1. May 31
2012
Industry Analysis Report on Information Technology
and Telecom Sector, especially concentrated for
Information Technology based Start-ups
Subham Sahu,
Centre or Innovation, Incubation and Entrepreneurship,
Indian Institute of Management,
Ahmedabad, India

2. Contents
Overview.................................................................................................................................... 4
Indian IT and Telecom Industry................................................................................................ 5
Information Technology Industry ............................................................................................. 7
IT Services and ITeS industry ................................................................................................ 7
Indian IT services industry................................................................................................. 8
Indian ITeS Industry........................................................................................................... 9
Pricing models in the industry............................................................................................. 10
Challenges ............................................................................................................................ 10
Key players:.......................................................................................................................... 11
Cloud computing..................................................................................................................... 11
Scope .................................................................................................................................... 11
Scenario in India................................................................................................................... 11
Business models of cloud computing industry ................................................................... 12
Challenges and Opportunities ............................................................................................. 13
Key plyers in Industry ......................................................................................................... 13
Enterprise Software Solutions ................................................................................................. 14
Scenario of Indian Enterprise Software Industry ................................................................ 14
Enterprise application licence pricing ................................................................................. 14
Verticals of Enterprise Software .......................................................................................... 15
Challenges and Barriers........................................................................................................... 15
Key players in Industry ....................................................................................................... 16
Telecom Industry..................................................................................................................... 16
Telecommunication ................................................................................................................. 16
Scope .................................................................................................................................... 16
Indian telecommunication industry .................................................................................... 16
Challenges and Opportunities ............................................................................................. 17
Value Added Services Industry............................................................................................... 18
Scope .................................................................................................................................... 18
Scenario of Indian VAS Industry ......................................................................................... 18

3. Drivers of MVAS.................................................................................................................. 19
Start-up Study:......................................................................................................................... 20
Cloud Computing ................................................................................................................ 20
ERP Solution Provider ......................................................................................................... 20
CRM Solution provider........................................................................................................ 21
Security Solution Industry (EAS)......................................................................................... 21
Telecom and VAS INDUSTRY............................................................................................. 22
Reference:................................................................................................................................. 23

4. Overview
The Information Technology (IT) and Telecom industry has become one of the most
robust industries in the world. IT, more than any other industry or economic facet, has an
increased productivity, particularly in the developed world, and therefore is a key driver of
global economic growth. Information technology (IT) is defined as the design, development,
implementation and management of computer-based information systems, particularly
software applications and computer hardware. Today, it has grown to cover most aspects of
computing and technology.
This industry Analysis report covers the IT industry and telecom services industry. The IT
industry can be classified as IT services, IT enabled services and Software Production
industry. The trends in current market are Cloud computing, Enterprise Application service,
Software testing, Merging and Acquisitions in IT industry, Custom application development
and exporting. The ITeS sector has some of the service area as Knowledge Services (legal
process outsourcing, research outsourcing, analytics etc.) Business process outsourcing and
Engineering service outsourcing(R & D, Designing).
Telecom sector industry plays an important role in world economy. The sharp growth in
wireless communication, the penetration of mobile phones to rural area, introduction of the
third-generation(3G) and fourth generation(4G) are the key drivers of the industry. The
telecom industry is so developed still the challenges to bring the rural area under the reach of
internet reach opens a wide opportunity to growth. The telecommunication industry is also a
good consumer of IT industry. The telecom industry is vast and offers a wide range of career
opportunities on both the hardware and software fronts. These prospects include functional
jobs in mobile telephony, internet protocol media systems, wireless communications, GSM,
GPRS and CDMA technology, VoIP, data networks and optical networks amongst others.
“Despite global economic uncertainty, the telecommunications industry is showing
strong revenue growth, which is being driven by consumer Internet usage and business
mobility solutions. These are enabling new applications,” says Fran Caulfield, Research
Director for Insight Research[1].
The telecom industry’s services are mobile services, fixed line telecom services and GPRS,
3G, 4G services. The telecom industry gave rise to another industry as Value Added Services,
Which now have grown to a billion dollar industry. The industry derives its revenues
primarily from entertainment related services such as games and music downloads, which
make in close to 80% of VAS revenues. Whereas utility mobile VAS, which are services
such as m-governance, m-commerce and education over the mobile, currently constitute only
20-25% of VAS revenues, leaving large scope for growth.
This Industry analysis report focuses on the IT industry and telecom industry, in order
to study the challenges , barriers, opportunities, gap, which could be helpful the start-up
analysis and the evaluation of start-up according to according to present environment.

5. Indian IT and Telecom Industry
Over the past decade, information technology industry has become one of the fastest growing
industries in India. Strong demand over the past few years has placed India among the fastest
growing IT markets in the Asia pacific region. The role of information technology changes
now a days, It is changing and putting an invisible layer to the lives.
 The IT sector has increased its contribution to India's GDP from 1.2% in FY1998 to
7.1% in FY2011.
 According to NASSCOM, the Indian IT/ITeS industry is expected to aggregate
revenues of $28.8 billion in 2010-11, up by $4.9 billion in 2009-10, indicating a
growth rate of 20.7 per cent.
 Revenues of the top 3 players (TCS, Infosys and Wipro) in the Indian software
industry grew by 19.8 per cent (y-o-y) in 2010-11 to touch Rs 958.4 billion; growth
was on account of recovery in the volumes.
 Export revenues are expected to reach $59.4 billion in 2010-11 as compared to $50.1
billion in 2009-10 ' a growth of 18.5 per cent. Export dominate the IT–ITES industry,
and constitute about 77% of the total industry revenue.

6.  Though the IT–ITES sector is export driven, the domestic market is also significant
with a robust revenue growth. The industry’s share of total Indian exports
(merchandise plus services) increased from less than 4% in FY1998 to about 25% in
FY2012.
Some of the major reasons for the significant growth of the IT industry of India are
 Abundant availability of skilled manpower
 Reduced telecommunication and internet costs
 Reduced import duties on software and hardware products
 Cost advantages
 Encouraging government policies
The India has the world's second-largest mobile phone users with over 919 million as of
March 2012. It has the world's third-largest Internet users with over 121 million as of
December 2011.India has become the world's most competitive and one of the fastest
growing telecom markets.
The total revenue of the Indian telecom sector grew by 7% to 283,207 crore (US$56.5
billion) for 2010–11 financial year, while revenues from telecom equipment segment stood at
117,039 crore (US$23.35 billion).The industry is expected to reach a size of 344,921 crore
(US$68.81 billion) by 2012 at a growth rate of over 26 per cent, and generate employment
opportunities for about 10 million people during the same period.
With the launch of 3G in the Indian market, a variety of data services, mobile internet, and
location-based services, m-commerce, app stores, and applications are expected to increase
the end-user experience, and created a revenue of 13,026 crore by the end of the year 2011.
Now the leading telecom operators of India are launching 4G services in major cities. The 3G
and 4G in india are not yet shown a significant growth in data consumtion as the speed
through them still remains below expectation.
In telecom industry of India the Introduction of Tata Docomo to india and the slash of
price started tariff war between the operator. The inclination of the tariff also helped the
industry for better penetration in Indian market.
The leading telecom operators of India are BSNL, Airtel, Tata Docomo, Tata indocom,
reliance communications, Loop, Vodafone etc.
India’s mobile VAS market is projected at US$ 3 billion with revenues driven by
mobile–entertainment-themed VAS, including mobile music, games, images, TV and video,
accounts for 29 per cent. Mobile messaging and mobile Internet accounts for 49 per cent and
21 per cent respectively and 1 per cent revenue is generated from other value added services.
Major players in field of VAS are one97, on mobile, spice digital, IMImobile.

7. Information Technology Industry
The IT industry can be divided into three Subsectors as
1. IT Services
2. ITeS Services
3. Software Industry
Though the IT industry is divided into this three sector, some themes are the trends now a
days which are lucrative opportunity to grow. The study shows that some of themes are
offering good opportunity, they are
1. Cloud Computing
2. Enterprise Application Service
3. Software Testing
Some trends are being seen in IT industry as their growth and opportunity
1. Non-linear Growth
2. Mergers and Acquisitions
IT Services and ITeS industry
According to NASSCOM, the global IT services industry is expected to grow at a CAGR of
3.8 per cent from $566 billion in 2009 to $684 billion in 2014, led by outsourcing
engagements.
300
250
200
150
Project-Oriented services
100 Outsourcing
Support and Training
50
0
2009 2010 2011 2012e 2013e 2014e
Worldwide Spending on IT Services

8. Domestic IT-ITes market:
Domestic It-ITeS market shows an increase in revenue in coming days.
Indian IT services industry :
 IT services exports is the fastest growing segment, growing by 19 per cent in FY2012,
to account for exports of USD 40 billion
 Increased acceptance from mature segments such as BFSI, US, and large
corporations, and emerging segments such as retail, healthcare, utilities, SMBs, Asia
Pacific and RoW

9. IT Services to different Industry
 The increase in domestic market for IT Services industry
 Emerging technologies – cloud computing, mobility, social media and big
data/analytics unleashing new opportunities for the industry
Indian ITeS Industry
 ITeS industry commonly nown as BPO services industry which deals with Legal
process outsourcing, knowledge process outsourcing and Engineering services
outsourcing.
 Exports, which formed around 84 per cent of the revenues in 2010-11, grew by 14 per
cent on a y-o-y basis and reached USD 14.1 billion
 Domestic revenues grew by 22 per cent in 2010-11, grew higher compared to about
18 per cent in 2009-10. This ITeS growth in domestic market is led by the BFSI,
telecom and manufacturing and a greater vendor focus with specific offerings.

10.  Software and services revenues (excluding Hardware), comprising nearly 87 per cent
of the total industry revenues, expected to post USD 87.6 billion in FY2012;
estimated growth of about 14.9 per cent over FY2011
Pricing models in the industry
The maturity of the third-party model has brought with it a variety of pricing and engagement
models. Some of the pricing models seen in the industry include:
 Per-unit time / variable cost: This is currently the most common pricing model in
the industry. The client guarantees a minimum amount of business and is billed on a
per hour or per seat basis.
 Per seat or full time employee (FTE) per month: The client guarantees a minimum
amount of business for a number of FTEs on a monthly basis.
 Activity based billing: Billed by the volume of activity (i.e. per call, per statement or
per line transcribed)
 Gain-share models: Billing based on quantifiable value delivered (i.e. success rate,
conversion ratio etc) on the basis of mutually agreed parameters.
 Hybrid pricing models: Combination of 2 or more models. Typically incorporate a
fixed volume rate plus a marginally higher rate for peak load absorption.
Challenges
 The mix of voice and non-voice jobs: The costs associated with a voice-based
business are high, given the high attrition rates and wage hikes.
 Foreign exchange : the appreciation and depreciation of the rupee value with
dllar plays a major role in long term contracts.
 Attrition: the Attrition rate is very high as the BPO sector growth rate is high.

11.  Wage increases: the inflation in India results in wage increase,, which affect
the industry
 Infrastructure: the industry needs good infrastructure, which should be
provided to start –ups , as they have limited infrastructure for company.
“In India, STPI has tried to address this issue by providing incubation office
space, i.e., ready to plug-in offices, in nearly 51 locations across the country.”
Key players:
Tata Consultancy Services IBM
Infosys Hewlett-Packerd
Cognizant Accenture
Wipro
HCL Technologies
Cloud Computing
Scope
Cloud computing refers to a pay-per-use model of computing where applications and
software are accessed over the Internet and not owned by users. It helps IT companies to save
huge costs as they do not have to invest heavily in IT infrastructure. This service driven
model has three distinct characteristics that differentiate it from traditional hosting. It is sold
on demand, is elastic, and offers greater flexibility.
 Microsoft-IDC study estimates that the revenues from cloud innovation could reach
as high as $1.1 trillion a year by 2015 from $400 billion in 2011, where some $28
billion was spent worldwide on public cloud IT services (as compared to over $1.7
trillion of spending on total IT products and services industry) creating 1.5 million
jobs.
 According to Zinnov Management Consulting, India's cloud computing market is
expected to reach USD 4.5 billion by 2015.
Scenario in India
 India and China are two major players in the cloud computing arena. Subscription
based service model and cost effectiveness are two important factors that drive more
and more Indian companies and SME’s to enter and utilize cloud-based applications.

12.  Software as a Service (SaaS) applications are gaining acceptance in India, with 32%
of SaaS adopters replacing an on-premise application in 2009-10 says Springboard
research
 22% of organizations using an on-premise application have chosen to adopt the
same application's SaaS version in another geography or department within the
organization.
 Springboard estimates that the Indian SaaS market, valued at US$105 million in
2009, will be worth US$352 million by 2012. It's likely to register a growth of 60%
CAGR from 2008 to 2012.
Business models of cloud computing industry:

13. Challenges
 Security is a Main concern: Since the deployment models are private and public ,
the enterprises are concerned about using the cloud as the security concern. The large
firms have the Resources to build private cloud to avoid this but everyone cannot.
 Potential erosion in traditional services: Traditional on-site software product
vendors are increasingly facing competition from SaaS providers who provide flexible
payment models as compared to the incumbent fixed price plus annual maintenance
model.
Opportunities
 Low total cost of ownership of applications because of pay as you go services. No
need to have a dedicated in-house IT team to manage applications. This ensures they
focus on their sore business and not supporting tasks. So, SMBs are more interested in
this service.
 Many SMBs are worried about loss of data as they do not have systems and processes
in place to take regular backups. They opt for easy to use cloud based backup
services
“SMBs will be the key driving factor for cloud computing services in future. It also
identifies that SMBs will be specifically interested in services which can assist them in:
Marketing (Business to Business, Business to consumer, Consumer to Business)
Communication: enable their clients to interact with them online. Also enable
smooth interactions within the business (internal communication)
Product / Service development: conceptualize, develop and launch new products
Today some of the most common cloud applications used by SMBs include:
 CRM : Customer support and interaction
 Sales and marketing automation
 Accounting and financial transactions
 Content communication and collaboration (CCC)
Key plyers in Industry
Amazon Google BlueLock GoGrid
CSC IBM AT&T

14. Enterprise Software Solutions
Enterprise software are typically business-oriented tools such as online shopping and online
payment processing, interactive product catalogue, automated billing systems, security,
enterprise content management, IT service management, customer relationship management,
enterprise resource planning, business intelligence, human resource management,
manufacturing, enterprise application integration, and enterprise forms automation. The
market for softwares used by enterprises in the country is projected to grow 13 per cent this
year and revenues for the segment will reach $ 3.22 billion despite challenging economic
conditions, research firm Gartner
Scenario of Indian Enterprise Software Industry
 enterprise software market in India is projected to grow 13 per cent in 2012, as
revenue reaches $$3.22 billion USD in 2012, according to Gartner, Inc
 India’s enterprise software market is forecast to maintain its strong performance, with
an estimated compound annual growth rate (CAGR) of 13.6 per cent from 2009 to
2016 – the third highest growth rate in the world.
 The country is forecast to account for 11 per cent of the region’s total revenue of
$29.33 billion USD for Asia/Pacific this year, the equivalent to 1.15 per cent of the
total worldwide software of market share of $280 billion USD billion.
Enterprise application licence pricing
Enterprise application licences are typically sold on following basis:
 Number of employees
 Number of users – Licences are sold on the basis of number of end users, rather than
number of employees
 Transaction – The user pays for the service on a per transaction basis
 Server – The software is licensed on the basis of number of servers

15. Verticals of Enterprise Software
Challenges and Barriers
 Lack of domain expertise: Serving verticals like life sciences, aviation and oil and
gas requires deep domain expertise across the breadth of the verticals. Lack of domain
expertise in these areas limits the off-shoring opportunity in the EAS space.
 Lack of experience in consulting and configuration space
 Cloud based CRM and security of cloud is a challenge now a days , which seems
great opportunity.

16. Key players in Industry
SAP Salesforce.com
ORACLE Lawson
SAGE Unit4 Agresso
INFOR Epicor
MICROSOFT Visma
Telecom Industry
Telecommunication
Scope
The telecom industry is growing at a great pace and the growth rate is expected to double
with every passing year. There are new developments in the telecomm sector, including the
launch of 3G and 4G technology that the Indian market is witnessing at present.
Indian telecommunication industry
 India has the world's second-largest mobile phone user base with over 919 million
users as of March 2012. It has the world's third-largest Internet users with over 121
million as of December 2011. In recent times India has become the world's most
competitive and one of the fastest growing telecom markets .

17. Net addition to mobile subscribers
 The no. of subscriber to fixed line connections are declined in a vast rate.
The share of rural subscribers has increased to 34.77 per cent MoM, urban share has declined
by 0.36 per cent. With this, the overall Tele-density in India reaches to 78.66 at the end of
March, 2012 from 78.10 of the previous month.The country has the world's third largest
Internet users with over 121 million users (of whom 59% who only access the internet via
mobile devices) as of December 2011 However, the Internet penetration in India is one of the
lowest in the world and only accounts for 8.4% of the population compared to OECD
counties where average penetration rate is over 50%.
Challenges and Opportunities
 This has been witnessed due to strong competition that has brought down
tariffs as well as simplification of policy environment that has promoted healthy competition
among various players
 The licence and investment is not affordable for a startup.
 It is not matures still very difficult to survive in present competition
Opportunities:
 The opportunity for internet providers in cheaper rate open
 Internet users base fast reaching near the English speaking population base.
Local language and content required for further growth
 Infrastructure equipment cost is down to a fraction of what prevailed just a
few years ago.

18.  Increased viability for the operators to expand to semi-urban and rural
markets, hence, Operators can plan better expansion plan now
Value Added Services Industry
Scope
The industry derives its revenues primarily from entertainment related services such as games
and music downloads, which rake in close to 80% of VAS revenues. Whereas utility mobile
VAS, which are services such as m-governance, m-commerce and education over the mobile,
currently constitute only 20-25% of VAS revenues, leaving large scope for growth.
Scenario of Indian VAS Industry
India’s mobile VAS market is projected at US$ 3 billion with revenues driven by mobile–
entertainment-themed VAS, including mobile music, games, images, TV and video, accounts
for 29 per cent. Mobile messaging and mobile Internet accounts for 49 per cent and 21 per
cent respectively and 1 per cent revenue is generated from other value added services.
"As far as India is concerned, voice and/or SMS based
applications are likely to continue to dominate, especially as the
user base continues to expand into lower income segments of the
population"- Lead ICT Policy Specialist, World Bank
With mobile penetration expected to go up to nearly 100% by 2015 , and the advent of 3G,
MVAS revenues are expected to grow to approximately Rs. 48,000 crores

19. Drivers of MVAS
 Govt. mandate for inclusive growth: the Govt. should use MVAS to reach
people for inclusive growth.
 Increasing Mobile phone ,and network penetration
 Need for differentiation
 Increasing consumer demand/awareness
 Automation due to Information And Comm. Technology

20. IT & TelecomIndustry Analysis Report 2012
Start-up Study: IT/ITeS industry
Name Founded innovation Monetization
Helical 2005 a healthcare IT solutions
Technologies provider
Desicrew 2005 Rural people employment BPO services to
through low cost BPO service Corporate clients
RuralShores 2008 create a social impact by ITeS services in low
providing opportunity to the cost
rural community
Cloud Computing
Name Founded Innovation Monetization
Appfog 2011 it leverages the open-source Cloud Platform-as –a-
Foundry code as its core Service
Bromium 2011 virtualization technology as a tool Service charge
for securing the myriad endpoints
CloudSigma 2012 impressive SuperNAP data center IaaS service model
and offers 10 GbE interconnects
Orange 2003 Visual Platform as a Service PaaS service model
(PaaS), a modeling driven visual
Scape
development and deployment
environment for creating business
applications
Dropmyemail 2012 backing up one’s email Freemium model
ChalkPad Education ERP systems Product sale and
revenue
ERP Solution Provider
Name Founded Innovation Monetization
VendAPPS™ 2011 vendor solution which B2B software revenue
covers your entire supply
chain
ERP- 2011 Info-portal about ERP Ad and revenue
Software.org solutions
Niqotin 2008 Enterprise Resource App revenue
Planning (ERP)
application, named Rural
ERP, for Indian Rural
MSME’s

21. IT & TelecomIndustry Analysis Report 2012
CRM Solution provider
Name Founded Innovation Monetization
Cirrus Insight 2011 puts the power of the Revenue as a product
Salesforce.com CRM right
inside Gmail.
iWeb Technology 2011 Knowledge Base as well as Revenue as a product
Solutions Pvt.Ltd an Application Generator
which creates multi vertical
& horizontal applications
like ERP, CRM, SCM, HR,
Payroll, Finance, Quality,
Productio etc
ContractuallyCRM 2011 easy to automatically convert REVENUE AS A
your email contacts to one PRODUCT
central spot, sync it with
your CRM (if needed), and
add tasks, follow-ups, and
priority associated with those
contacts
Security Solution Industry (EAS)
Name Founded Innovation Monetization
Epic Alarm 2012 advanced solutions designed to Product revenue(b2b,
protect businesses and b2c)
residences.
alfredNFC.com 2012 invented a universal conduit of Product revenue(EAS)
information that ties mobile
devices to location-specific
events via the Cloud and made
it accessible to all developer
partners.
BriVAS 2012 technology that allows for Product revenue
technologies multimodal authentication
verification for digital devices
Pratikar 2012 interact with the real world just Product
technologies(Ana by scanning QR Codes, NFC revenue(consumer)
tag Tags or even plain text.
(http://anatag.co
m)

22. IT & TelecomIndustry Analysis Report 2012
Telecom and VAS INDUSTRY
Name Founded Innovation Monetization
Internet Libre 2011 pre-paid internet wireless Customer paid
access service with three key
advantages
Keku 2012 connects people around the Customer paid
world with its high-quality
calling service and simple
mobile apps.
Mobile tulip 2011 Providing technology
solutions for top tier
operators, aggregators
and mission critical
needs. Bulk messaging
revenue
TTAG 2011 web and telecom technologies Paid Service(customer
to deliver innovative telecom pays)
products and services
 No complicated
distance dialling
codes
Mobacomm 2012 Pay by phone(mobile wallet) App. Revenue
StarTele 2011 mobile SIP Product for Product revenue
Tech businesses and VoIP carrier
services across worldwide

23. IT & TelecomIndustry Analysis Report 2012
Reference:
1. http://www.bgr.com/2012/01/05/global-telecommunications-industry-revenue-to-
reach-2-1-trillion-in-
2. http://www.tele.net.in/telefocus/vas/item/4962
3. https://www.deloitte.com/assets/Dcom-
India/Local%20Assets/Documents/Deloitte_ASSOCHAM_MVAS_Study.pdf
4. http://saharanext.com/mobility/enterpriseHorizontalSolutions.asp
5. http://articles.economictimes.indiatimes.com/2012-04-
03/news/31281242_1_enterprise-software-software-market-asheesh-raina
6. http://www.mikeonmanufacturing.com/mike-on-manufacturing/2010/06/how-do-
erp-software-companies-survive.html
7. www.crisilresearch.com
8. http://www.nasscom.org
9. https://www.bcgperspectives.com/information_technology