Dissertation
Content
1.ABSTRACT
The information technology (IT) industry has become of the most robust industries in the world. IT, more than any other industry or economic facet, has an increased productivity, particularly in the developed world, and therefore is a key driver of global economic growth. Economies of scale and insatiable demand from both consumers and enterprises characterize this rapidly growing sector. Owing to its easy accessibility and the wide range of IT products available, the demand for IT services has increased substantially over the years. The IT sector has emerged as a major global source of both growth and employment. Scenario of the uk software industry needs unified voice and high level skills to thrive. The working party's report analyzed the current state of the UK software sector and identified actions needed to capitalize on these opportunities for growth: Technical innovators must develop better business skills to attract venture capital. Academia and employers must communicate more effectively. The software sector must establish itself as an attractive area in which to build a career. The UK software industry must develop a clear and unified voice. The current scenario in the IT industry of India and the tremendous growth registered in recent years has generated much optimism about the future of the Indian Information technology industry. Analysts are upbeat about the huge potential of growth in the Information Technology industry in India. This research includes the facts and figures regarding the top software companies in uk and india.Basically the data will be taken from the prominent companies in india which are leading in IT Industry such as Infosys,TCS AND Wipro similarly in UK such as Oracle Corporation,FOXIT and Infotech enterprises europe.Based on the facts and figures of the companies in uk and india We will be analyzing the developed market and developing market with respect to the countries.
1
2.INTRODUCTION 2.1 INDIAN I.T INDUSTRY OVERVIEW:
The Indian software industry has been one of the success stories of India post 1991 when a slew of reforms lead to liberalization of the economy. It has grown from a mere US $ 150 million in 1991-92 to revenues of 31$ billion in 2008-09. The growth of the IT-BPO industry can be shown with the help of the following bar diagram:
With estimated revenues of USD 71.6 billion in fiscal 2009 (Growth of 12.0%), the IT-BPO industry continues to grow at a CAGR of 27.1% since FY 2004. The world-wide technology and related services spend is estimated to have crossed USD 1.6 trillion in 2008 a growth rate of 4.6% over 2007. The world- wide forecast for I.T Services can be illustrated with the below chart:
2
High Quality Delivery According to Process Maturity Profile published by Carnegie Mellon Software Engineering Institute, approximately 158 companies are certified at SEI-CMM Level 5 in India- higher than any country in the world. It suggests that Indian Companies are highly quality conscious and focus on achieving operational excellence while delivering their services. Significant Cost Benefits The NASSCOM Strategic Review 2009 indicates that company¶s experience cost savings of around 60-70% by outsourcing their I.T and BPO requirements to India as compared to their source locations and suggests that the cost advantage offered by ITES Industry is sustainable even in the long term. Abundant Skilled Resources India has a large and highly skilled English speaking labour pool. According to NASSCOM Strategic Review 2009 the total graduate turn out in India in fiscal is expected to be 3.5 million, including a technical graduate turn out of approximately 5.14 lacs Complete bouquet of services The Indian I.T companies offer a one stop solution to their clients and have developed length and breadth service offering capabilities. Effective Service Delivery Model The Indian I.T companies have developed the global delivery model and have effectively integrated onsite and offshore execution capabilities to deliver seamless, scalable services to their clients.
The top I.T companies in India are TCS, Wipro, Infosys and Tech Mahindra after the successful acquisition of Satyam. MNC¶s who have set up their base in India include Microsoft, Accenture, Google and Oracle.
3
2.2 UK IT INDUSTRY OVERVIEW :
The UK¶s software industry is a thriving and highly profitable business. With the top 50 companies reporting revenue growth of 20% and operating profit growth of 25% last year, it is also a significant investment opportunity for those willing to take UK software to the world stage. These are the findings of a comprehensive report into the UK software industry by TechMarketView, the leading analyst firm focused on the UK software and IT services market. ³There is a tendency to write-off the UK software industry because most of the familiar software companies are in the US. That would be a big mistake,´ states Richard Holway, Chairman, TechMarketView. ³A combination of organic and inorganic growth has resulted in the top 50 UK headquartered software companies growing c20% in the last year. Perhaps even more surprising, to an ever sceptical British audience, is the c70% of revenues that the UK software industry earns abroad. Indeed, the UK is not that far off earning as much from overseas markets as we buy in. Currently £4.6b plays £5.6b with the gap narrowing each year.´ While the report paints a more positive picture of the UK software industry, it highlights a number of ³national failings´ that have prevented the UK from producing global software giants the likes of Microsoft, SAP or Oracle.³The problem for the UK software industry has never been the quality of its people or its innovation,´ argues Holway, citing the following factors are: * Lack of available financial backing: In comparison to the US, it is much more difficult for UK software developers to gain access to venture capital funding. * Lack of marketing expertise: Many of the UK¶s best developers simply fail in explaining how great their product is to investors and to the market. * Local not Global: Many of the UK¶s software companies focus mainly (if not solely) on products geared to the UK market. * Lack of ambition: Many UK software companies are run as µlifestyle¶ businesses. Very few UK software entrepreneurs seem prepared to risk the Merc for the seemingly scant possibility to become a global player. * Lack of management skills: Growing from a small enterprise to medium-sized is hard enough - but not a fraction as hard as that required to grow to be large. Few founders are up to running large, global organisations; even fewer are prepared to step aside!
4
* Easily pleased: UK software companies have a long history of being other nations¶ µacquisition fodder¶. Founders seem to want to µtake the money and run¶ rather than take the risk of growing to something larger. UK Software Industry Key facts:
y y y y y y
y y y y y
Employs almost one million people Contributes an estimated £20 Billion to the UK economy Needs almost 150,000 new entrants every year First generation of IT workers approaching retirement age No longer perceived to be an attractive career In the last five years: o 50% drop in applications to computer related degrees o 47% drop in systems engineering students o 60% drop in software engineering students Down to 20,000 new IT graduates per year 200,000 µbasic¶ jobs will be off-shored by 2010 - equivalent to the population of Brighton Clear and present danger to high-end jobs from Eastern Europe and Asia Acute and growing shortage of high-end software skills Software companies account for 22% of the companies invested in by venture capitalists, but only receive 5% of the total funding
5
3.LITERATURE REVIEW
Information technology (IT) is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications.[1] The term in its modern sense first appeared in a 1958 article published in the Harvard Business Review, in which authors Leavitt and Whisler commented that "the new technology does not yet have a single established name. We shall call it information technology
IT is the area of managing technology and spans wide variety of areas that include but are not limited to things such as processes, computer software, information systems, computer hardware, programming languages, and data constructs. In short, anything that renders data, information or perceived knowledge in any visual format whatsoever, via any multimedia distribution mechanism, is considered part of the domain space known as Information Technology (IT).
IT Disciplines/Competencies)
professionals that range
perform from
a
variety
of
functions
(IT
installing
applications to
designing
complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as management and administration of entire systems. Information technology is starting to spread further than the conventional personal computer and network technology, and more into integrations of other technologies such as the use of cell phones, televisions, automobiles, and more, which is increasing the demand for such jobs.
6
4.RESEARCH DESIGN
This is an empirical study of the computer software industry in India and UK. The Indian software industry represents a case of export led growth in a country with a large domestic market but without a great exporting tradition. It has accomplished this growth by becoming an important part of the global division of labor in software. Our first objective in this report is to develop a comprehensive and quantitative picture of the industry and its growth. Second, we aim for a deeper understanding ofthe institutions, linkages, technologies, and processes that enable the international division of labor between the software industry in India and its customers elsewhere in the United States, Japan, and Western Europe. Finally, this report explores the implications that this international division of labor has for the labor market in the IT sector in the U.S. and for the U.S. economy as a whole. questions include 1. The structure and composition of the Indian software industry What types of services and products are provided by the industry for domestic market and for export? What is the level of sophistication of these services? What linkages, if any, do software exporters have to the Indian economy? 2. The linkages between the Indian software firms and the U.S. economy What is the nature of services provided to U.S. firms? What are the different organizational arrangements for software service exports? Is the relationship primarily one of complementarily, or one of substitution (competition)? 3. Sources of comparative advantage of the Indian and UK software industry What are the distinct sources of advantage? What are the major weaknesses? 4. The supply of human capital What is the quality of the workforce? What are the likely scenarios for the future, as projected by the government, and by the industry participants? Our specific research
7
5. Future scenario What are the potentialities of the Indian and UK software industry? What are the strategic options for Indian and UK software firms for the future?
8
5.FINDINGS 5.1 Indian I.T Companies:
Tata Consultancy Services (TCS)
Tata Consultancy Services Limited (TCS) is one of India's oldest and largest providers of information technology and business process outsourcing services and was established in the year 1968. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. TCS has over 143,000 of the world's best trained IT consultants including 10,000 international associates from 67 nationalities. At the end of the year 2008-09, TCS' global footprint has extended to over 42 countries through its 140 offices globally. Vision: To be one of the top 10 global companies by the year 2010.
Mission: To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services, and to actively engage all stakeholders in a productive, collaborative, and mutually beneficial relationship. Values: Integrity, leading change, excellence, respect for the individual, and fostering an environment of learning and sharing. Awards & Achievements: y y y y y Best Governed Company Award 2008 of the Asian Centre of Corporate Governance and Sustainability and Indian Merchants Chamber Topper of the Dataquest Top 20 list of Indian IT companies Most Admired Knowledge Enterprise (MAKE) Award, for the fourth time Highest Delta Award in the 600+ company category on the TATA Business Excellence Model Top ranking in HR in Data Quest-IDC's Best Employer Award Recruiting and Staffing Best in Class Awards (RASBIC) 2008-09 for 'Best Use of Technology in Recruiting' and 'Most Innovative Program/Initiative in Recruiting
9
Quality Initiatives: y TCS is the world¶s first organization to achieve an enterprise-wide Maturity Level 5 on CMMI® and P-CMM® based on SCAMPISM, the most rigorous assessment methodology. TCS Integrated Quality Management System (iQMS) integrates processes, people, and technology maturity through various established frameworks and practices, including IEEE, ISO 9001: 2000, CMMi, SW-CMM, P-CMM, and SixSigma. Certified for domain specific quality certification: TL 9000 for the Telecom business. AS9100 for Aerospace industry and ISO 13485 for Medical Devices.
y
y
Infosys
Infosys Technologies Limited) is a multinational information technology services company headquartered in Bangalore. Infosys' offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Infosys has defined, designed and delivered technology-enabled business solutions that help Global 2000 companies win in a Flat World and provides the above mentioned services by domain and business expertise and strategic alliances with leading technology providers. Infosys has a global footprint with over 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan with over 103,000 employees. Vision: To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people. Mission: To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large. Values: Customer Delight: To surpass customer expectations consistently.
10
y
Leadership by Example: To set standards in our business and transactions and be an exemplar for the industry and ourselves. Integrity and Transparency: To be ethical, sincere and open in all our transactions. Fairness: To be objective and transaction-oriented, and thereby earn trust and respect. Pursuit of Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services and products to become the best. Awards & Achievements: Ranked among the top 50 most respected companies in the world by Reputation Institute¶s Global Reputation Pulse 2009. Most Admired Knowledge Enterprises (MAKE) award 2008 Best company in India in Corporate Governance in The Asset Magazine's annual Corporate Governance Index 2008
y
Quality Initiatives: Infosys Australia achieves SEI-CMMI Level 5 Ver 1.2 in 2008. Certified at SEICMM Level 5. Certified at SEI-CMMI Level 5. INSIGHT is an Integrated Audit System to facilitate quality audits across the enterprise. Establishment of Quality Academy with a focus on building Project Management, software engineering and process competencies with training and certification programs. Development of Estimated Enterprise Models(ESTEEM) to facilitate adoption of formal estimation techniques and models
Wipro:
Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. Wipro has 55+ µCenters of Excellence¶ that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation Values: Make customers successful Team, Innovate, Excel Act with Sensitivity Respect for the individual Thoughtful and responsible Unyielding Integrity
11
Delivering on commitments Honesty and fairness in action
Awards & Achievements: y y y y Winner of International Institute for Software Testing¶s Software Testing Best Practice Award,2008 Winner of Indian MAKE Award, 2008 Wins Verizon¶s 2006 Supplier Excellence Award Only Indian company in the Business Week¶s IN25 ³Champions of Innovation´ list.
Quality Initiatives: SEI-CMM Level 5, World¶s first IT services company , 1998 Six Sigma, World¶s first IT services company , 1999 PCMM Level 5, World¶s first software company ,2001 ISO 9001 compliant by 1995. Over 3350 employees trained in Six Sigma with 120 certified black belts
Financial Performance Comparison:
\
12
As per the table data, TCS revenues¶ have increased from Rs.18289.95 to Rs.22, 404 cr, a Y-O-Y increase of 22.49 %. At the same time, Infosys revenues¶ have increased significantly greater than TCS from Rs.15648 to Rs.20,264 cr, a YO-Y increase of 29.50 %. Wipro revenues¶ have also increased appreciably from Rs.17658.1 to Rs.21612.8 cr, a Y-O-Y increase of 22.39% TCS¶ operating profit has increased only marginally from Rs. 5466.06 to Rs.5564.59 cr, a Y-O-Y increase of 1.80 %. Infosys¶ operating profit has increased highly from Rs. 4963 to Rs.6906 cr, a Y-O-Y increase of 39.1 % while Wipro¶s operating profit has only increased thinly from Rs.4042.5 to 4278.4 cr, a Y-O-Y increase of 5.83% .In the same vein TCS¶ Net profit has increased only slightly from Rs. 4508.76 to Rs.4696.21 cr, a Y-O-Y increase of 4.80%. Infosys¶ Net profit has increased outstandingly from Rs.4470 to Rs.5819 cr, a Y-O-Y increase of 30.2 % while Wipro¶s net profit has actually decreased from 3063.3 to 2973.8 cr.
Also the employee costs have slightly risen for TCS to Rs.11, 676.34 from Rs.9, 413.05, a rise of 0.65%, one of the factors affecting the operating profit of the company. Another aspect affecting the margins was the net Other Income which resulted in a loss of Rs.456.24 crore deviating in the opposite direction from a gain of Rs.689.82 crore in fiscal 2008. Infosys was also hit by this factor with exchange losses of 372 crores but managed to recover to post net Other Income of gain of 502 crores.
Segment Wise Revenue Comparison:
Geographic Segmentation:
\
13
As per the table data, the majority of revenues for TCS (from 56% in 2008 to
56.77% in 2009) and Infosys (from 63% in 2008 to 64.70 % in 2009) continue to come from America indicating the dependency on this market. The financial crisis in U.S.A continues to be a big source of worry. Also as indicated by a research agency survey that majority of U.S clients are contemplating a cut in their I.T budgets along with decrease in discretionary spending further deepening the problems for the I.T companies. The revenue growth from Europe has decreased slightly for both the companies denoting the spread of global meltdown to Europe and inability of Indian I.T companies to make huge inroads into the European Landscape. The revenue from Indian market is on the lower side for Infosys and they should try to tap this channel in these difficult times. With reference to revenue generated from other global markets, both companies show positive signs which indicate the diversification which is required in un hitherton on traditional markets such as Africa, Australia and Japan which is needed for survival in these challenging situations. 5.2 UK I.T Companies : MISYS PLC: Misys plc (LSE: MSY) is a leading multinational software company providing software solutions and services to the financial services and healthcare sectors. The company merged its healthcare information technology division with Allscripts in 2008. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The company was founded in 1979 as a computer systems supplier to UK insurance brokers.[2] In 1987 its shares were first traded on theUnlisted Securities Market. It was admitted to the Main List of the London Stock Exchange in 1989. The company started in the late 1970's under the name of BIS Ltd and had bought in a software package from a London based International Bank they then named MIDAS. This banking software system was based on a concept of a core multicurrency accounting module (at the time all other International Banks worldwide worked and accounted on a 'single currency' methodolgy). It was marketed to and operated successfully by a number of client London Banks from 1979. From the mid/late-1980's lesser competition to MIDAS came from two other separate software vendors with systems called Kapiti and IBIS. BIS/Misys in acquiring 'Kapiti' as a strategic purchase raised MIDAS to the market leader for 'off-the'shelf' banking software. In 1997 it bought Medic Computer Systems, a healthcare
14
software business In 2001 it went on to buy DBS Management plc, a supplier of software to Independent Financial Advisors, and Sunquest Information Systems Inc., a US supplier of clinical systems software and later sold the same in 2007 In 2004 the company bought IQ Financial Systems from Deutsche Bank for £20m. In March 2007 newly appointed CEO Mike Lawrie set out a new three- to five-year strategy to turn around and improve the financial operating performance of the company. In March 2008 the company announced a merger between its healthcare business and Allscripts, a medical records business. The merger was completed on 10 October 2008, and Misys plc now holds a majority shareholding in the merged entity known as Allscripts-Misys Healthcare Solutions, Inc, which is listed on the NASDAQ (MDRX). In June 2010, Allscripts announced a merger with Eclipsys Corporation, and that the Misys stake in Allscripts was to be reduced through a share buyback and secondary offering. On 12 November 2010, Misys announced that is had reached an agreement to acquire Sophis, a leading provider of portfolio and risk management software. Operations : The company's software is used as follows: Misys Banking is the specialist banking solutions business within Misys plc with a customer base across retail banking, corporate and wholesale banking. Misys Treasury & Capital Markets (TCM) creates integrated solutions for financial institutions to manage their capital market activities across multiple asset classes. Misys Open Source Solutions (MOSS) creates open source assets to service the financial and healthcare industries. Its first two projects are in the areas of Carbon Trading and Health Information Exchanges (HIEs).
AUTONOMY CORPORATION PLC : Autonomy Corporation PLC (LSE: AU.) is an enterprise software company with joint headquarters in Cambridge, United Kingdom, and San Francisco, USA. The company uses a combination of technologies born out of research at the University of Cambridge. It develops a variety of enterprise search and knowledge management applications using adaptive pattern recognition techniques centered on Bayesian inference in conjunction with traditional methods. In March 2009, it acquired the enterprise content management firm Interwoven, now Autonomy Interwoven and Autonomy iManage.
15
It is currently listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Autonomy was founded in Cambridge, England by Dr Michael Lynch and Richard Gaunt in 1996 as a spin-off from Cambridge Neurodynamics.[3] Autonomy floated in 1998 on the EASDAQ exchange at a share price of approximately 30p. At the height of the "dot com bubble", the peak share price was £30.[4] In December 2005 Autonomy acquired Verity, Inc., one of its main competitors, for approximately $500m.[5] In May 2007 after exercising an option to buy a stake of technology start up, Blinkx Inc, and combining it with its consumer division, Autonomy floated Blinkx on a valuation of $250m.[6] In July 2007 it acquired Zantaz, an email archiving and litigation support company, for $375M.[7] In January 2009, it acquired Interwoven, a niche provider of enterprise content management software, for $775m. In June 2010, the company announced that it was to acquire the Information Governance business of CA Technologies. Terms of the sale were not disclosed.[9] On 8 July 2010, Tottenham Hotspur FC announced a two year sponsorship deal with Autonomy for their Premier League kit. Products : The main technology, Intelligent Data Operating Layer (IDOL), allows search and processing of text, audio, video, and structured information. The processing of such information by IDOL is referred to by Autonomy as Meaning-Based Computing.[11] Autonomy's technology attempts to understand any form of unstructured information, whether text, voice, or video, and based on that understanding perform automatic operations on the information.
Customers: Autonomy also has over 400 OEM partners and more than 400 vendors and integrators, numbering among them are companies such as Citrix,EDS, Novell and Symantec.
16
The Sage Group Plc: The Sage Group Plc commonly known as Sage, is a global enterprise software company headquartered in Newcastle upon Tyne, United Kingdom. It is the world's third-largest supplier of enterprise resource planning software (behind Oracle and SAP), the largest supplier to small businesses, and has 6.1 million customers worldwide.[3] It has offices in 24 countries and its products and services are available in more than 160 countries.[1] It was the patron of The Sage Gateshead music venue in Newcastle upon Tyne.[4] It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Operations: Founded and headquartered in Newcastle upon Tyne, United Kingdom, the company initially grew organically, but more recently has grown primarily through acquisitions. In 2004 the company's new headquarters was completed in the North Park area of Newcastle upon Tyne. It now operates worldwide. The company's US headquarters are in Irvine, California, the Canadian headquarters are in Richmond, Canada and the French and Continental European headquarters are in Paris, France. Sage has 6.1 million customers and 13,400 employees across the world. Key industry focus includes: Healthcare; HR & Payroll; Construction/ Real-Estate; Transport/ Distribution; Payment Processing; Accountancy; Not-for-Profit; Manufacturing; Retail; Automotive Distribution.
17
6.ANALYSIS AND DISCUSSION
Analysis of Indian IT Industry:
The Indian I.T Industry is facing an uphill battle in today s troubling times. The challenge is to sustain their growth rate and keep on providing value to their shareholders. The key for survival would be I.T Companies ability to diversify into global markets while getting more from their existing clients and initiating stringent cost optimization measures. Organizations who withstand this onslaught will come out of this crisis stronger, leaner and ready to take on global giants and stamp their authority in this flat world.
ANALYSIS OF UK I.T INDUSTRY The UK software industry is alive and kicking²despite many claims to the contrary. But more needs to be done to help young software companies if the UK wants to create its own Google or Microsoft. The top 50 UK software companies reported revenue growth of around 20 per cent last year, together with operating profit growth of around 25 per cent²showing that the UK's software industry is "a thriving and highly profitable business", according to research firm TechMarketView. In addition, the UK software industry pulls in around 70 per cent of its revenues from abroad, earning nearly as much from exports²£4.6bn²as the country spends on buying in foreign software, £5.6bn.There is a tendency to write-off the UK software industry because most of the familiar software companies are in the US, said TechMarketView chairman Richard Holway who warned: "That would be a big mistake."
18
7.CONCLUSION AND RECOMMENDATIONS
I.T industry is improving in india day by day whereas in UK I.T industry is struggling because of lack of man power.In india even the market is increasing there are lot even threats for the industry such as High dependency on U.S markets,advent of protectionist policies, Pricing Margin Pressure, Currency Related Fluctuations so by that we can say that even I.T industry is improving in india it should take care of the global policies and markets.When considering the case of UK has played a vital role in the development of the software industry over its 40-year history, having had an early hand in many of today's most popular applications²from databases and email to computer games and the internet. Right now the position of UK is struggling as the no of software professionals are being reduced as the demand is more than the supply it is lacking in I.T industry when compared to india.
Recommendations for Indian I.T Industry: Increase the ability to diversify global markets Make the domestic firms stronger. Make the Business according to currency rate fluctuations.
Recommendations for UK I.T Industry:
Technical innovators must develop better business skills to attract venture capital Academia and employers must communicate more effectively IT must re-establish itself as an attractive career UK software industry must develop a clear and unified voice Take advantage of creative environment in the UK to set apart its software industry throughout the world .
19
8.References
Origins and Growth of the Software Industry in India by Rafiq Dossani. Can the UK Succeed in a Global Software Economy? £20 billion annual contribution to UK economy at risk from skills shortage The Globalization of Software: The Case of the Indian Software Industry By Carnegie Mellon University Software Industry Facts and Figures. Benefits of U.K Software Industry. British Software Industry Is Still Alive Software Industry Today. Indian I.T Industry from Economic times. Global I.T industry by Richardson MIT.
20
The information technology (IT) industry has become of the most robust industries in the world. IT, more than any other industry or economic facet, has an increased productivity, particularly in the developed world, and therefore is a key driver of global economic growth. Economies of scale and insatiable demand from both consumers and enterprises characterize this rapidly growing sector. Owing to its easy accessibility and the wide range of IT products available, the demand for IT services has increased substantially over the years. The IT sector has emerged as a major global source of both growth and employment. Scenario of the uk software industry needs unified voice and high level skills to thrive. The working party's report analyzed the current state of the UK software sector and identified actions needed to capitalize on these opportunities for growth: Technical innovators must develop better business skills to attract venture capital. Academia and employers must communicate more effectively. The software sector must establish itself as an attractive area in which to build a career. The UK software industry must develop a clear and unified voice. The current scenario in the IT industry of India and the tremendous growth registered in recent years has generated much optimism about the future of the Indian Information technology industry. Analysts are upbeat about the huge potential of growth in the Information Technology industry in India. This research includes the facts and figures regarding the top software companies in uk and india.Basically the data will be taken from the prominent companies in india which are leading in IT Industry such as Infosys,TCS AND Wipro similarly in UK such as Oracle Corporation,FOXIT and Infotech enterprises europe.Based on the facts and figures of the companies in uk and india We will be analyzing the developed market and developing market with respect to the countries.
1
2.INTRODUCTION 2.1 INDIAN I.T INDUSTRY OVERVIEW:
The Indian software industry has been one of the success stories of India post 1991 when a slew of reforms lead to liberalization of the economy. It has grown from a mere US $ 150 million in 1991-92 to revenues of 31$ billion in 2008-09. The growth of the IT-BPO industry can be shown with the help of the following bar diagram:
With estimated revenues of USD 71.6 billion in fiscal 2009 (Growth of 12.0%), the IT-BPO industry continues to grow at a CAGR of 27.1% since FY 2004. The world-wide technology and related services spend is estimated to have crossed USD 1.6 trillion in 2008 a growth rate of 4.6% over 2007. The world- wide forecast for I.T Services can be illustrated with the below chart:
2
High Quality Delivery According to Process Maturity Profile published by Carnegie Mellon Software Engineering Institute, approximately 158 companies are certified at SEI-CMM Level 5 in India- higher than any country in the world. It suggests that Indian Companies are highly quality conscious and focus on achieving operational excellence while delivering their services. Significant Cost Benefits The NASSCOM Strategic Review 2009 indicates that company¶s experience cost savings of around 60-70% by outsourcing their I.T and BPO requirements to India as compared to their source locations and suggests that the cost advantage offered by ITES Industry is sustainable even in the long term. Abundant Skilled Resources India has a large and highly skilled English speaking labour pool. According to NASSCOM Strategic Review 2009 the total graduate turn out in India in fiscal is expected to be 3.5 million, including a technical graduate turn out of approximately 5.14 lacs Complete bouquet of services The Indian I.T companies offer a one stop solution to their clients and have developed length and breadth service offering capabilities. Effective Service Delivery Model The Indian I.T companies have developed the global delivery model and have effectively integrated onsite and offshore execution capabilities to deliver seamless, scalable services to their clients.
The top I.T companies in India are TCS, Wipro, Infosys and Tech Mahindra after the successful acquisition of Satyam. MNC¶s who have set up their base in India include Microsoft, Accenture, Google and Oracle.
3
2.2 UK IT INDUSTRY OVERVIEW :
The UK¶s software industry is a thriving and highly profitable business. With the top 50 companies reporting revenue growth of 20% and operating profit growth of 25% last year, it is also a significant investment opportunity for those willing to take UK software to the world stage. These are the findings of a comprehensive report into the UK software industry by TechMarketView, the leading analyst firm focused on the UK software and IT services market. ³There is a tendency to write-off the UK software industry because most of the familiar software companies are in the US. That would be a big mistake,´ states Richard Holway, Chairman, TechMarketView. ³A combination of organic and inorganic growth has resulted in the top 50 UK headquartered software companies growing c20% in the last year. Perhaps even more surprising, to an ever sceptical British audience, is the c70% of revenues that the UK software industry earns abroad. Indeed, the UK is not that far off earning as much from overseas markets as we buy in. Currently £4.6b plays £5.6b with the gap narrowing each year.´ While the report paints a more positive picture of the UK software industry, it highlights a number of ³national failings´ that have prevented the UK from producing global software giants the likes of Microsoft, SAP or Oracle.³The problem for the UK software industry has never been the quality of its people or its innovation,´ argues Holway, citing the following factors are: * Lack of available financial backing: In comparison to the US, it is much more difficult for UK software developers to gain access to venture capital funding. * Lack of marketing expertise: Many of the UK¶s best developers simply fail in explaining how great their product is to investors and to the market. * Local not Global: Many of the UK¶s software companies focus mainly (if not solely) on products geared to the UK market. * Lack of ambition: Many UK software companies are run as µlifestyle¶ businesses. Very few UK software entrepreneurs seem prepared to risk the Merc for the seemingly scant possibility to become a global player. * Lack of management skills: Growing from a small enterprise to medium-sized is hard enough - but not a fraction as hard as that required to grow to be large. Few founders are up to running large, global organisations; even fewer are prepared to step aside!
4
* Easily pleased: UK software companies have a long history of being other nations¶ µacquisition fodder¶. Founders seem to want to µtake the money and run¶ rather than take the risk of growing to something larger. UK Software Industry Key facts:
y y y y y y
y y y y y
Employs almost one million people Contributes an estimated £20 Billion to the UK economy Needs almost 150,000 new entrants every year First generation of IT workers approaching retirement age No longer perceived to be an attractive career In the last five years: o 50% drop in applications to computer related degrees o 47% drop in systems engineering students o 60% drop in software engineering students Down to 20,000 new IT graduates per year 200,000 µbasic¶ jobs will be off-shored by 2010 - equivalent to the population of Brighton Clear and present danger to high-end jobs from Eastern Europe and Asia Acute and growing shortage of high-end software skills Software companies account for 22% of the companies invested in by venture capitalists, but only receive 5% of the total funding
5
3.LITERATURE REVIEW
Information technology (IT) is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications.[1] The term in its modern sense first appeared in a 1958 article published in the Harvard Business Review, in which authors Leavitt and Whisler commented that "the new technology does not yet have a single established name. We shall call it information technology
IT is the area of managing technology and spans wide variety of areas that include but are not limited to things such as processes, computer software, information systems, computer hardware, programming languages, and data constructs. In short, anything that renders data, information or perceived knowledge in any visual format whatsoever, via any multimedia distribution mechanism, is considered part of the domain space known as Information Technology (IT).
IT Disciplines/Competencies)
professionals that range
perform from
a
variety
of
functions
(IT
installing
applications to
designing
complex computer networks and information databases. A few of the duties that IT professionals perform may include data management, networking, engineering computer hardware, database and software design, as well as management and administration of entire systems. Information technology is starting to spread further than the conventional personal computer and network technology, and more into integrations of other technologies such as the use of cell phones, televisions, automobiles, and more, which is increasing the demand for such jobs.
6
4.RESEARCH DESIGN
This is an empirical study of the computer software industry in India and UK. The Indian software industry represents a case of export led growth in a country with a large domestic market but without a great exporting tradition. It has accomplished this growth by becoming an important part of the global division of labor in software. Our first objective in this report is to develop a comprehensive and quantitative picture of the industry and its growth. Second, we aim for a deeper understanding ofthe institutions, linkages, technologies, and processes that enable the international division of labor between the software industry in India and its customers elsewhere in the United States, Japan, and Western Europe. Finally, this report explores the implications that this international division of labor has for the labor market in the IT sector in the U.S. and for the U.S. economy as a whole. questions include 1. The structure and composition of the Indian software industry What types of services and products are provided by the industry for domestic market and for export? What is the level of sophistication of these services? What linkages, if any, do software exporters have to the Indian economy? 2. The linkages between the Indian software firms and the U.S. economy What is the nature of services provided to U.S. firms? What are the different organizational arrangements for software service exports? Is the relationship primarily one of complementarily, or one of substitution (competition)? 3. Sources of comparative advantage of the Indian and UK software industry What are the distinct sources of advantage? What are the major weaknesses? 4. The supply of human capital What is the quality of the workforce? What are the likely scenarios for the future, as projected by the government, and by the industry participants? Our specific research
7
5. Future scenario What are the potentialities of the Indian and UK software industry? What are the strategic options for Indian and UK software firms for the future?
8
5.FINDINGS 5.1 Indian I.T Companies:
Tata Consultancy Services (TCS)
Tata Consultancy Services Limited (TCS) is one of India's oldest and largest providers of information technology and business process outsourcing services and was established in the year 1968. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled services delivered through its unique Global Network Delivery Model, recognized as the benchmark of excellence in software development. TCS has over 143,000 of the world's best trained IT consultants including 10,000 international associates from 67 nationalities. At the end of the year 2008-09, TCS' global footprint has extended to over 42 countries through its 140 offices globally. Vision: To be one of the top 10 global companies by the year 2010.
Mission: To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services, and to actively engage all stakeholders in a productive, collaborative, and mutually beneficial relationship. Values: Integrity, leading change, excellence, respect for the individual, and fostering an environment of learning and sharing. Awards & Achievements: y y y y y Best Governed Company Award 2008 of the Asian Centre of Corporate Governance and Sustainability and Indian Merchants Chamber Topper of the Dataquest Top 20 list of Indian IT companies Most Admired Knowledge Enterprise (MAKE) Award, for the fourth time Highest Delta Award in the 600+ company category on the TATA Business Excellence Model Top ranking in HR in Data Quest-IDC's Best Employer Award Recruiting and Staffing Best in Class Awards (RASBIC) 2008-09 for 'Best Use of Technology in Recruiting' and 'Most Innovative Program/Initiative in Recruiting
9
Quality Initiatives: y TCS is the world¶s first organization to achieve an enterprise-wide Maturity Level 5 on CMMI® and P-CMM® based on SCAMPISM, the most rigorous assessment methodology. TCS Integrated Quality Management System (iQMS) integrates processes, people, and technology maturity through various established frameworks and practices, including IEEE, ISO 9001: 2000, CMMi, SW-CMM, P-CMM, and SixSigma. Certified for domain specific quality certification: TL 9000 for the Telecom business. AS9100 for Aerospace industry and ISO 13485 for Medical Devices.
y
y
Infosys
Infosys Technologies Limited) is a multinational information technology services company headquartered in Bangalore. Infosys' offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing. Infosys has defined, designed and delivered technology-enabled business solutions that help Global 2000 companies win in a Flat World and provides the above mentioned services by domain and business expertise and strategic alliances with leading technology providers. Infosys has a global footprint with over 50 offices and development centers in India, China, Australia, the Czech Republic, Poland, the UK, Canada and Japan with over 103,000 employees. Vision: To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people. Mission: To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large. Values: Customer Delight: To surpass customer expectations consistently.
10
y
Leadership by Example: To set standards in our business and transactions and be an exemplar for the industry and ourselves. Integrity and Transparency: To be ethical, sincere and open in all our transactions. Fairness: To be objective and transaction-oriented, and thereby earn trust and respect. Pursuit of Excellence: To strive relentlessly, constantly improve ourselves, our teams, our services and products to become the best. Awards & Achievements: Ranked among the top 50 most respected companies in the world by Reputation Institute¶s Global Reputation Pulse 2009. Most Admired Knowledge Enterprises (MAKE) award 2008 Best company in India in Corporate Governance in The Asset Magazine's annual Corporate Governance Index 2008
y
Quality Initiatives: Infosys Australia achieves SEI-CMMI Level 5 Ver 1.2 in 2008. Certified at SEICMM Level 5. Certified at SEI-CMMI Level 5. INSIGHT is an Integrated Audit System to facilitate quality audits across the enterprise. Establishment of Quality Academy with a focus on building Project Management, software engineering and process competencies with training and certification programs. Development of Estimated Enterprise Models(ESTEEM) to facilitate adoption of formal estimation techniques and models
Wipro:
Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. Wipro has 55+ µCenters of Excellence¶ that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation Values: Make customers successful Team, Innovate, Excel Act with Sensitivity Respect for the individual Thoughtful and responsible Unyielding Integrity
11
Delivering on commitments Honesty and fairness in action
Awards & Achievements: y y y y Winner of International Institute for Software Testing¶s Software Testing Best Practice Award,2008 Winner of Indian MAKE Award, 2008 Wins Verizon¶s 2006 Supplier Excellence Award Only Indian company in the Business Week¶s IN25 ³Champions of Innovation´ list.
Quality Initiatives: SEI-CMM Level 5, World¶s first IT services company , 1998 Six Sigma, World¶s first IT services company , 1999 PCMM Level 5, World¶s first software company ,2001 ISO 9001 compliant by 1995. Over 3350 employees trained in Six Sigma with 120 certified black belts
Financial Performance Comparison:
\
12
As per the table data, TCS revenues¶ have increased from Rs.18289.95 to Rs.22, 404 cr, a Y-O-Y increase of 22.49 %. At the same time, Infosys revenues¶ have increased significantly greater than TCS from Rs.15648 to Rs.20,264 cr, a YO-Y increase of 29.50 %. Wipro revenues¶ have also increased appreciably from Rs.17658.1 to Rs.21612.8 cr, a Y-O-Y increase of 22.39% TCS¶ operating profit has increased only marginally from Rs. 5466.06 to Rs.5564.59 cr, a Y-O-Y increase of 1.80 %. Infosys¶ operating profit has increased highly from Rs. 4963 to Rs.6906 cr, a Y-O-Y increase of 39.1 % while Wipro¶s operating profit has only increased thinly from Rs.4042.5 to 4278.4 cr, a Y-O-Y increase of 5.83% .In the same vein TCS¶ Net profit has increased only slightly from Rs. 4508.76 to Rs.4696.21 cr, a Y-O-Y increase of 4.80%. Infosys¶ Net profit has increased outstandingly from Rs.4470 to Rs.5819 cr, a Y-O-Y increase of 30.2 % while Wipro¶s net profit has actually decreased from 3063.3 to 2973.8 cr.
Also the employee costs have slightly risen for TCS to Rs.11, 676.34 from Rs.9, 413.05, a rise of 0.65%, one of the factors affecting the operating profit of the company. Another aspect affecting the margins was the net Other Income which resulted in a loss of Rs.456.24 crore deviating in the opposite direction from a gain of Rs.689.82 crore in fiscal 2008. Infosys was also hit by this factor with exchange losses of 372 crores but managed to recover to post net Other Income of gain of 502 crores.
Segment Wise Revenue Comparison:
Geographic Segmentation:
\
13
As per the table data, the majority of revenues for TCS (from 56% in 2008 to
56.77% in 2009) and Infosys (from 63% in 2008 to 64.70 % in 2009) continue to come from America indicating the dependency on this market. The financial crisis in U.S.A continues to be a big source of worry. Also as indicated by a research agency survey that majority of U.S clients are contemplating a cut in their I.T budgets along with decrease in discretionary spending further deepening the problems for the I.T companies. The revenue growth from Europe has decreased slightly for both the companies denoting the spread of global meltdown to Europe and inability of Indian I.T companies to make huge inroads into the European Landscape. The revenue from Indian market is on the lower side for Infosys and they should try to tap this channel in these difficult times. With reference to revenue generated from other global markets, both companies show positive signs which indicate the diversification which is required in un hitherton on traditional markets such as Africa, Australia and Japan which is needed for survival in these challenging situations. 5.2 UK I.T Companies : MISYS PLC: Misys plc (LSE: MSY) is a leading multinational software company providing software solutions and services to the financial services and healthcare sectors. The company merged its healthcare information technology division with Allscripts in 2008. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The company was founded in 1979 as a computer systems supplier to UK insurance brokers.[2] In 1987 its shares were first traded on theUnlisted Securities Market. It was admitted to the Main List of the London Stock Exchange in 1989. The company started in the late 1970's under the name of BIS Ltd and had bought in a software package from a London based International Bank they then named MIDAS. This banking software system was based on a concept of a core multicurrency accounting module (at the time all other International Banks worldwide worked and accounted on a 'single currency' methodolgy). It was marketed to and operated successfully by a number of client London Banks from 1979. From the mid/late-1980's lesser competition to MIDAS came from two other separate software vendors with systems called Kapiti and IBIS. BIS/Misys in acquiring 'Kapiti' as a strategic purchase raised MIDAS to the market leader for 'off-the'shelf' banking software. In 1997 it bought Medic Computer Systems, a healthcare
14
software business In 2001 it went on to buy DBS Management plc, a supplier of software to Independent Financial Advisors, and Sunquest Information Systems Inc., a US supplier of clinical systems software and later sold the same in 2007 In 2004 the company bought IQ Financial Systems from Deutsche Bank for £20m. In March 2007 newly appointed CEO Mike Lawrie set out a new three- to five-year strategy to turn around and improve the financial operating performance of the company. In March 2008 the company announced a merger between its healthcare business and Allscripts, a medical records business. The merger was completed on 10 October 2008, and Misys plc now holds a majority shareholding in the merged entity known as Allscripts-Misys Healthcare Solutions, Inc, which is listed on the NASDAQ (MDRX). In June 2010, Allscripts announced a merger with Eclipsys Corporation, and that the Misys stake in Allscripts was to be reduced through a share buyback and secondary offering. On 12 November 2010, Misys announced that is had reached an agreement to acquire Sophis, a leading provider of portfolio and risk management software. Operations : The company's software is used as follows: Misys Banking is the specialist banking solutions business within Misys plc with a customer base across retail banking, corporate and wholesale banking. Misys Treasury & Capital Markets (TCM) creates integrated solutions for financial institutions to manage their capital market activities across multiple asset classes. Misys Open Source Solutions (MOSS) creates open source assets to service the financial and healthcare industries. Its first two projects are in the areas of Carbon Trading and Health Information Exchanges (HIEs).
AUTONOMY CORPORATION PLC : Autonomy Corporation PLC (LSE: AU.) is an enterprise software company with joint headquarters in Cambridge, United Kingdom, and San Francisco, USA. The company uses a combination of technologies born out of research at the University of Cambridge. It develops a variety of enterprise search and knowledge management applications using adaptive pattern recognition techniques centered on Bayesian inference in conjunction with traditional methods. In March 2009, it acquired the enterprise content management firm Interwoven, now Autonomy Interwoven and Autonomy iManage.
15
It is currently listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Autonomy was founded in Cambridge, England by Dr Michael Lynch and Richard Gaunt in 1996 as a spin-off from Cambridge Neurodynamics.[3] Autonomy floated in 1998 on the EASDAQ exchange at a share price of approximately 30p. At the height of the "dot com bubble", the peak share price was £30.[4] In December 2005 Autonomy acquired Verity, Inc., one of its main competitors, for approximately $500m.[5] In May 2007 after exercising an option to buy a stake of technology start up, Blinkx Inc, and combining it with its consumer division, Autonomy floated Blinkx on a valuation of $250m.[6] In July 2007 it acquired Zantaz, an email archiving and litigation support company, for $375M.[7] In January 2009, it acquired Interwoven, a niche provider of enterprise content management software, for $775m. In June 2010, the company announced that it was to acquire the Information Governance business of CA Technologies. Terms of the sale were not disclosed.[9] On 8 July 2010, Tottenham Hotspur FC announced a two year sponsorship deal with Autonomy for their Premier League kit. Products : The main technology, Intelligent Data Operating Layer (IDOL), allows search and processing of text, audio, video, and structured information. The processing of such information by IDOL is referred to by Autonomy as Meaning-Based Computing.[11] Autonomy's technology attempts to understand any form of unstructured information, whether text, voice, or video, and based on that understanding perform automatic operations on the information.
Customers: Autonomy also has over 400 OEM partners and more than 400 vendors and integrators, numbering among them are companies such as Citrix,EDS, Novell and Symantec.
16
The Sage Group Plc: The Sage Group Plc commonly known as Sage, is a global enterprise software company headquartered in Newcastle upon Tyne, United Kingdom. It is the world's third-largest supplier of enterprise resource planning software (behind Oracle and SAP), the largest supplier to small businesses, and has 6.1 million customers worldwide.[3] It has offices in 24 countries and its products and services are available in more than 160 countries.[1] It was the patron of The Sage Gateshead music venue in Newcastle upon Tyne.[4] It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Operations: Founded and headquartered in Newcastle upon Tyne, United Kingdom, the company initially grew organically, but more recently has grown primarily through acquisitions. In 2004 the company's new headquarters was completed in the North Park area of Newcastle upon Tyne. It now operates worldwide. The company's US headquarters are in Irvine, California, the Canadian headquarters are in Richmond, Canada and the French and Continental European headquarters are in Paris, France. Sage has 6.1 million customers and 13,400 employees across the world. Key industry focus includes: Healthcare; HR & Payroll; Construction/ Real-Estate; Transport/ Distribution; Payment Processing; Accountancy; Not-for-Profit; Manufacturing; Retail; Automotive Distribution.
17
6.ANALYSIS AND DISCUSSION
Analysis of Indian IT Industry:
The Indian I.T Industry is facing an uphill battle in today s troubling times. The challenge is to sustain their growth rate and keep on providing value to their shareholders. The key for survival would be I.T Companies ability to diversify into global markets while getting more from their existing clients and initiating stringent cost optimization measures. Organizations who withstand this onslaught will come out of this crisis stronger, leaner and ready to take on global giants and stamp their authority in this flat world.
ANALYSIS OF UK I.T INDUSTRY The UK software industry is alive and kicking²despite many claims to the contrary. But more needs to be done to help young software companies if the UK wants to create its own Google or Microsoft. The top 50 UK software companies reported revenue growth of around 20 per cent last year, together with operating profit growth of around 25 per cent²showing that the UK's software industry is "a thriving and highly profitable business", according to research firm TechMarketView. In addition, the UK software industry pulls in around 70 per cent of its revenues from abroad, earning nearly as much from exports²£4.6bn²as the country spends on buying in foreign software, £5.6bn.There is a tendency to write-off the UK software industry because most of the familiar software companies are in the US, said TechMarketView chairman Richard Holway who warned: "That would be a big mistake."
18
7.CONCLUSION AND RECOMMENDATIONS
I.T industry is improving in india day by day whereas in UK I.T industry is struggling because of lack of man power.In india even the market is increasing there are lot even threats for the industry such as High dependency on U.S markets,advent of protectionist policies, Pricing Margin Pressure, Currency Related Fluctuations so by that we can say that even I.T industry is improving in india it should take care of the global policies and markets.When considering the case of UK has played a vital role in the development of the software industry over its 40-year history, having had an early hand in many of today's most popular applications²from databases and email to computer games and the internet. Right now the position of UK is struggling as the no of software professionals are being reduced as the demand is more than the supply it is lacking in I.T industry when compared to india.
Recommendations for Indian I.T Industry: Increase the ability to diversify global markets Make the domestic firms stronger. Make the Business according to currency rate fluctuations.
Recommendations for UK I.T Industry:
Technical innovators must develop better business skills to attract venture capital Academia and employers must communicate more effectively IT must re-establish itself as an attractive career UK software industry must develop a clear and unified voice Take advantage of creative environment in the UK to set apart its software industry throughout the world .
19
8.References
Origins and Growth of the Software Industry in India by Rafiq Dossani. Can the UK Succeed in a Global Software Economy? £20 billion annual contribution to UK economy at risk from skills shortage The Globalization of Software: The Case of the Indian Software Industry By Carnegie Mellon University Software Industry Facts and Figures. Benefits of U.K Software Industry. British Software Industry Is Still Alive Software Industry Today. Indian I.T Industry from Economic times. Global I.T industry by Richardson MIT.
20
