In the last ten years, the technology and business services sector has had an unparalleled impact on the Indian economy , through a multiplier effect on job creation, expansion in tertiary education, foreign exchange reserve creation, sustainable exports and incremental GDP growth. Driven by the phenomenon of globalization of services, organizations have leveraged India’s value proposition to enhance their competitiveness, blurring the boundaries of offshoring, outsourcing towards global sourcing. The global economic crisis has led to a slowdown in growth in the Indian technology and business services sector. While strategies to manage the downturn are critical, it is equally important to look ahead and plan for the future. Industry leaders recognize that the next ten years will be fundamentally different from the past and require all stakeholders to develop strategies and insights to identify new opportunities and mitigate the risks. There are several global megatrends which offer new opportunities and new challenges which need to be thought of now. Macroeconomic , demographic, social, business and technological trends are likely to alter the landscape of global business and society . Demographics shifts will fuel the growth of new sectors, markets and enable process transformation. At the same time, technology automation may pose a risk to some of the core markets being addressed today. To understand the implications of these megatrends and the changing global technology and business services landscape, NASSCOM collaborated with McKinsey & Co to develop an extensive research report `Perspective 2020: Transform Business, Transform India’. The objective of this report is to identify opportunities that the industry can penetrate and provide strategic insights for the industry to reinvent business models and offerings that can transform global businesses through a well defined customer value proposition. The report also articulates a vision for the sector to transform India through economic development and ICT enabled solutions in healthcare, education, financial services and public services, which can drive socio-economic inclusion of 30 million citizens each year.

1. Perspective 2020:
Perspective 2020:Transform
Transform Business,
Business, India
Transform
Transform India
Perspective 2020: Transform
Business, Transform India

2. PERSPECTIVE 2020: KEY MESSAGES
The Decade in Review
An unparalleled impact on the Indian economy in the last 10 years – 6% of incremental GDP
growth; 45% of incremental urban employment (direct and indirect); 6-7x increase in tertiary
education in top 7 states that account for 90% of industry exports
Significant returns to customers – annual savings of USD 20-25 billion in 2008 alone
A large unfinished agenda remains – Especially structural changes (e.g., tertiary education
reform), have not been implemented
Global economic crisis will have a far-reaching and as yet uncertain impact on the industry.
Near-term volumes and pricing likely to be under pressure.
While 10-year aspiration of USD 50 billion in exports in 2008 has largely materialised, extreme
contraction in the global economy likely to delay achievement of the 2010 goal by at least 3-4
quarters
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3. THE INDUSTRY HAS HAD AN UNPARALLELED IMPACT ON
THE INDIAN ECONOMY
Rapid growth in the last decade Areas of Impact Impact
Exports USD billion Employment • 45% of new urban
47 Creation jobs created (1995-
2005)
Contribution to • 6-7x fold increase in
Education tertiary education in
18 exporting states
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2
Diversity and • Women in the
Global workforce estimated
1998 2002 2005 2009 Exposure to be 30%; new
entrants-45%
• 30% of delivery
CAGR 1998- outside India
33%
2009 (exports)
Contribution to • Exports offset close
CAGR 1998- Exports to 65 per cent of
26% India’s cumulative
2009 (domestic)
net oil imports over
past decade
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4. PERSPECTIVE 2020: KEY MESSAGES
Perspective 2020: An Altered Landscape
Global Megatrends
Demographic shifts will fuel the growth of new sectors (healthcare), markets (BRIC, Japan,
Germany) and service lines (process transformation for productivity improvement)
Social, environmental and technology trends will create hitherto unseen opportunities (e.g.,
climate change, servicing SMBs) and risks (automation of core service lines) that could
endanger up to a third of today’s market
A Redefined Market
The addressable market for global sourcing will triple in size from USD 500 billion today to
USD 1.5-1.6 trillion in 2020.
80% of incremental growth will be driven by opportunities outside the current core markets,
verticals and customer segments
Industry Outlook
The exports component of the Indian industry is expected to expand three-fold and reach
USD 175 billion in revenues by 2020. Focused initiatives and innovation-led growth can lead
to additional revenues of up to USD 135 billion by 2020
The domestic component will grow to USD 50 billion, equal to today’s exports revenues.
Focused initiatives can drive an additional USD 15 billion in revenues by 2020
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5. SHIFT IN ECONOMIC AND DEMOGRAPHIC BALANCE 2008
2020
Working age (15-60 years), Retiree (60+
Regional share of global GDP, 1990- 2025
Millions years), Millions
CAGR 207 38
US 222 54
100 Middle East & Africa 4.2%
Latin America 3.4% 40 9
UK
Asia (except Japan) 41 13
80 6.3%
Japan 39 12
Italy
1.4% 37 14
60
Europe 55 16
2.1% Germany
53 18
40
83 27
Japan
75 35
20 3.0%
North America
750 60
India
0 920 92
1990 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20 2025
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6. 2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (1/2)
Past decade 2020
Demand
• Concentrated footprint • Significant opportunity outside
– 75% of Fortune 500 today’s markets
– 80% from US/UK – SMB (Beyond Fortune 500)
1 Market – BRIC, GCC, Japan, ROW
– 75% from BFSI*, Telecom,
Manufacturing – Public sector and healthcare
– 60% from IT services
• Managing for cost, • Innovation, end-to-end
productivity and quality transformation, risk & compliance
Customers • Labour arbitrage dominant • Access to talent and expertise
2 value driver
• “Onshore/offshore” mindset • Global value chain
* Banking Financial Services and Insurance 5

7. 2020 WILL PRESENT A DRAMATICALLY ALTERED
LANDSCAPE (2/2)
Past decade 2020
Supply
• India accounting for more • Diversified talent pool with
than 50% of the global low- globalised recruiting and HR
cost workforce practices
• Delivery-centric • Multiple management tracks,
management globalised expertise
3 Talent
• Recruiting and training as • Emphasis on learning,
key differentiators knowledge management,
research spending
• Trainable talent pool • Deployable and specialized talent
pools
6

8. CURRENTLY UNTAPPED MARKETS WILL DRIVE ALMOST 80% OF
INCREMENTAL GROWTH BY 2020
Total revenue potential for global sourcing, 2020
USD billion
380 1,500
230
190
200
500
Up to 80% of growth from
markets that are not core today
Core Growth in New New Outsourcing
markets core verticals in customer market in
2008 markets developed segments new
• 6 verticals* • Not countries • SMBs geographies
• N. America, adjusted for • Public • BRIC
Europe, potential sector
Japan erosion due • Healthcare
• Large to • Media
enterprises automation • Utilities
* BFSI, telecom, retail, pharma, manufacturing, travel 7

9. PERSPECTIVE 2020: KEY MESSAGES
Transform Business, Transform India
Reinventing Business Models
80 per cent of incremental growth cannot be captured solely through the current “offshore
and low-cost” proposition. Providers should consider distinctive approaches, each building
on a source of competitiveness, with distinct performance markers and imperatives
Fostering Innovation in Business
India can become a laboratory for innovation for the world and own business systems in at
least 3 areas – energy efficiency and climate change, mobile applications, clinical research
outsourcing
Catalysing Inclusive Growth Through ICT
ICT-enabled solutions in healthcare, education, financial services and public services can
drive socio-economic inclusion of 30 million citizens each year, faster, cheaper and more
effectively than traditional models
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10. THE INDUSTRY CAN TRANSFORM INDIA BY HARNESSING
TECHNOLOGY TO ENABLE INCLUSIVE GROWTH
Areas Potential of ICT solutions
50% of Indians do not have access to primary healthcare
Healthcare • Technology can provide it at half the cost of traditional
solutions
Financial 80% of Indian households do not have bank accounts
services • Technology can enable access to 200 million families
India faces a 3x shortage in teachers
Education
• Technology can address this through remote solutions
40-50% of public food distribution in India does not reach the
Public targeted groups
services
• Technology can ensure efficiency and transparency
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11. PERSPECTIVE 2020: KEY MESSAGES
India’s opportunity at risk
India’s market share can decline by 10% by 2020 and be lost to other aspiring nations. In
this case, export revenues would reach USD 175 billion in 2020 (an additional USD 50 billion
is at risk due to protectionism).
With focused initiatives, the industry has the potential to achieve over USD 300 billion in
revenues
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12. Likely scenario
AN OPPORTUNITY OF UP TO USD 150 BILLION COULD Growth multiple
BE AT RISK IN 2020 (1/2) CAGR
India’s technology and business services export market in 2020 – scenarios*
USD billion 7.7x 18.6%
225-310 135
4.4x 13%
175
40
FY 2008 FY 2020-Current FY 2020-Focused Initiatives
Initiatives and Innovation - driven growth
• Slow pace of reforms in • Expedited reforms in tertiary
education (talent pool of 10 education
million) • 10-15 Tier II cities with world
• Limited development of Tier class infrastructure
II, III cities • Adoption of new business
• Continued trust as a sourcing models by the industry
hub • India among the top 3
• Continued government innovation hubs of the world
support • Talent pool of 13.5 million
• Limited lash back from
protectionism
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13. Likely scenario
AN OPPORTUNITY OF UP TO USD 150 BILLION COULD Growth multiple
BE AT RISK IN 2020 (2/2) CAGR
Indian domestic technology and business services market in 2020 – scenarios
USD billion
5.4x 15%
4.2x 12.6% 15
65
50
12
FY 2008 FY 2020 - Current Initiatives FY 2020 - Focused Initiatives
and Innovation Led Growth
• GDP CAGR of ~5.5% • GDP CAGR of ~7%
• Moderate IT adoption across • Significant IT adoption
verticals across verticals
• Significant government thrust
on IT adoption including
broadband rollout
• Reinvented business models
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14. PERSPECTIVE 2020: KEY MESSAGES
An agenda for action
Success will rely on concerted action by industry stakeholders (Companies, NASSCOM,
Government) anchored on a five-fold vision:
• Catalysing growth beyond today’s core markets
• Establishing India as a trusted global hub for professional services
• Harnessing ICT for inclusive growth
• Developing a high calibre talent pool
• Building a preeminent innovation hub in India
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15. SUCCESS WILL RELY ON CONCERTED ACTION ANCHORED ON A
FIVE-FOLD VISION
• Intellectual property • Winning through the downturn
framework • Reinvented business models
• Centres of Excellence • New verticals, geographies,
• Entrepreneurship Building a Catalysing customer segments
preeminent growth • Robust domestic demand
innovation beyond
hub in India today’s core
5 1 markets
Five Establishing • Infrastructure
• Quality Developing a
4 themes 2 India as a • Corporate
scale of high calibre
3 trusted global governance
tertiary talent pool of
hub for
education over 3 million • Risk
professional
• Curriculum people management
Harnessing services
and faculty and security
ICT for inclusive
quality growth • Global branding
• ICT solutions for healthcare,
education, financial services, public
services
• Connectivity and access
• Soft infrastructure
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14

16. ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED
MANNER (1/2) ILLUSTRATIVE
Areas Government NASSCOM Industry
• Foster domestic • Become a brand • Investing in new
Catalysing demand through ambassador for business models to
growth beyond national CIO office, global services tap into new
today’s core allocate 1-3% of budget geographies and
markets on e-governance verticals
• Improve urban • Global awareness to • Develop self regulatory
India as a trusted infrastructure and reposition India as a framework to adhere to
global hub for public services in 10- trusted sourcing hub world class standards
professional 15 Tier II, III cities; in corporate
services incentivise through governance and risk
STPI extension management
• Create a national • Collaborate with • Collaborate to create
information structure, government to develop interoperable
Harnessing (Internet connectivity, a national blueprint for applications and
ICT for inclusive national ID, ICT IT-enabled solutions for standards, such as
growth literacy) major public services integrated hospital
management systems
15

17. ALL STAKEHOLDERS MUST ACT TOGETHER IN A CONCERTED
MANNER (2/2) ILLUSTRATIVE
Areas Government NASSCOM Industry
Developing a • Educational reforms • Scale up certifications • Invest in building a
high caliber to facilitate increased and faculty specialized talent pool/
talent pool of private participation development by 50x globalised workforce
over 3 million in higher education
people
• Allocate 2% of • Roadmap and • Increase R&D
national budget for collaboration for spending and co-invest
Building a research developing 3-4 with universities to
Preeminent • Create quality innovation hubs drive research
innovation hub institutions to around climate
in India increase PhD holders change/mobile
to 200,000 by 2020 applications/clinical
research
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18. THE INDUSTRY CAN HAVE AN UNPARALLELED IMPACT ON
INDIA’S ECONOMY AND SOCIETY BY 2020 ILLUSTRATIVE
Areas Contribution of Indian technology-business services by 2020
• 6% of annual GDP
Economy
• 28% of annual exports
• 30 million urban employment (direct and indirect)
• Significant job creation in rural and non-metro areas
Employment • Increased diversity (women are 50% of the total workforce)
• Significant global career opportunities due to location-independent
models
• Infrastructure development
Growth outside – 8-10 satellite townships around Tier-I cities
metro cities – 10-15 Tier-II cities with upgraded basic and business
infrastructure
• ICT can provide solutions at a fraction of the cost of traditional
Reduced fiscal
solutions and reduce public spend on these areas (healthcare,
burden
education, financial services and public services)
Globally reputed
• Additional revenues of USD 50 billion-80 billion through
innovative
innovation, driving additional GDP contribution of 1.5-2%
solutions
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