Cross-Border Supply of IT Services

www.tcs.com

A Private Sector Perspective

WTO Cross-Border Supply Symposium

Presentation by:-

Yogesh Singh

SPB SURAT

07 Sept 2011

Agenda
Indian IT Industry Cross-Border Service Delivery

Opportunities As Supplier & Consumer

Challenges Conclusion

Indian IT Industry
Services Spectrum

Application Development &

Maintenance

IT Enabled Services

IT Infrastructure Management
Engineering, R&D

30000

Indian IT Industry
28200

US $ Million
25000 21500 20000

16100 15000 12100 13400

10000 8200

5000

0 99-00 00-01 01 - 02 02- 03 03- 04 04-05E

Includes IT Services & Software, ITES-BPO and Hardware

Source: NASSCOM, Strategic Review 2005

20000

Indian IT Industry - Exports

US $ Million
17900

18000

16000

14000

13300

12000 9900 10000 7600 6200 6000 4000 4000

8000

2000

0 99-00 00-01 01 - 02 02- 03 03- 04 04-05E

Includes IT Services & Software, ITES-BPO and Hardware

Source: NASSCOM, Strategic Review 2011

Indian IT Export Destinations

Americas 69.4%

Others 4.4%

Africa 0.6% Japan 3.0%

Excludes hardware exports

Europe 22.6%
Source: NASSCOM, Strategic Review

Cross Border Service Providers

17.2

12.8

India - the largest Cross-border IT Services Provider

4.7 1.9 1.8 0.9 India Canada China Eastern Europe Philippines 0.5 Mexico Others

Estimated Value of Offshore Sourcing (US $ M) CY 2011

Source: neoIT, NASSCOM

TCS Largest Indian IT Service Provider

Revenue (US $ M)
2011 2005 2004 2002 2000 1998 0
489 291 880 1560 2240 5000

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 100000+

1000

2000

3000

4000

5000

6000

60% Revenue from North America, 23% from Europe Enterprise wide CMMi, PCMM L5

Agenda
Indian IT Industry Cross-Border Service Delivery

Opportunities As Supplier & Consumer

Challenges Conclusion

Cross-Border Service Delivery Genesis

Client Office, Onsite
Small, dedicated team stationed at client site Development Maintenance Testing Support

TCS Office, India

1970s
Movement of Natural Persons

Cross-Border Service Delivery Genesis

Client Office, Onsite
Office Setup in the same country as client Sales & Marketing Account management

TCS Office

Commercial Presence

TCS Office, India

1980s

Movement of Natural Persons

Cross-Border Service Delivery Genesis

Client Office, Onsite Cross Border Supply TCS Office
Remote Service Delivery (Offshore) Design & Coding Testing Documentation Maintenance

Commercial Presence

TCS Office, India

1990s

Movement of Natural Persons

Cross-Border Service Delivery Genesis

Client Office, Onsite Multi Cross Border Supply TCS Office TCS GDC
Local Recruits
Delivery Centers across the globe to establish a near-shore presence

Commercial Presence

TCS Office, India

2000+

Movement of Natural Persons

Cross-Border Service Delivery Summary

Cross Border Supply Offshore Delivery Centers established in India to service overseas customers remotely with a costeffective, scalable model Consumption Abroad

People sent overseas for specialized Training

Commercial Presence Global Delivery Centers setup to address regulatory & language requirements, 24x7 service delivery windows, BCP & DR

Movement of natural persons Dedicated team stationed at client site & People moving between Vendor offices in different Countries

Agenda
Indian IT Industry Cross-Border Service Delivery

Opportunities As Supplier & Consumer

Challenges Conclusion

Opportunities 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 Supplier
Potential for Indian IT Industry by 2008

Category
IT Services Exports

$ Billion
28-30

ITES Exports
Product and Technology Services Domestic Market Total

21-24
8-11 13-15 70-80

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
Source: NASSCOM, McKinsey Report, 2002

Agenda
Indian IT Industry Cross-Border Service Delivery

Opportunities As Supplier & Consumer

Challenges Conclusion

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

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

Data Security / Data Protection IP Protection & Software Piracy Language & Cultural Differences Deduction of Withholding Tax

Double Taxation
Geo-political Stability & Government support Offshore Management

Agenda
Indian IT Industry Cross-Border Service Delivery

Opportunities As Supplier & Consumer

Challenges Conclusion

Conclusion

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