Group Assignment_industry Report.docx

INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY Management Consulting (MBA-FT – YEAR-II, TERM-VI)

GROUP ASSIGNMENT Industry Report and Analysis

SUBMITTED TO: PROF. Hardik Shah

SUBMITTED BY: Roll No. 171123 171125 171160 171165

Name Jaykrishna Verma Kishan Singh Vaibhav Gala Vishal Singh

Signature

DATE OF SUBMISSION: 11th March 2019

Industry Analysis

India is the world's largest sourcing destination, accounting for approximately 55 per cent of the US$ 185-190 billion market in 2017-18. India’s highly qualified talent pool of technical graduates is one of the largest in the world and the country has a low-cost advantage by being 5-6 times inexpensive than US. Revenue of India’s IT industry reached US$ 167 billion and exports stood at US$ 126 billion in 2017-18. Export revenue from digital segment forms about 20 per cent of the industry’s total export revenue. Total export revenue of the industry is expected to grow 7-9 per cent year-on-year to US$ 135137 billion in FY19. However, IT services exports are projected to add US$ 10 billion in FY19 to reach US$ 126 billion by the end of the year. Further, India’s IT-BPM sector is expected to expand to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue. Moreover, revenue from the digital segment is expected to form 38 per cent of the total industry revenue by 2025. IT industry employs nearly 3.97 million people in India of which 105,000 were added in FY18. The industry added around 105,000 jobs in FY18 and is expected to add over 250,000 new jobs in 2019. Hardware exports from India are expected to grow at 7-8 per cent in FY19. The computer software and hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows worth US$ 33.36 billion between April 2000 and September 2018 and ranks second in inflow of FDI, as per data released by the Department of Industrial Policy and Promotion (DIPP). The Government of India has extended tax holidays to the IT sector for software technology parks of India (STPI) and Special Economic Zones (SEZs). Further, the country is providing procedural ease and single window clearance for setting up facilities. Also, the government has identified Information Technology as one of the 12 champion service sectors for which an action plan is being developed. It will set up a Rs 5,000 crore (US$ 745.82 million) fund for realising the potential of these champion service sectors.

Fig:1 Size of the Indian business consulting market

Of the $11.5 billion market, $1.5 billion (approximately 13%, Rs. 9,600 Crore) is contributed by the management consulting segment, which includes the strategic functions of the market (‘strategy consulting,’) as well as a number of other organisational advisory functions. The management segment has also registered consistent growth over the last few years, projected to reach around the $1.7 billion (Rs. 10,900 Crore) mark by next year. A number of transformational factors are responsible for this rapid development, which include a general wave of digitalisation, as well as the widespread opening up of the Indian economy since the establishment of the Modi administration in early 2014. The Modi regime has been built on promises of market-liberalisation and pro-business policies.

International Position

The rapid growth in the Indian consulting market has placed it amongst the biggest markets on the international stage. This year, the 6% growth registered by India exceeded the growth rate of several of the biggest members of the global consulting market, including the UK (5%), Germany (1%) and the Netherlands (0%). However, data reveals that India still has a long way to catch up with these economies in terms of total market value. The UK consulting market, for example, is worth more than seven times the Indian market at $81 billion, while the German and the Dutch markets are also significantly ahead at approximately $31 billion and $17 billion respectively.

Fig: 2 Business consulting market of India

One of the possible reasons for this significant gap between India and the developed consulting markets is the divide between the low value in technology implementation and the relatively high value of strategy work. Moreover, there is also considerable stagnation and deficiency in the consulting fees in India, which significantly dents the potential profits for consulting firms in the region. Similar issues are typically faced by emerging consulting markets that lie outside of the matured western consulting economy.

IT BPM industry revenues (excluding hardware) was estimated at around US$ 154 billion in FY 2016-17 and grew to US$ 167 billion in FY2017-18. The contribution of the IT sector to India’s GDP stood at 7.9 per cent in 2017-18. The domestic revenue^ of the IT industry is estimated at US$ 41 billion and export revenue is estimated at US$ 126 billion in FY18. The market size of India’s IT-BPM sector is expected to grow to US$ 350 billion by 2025 and BPM is expected to account for US$ 50-55 billion out of the total revenue. Spending on Information Technology in India is expected to grow over 9 per cent to reach US$ 87.1 billion in 2018. Outsourcing of large technology contracts by clients is expected to accelerate the growth of the industry in FY20.

SWOT Analysis

Strengths 

Highly skilled human resource

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Low wage structure

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Quality of work

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Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of egovernance projects)

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Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc.

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Following Quality Standards such as ISO 9000, SEI CMM etc.

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English-speaking professionals

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Cost competitiveness

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Quality telecommunications infrastructure

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Indian time zone (24 x 7 services to the global customers). Time difference between India and America is approximately 12 hours, which is beneficial for outsourcing of work.

Weakness 

Absence of practical knowledge

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Dearth of suitable candidates

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Less Research and Development

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Contribution of IT sector to India ‘s GDP is still rather small.

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Employee salaries in IT sector are increasing tremendously. Low wages benefit will soon come to an end.

Opportunity 

High quality IT education market

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Increasing number of working age people

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India ‘s well developed soft infrastructure

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Upcoming International Players in the market

Threat 

Lack of data security systems Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier

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Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier

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IT development concentrated in a few cities only

References https://www.consultancy.in/news/70/indian-business-and-management-consulting-market-picks-upgrowth