presentation by:- ajoyendra mukherjee vice president, tcs
DESCRIPTION
Cross-Border Supply of IT Services. A Private Sector Perspective. www.tcs.com. WTO Cross-Border Supply Symposium. Presentation by:- Ajoyendra Mukherjee Vice President, TCS. 28 April 2005 • Geneva. Agenda. Indian IT Industry Cross-Border Service Delivery - PowerPoint PPT PresentationTRANSCRIPT
Presentation by:-
Ajoyendra MukherjeeVice President, TCS
Cross-Border Supply of IT
Services
A Private Sector Perspectivewww.tcs.com
WTO Cross-Border Supply Symposium
28 April 2005 • Geneva
AgendaAgenda
Indian IT Industry
Cross-Border Service Delivery
Opportunities – As Supplier & Consumer
Challenges
Conclusion
Application Development &
Maintenance
IT Enabled Services
IT Infrastructure Management
Engineering, R&D
Indian IT IndustryIndian IT IndustryServices SpectrumServices Spectrum
Indian IT IndustryIndian IT Industry
8200
12100
13400
16100
21500
28200
0
5000
10000
15000
20000
25000
30000
99-00 00-01 01 - 02 02- 03 03- 04 04-05E
US $ Million
Source: NASSCOM, Strategic Review 2005Includes IT Services & Software, ITES-BPO and Hardware
Indian IT Industry - ExportsIndian IT Industry - Exports
4000
6200
7600
9900
13300
17900
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
99-00 00-01 01 - 02 02- 03 03- 04 04-05E
US $ Million
Source: NASSCOM, Strategic Review 2005Includes IT Services & Software, ITES-BPO and Hardware
Africa0.6%
Japan3.0% Europe
22.6%
Others4.4%
Americas69.4%
Indian IT Export DestinationsIndian IT Export Destinations
Source: NASSCOM, Strategic Review 2004Excludes hardware exports
Cross Border Service ProvidersCross Border Service Providers
17.2
12.8
1.9 1.80.9 0.5
4.7
India Canada China EasternEurope
Philippines Mexico Others
Source: neoIT, NASSCOM
Estimated Value of Offshore Sourcing (US $ M) – CY 2004
India - the largest“Cross-border”
IT Services Provider
TCS – Largest Indian IT Service ProviderTCS – Largest Indian IT Service Provider
Created Indian IT Industry and have led it since 1968
Operate in 47 countries
33 Delivery Centers - 15 in India, 18 Overseas
Growing at a rate of > 40% annually
Global Employee Strength of 43000+
60% Revenue from North America, 23% from Europe
Enterprise wide CMMi, PCMM L5
Revenue (US $ M)
489
880
1560
2240
291
0 500 1000 1500 2000 2500
1998
2000
2002
2004
2005
AgendaAgenda
Indian IT Industry
Cross-Border Service Delivery
Opportunities – As Supplier & Consumer
Challenges
Conclusion
Cross-Border Service Delivery – GenesisCross-Border Service Delivery – Genesis
““Movement of Natural Persons”Movement of Natural Persons”
TCS Office, IndiaTCS Office, India
1970s1970s
Client Office, OnsiteClient Office, OnsiteSmall, dedicated team stationed at client site
• Development • Maintenance• Testing Support
1980s1980s
Cross-Border Service Delivery – GenesisCross-Border Service Delivery – Genesis
““Commercial Commercial Presence”Presence”
““Movement of Natural Persons”Movement of Natural Persons”
TCS Office, IndiaTCS Office, India
Client Office, OnsiteClient Office, Onsite
TCS OfficeTCS Office
Office Setup in the same country as client
• Sales & Marketing• Account management
1990s1990s
Cross-Border Service Delivery – GenesisCross-Border Service Delivery – Genesis
““Cross Border Supply”Cross Border Supply”
““Commercial Commercial Presence”Presence”
““Movement of Natural Persons”Movement of Natural Persons”
TCS Office, IndiaTCS Office, India
Client Office, OnsiteClient Office, Onsite
TCS OfficeTCS OfficeRemote Service Delivery (Offshore)
• Design & Coding• Testing• Documentation • Maintenance
TCS Office, IndiaTCS Office, India
2000+2000+
Cross-Border Service Delivery – GenesisCross-Border Service Delivery – Genesis
Client Office, OnsiteClient Office, Onsite
TCS OfficeTCS Office
““Commercial Commercial Presence”Presence”
““Movement of Natural Persons”Movement of Natural Persons”
Multi “Cross Border Supply”Multi “Cross Border Supply”
TCS GDCTCS GDCLocal RecruitsLocal Recruits
Delivery Centers across the globe to establish a near-shore presence
“Movement of natural persons”
Dedicated team stationed at client site &
People moving between Vendor offices in different
Countries
“Commercial Presence”
Global Delivery Centers setup to address regulatory & language requirements,
24x7 service delivery windows, BCP & DR
“Cross Border Supply”
Offshore Delivery Centers established in India to
service overseas customers remotely with a cost-
effective, scalable model
“Consumption Abroad”
People sent overseas for specialized Training
Cross-Border Service Delivery – SummaryCross-Border Service Delivery – Summary
AgendaAgenda
Indian IT Industry
Cross-Border Service Delivery
Opportunities – As Supplier & Consumer
Challenges
Conclusion
Opportunities – As ConsumerOpportunities – As Consumer
Cost Saving
High Quality
Faster Time to Market
24 Hour Service Window
Better Utilization of Internal Workforce
Address Aging Demographics of
Western economies
Opportunities – As SupplierOpportunities – As Supplier
Source: NASSCOM, McKinsey Report, 2002
Category $ BillionIT Services Exports 28-30
ITES Exports 21-24
Product and Technology Services 8-11
Domestic Market 13-15
Total 70-80
Potential for Indian IT Industry by 2008
• By 2008, IT and ITES Services will generate an employment for 1.1 M and 1 M respectively
• In addition the Parallel Support Services will create employment for another 2 M people
AgendaAgenda
Indian IT Industry
Cross-Border Service Delivery
Opportunities – As Supplier & Consumer
Challenges
Conclusion
Challenges – “Movement of Natural Persons”Challenges – “Movement of Natural Persons”
Immigration & Visa Issues
Universal Recognition of Qualifications,
Experience and Training
Employment laws enforcing local hiring directly
or indirectly e.g. USA (recruitment attestation /
displacement attestation), UK (TUPE)
Wage Parity Insisted upon
Social Security Tax
Tax Withholding
Challenges – “Commercial Presence”Challenges – “Commercial Presence”
Structure of Entity (Branch, JV, Fully owned
Subsidiary etc.)
Restrictions on Foreign Investments & Local
equity participations
Remittance of foreign exchange
Staffing & Management conditions
Restricted Access to certain market
segments based on the structure
Challenges – “Cross-Border Supply”Challenges – “Cross-Border Supply”
Data Security / Data Protection
IP Protection & Software Piracy
Language & Cultural Differences
Deduction of Withholding Tax
Double Taxation
Geo-political Stability & Government support
Offshore Management
AgendaAgenda
Indian IT Industry
Cross-Border Service Delivery
Opportunities – As Supplier & Consumer
Challenges
Conclusion
ConclusionConclusion
Cross-Border IT Services is a growing
necessity and opportunity
Visa & Immigration, Taxation, Protectionist Law
and Uniformity in Qualification are some of the
key challenges still faced by a service provider
like us…
A uniform GATS framework and commitment
will provide the right impetus to the growth of
Cross-Border IT Services
