Sustaining competitive Edge of Indian Outsourcing IT-ITes Industry: A Systems Approach

Transcription

1 2 nd Asia-Pacific Region system Dynamics Conference of the system dynamics society UTown, National University of Singapore Feb, 2017 Sustaining competitive Edge of Indian Outsourcing IT-ITes Industry: A Systems Approach BITS Pilani Pilani Dubai Goa Hyderabad Authors: Neetu Yadav, Anil K Bhat, Sushil* Birla Institute of Technology and Science, Pilani, Rajasthan-India *Indian Institute of Technology Delhi, New Delhi-India

2 Flow of Presentation Introduction Indian Outsourcing IT-ITes industry Systems Approach Dynamic Hypotheses Capability building & eroding loops Infrastructure competitiveness loop Moving up value chain loop Non-linear growth loop Evidences

3 India as Outsourcing Destination for IT-ITes IT-BPM sector currently valued at: $143 billion Contribution 9.5 % of Indian GDP 45 % in total service exports ( ) India holds 55 % market share of global sourcing Industry exports of $98 billion What is competitive edge of this industry? How this competitive edge could be sustained? How to combat Global challenges to sustain competitiveness?

4 Indian IT-ITes Revenues (Source: NASSCOM Strategic Review, 2015)

5 A.T. Kearney Global Services Location Index Rank Country Overall outsourcing index Financial attractiveness index People skills and availability index Business environment index 1 India China Malaysia Brazil Indonesia Thailand Philippines Mexico Chile Poland (Adopted from:

6 Global Growth Forecasts (F) 2017 (F) World High Income U.S E.U Japan Russia Developing countries China India (Source: World Bank, 2016)

7 Porter s Diamond Model (Indian IT-ITes) Porter (1990)- Competitive advantage of nations Nation s competitiveness- Industry competitiveness Potent determinants of competitiveness-prevailing thinking, labor cost, interest rates, exchange rates, economies of scale Porter s diamond model-indian IT-ITes Industry

8 Factor Conditions Availability of young workforce Large English speaking population Large number of Engineering graduates Availability of workforce at competitive prices Presence of Indian diaspora Lower infrastructure cost

9 Demand Conditions Growth Patterns Start-up ecosystem Automation Currency fluctuations Visa fees hike Global economy slowdown

10 Firm Strategy, Structure and Rivalry Margin pressure Non-linear growth strategies Differentiation strategies

11 Related and Supporting Industries Education institutions Analytics industry

12 Government Digital India campaign Make-in India campaign

13 Systems Approach Porter signifies-points of diamond are self-reinforcing Diamond creates SYSTEM Jim Hines (2004) model development & analysis Limited to developing dynamic hypotheses Causal loop diagram Input conditions: Resources capability, infrastructure Firm s strategies: Non-linear growth, Moving up value chain

14 Capability Building & Eroding Loops

15 Infrastructure Competitiveness Loop

16 Moving up Value Chain Loop

17 Non-linear Growth Loop

18 Evidences

19 Evidences

20 Reflections Sustaining competitive edge in global turmoil- from outsourcing to complete IT solution provider Home grown software products-bancs (TCS), ion, Finacle Domestic demands- Digital India campaign enabler R&D in product development Growing digital workforce Reorienting business models away from labor arbitrage

21 Conclusions

22 NEETU YADAV, Ph.D.