1. No category

Cross-Border
Supply of IT
Services
A Private Sector Perspective
www.tcs.com
WTO Cross-Border Supply Symposium
Presentation by:-
Ajoyendra Mukherjee
28 April 2005 • Geneva
Vice President, TCS
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
Indian IT Industry
30000
28200
US $ Million
25000
21500
20000
16100
15000
13400
12100
10000
8200
5000
0
99-00
00-01
Includes IT Services & Software, ITES-BPO and Hardware
01 - 02
02- 03
03- 04
04-05E
Source: NASSCOM, Strategic Review 2005
20000
Indian IT Industry - Exports
17900
US $ Million
18000
16000
14000
13300
12000
9900
10000
7600
8000
6200
6000
4000
4000
2000
0
99-00
00-01
Includes IT Services & Software, ITES-BPO and Hardware
01 - 02
02- 03
03- 04
04-05E
Source: NASSCOM, Strategic Review 2005
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 2004
Cross Border Service Providers
17.2
12.8
India - the largest
“Cross-border”
IT Services
Provider
4.7
1.9
India
Canada
China
1.8
Eastern
Europe
0.9
0.5
Philippines
Mexico
Others
Estimated Value of Offshore Sourcing (US $ M) – CY 2004
Source: neoIT, NASSCOM
TCS – Largest Indian IT Service
Provider
 Created Indian IT Industry and
have led it since 1968
Revenue (US $ M)
2005
2240
2004
 33 Delivery Centers - 15 in India,
18 Overseas
1560
2002
 Growing at a rate of > 40%
annually
880
2000
489
1998
 Global Employee Strength of
43000+
291
0
500
 Operate in 47 countries
1000
1500
2000
2500
 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
Office Setup in the same
country as client
Client Office, Onsite
• Sales & Marketing
• Account management
TCS Office
“Commercial
Presence”
1980s
TCS Office, India
“Movement of Natural Persons”
Cross-Border Service Delivery – Genesis
Client Office, Onsite
“Cross Border Supply”
Remote Service
Delivery (Offshore)
TCS Office
• Design & Coding
• Testing
• Documentation
• Maintenance
“Commercial
Presence”
1990s
TCS Office, India
“Movement of Natural Persons”
Cross-Border Service Delivery – Genesis
Delivery Centers
across the globe to
establish a near-shore
presence
Client Office, Onsite
Multi “Cross Border Supply”
TCS Office
TCS GDC
Local Recruits
“Commercial
Presence”
2000+
TCS Office, India
“Movement of Natural Persons”
Cross-Border Service Delivery – Summary
“Cross Border Supply”
“Consumption Abroad”
Offshore Delivery Centers
established in India to
service overseas customers
remotely with a costeffective, scalable model
People sent overseas for
specialized Training
“Commercial Presence”
“Movement of natural
persons”
Global Delivery Centers
setup to address regulatory
& language requirements,
24x7 service delivery
windows, BCP & DR
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
$ Billion
IT Services Exports
ITES Exports
28-30
21-24
Product and Technology Services
Domestic Market
8-11
13-15
Total
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