finance for 7 bank Logistics and land registry management in consortium in India public sector
Start-ups
Focus Area BFSI Healthcare Logistics, Retail Public sector & Manufacturing
• Land registry • Supply chain Usecases • Employment verification • Medical record maintenance • Anti-counterfeiting • Supply chain traceability
More than 50% of the start-ups India accounts for <2% of all generate solutions specific to BFSI blockchain startups globally that Trends and 15% is focused on supply are actively developing consumer chain solutions and industry solutions
Blockchain startups like Statwig (supply chain), Zebi Data working with Examples Kare4U (healthcare), Nucleus Vision (retail) and Andhra Pradesh Springrole (HR) are building specialized blockchain government on land based innovative solutions registry use case
Source: NASSCOM AVASANT India Blockchain Report 2019
Strategic Review 2019 : Decoding Digital 179 The IT-BPM Sector in India: Blockchain Ecosystem players investing extensively in capability building and research
CoEs, Labs, Co-creation & Skill Building & Research Innovation centers Co-investment
Investing in blockchain Collaborating with start-ups, specific CoE labs to build government bodies and solutions and accelerators Collaborating with academic enterprises to jointly develop and research institutes on Investing in specialized labs enterprise solutions through technical, application and to research on blockchain co-investment and policies guidance applications in different co-innovation industries Partnering with the As part of consortiums Government and building partnering with platform TRENDS Start-ups, service providers innovative cross training and public sector are providers like Ripple, R3 programs collaborating to build India Corda and Hyperledger to specific Blockchain develop and enhance platforms platform capabilities
NIIT Tech has set up a blockchain CoE to build Tech Mahindra with Nucleus blockchain specific solutions Vision providing technical expertise in blockchain Wipro with UC Berkley is Zensar has set up Zenlabs to applications conducting technical conduct research in research in smart city technology Oracle jointly with Apollo initiative for Andhra Pradesh hospitals and NITI Aayog government Hexaware has set up Fintech building solutions in labs in Chennai, Mumbai and healthcare Tech Mahindra with Pune to explore blockchain Telangana government
EXAMPLES application NITI Aayog, is developing through “Blockchain district” India Chain, a nationwide building skills Eleven01 protocol is built Blockchain platform that will collaboratively by state host blockchain based government of Telangana applications and Tech Mahindra
Source: NASSCOM AVASANT India Blockchain Report 2019
Strategic Review 2019 : Decoding Digital 180 The IT-BPM Sector in India: Blockchain Government the most critical stakeholder and enabler; while BFSI leads adoption in India
Logistics, Retail & Public Sector BFSI Manufacturing
Priority use cases Priority use cases Priority use cases • Land registry • Trade finance • Supply chain management • Governance • Cross company data sharing • Anti- counterfeiting • Records management • KYC • Digital provenance • IP protection • Claims management • Inventory control • Cross border remittance • Cargo track & trace
Currently 40+ blockchain At nearly 50%, BFSI has the Logistics, retail and initiatives are being executed maximum production level manufacturing account for by public sector in India with implementations in India nearly 25% of blockchain ~92% in pilot/POC phase and implementations ~8% projects in production Specialized consortiums like phase Bank Chain & Insurance Almost 15% of start-ups are Consortium are driving nation addressing supply chain 50% states in India involved in wide initiatives problems; building solutions for blockchain related initiatives; agriculture, fisheries, medicine Telangana and Andhra Pradesh and trade are leading adopters
Key Examples Key Examples Key Examples Andhra Pradesh with Tech Infosys is working with 7 IBM is working with logistics Mahindra and a Swedish private Indian banks to build a company JM Baxi to build startup Chroma way is solution “India Trade Connect” blockchain enabled Port implementing a database for for document tracking systems Community System (PCS) government records in trade finance connecting 12 major ports to ensure a single, robust Karnataka with PwC is building Cognizant is working with a messaging platform a online idea marketplace to consortium of 15 life insurance safeguard intellectual property firms to build a solution that Apollo Enterprises is reduces reliability on data collaborating with Strides Telangana is working with IBM intermediaries and aggregators Pharma, Oracle and NITI Aayog to build a solution for land for obtaining customer and to build drug supply chain in registry policy details the country to eliminate counterfeit drugs in the market
Source: NASSCOM AVASANT India Blockchain Report 2019
Strategic Review 2019 : Decoding Digital 181 The IT-BPM Sector in India: Blockchain Outlook: Implementation to shift from experiment centric to business case centric
Service Providers are shifting Large member consortiums from experiment centric to will be created across business case centric model different industry sectors like Service Providers will focus on which will result in more BFSI, transportation and conducting cross training projects moving to production energy etc. with cross industry blockchain programs for phase where over 70% of consortiums emerging rapidly inhouse employees. Focus on implementations will deliver developing abstraction layers cost savings or operational on top of existing platforms to efficiencies enable employees skilled in widely used languages to develop on blockchain platforms
A consultative and enabling Newer forms of fundraising regulatory approach towards such as Security Token blockchain will be required to Offerings (STOs), where the Growth of blockchain start-ups drive the growth of Blockchain digital tokens are backed by have led to the development ecosystem and innovation in tangible assets, equities, of a new wave of India profits or revenue of the decentralized applications. An company is increasingly increasing number of gaining traction among Decentralized Applications investors (Dapps) will be built by startups to solve challenges in different industries
Source: NASSCOM AVASANT India Blockchain Report 2019
Strategic Review 2019 : Decoding Digital 182 IT-BPM Sector in India 2019 Talent: Skilling for Digital
STRATEGIC REVIEW Talent: Skilling for Digital
Emerging skills take precedence as organizations are transforming digitally
Digital Disruptions Leading to Demand for Skills Around Emerging Technologies High
ML & Data Science
Cyber Security IoT
Blockchain Devops Cloud Mobility
UX/UI AR/VR Networking Big Data
Digital Marketing Importance of Skill Importance
End User Computing Project ADM Management Business Intelligence & Analytics
Time Required by Organization to Attain Low High Emerging Skills Mainstream Skills
Key Highlights
~80% organizations including service providers and GCCs plan to Technologies such as Blockchain make significant investments to build talent in AI and Data Sciences are still in exploratory phase; pulled domain, followed by Cyber security down primarily by lack of talent
Skills in IoT and Devops are Rather than hiring, Learning and development programs considered critical, however, organizations aspire to build around emerging technologies comprise not expected to disrupt in-house skill base around a mix of instructor-led programs and hiring and expansion plans emerging technologies online courses and certifications
Source: Zinnov, Pluralsight
Strategic Review 2019 : Decoding Digital 184 The IT-BPM Sector in India: Talent: Skilling for Digital Digital skills key to digital transformation, but there is a gap
Tech Hiring Challenges Expected to Persist in 2019
United States Canada United Kingdom 15% 16% 15%
31% 8% 37% 9% 34% 12%
14%
40% 41% 42%
2019 significantly more challenging 2019 about on par with 2018 2019 moderately more challenging NET less challenging / don’t know
Percentage of Organizations Responding to Widening of Digital Talent Gap, by Industry
62% 60% 60% 58% 50% 48% 42%
Banking Consumer Products Retail Insurance Automotive Utilities Telecom
The digital talent gap in the organization has been widening over the past couple of years
Global Skills Shortage
IDC’s Worldwide CIO Agenda According to LinkedIn Research by (ISC)2 estimates 2019 Predictions reveals that Workforce Report (August shortage of cyber security 30% of high-demand roles for 2018), more than 151,000 professionals at 2.93 million, emerging technologies will data scientist jobs are going with ~500,000 of those remain unfilled through 2022 unfilled across the US positions in North America
By 2020, over a third of the core skills As per PwC CEO Survey 2019, more than 55% of CEOs needed for most jobs will need skills that are affirmed that availability of key skills is impacting the currently not considered crucial to the job ability of their organization to innovate effectively
Source: CompTIA IT Industry Outlook 2019, CapGemini: The Digital Talent Gap, Secondary Sources
Strategic Review 2019 : Decoding Digital 185 The IT-BPM Sector in India: Talent: Skilling for Digital Big Data & Analytics leads the demand in terms of net employment outlook in India
Top Practice Areas in Demand Digitally Skilled Employees
% ‘000s
2-5% Big Data & Analytics 10-12% Cloud Computing 25-35% Mobility 600 12-15% 450 Machine Learning 320 Cybersecurity 15-18% 12-15% Other FY2017 FY2018 FY2019E
Digitally Skilled Employees by Skill Level
% 5-10%
Awareness 25-30% Intermediate 60-65% Expert
Key Highlights
India features ~65% of Fortune IT 7 out of every 10 large IT ~74% of the ~600,000 digitally companies and service companies and digital workforce skilled workforce that enterprise are GCCs have established or is concentrated accounts for USD 33 investing heavily spun off their digital across Bangalore, billion in revenue, and spending more capability into a digital Delhi/NCR, Pune growing at ~30% YoY on digital initiatives CoE/digital labs and Hyderabad
Source: Experis IT Employment Outlook, Apr – Sep 18, Han Digital Solution, NASSCOM
Strategic Review 2019 : Decoding Digital 186 The IT-BPM Sector in India: Talent: Skilling for Digital Enterprises prefer to make in-house investments to train employees on digital technologies
Acquiring Skills vs. Acquiring Talent
33% 28% 19% 19% Prefer to train and Prefer to train and Over 20% of the No response redeploy existing talent redeploy existing talent project needs are met through lateral hiring Have enough time/ Don’t have enough resources to time/resources to Unable to reskill fast implement this implement this enough
Top Technologies with Highest Re-skilling Need
Artificial Intelligence Machine Learning Big Data Analytics Mobile & Software Development 41% 32% 25% 20%
Online Course / Certification Completion Rate Among Employees
39% 28% 19% 15%
Less than 25% Between Between Above 75% 25% to 50% 50% to 75%
Key Highlights
More than 60% organizations prefer Major demand for Online courses and certifications are to acquire skills by training and re-skilling will be in the preferred learning and development redeploying existing talent, instead areas such as AI, ML channels for organizations. However, of hiring skilled talent from outside and Big Data & Analytics challenged by a low completion rate
Source: People Matters, Simplylearn
Strategic Review 2019 : Decoding Digital 187 The IT-BPM Sector in India: Talent: Skilling for Digital In addition, enterprises are all set to re-skill their employees on emerging technologies
Illustrative
As of December 31, 2018, TCS has trained over 292,000 employees on Digital technology and over 318,000 employees on Agile methods
Over 125,000 employees across Wipro are digitally aware out of which ~55,000 employees have covered at least one digital skill beyond awareness
In 2018, EXL had trained ~3,000 employees in Analytics and ML and ~1,000 employees in Robotics
In 2018, over 4,000 employees at Mindtree completed close to 6,500 courses in areas such as Cloud, algorithms and programming languages, web technologies and emerging technologies such as IoT, Blockchain, AI, etc.
Mphasis certified ~3,000 employees in digital technologies. Further, it plans to re-skill 5,000 employees on digital skills in 2018
Tech Mahindra plans to train ~115,000 employees on digital skills in 2019
WNS targets to reskill over 11,000 employees through a structured digital educational program in 2019
Source: Secondary Sources, NASSCOM
Strategic Review 2019 : Decoding Digital 188 The IT-BPM Sector in India: Talent: Skilling for Digital Increasing collaborations among industry, academia and government to reskill existing and fresh talent
Illustrative
FutureSkills, a Simplilearn partnered UiPath rolled-out Cyient signed an MoU NASSCOM initiative, with Automation Academic Alliance with the Telangana has set a target to Anywhere and UiPath Program; Announced Academy for Skill and up-skill 2 million to offer RPA partnerships with ICT Knowledge (TASK) to current technology certification course Academy of Kerala, collaborate on professionals and skill Bennett University, skill-building and to another 2 million in NTTF, and Trident improve employability technologies such as Academy of for engineering RPA, IoT, Big Data Technology students by imparting Analytics, etc. technical and soft skills trainings
Rocheston partnered National Programme IIIT-H partnered with Microsoft announced with Pearson VUE to on Technology TalentSprint to offer Intelligent Cloud Hub launch Professional Enhanced Learning AI/ML executive program to equip Certification (NPTEL) collaborated program that selected research and programme. with IBM to offer a witnesses 400 higher education Rocheston offers 12-week online course participants from 127 institutions with AI courses in Innovation, focused on blockchain leading technology infrastructure, build IoT, Big Data and architecture, design companies. IIIT-H curriculum and faculty Business Leadership and use cases plans to equip 10,000 capability to skill through online, industry professionals students in AI and classroom and with expertise in Cloud technologies blended formats AI/ML by 2021
Source: Secondary Sources
Strategic Review 2019 : Decoding Digital 189 The IT-BPM Sector in India: Talent: Skilling for Digital
The future belongs to tri-lingual experts who excel not only in digital skills, but also soft skills and domain knowledge
Triad for the Skills of Future
Domain Knowledge Workforce that understands the industry and role-specific skills such as finance, sales and marketing, procurement, etc.
Employees with job-specific technology skills such as architecture, engineering, analysis, etc. Digital Skills
Soft Skills Employees with the ability to work effectively on interpersonal and collaboration skills, problem solving, creative thinking, etc.
Key Highlights
As enterprises are moving towards digital According to industry experts, cross-training is the key to transformation, new job roles are evolving up-skill the existing workforce by providing trainings on that demand blend of various other skills domain knowledge and soft skills, in addition to digital skills
Source: NASSCOM
Strategic Review 2019 : Decoding Digital 190 IT-BPM Sector in India 2019 Appendix
STRATEGIC REVIEW
191 The IT-BPM Sector in India: Strategic Review 2019
Glossary
Artificial Intelligence Cloud Computing
Artificial intelligence (AI) makes it possible for machines to The delivery of computing services—servers, storage, learn from experience, adjust to new inputs and perform databases, networking, software, analytics, intelligence human-like tasks. and more—over the Internet (“the cloud”) to offer faster innovation, flexible resources and economies of scale. Augmented Reality Cloud Infrastructure A technology that superimposes a computer-generated image on a user’s view of the real world to enrich Cloud infrastructure is no different from typical data interactions centre infrastructure except that it’s virtualised and offered as a service to be consumed via the Internet. Servers, storage, compute resources and security are all Big Data key components of cloud infrastructure. A term that describes the large volume of data – both structured and unstructured – that inundates a business Cloud Management Platform on a day-to-day basis. Cloud management platforms are integrated products that provide for the management of public, private and hybrid Blockchain cloud environments. A decentralized, consensus-based, tamper-proof data structure, comprised of unchangeable, digitally recorded Cloud Orchestration data in packages called blocks. Each block is then ‘chained’ to the next block, using a cryptographic Cloud orchestration refers to the arrangement and signature. This allows block chains to be used like a coordination of automated tasks resulting in a ledger, which can be shared and accessed by anyone with consolidated process or workflow. the appropriate permissions. Consortium Business Intelligence (BI) A blockchain where the consensus process is controlled by A way to reveal actionable insights in your data. a pre-selected set of nodes. The right to read the blockchain may be public or restricted to the participants. Business Process as a Service (BPaaS) Custom Application Development (CAD) A version of software as a service (SaaS) where buyers receive standardised business process services sourced CAD services focus on delivering customized (to client from the cloud by accessing a shared set of resources at requirements) development of software applications and each delivery level (people, application, infrastructure) interfaces as well as enhancements to existing packaged from a single service provider and constructed for applications or pre-engineered templates and support and multi-tenancy. Services are often automated, and provision of custom applications. accessed via Internet-based technologies. Customer Interaction & Support Business Process Management (CIS) (BPM) CIS includes all forms of IT-enabled customer contact; Erstwhile BPO; now re-branded as BPM - includes inbound or outbound, voice or non-voice based support processes that may be IT-enabled, do not necessitate used to provide customer services, sales and marketing, on-shore presence and are hence, offshoreable. technical support and help desk services.
Strategic Review 2019 : Decoding Digital 192 The IT-BPM Sector in India: Strategic Review 2019
Glossary
R&D, prototyping, development, testing, maintenance, Data Lakes support and development of next generation of the products. The development can be outsourced to either A data lake is a centralized repository that allows you to a GIC (global in-house captive) or to a third-party vendor. store all your structured and unstructured data at any scale. Going forward, this segment would be clubbed with ER&D and would be referred to as Product Engineering Services (PES). Decentralized Ledger Technology
A decentralized ledger is a digital logbook that uses some Finance & Accounting (F&A) protocol to enable computers in different places to F&A includes activities such as general accounting, continuously update the shared information store transaction management (account receivables and payables management), corporate finance (e.g. treasury eCommerce and risk management, and tax management); compliance management and statutory reporting, etc. Commercial transactions conducted electronically on the Internet by businesses and consumers is called eCommerce. eCommerce is divided into Business to Global Capability Business (B2B), Business to Consumer (B2C) and Centers/Captive units Consumer to Consumer (C2C). Captive units include both MNC-owned units that Edge Computing undertake work for the parents’ global operations and the company owned units of domestic firms. Edge computing enables connected devices to process data closer to where it is created. Global Sourcing Engineering Services and Services sourced from a country/countries different from the country where the firm receiving the services is Research & Development located. It includes both offshoring and near-shoring. (ER&D) Hardware Deployment and Engineering services are those that augment or manage processes that are associated with the creation of a Support product or service, as well as those associated with The hardware deployment and support service pertains to maximizing the life span and optimizing the yield the installation and support of a specific hardware device. associated with a product or asset. This not only includes The service is focused on the device and its components design elements of the product or service itself, but also rather than on software that is running on the device. encompasses the infrastructure, equipment and processes Installation activities can include hardware staging and engaged in manufacturing/delivering them. configuration, testing and debugging, site preparation, and physical installation of the device. R&D services involve providing research and development for hardware and software technologies, as well as development of software running on embedded systems. Horizontal-specific BPM services This includes computer-aided design (CAD). Services that are reasonably similar across industries. Horizontal BPM services include Customer Interaction and • Product Engineering Services (PES)/Offshore Software Support (CIS), Finance and Accounting (F&A) and other Product Development (OSPD): Outsourced development of the customer’s product, thereby taking up the related processing services, Knowledge Services, Human responsibility of all aspects of the product lifecycle - Resource Management (HRM), Procurement BPM, etc.
Strategic Review 2019 : Decoding Digital 193 The IT-BPM Sector in India: Strategic Review 2019
Glossary
Human Resource BPM Infrastructure Services
HR BPM, involves services that are delivered during the It involve a long-term, contractual arrangement in which a initial design and implementation of the solution as well service provider takes ownership of and responsibility for as on a continuous and ongoing process improvement managing all or part of a client’s information systems basis. Services such as business consulting, IT consulting, operations or department based on a service level systems integration, application outsourcing (AO), training agreement. It usually includes data centre operations and and education, and change management are typically may also include services such as desktop management, involved in HR BPM engagements local and wide area network operations management, help desk support, application development and Human Resources Processing maintenance, disaster recovery services and related consulting and systems integration activities. HR processing services includes services that support the core HR activities plus talent management activities and IT Consulting associated business processes such as benefits, payroll and talent management. IT consulting includes IS strategy, IT and network planning, architectural assessments, IS operational analysis, Intelligent Automation technical system and network designs, product-specific consulting, supplier assessment and maintenance Intelligent automation is a more advanced form of robotic planning. process automation (RPA). It is a combination of robotic automation with one or more AI technologies IT Education and Training Initial Coin Offerings (ICOs) Encompasses education to enhance the knowledge of information technology and expand its use. Training ICOs, or Initial Coin Offerings, are a form of company represents training content, delivery solutions, and financing. In most jurisdictions due to regulations these learning services of IT/technical and desktop applications “tokens” don’t represent shares or real economic rights training delivered to the corporate market by an external over the company that issues the ICO. Instead of shares provider. and the shareholders have the option of trading tokens with other users, or using them to pay for services from IT Services the issuing entity. IT services involve a full range of engagement types that Independent software vendor include consulting, systems integration, IT outsourcing/managed services/hosting services, training, (ISV) and support/maintenance.
An ISV makes and sells software products that run on one or more computer hardware or operating system Knowledge Services platforms. It comprises outsourcing of knowledge intensive processes, which includes services such as business Internet of Things (IoT) research, market research, data management, data analytics, legal and intellectual property services. A network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.
Strategic Review 2019 : Decoding Digital 194 The IT-BPM Sector in India: Strategic Review 2019
Glossary
Machine Learning Outsourcing Machine learning refers to ability of computer systems to improve their performance by exposure to data without the Outsourcing is a type of engagement, such as consulting need to follow explicitly programmed instructions and integration that can be sourced from any of the lower-cost regions. Natural Language Processing Packaged Software Natural language processing (NLP) is a branch of artificial intelligence that helps computers understand, interpret SEE: Software Products. and manipulate human language. Platform-based solutions Nearshore/Near-site Solutions where the software platform is provided (owned Country near to client country. or maintained) by the provider.
Network Consulting and Product Engineering Services Integration (PES)
Network consulting and integration services are the SEE: Engineering Services and Research & Development activities and skills associated with planning for and (ER&D). building data networks. Network consulting services include activities such as operations assessment, network planning and design, capacity planning, and maintenance Procurement services planning. Network implementation includes services such Procurement services are the transfer of ownership of as installation, configuration, custom software some or all procurement processes or functions to development, testing and debugging, project providers. This could include administrative, delivery, or management, staging, and security implementation management-related processes or functions. activities. Robotic Process Automation Offshore (RPA) The transferring of a complete business process to a different country that is significantly geographically It refers to automation which interacts with a computer separated from the country or countries where the firm centric process through the User Interface (UI) / user receiving the services is located. objects of the software application supporting that process. A robot is usually a runtime environment on which different processes/tasks can be executed. RPA can Outsourced/Offshore Software process structured and semi-structured data. Product Development (OSPD)
SEE: Engineering Services and Research & Development Small and Medium Businesses (ER&D). (SMB)
Demand side enterprises with average employees of less On-site than 1,000 who are potential users of IT-BPM services.
Client site
Strategic Review 2019 : Decoding Digital 195 The IT-BPM Sector in India: Strategic Review 2019
Glossary
Small and Medium Enterprises Systems Integration
(SME) Systems integration (SI) includes the planning, design, implementation, and project management of a solution Supply side enterprises that offer IT-BPM services and that addresses a customer’s specific technical or business have annual revenues of less than ` 500 million. needs. It involves systems and custom application development, as well as implementation and integration Smart Enterprise of enterprise package software.
An enterprise configured to deliver maximum strategic and operational value from established and emergent Third-party units technologies and associated shifts in customer behaviour Third-party units are essentially service vendors that are and competitive landscape. It uses technology to redefine mostly independently owned units (i.e. no single client has customer experiences, improve operational efficiency, and a controlling stake in the vendor entity).Third-party vendors embed digital advantages throughout its business model. also include a small section of MNC-owned independent third-party vendors, such as Cognizant, IBM, Convergys, Software-as-a-Service (SaaS) SITEL, Vertex and Sykes, having a significant part of their global operations based out of India. A model of software development where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the Vertical-specific BPM services application on the customer’s own computer, it alleviates Vertical-specific BPM services refer to offerings that the customer’s burden of software maintenance, ongoing require a high degree of vertical specific knowledge that is operation and support. not easily replicable across industries (e.g. insurance claims processing). Software Deployment and Support Virtual Reality
Software deployment and support services are activities, An artificial, computer-generated simulation of a real life expertise, and systems providing the customer with proper environment or situation that surrounds a user and installation and configuration of all packaged software responds to that individual’s actions in a natural way, products as well as appropriate ongoing support, access to usually through immersive head-mounted displays and resources, and distribution of software product releases, head tracking. updates, and upgrades.
Software Products (Packaged software)
Packaged software is programs or code sets of any type, commercially available through sale, lease, rental, or as a service. Packaged software revenues typically include fees for initial and continued right-to-use packaged software licenses.
Strategic Review 2019 : Decoding Digital 196 The IT-BPM Sector in India: Strategic Review 2019
List of Abbreviations
3D Three Dimensional CEE Central & Eastern Europe A-CMS Alliance Connected and Mobility Services CERT Computer Emergency Response Team ACV Annual Contract Value CES Customer Effort Score ADAS Advance Driver Assistance Systems CIN Challan Identification Number ADK App Development Kit CIO Chief Information Officer ADM Application Development Management CIS Customer Interaction Services ADSL Asymmetric Digital Subscriber Line CLM Contract Lifecycle Management AECS Autonomous, Electrification, Connectivity, ClnO Chief Innovation Officer Shared Mobility CMO Chief Marketing Officer AEPS Aadhaar Enabled Payment System CMOS Complementary Metal-oxide AGV Automated Guided Vehicle Semiconductor AI Artificial Intelligence Co-Bots Collaborative Robots AML Anti-Money Laundering CoE Centres of Excellence AMRUT Atal Mission for Rejuvenation and Urban COIN Co-Innovation Network Transformation COLE Center of Lending Excellence AP Accounts Payable CPDM Centre for Product Design and APAC Asia Pacific Manufacturing API Application Program Interface CPG Consumer Packaged Goods AR Augmented Reality CRM Customer Relationship Management ASRS Automated Storage and Retrieval System CRO Chief Restructuring Officer AWS Amazon Web Services C-SAT Customer Satisfaction B2B Business to Business CSC Common Service Centres B2C Business to Consumers CSEC Cyber Security Engagement Centre BFSI Banking, Financial Services and Insurance CSR Corporate Social Responsibility BHIM Bharat Interface for Money CTO Chief Technology Officer BI Business Intelligence CTS Concept To Shelf BOYD Bring Your Own Device CX Customer Experience BPaaS Business Process as a Service CXO Chief Executive Officer/ Chief Experience Officer BPL Below Poverty Line DACH Germany, Austria, Switzerland: German BPM Business Process Management speaking countries BPS Business Process Services DBT Direct Benefit Transfer BSE Bombay Stock Exchange DEC Digital Experience Centres BU Business Unit DevOps Development + Operations CAD/M Custom Application DFM Design for Manufacturability Development/Management DIN Director Identification Number CAGR Compounded Annual Growth Rate DMS Digital Managed Services CAIO Chief Artificial Intelligence Officer DoT Department of Telecommunication CC Constant Currency DPP Defence Procurement Policy CCC Content Communication & Collaboration DX Digital Transformation CDO Chief Data Officer/Chief Digital Officer ECG Electrocardiogram CEC Customer Experience Centre ECU Engine Control Unit
Strategic Review 2019 : Decoding Digital 197 The IT-BPM Sector in India: Strategic Review 2019
List of Abbreviations
EDF Electronics Development Fund HCM Human Capital Management EDT Enterprise Digital Transformation HEV Hybrid Electric Vehicle EHRs Electronic Health Records HIMS Hospital Information Management System eKYC Elecrtonic Know Your Customer HIS Hospital Information System EMEA Europe, Middle East and Africa HMD Head Mounted Devices EMI Equated Monthly Instalments HQ Headquaters EMR Electronic Medical Records HRO Human Resource Outsourcing eNAM An e-trading portal for agricultural commodities HUD Heads-up-Display EPFO Employee's Provident Fund Organisation HVAC Heating, Ventilation, Air-conditioning ER&D Engineering Research & Development IA Intelligent Automation ERNET Education and Research Network IaaS Infrastructure as a Service ERP Enterprise Resource Planning IAP Infosys Automation Platform EU European Union IC Integrated Circuit EV Electric Vehicles ICOMC Intelligent City Operations and Management Centre F&A Finance and Accounting ICT Information and Communications FDI Foreign Direct Investment Technology FMCG Fast Moving Consumer Goods IDS Intrusion Detection Systems FMS Financial Management System IESA India Electronics and Semiconductor FP&A Financial Planning & Analysis Association FTE Full Time Employee IFC International Finance Corporation GCC Global Capability Center IIoT Industrial Internet of Things GDP Gross Domestic Product ILC Immersive Learning Centre GE General Electric IMPS Immediate Payment Service GEN's The Global Entrepreneurship Network INR Indian Rupee GIC Global In-house Centre IoT Internet of Things GIS Geo-Spatial Information System IoT OS IoT Operating System GL General Ledger IP Intellectual Property GMS Gross Merchandise Sold IPS Intrusion Prevention Systems GMV Gross Merchandise Value ISL IoT Service Line GoI Government of India ISO Infrastructure Services Outsourcing GPC Global Parts Centre ISP Internet Service Providers GPs Gram Panchayats ISV Independent Software Vendors GRC Governance, Risk & Compliance IT Information Technology GRU Gated Recurrent Units IT OPEX Information Technology Operating Expenses GSPs GST Suvidha Providers ITES IT-enabled Services GST Goods and Services Tax ITIs Industrial Training Institutes GSTN Goods and Services Tax Network ITO IT Outsourcing GTM Go-To-Market ITS Information Technology HAS Hardware Assisted Security Services/Intelligent Transport System HBM Human Body Modelling IUC Interconnect Usage Charges
Strategic Review 2019 : Decoding Digital 198 The IT-BPM Sector in India: Strategic Review 2019
List of Abbreviations
IUX Intelligent Urban Exchange MSMEs Micro, Small & Medium Enterprises JAM Jan Dhan-Aadhar-Mobile MTCoE Marketing Technologies CoE JV Joint Venture NA North America K Thousand ('000) NB-IoT Narrowband Internet of Things kbps Kilobits per second NCR National Capital Region KBS Knowledge Based Services NDCP National Digital Communication Policy KMRL Kochi Metro Rail Limited NDLM National Digital Literacy Mission KPIs Key Performance Indicators NEBPS North East BPO Promotion Scheme KPO Knowledge Process Outsourcing NeGP National e-Governance Plan KYC Know Your Customer NFV Network Function Virtualization LAN Local Area Network NGN Next Generation Network LATAM Latin America NHDC National Handloom Development Corporation Ltd. LED Light-Emitting Diode NLG Natural Language Generation LEO Low Earth Orbit NLP Natural Language Processing LTE Long-Term Evolution NOFN National Optical Fibre Network LTL Less than Truck Load NPCI National Payments Corporation of India M&A Mergers & Acquisitions NPS Net Promoter Score M2M Machine to Machine NPSDE National Policy for Skill Development and mbps Megabits per second Entrepreneurship MBRDI Mercedes-Benz Research and NSDM National Skill Development Mission Development India NTA New Technology Accelerator MCU Micro Controller Unit NUUP National Unified USSD Platform MDM Mobile Device Management NXPs Consumers' "Next Experience" MDR Merchant Discount Rate OCR Optical Character Recognition ME Middle East ODC Offshore Development Centres MeitY Ministry of Electronics and Information Technology OEM Original Equipment Manufacturer MEM/S Micro-Electro-Mechanical/Systems OLAs Operational Level Agreement MES Manufacturing Execution Systems OPD Out Patient Department MICE Meetings, Incentives, Conferences and OSPD Outsourced Software Product Exhibitions Space Development MIS Management information system OTAs Online Travel Agencies ML Machine Learning OTC Over The Counter MMP Mission Mode Projects OTT Over the Top MNC Multi National Company P&L Procurement & Logistics MOM Manufacturing Operations Management P2P Peer-to-Peer MOOC Massive Online Open Courses PaaS Platform as a Service MoU Memorandum of Understanding PE Private Equity MPE Media, Publishing and Entertainment PES Product Engineering Services MR Mixed Reality PLC Programmable Logic Controller MRO Maintenance, Repair, and Overhaul PLM Product Lifecycle Management
Strategic Review 2019 : Decoding Digital 199 The IT-BPM Sector in India: Strategic Review 2019
List of Abbreviations
PMGDISHA Pradhan Mantri Gramin Digital Saksharta SOA Service Oriented Architecture Abhiyan SOC/SoC Security Operations Centres/System on PMJDY Pradhan Mantri Jan-Dhan Yojana Chip POS Point of Sales SON Self Optimising Network PPC Pay Per Click T&L Transport & Logistics PPP Public Private Partnership T&M Time & Material PSTN Public Switched Telephone Network TAP Target Accelerator Program QA Quality Assurance TCoE Testing Center of Excellence q-o-q Quarter on Quarter TCV Total Contract Value R&D Research & Development TEaaS Testing as a Service RAILIPT Robotic Artificial Intelligence Language – TIE The Indus Entrepreneurs Integrated Product Technology TNGA Toyota New Global Architecture RBI Reserve Bank of India TPV Third Party Vendor RFID Radio-Frequency Identification TRAI Telecom Regulatory Authority of India RFP Request for Proposal TS Technical Support RoI Return on Investment TSSC Telecom Sector Skill Council RoW Rest of the World UAE United Arab Emirates RPA Robotic Process Automation UI User Interface S&M Sales & Marketing UIDAI Unique Identification Authority of India SaaS Software as a Service UK United Kingdom SAP System Applications and Products UMANG Unified Mobile Application for New-age SCADA Supervisory Control and Data Acquisition Governance SCM Supply Chain Management UPI Unified Payments Interface SCOR Supply Chain Operations Reference Model USA United States of America SDI Serial Digital Interface USD US Dollars SDK Software Development Kit UX User Experience SDL Smart Device Link V&V Verification & Validation SDN Software Defined Networking V2V Vehicle to Vehicle SDS Self-driving system V2X Vehicle to Everything SDx Software-Defined Everything VC Venture Capitalist SEM Search Engine Marketing VLE Village Level Entrepreneurs SEO Search Engine Optimisation VoLTE Voice over Long Term Evolution SI System Integration/System Integrator VR Virtual Reality SIAM Society of Indian Automobile VSAT Very Small Aperture Terminal Manufacturers WEF The World Economic Forum SiC Silicon Carbide WMS Warehouse Management System SKU Stock Keeping Unit XaaS Everything as a Service SLA Service Level Agreement XR Extended Reality SMAC Social, Mobile, Analytics, Cloud Y-o-Y Year-on-Year SMB Small and Medium-sized Business SME Small and Medium Enterprises
Strategic Review 2019 : Decoding Digital 200 The IT-BPM Sector in India: Strategic Review 2019
List of Sources & Contributors
Sources
451 Research Frost & Sullivan Price Waterhouse Cooper Accenture Gartner Questel Orbit Patent Database AgFunder Goldman Sachs R&Dmag Analyticsindiamag Goldsmiths Redseer Consulting App Annie Grandview Research Reuters AT Kearney Han Digital Solution Reserve Bank of India Automation Anywhere HfS Research Shopify Avasant IAMAI Simplylearn Bank of America Merrill Lynch IBEF Software Technology Parks of India BNP Paribas IDC Strategy& Business Insider Inc42 Techcircle Business Wire INSEAD Techinasia Boston Consulting Group ISG Tech Sci Research Capgemini KPMG Tracxn Cognizant LinkedIn TRAI CompTIA Marketresearchfuture Transparency Market Research Constellation Research McKinsey Global Analysis UNCTAD CLSA Ministry of Electronics & Information ValueNotes Research CrunchBase Technology (Meity) VCCircle Deloitte Research Morgan Stanley Venture Intelligence DIPP Motilal Oswal WIPO Dimension Data National Payements Corporation of Wipro E-marketer India WNS Ernst & Young NelsonHall World Bank Everest Group Niti Aayog Yourstory Experis Offshore Insights Zinnov Research Financial Times People Matters Forrester Pluralsight
Contributers
Atos Origin Hinduja Global Solutions Persistent Systems Cyient Infosys Quest Global EXL L&T Technology Services Tata Consultancy Services Firstsource Mahindra Integrated Business Tech Mahindra Genpact Solutions Teleperformance HCL BPO Mindtree Wipro HCL Technology Services Mphasis WNS Hexaware NIIT Technologies
Strategic Review 2019 : Decoding Digital 201 The IT-BPM Sector in India: Strategic Review 2019
List of NASSCOM Reports
Indian Cybersecurity Product Landscape – Scripting a promising story
EdTech - The Advent of Digital Education
Agritech in India – Maxing India Farm Output
INDIAN TECH START-UP ECOSYSTEM 2018: Approaching Escape Velocity
Product Opportunities Driving a USD 10 Trillion Economy
Fintech in India – Powering a Digital Economy
Propelling India towards Global Leadership in e-commerce
Technology M&As in India (2017-18): A Digital Revolution
IT Infrastructure Services in the Digital Era
Digital Customer Experience Services: How India Can Lead the World
HealthTech in India - Are we there yet?
Perspective 2025: Shaping the Digital Revolution
Releasing Soon
NASSCOM KPMG Report on Software Testing 2019
NASSCOM AVASANT India Blockchain Report 2019
NASSCOM Cloud Report 2019
NASCCOM Report on Immersive Media 2019
NASSCOM-Zinnov GCC report 2019
Strategic Review 2019 : Decoding Digital 202 The IT-BPM Sector in India: Strategic Review 2019
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