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Changing Business Models and Indian Influence

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November 15, 2007
Changing Business Models and Indian Influence
- 2 - DigiWorld 2007, Montpellier
Telco Market: Critical Challenges
 Increasing commoditization of core
services
 Higher-SLA & lower-cost expectation
 Pushing for new products and services
and faster technology adoption
 Greater visibility into the service
provider
 Greater role of the CIO in telecom
Empowered Customers
 Legacy networks vs. Disruptive Technologies
 Need to support voice, data, video and each at
different cost points
 Mobility & Devices
Technology Impacts
 Penetration levels leading to limited
growth in core products/ markets
 Growth in Nascent Markets
 Deregulation
 Broadband – the next growth engine
 Content & Application Services
 Non-traditional players in core
businesses
Markets & Competition
Financial
 Cost structures in Home markets
 Alliances and Partnerships are essential drivers of
delivery
 Volume growth not matched by revenue or margin
growth
 Lower unit CAPEX not matching price drops in
many markets
- 3 - DigiWorld 2007, Montpellier
 Deregulation and its domino effect on
price
o Increased competition
o M&A
o New Entrants taking market share
o Technology Changes
 Need to retain HN Customers
 Increasing commoditization of services
 SLA Management
 Traditional revenue streams declining
 IP Revolution
o Design and deliver new service
options
o Increasing investment
o Increasing partners in value chain
Generate Profit whilst effectively containing costs - AMPU
Cost of
Delivery
Level of
Service
Customer
Profitability
Enhance Service Delivery
Strike the Right Balance
Changing Telco Landscape
- 4 - DigiWorld 2007, Montpellier
First Time Right and Improve Customer Experience
Lower Cost
Competitive Advantage
Market Share
•Automated Processes
•Lower Cost of:
oAcquisition
oOperations
oDevelopment
oDeployment
oMaintenance
•Reduce Time-to-Market
•Streamline Operations
•Unified view of customer
•Customer focused business processes
• Expand product and solution offerings
and expand customer reach
• Create customer loyalty
• Customer Profiling and Segmentation
• Acquisition and Consolidation
Profit&Revenue
Business Drivers: To Improve Service Delivery
- 5 - DigiWorld 2007, Montpellier
Business Model Changes for Service Provider
• Transformation from single-offering single-segment to multi-offering multi-segment play
• Voice now commodity; value added services and Enterprise Applications to enhance ARPU
• Processes and IT key enablers to run lean
• Partnerships key to address the breadth required
Customer
Experience
Lean Operation Enablers
Reusable
IT
Outsourced
Processes
NGN Services
Content Applications
SP Multi-Access
All IP core
Multi-Device
Communities
Individuals
Enterprises
SMBs
CSPs
Acquisitions
Partnerships
Regulation
- 6 - DigiWorld 2007, Montpellier
Business Model Changes for Equipment Vendor
• Multiple competing technologies
• Emerging markets open for new technologies (Wireless, Wimax)
• M&As for achieving portfolio expansion and economy of scale
• Manufacturing shift to areas with better cost arbitrage
• Lean operations demand from service providers leading to focus in services component
• Partnerships with IT Vendors for compelling value proposition
Competing
Technologies
Global
Reach
IT
Partners
Lifecycle
Services
- 7 - DigiWorld 2007, Montpellier
Business Model Changes for Enterprises
Brand
Infrastructure
Customer
Business Process Strategy
IT &
Communication Presence
Outsourced/Offshored
Aligned
Innovation
• Field force productivity from telecom (mobile enablement)
• Potential to reduce telecom costs (VoIP)
• Potential for customer intimacy through collaboration (Web 2.0, MVNO)
• Attention to core now a priority (brand, strategy, customers, global presence)
• Willingness to outsource more for achieving agility (process and IT)
• Other industry best practices, cross-pollination and benchmarking
- 8 - DigiWorld 2007, Montpellier
Communication
Service
Providers
Customer
Internet & Other
Service
Providers
Content
Providers
Equipment
Vendors
Software
Vendors
Systems
Integrators
Interrelated Ecosystem - Blurring Boundaries-Changing Identities
New Business Models; Newer ways to do Business
- 9 - DigiWorld 2007, Montpellier
Beyond Arbitrage To Transformation
More
Cost-Effective
Partnering in
Business
Transformation
 Global delivery model
 Lift and drop
 Labor cost savings
 Labor productivity savings
 Process improvement
 Six sigma
 Value added reporting
 SLA driven service delivery model
 Strategic transformation
 BPR
 Process & org restructuring
 Inter & Intra industry best practices
 Integrate technology capabilities to
improve efficiencies
 Business assurance
Operationally
Enhanced
Differentiated
Generate Profit whilst effectively containing costs
Transformational Outsourcing has a vital role to play in meeting these objectives
- 10 - DigiWorld 2007, Montpellier
Key Enablers Of Successful Transformation
India and its role in Global Transformation
- 12 - DigiWorld 2007, Montpellier
Outsourcing and India
• Demand of off-shoring is
here to stay - Fundamental
shift from “should I
outsource” to “how do I
outsource”
• In spite of some
challenges, India will
continue to be the
preferred choice for off-
shoring
• Indian IT leaders are
rapidly globalizing and
widening the gap versus
Tier II Players
• Capturing the full benefit is
hard - and a systematic
process is required
• Largest democracy in the world
• 4th largest economy in PPP and
10th most industrialized nation
• GDP growth continuously
between 7 to 8%
• Crosses USD 262 Billion in
Forex Reserves
• 300 million middle class with
44% population <19 years.
Median age 24 years
• Ranked as #2 destination for
Telecom FDI Global
- 13 - DigiWorld 2007, Montpellier
What is behind this Growth Engine, and Why is it Sustainable?
Large pool of young, talented
work-force
Increasing share of FDI
Economic
liberalization
50%-90% lower
and sustainable
wages
Rapid increase in
domestic consumption
base
- 14 - DigiWorld 2007, Montpellier
- 15 - DigiWorld 2007, Montpellier
- 16 - DigiWorld 2007, Montpellier
- 17 - DigiWorld 2007, Montpellier
Favorable Demographics have made India a Hotbed for Talent
Sourcing
Large/Young Working Population Skilled/Educated Workforce
No. of engineering degrees granted (2003)2010 forecast population by age group
Source: Euromonitor, NASSCOM, US Census Bureau
0.0
0.5
1.0
1.5B
China
65+
15-640-14
1.3
1.2
US
0.3
Japan
India Russia S. Korea 0
100
200
300K
India
292
195
Japan
103
82
US
61
45
China Russia S. Korea
0.1 0.1
0.5
- 18 - DigiWorld 2007, Montpellier
Scale Becoming Increasingly Important
0
10
20
30
40%
0.02 0.05 0.1 0.2 0.5 1 2 5
$1.5B
Revenue
TCS
Infosys
Wipro
Patni
Igate
I-flex
Syntel
Polaris
Mphasis
Relative Market Share (FY05)
EBITDA Margins FY05)
Satyam
HCL
Cognizant
Source: Bain & Co
Note: Wipro Figures Reflect Global IT/ITES Revenues
Case: Tata’ in Global Play
- 20 - DigiWorld 2007, Montpellier
Tata Snapshot
- 21 - DigiWorld 2007, Montpellier
The TATA Group
India’s
Largest
India’s
Largest
India’s
Largest Pvt
Sector Player
Asia’s
Largest &
Global No. 11
Top 3
in India
India’s
Largest
Luxury Chain
World’s
No 1
Tea Producer
Steel
Vehicles and
Engineering
Energy
IT Services
& Consulting
Telecom
VSNL/TTSL
Hotels
Consumer
Goods & Retail
Pioneering Indian Industries since 1868
US$ 22 Billion (July 07)
98 Companies, 7 Industry Sectors,
40 Nations
International Income: 30% of Group Revenue
Ratan Tata
Chairman, Tata Group
Forbes Asian Businessman of the
Year 2004
Close to 140 years of Business Excellence
- 22 - DigiWorld 2007, Montpellier
Tata’s in ICT
- 23 - DigiWorld 2007, Montpellier
TCS - Telecom, Media & Entertainment Practice
• 10,500+ Consultants in
Telecom engagements
• Over 40,000 person
years of experience
• Over 160 client
relationships across 34
countries
• Flexible Global Delivery
Model
• Proprietary Frameworks
to enable best-in-breed
process operations
• Technology Labs
• Multi-Technology
Component Support
Agile
Enterprise
Wireless
Communication
Solutions
Packet
Communication
Solutions
Convergence &
NGN Solutions
Terminal Devices
Solutions
SDP, CDP & VAS
Enterprise
Application
Integration
Order & Inventory
Systems
Billing & Mediation
Systems
DW, BI and KM,
ERP, CRM
Self Care
TV Syndication
Systems
Content Management
Systems
Digital Asset Mgt &
Media Distribution
Broadcast
Management
Systems
Contracts & Rights
Management
Systems
- 24 - DigiWorld 2007, Montpellier
Full Services Strategy
Asset Based Solutions
IT Products
Product Based Services
Global Consulting
IT Consulting
Business Consulting
Quality Consulting
Engineering & Industrial Services
Product & Process Engineering
Embedded Systems
Plant Automation Services
Enterprise Asset Management
IT Infrastructure
IT Outsourcing, Network Consulting and
Integration
Hardware Support and Installation
Infrastructure Management
Database Services
BPO
Inbound Call Centers
Back Office Support
Engineering Services
Clinical Data Management
Statistical Analysis & Medical Writing
IT Services
Application Development Maintenance
Reengineering Testing
Packaged Software Implementation
Systems Integration
Full Services Capability
- 25 - DigiWorld 2007, Montpellier
Tata Business Ethos
Thank You
Please Visit us at www.tcs.com