CHAPTER 1

1. INTRODUCTION

Indian Business Environment

“In 1991, with India running out of hard currency, Manmohan Singh…decided that India

had to open its economy. “Our Berlin Wall fell…and it was like unleashing a caged

tiger… We went from quiet self-confidence to outrageous ambition in a decade.” [Tarun

Das, Chief Mentor, Confederation of Indian Industries]

(Thomas Friedman, The World is Flat)

A chorus of recent long-term projections, citing India’s growing workforce and the scope

for it to increase productivity dramatically through technological ‘catch-up’ with the

West, suggest India could be the world’s fastest growing major economy over the next 50

years, outstripping even China and other emerging market economies. Assuming the

maintenance of growth-supportive policy settings, ongoing reform, and no major adverse

shocks, Goldman Sachs predicts annual real GDP growth of around six per cent through

to 2040, tapering off slightly after that. Employing similar assumptions,

PricewaterhouseCoopers forecast real average GDP growth of 5.2 per cent per annum in

India through to 2050, compared to 3.9 per cent in China, Brazil and Mexico, and 4.8 per

cent in Indonesia (PricewaterhouseCoopers 2006). The Economist Intelligence Unit

projects annual average growth in India’s real GDP of 5.9 per cent through to 2030 (The

Economist 2005b).

There is a possibility of a significant re-alignment of the global economic order, as

emerging economies, led by China and India, come to account for a much larger share of

global economic output. India’s economy could rival – at market exchange rates – the

size of the largest European countries by 2020 and outstrip Japan by 2032 to become the

world’s third-largest economy after the United States and China. In purchasing power

parity terms, India is already the world’s fourth-largest economy and will become the

third-largest much sooner. Measured at market exchange rates, it is recently projected

that by 2050 the Indian economy will respectively be around 90 per cent of the size of the

US economy. These projections build on an impressive growth record since the then

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Finance Minister (and now Prime Minister) Manmohan Singh initiated key economic

reforms in June 1991, resulting in reduced public sector participation in the economy,

greater openness to international competition, and significant deregulation. Since those

reforms, India’s economic growth has averaged around six per cent, far ahead of its

previous sluggish performance; and over the past three years growth has been of the order

of 7.5 to 8.5 per cent.

Work by the World Economic Forum in collaboration with the Confederation of Indian

Industry, for example, produced three possible scenarios for the future of the Indian

economy, only one of which leads unequivocally to strong growth and broad-based

development – and one of which leads equally unequivocally in the opposite direction.

The key question will be the ability of successive governments to sustain the momentum

of reform. However, achieving major necessary reforms remains difficult, particularly in

flagship areas such as labour policy, privatisation, and foreign participation, whether

through trade or investment. If the necessary political support is to be achieved, it is

important that the benefits of economic growth are seen to be widely distributed.

Services and India’s rise

In one important respect, India’s growth path to date resembles those of other key

developing economies in Asia. That is, rapid growth in an export-oriented sector has been

a key stimulus for growth in the economy as a whole. But China and the ASEAN

countries rose to prominence through the rapid expansion of their export-oriented

manufacturing, fuelled by significant foreign investment. While studying the growth

behaviour of the economy, it seems that to an extent industrial sector has been bypassed

and pressure is on the service sector. Major international services – led by exports of

business services from India’s burgeoning information technology and information

technology enabled services (IT–ITES) sectors – have been the chief source of India’s

recent economic success.

Due to the increasing contribution of service sector to GDP, which is an important

indicator of economic progress and modernization, more emphasis has been given to this

sector in five-year plans. The rise in service sector’s share in GDP marks a structural shift

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in the Indian economy and takes it closer to the fundamentals of a developed economy as

in these developed economies the industrial and service sectors contribute a major share

in GDP, while agriculture accounts for a relatively lower share.

Nevertheless, the increasing share of services in GDP has been a source of controversy

ever since independence. Besides, income from service sector is growing much in excess

of the demand generated for the services by the commodity sector. Further it is also said

that a shift in value added mix towards industry and tertiary activities have caused a

larger decline in the incidence of poverty in the nineties compared to that in the eighties.

Uniqueness and sudden growth pattern of these services needs to be recognised,

understood and analysed with their implications for long term development of strategy

and policy. It is against this backdrop, the present study has been designed. The study has

been built around the quests including: What is the scenario of major services in different

countries all over the world? What is the services intensity of the various sectors of the

economy? Which services have the largest contributing effect on the economy?

RATIONALE FOR TAKING THE PROJECT

This report focuses specifically on the major international services because of the central

importance of these services to India’s current economic expansion. Whereas the East

Asian economies’ success has largely been built on the development of export-oriented

manufacturing, India’s recent growth has been led by the dynamism of its services sector

– particularly high-end, knowledge-intensive services exports. Services have consistently

grown at a faster pace than the economy as a whole since 1991, when the reform effort

was kicked off in earnest. They now occupy around 55 per cent of India’s GDP.

Manufacturing, by contrast, has maintained a stubbornly static share in the economy at

around 20 per cent, while that of agriculture – still far and away the largest employer –

has dwindled. Productivity growth in India, unlike virtually all other regions of the world,

has been strongest in services.

This is not to say that developments in other sectors are unimportant; or that the profile of

India’s economy will remain static over time. Already, for example, there are signs of

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acceleration in the growth of India’s manufacturing sector. But to date, it has been

services that have led the way; and their sheer size within the economy means they will

continue to have a critical role. This is an unusual growth path. In terms of per capita

income India remains a poor country. Yet the services-dependent profile of its economy

is much closer to that which has typically been associated with middle-income

developing countries. In general, development of the services sector occurs after

developments in agriculture and manufacturing. In India’s case, the reverse has occurred.

ROLE OF SERVICES: AN OVERVIEW

A Global Glimpse of Service Sector

In the last two decades, service sector has expanded rapidly all over the world.

Consequently, there is a boom in respect of services all over the world. Services are

estimated to account for half of the world output and a quarter of world trade. Their

importance corresponds to the growth in incomes. This is reflected in services share in

gross domestic product, which accounts 60 per cent in high-income countries and 30 – 35

per cent in low income countries (Exhibit 1)

Generally speaking the developed countries have dominated this expansion of services

accounting for three-fourth of the world services output. The service sector today

constitutes more than 50 per cent of economic activity in developing countries,

which is significantly more than the traditional sectors. This sector constitutes more

than 60 per cent of economic activity in all OECD countries. Some of the developed

countries such as Brazil and Mexico have services accounting for a higher

percentage of GDP than the world average. In comparison to world scenario, growth

in India has not been so pronounced and India lagged behind some of the South Asian

countries such as Sri Lanka. One pattern that emerges with regard to contribution of

the services sector at this level of aggregation shows that the sector’s share of

national output grew in all the countries, no matter what the level of economic development.

This points to the fact that the service sector of an economy becomes large both in

absolute and relative terms as the economy reaches a certain level of maturity. The actual

development path and time it takes to go through a specific stage may vary from country

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to country, depending on the specific economic policy regime followed and the initial

economic and political conditions.

Growth of services in India

The strength and importance of India’s services sector distinguish it from Asia’s other

developing countries. Typically, service industries develop on a large scale after

agriculture and manufacturing have reached a certain stage of development.

Generally, as development proceeds, agriculture’s share in national output contracts

and a parallel expansion of industry takes place, initially centred on labour-intensive

production. The share of both industry and services in GDP tends to increase as per

capita incomes rise and the economy progresses from low to lower-middle income

status. As the economy moves to upper-middle income levels, services’ share tends to

grow more rapidly, while industry’s share plateaus or declines (Exhibit 2)

The upward trend in services’ share of Indian GDP has accelerated since the major

economic reforms initiated in 1991. In 1970-71, it stood at just 39 per cent. By 1990-91,

it was 48 per cent. By 2005-06, services’ share of GDP had risen to 60.7 per cent.

Over the period 1991-92 to 2005-06, the services sector grew at a trend rate of 7.9 per

cent, compared with just 2.6 per cent for agriculture, 6.1 per cent for industry and 6.1 per

cent for the economy overall. It contributed 70 per cent of overall GDP growth over the

period. Between1980-2004, productivity grew most rapidly in services, in contrast to the

general pattern observed in other countries where productivity growth was stronger in

manufacturing and agriculture (IMF 2006). Growth in services likewise exceeded overall

growth in the economy over 2002-03 to 2005-06, the first four years of the tenth Five

Year Plan (2002-07).

Growth is not, however, uniform across India’s services sector. Certain services stand out

in terms of their role in driving economic growth. Building on India’s large pool of

engineering talent and its rapidly expanding telecommunications sector, IT-ITES have in

recent years been the key catalyst of growth. Their success has come largely through

rapid expansion of exports tapping into burgeoning world-wide demand, as investment

and rapid advancements in telecommunications infrastructure and information technology

enable an increasing array of activities to be performed remotely. Faced with relatively

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low levels of regulation, IT-ITES and other fast-growing high-end services such as

telecommunications have now reached a size where they are significant contributors to

GDP growth. Growth and improved efficiencies in other key areas, such as financial

services, transportation and transport infrastructure, are vital to facilitating expansion of

other sectors of the economy. This could in turn help ensure that development is more

broadly based across both regions and socio-economic groups - and therefore sustainable.

Deregulation and foreign investment in such facilitating services drive improved

performance within those sectors and bring significant competitiveness benefits to the

wider economy given their importance as inputs to other sectors. While reform is

proceeding in these areas, much remains to be done. And other sectors which potentially

have a critical role to play in improving overall productivity have lagged far behind

growth in the economy as a whole.

Main Drivers of Service Sector Growth

‘The aphorism “In a desert one should find camels not hippopotamuses” is a good guide

to analyzing the pattern of economic growth. If rain is scarce, then one should find

animals adapted to a scarcity of water, not those reliant on water. In an economic

environment where, say, transport infrastructure is scarce, one should find

“infrastructure camels” – those industries and firms that are thriving should be less than

usually reliant on infrastructure.’

(World Bank 2006a)

Strong growth in foreign demand; deregulation, liberalisation of foreign investment and

greater private sector participation since 1991; increased industry outsourcing; and high

income elasticity of demand for services have been among the key factors driving high

growth in India’s services sector. These factors are examined further below. However

some other important influences should be noted, consistent with the comment from the

World Bank cited above. Services tend to be less dependent on large-scale investments,

and so less subject to investment related regulatory hurdles. Compared with the

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manufacturing sector, gross product in services sectors (outside of community, social and

personal services) is more concentrated in the largely unregulated ‘unorganised’ sector.

Transport infrastructure shortcomings also tend to have a lesser bearing on most services

sectors. The IT–ITES sector in particular has benefited from a supportive policy

approach. A large, relatively low cost, and well-educated workforce, which contains

more English-speakers than the United States and Britain combined, has enabled India to

capitalise on burgeoning export opportunities in high end services

Booming services trade

India’s service trade has grown at a phenomenal rate in recent times reflecting strong

growth in foreign demand, particularly for IT–ITES. Exports grew at a trend annual

growth rate of 20 per cent over the ten years to 2004–05. In 2005–06 they were valued at

US$60.6 billion, up over 40 per cent on their 2004–05 value. Around 85 per cent of the

growth in services exports in 2005–06 was attributable to growth in commercial services

excluding transportation and travel. Technological developments have been the key

enabler of the explosion in commercial services trade. (Exhibit 3)

Foreign Investment and deregulation

Liberalisation of foreign direct investment (FDI) regimes worldwide has enabled service

providers to establish a commercial presence in host countries, which can be critical for

the delivery of services. Reflecting the strong international demand for services in which

India enjoys a comparative advantage, FDI in India’s services has grown strongly. The

stock of FDI in India’s services sector grew at a compound annual rate of 36 per cent

between 1992–93 and 2001–02, compared with 20 per cent in other sectors. Close to one-

half of total FDI inflows between 2002–03 and 2005–06 were directed to services.

(Exhibit 4)

Increased industry outsourcing of services

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Indian industry has increasingly sought to contract out an array of services previously

produced in house, such as software development, design and testing, back-office

functions and post-sales service. Industry’s increased reliance on services inputs in turn

appears to be having a marked effect on increasing manufacturing output. Services inputs

contributed around 25 per cent of total output growth in India’s organised manufacturing

sector in the 1990s, up from just one per cent in the 1980s.

Increased private consumption of services

High levels of domestic consumption are fuelling growth in both the services sector and

the broader Indian economy. Private consumption expenditure accounts for 64 per cent of

India’s GDP - more than in Europe (58 per cent), Japan (55 per cent) and China (42 per

cent). Services’ share in private final consumption expenditure almost tripled to 29 per

cent over the 50 years to 2000-01. Services were prominent among the segments of

private consumption expenditure that grew at annual rates of above 15 per cent over the

decade to 2003.

MAJOR SERVICES IN INDIA

INFORMATION TECHNOLOGY

‘The advent of the internet proved to be the most important turning point. New

technology meant that at last India could reap the benefits of its long-term investments in

education, and inadequacies in infrastructure were less of a hindrance.’

Joseph Stiglitz, Making Globalization Work

Role of macroeconomic policies in promoting IT-ITES services

The policy measures introduced by the central government to bolster the position of the

IT sector arguably contributed significantly to India’s ability to exploit this opportunity.

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These included:

• A 1984 Computer Policy recognised software as an ‘industry’, making it eligible for an

investment allowance and other incentives. Import duties on software and personal

computers were also lowered.

• In 1986, import of software in any form was permitted and the sector was opened to

foreign investment.

• The Software Technology Parks (STP) scheme was introduced in the early 1990s,

modeled after Silicon Valley in USA. STPs are special zones, akin to Export Processing

Zones, provisioned with appropriate communication and physical infrastructure and

designated for export-oriented activities. Firms in STPs benefit from tax holidays up to

2010 and duty free equipment imports. FDI with 100 per cent foreign equity is permitted.

• The liberalization of the Telecom sector in 1994 which encouraged private

participation.

• The New Telecom Policy of 1999 introduced IP telephony and ended state monopoly

on international calling facilities

• In 1997, all import duties on software were eliminated and software firms were

permitted to invest overseas.

• A National Task Force, established in 1998, developed an Information Technology

Action Plan containing a large number of recommendations aimed at addressing the

inadequacy of telecommunications and other infrastructure, and the regulatory

impediments faced by the sector. The government accepted the plan’s recommendations.

• In 1998–99, the software sector was included amongst the list of ‘priority sectors’ to

which the banks are subject to directed lending. State governments have also played a

role in promoting the sector.

Indian IT services

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The information technology industry in India has taken center stage on the global

platform and is poised towards a period of new growth opportunities. As the global IT

opportunity increases from its current size of more than half a trillion dollars, Indian IT

industry with its mature processes and robust business models is well placed to take a

bigger share of the market. The industry has been able to handle both the growth as well

as the scale. This is clear from the fact that while the industry has grown over 200 times

in less than 15 years, the five pioneers of the industry still enjoy a leadership position in

IT services. FY 2006-07 witnessed a revalidation of the Indian Information Technology –

driven by a maturing appreciation of India’s role and growing importance in global

services trade.

Industry performance was marked by sustained double-digit revenue growth. The sector

closed the year at record levels, with the revenue aggregate growing by nearly ten times

over the past ten years. Positive market indicators include large unaddressed white-spaces

and the unbundling of IT-BPO mega-deals with increasing shares of global delivery

Strong optimism of the industry to achieve its aspired target of USD 60 billion in exports

by 2010

Industry Performance over the Last Ten Years

India’s IT sector has enjoyed remarkable success. Revenues of the sector grew

more than five-fold in the space of six years to reach an expected US$28.2 billion in

2004–05 (NASSCOM). IT services and software is the largest segment (US$16.5 billion),

followed by ITES-BPO (US$5.7 billion) and hardware (US$6 billion). According to

NASSCOM, the sector’s share of GDP grew from just 1.2 per cent to 4.1 per cent, which

would place it ahead of the communications sector. Total IT–ITES revenues (i.e.

excluding the hardware segment) increased by a further 30 per cent in 2005–06 to

US$29.5 billion and are expected to reach US$36–38 billion in 2006–07. IT–ITES’ share

of GDP is projected to increase to 4.8 per cent in 2006–07 (NASSCOM 2006b, 2006c).

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IT services and software revenues have been contributing more to growth in total IT–

ITES revenues.

‘Software services’ (predominantly IT–ITES) exports have grown at a compound annual

rate of around 35 per cent over the past six years. In 2005–06, they were valued at

US$23.9 billion, comprising US$23.4 billion in IT–ITES, and US$0.5 billion in

hardware. Large companies dominate the export profile, with the top ten companies

accounting for 60 per cent of total computer services exports in 2002–03 (RBI 2005).

ITES-BPO service

Introduction

Business process outsourcing (BPO) contains the transmission of processes along with

the associated operational activities and responsibilities, to a third party with at least a

guaranteed equal service level and where the client contains a firm grip over the

(activities of the) vendor for mutual long term success.

BPO as defined by the Gartner Group represents the delegation of one or more IT-

intensive business processes to an external provider to administer and manage the

selected process based on defined and measurable performance criteria through a contract

and take primary responsibility for providing a business process. BPO has evolved as a

management concept from IS outsourcing which is “the significant contribution by

external vendors in physical and/or human resources associated with entire or specific

components of the IT infrastructure in the user organization”.

The outsourcing and off shoring have been part of the corporate activities for a long time

but now they are being increasingly practiced in business services.

Benefits- BPO

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One of the most important advantages of BPO is the way in which it helps to increase a

company’s flexibility. However, several sources have different ways in which they

perceive organizational flexibility. Therefore business process outsourcing enhances the

flexibility of an organization in different ways.

• Most services provided by BPO vendors are offered on a fee-for-service basis. This

helps a company becoming more flexible by transforming fixed into variable costs. A

variable cost structure helps a company responding to changes in required capacity and

does not requisite a company in investing in assets and hereby making the company more

flexible.

• Another way in which BPO contributes to a company’s flexibility is that a company is

able to focus on its core competencies without being burdened by the demands of

bureaucratic dictate. Key employees are herewith released from performing non-core or

administrative processes and can invest more time and energy in building the firm’s core

businesses.

• A third way in which BPO increases organizational flexibility is by increasing the speed

of business processes. Using techniques such as linear programming is a way to reduce

cycle time and inventory levels, which reduces a company’s slack.

• Finally, flexibility is seen as a stage in the organizational life cycle. BPO allows firms

to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in

order to become efficient as they greatly expanded. It avoids a premature internal

transition from its informal entrepreneurial phase to a more bureaucratic mode of

operation

Indian BPO industry

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ITES-BPO is a very nascent segment of the domestic market, driven by voice based

services with customer care and sales and marketing activity accounting for

approximately 70 percent of the total. (Exhibit 7)

Currently, the BFSI and Telecom verticals account for over 70 percent of the demand for

ITES-BPO services in the domestic market.

Domestic ITES-BPO Revenues by Vertical Market (2004)

While cost savings have been the primary driver of offshore outsourcing, vendors do not

have comparable differences in labour costs to leverage while serving the domestic

market. As a result, the primary motivation for the domestic market, in its early years of

evolution are not cost savings but access to specialist skills and freeing client resources to

focus on the core business. Scalability and process efficiency is expected to return some

degree of cost savings in the domestic market as well. However this may not compare

with the levels achieved by overseas (e.g. US/UK) clients.

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The Indian ITES-BPO segment has witnessed a steady growth. BPO exports are growing

at about 33.5% percent and have exceeded FY06 expectation at USD 8.4 billion in

FY2007. (Exhibit 8)

Key facts of Indian BPO sector growth

Indian ITES-BPO exports grew from USD 6.3 billion in FY 2005-06 to USD 8.4

billion in FY 2006-07 expected to grow to USD 10.5-11bn in FY08.

ITES-BPO employee base has grown to 553,000 in FY 07 from 415,000 in FY 06

Over the past decade, the Indian BPO segment has witnessed significant

transformation. Starting with basic data entry tasks, the industry graduated to a

high proportion of voice-based services and a range of back-office processing

activities. The last 3-4 years have seen the scope of services expanding to include

increasingly complex processes involving rule-based decision making and even

research services requiring informed individual judgment.

The rapid expansion in the scope of BPO has been accompanied by an equally

rapid adoption across a range of vertical industries. This wide range of services

may be summarised into four broad categories comprising Finance and

Accounting (F&A), Customer Interaction Services (CIS), Human Resource

Administration and niche business services

Key facts of Domestic BPO industry

BPO demand in the domestic market has witnessed noticeable growth over the

past few years. The annual revenue aggregate of the domestic market for ITES-

BPO grew to $1.2 billion in FY 2006-07 from $0.9 billion in FY 2005-06,

illustrating a significant increase in demand.

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As the Indian economy becomes more globally integrated, businesses in India are

beginning to face increasing levels of global competition and being pushed to

deliver world class levels of product and service quality. BPO has emerged as an

effective means of entrusting specialists with the task of consistently delivering

the desired high-levels of quality – leaving the client organisations to focus on

their core businesses.

Key Growth Drivers of Indian BPO Industry

Abundant Talent- India’s young demographic profile is an inherent advantage

complemented by an academic infrastructure that generates a large pool of

English speaking talent. Talent suitability concerns are being addressed through a

combination of government, academia and industry led initiatives.

Sustained cost competitiveness- India has a strong track record of delivering a

significant cost advantage, with clients’ regularly reporting savings of 25-50

percent over the original cost base. The ability to achieve such high levels of cost

advantage by sourcing services from India is driven primarily by the ability to

access highly skilled talent at significantly lower wage costs and the resultant

productivity gains derived from having a very competent employee base.

Continued focus on quality- Demonstrated process quality and expertise in service

delivery has been a key factor driving India’s sustained leadership in global

service delivery. Since the inception of the industry in India, players within the

country have been focusing on quality initiatives, to align themselves with

international standards.

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World class information security environment- Stakeholders of Indian BPO

recognize fool proof security as an indispensable element of global service

delivery. Individual firm level efforts are complemented by a comprehensive

policy framework established by Indian authorities, which has built a strong

foundation for an ‘info-secure’ environment in the country.

Rapid growth in key business infrastructure- Rapid growth in key business

infrastructure has ensured unhindered growth and expansion of this sector.

Critical business infrastructure such as telecom and commercial real estate is well

in place; improving other supporting infrastructure a key priority for the

government. STPI infrastructure available across the country and magnitude of

investments shows government support to the industry.

Enabling Business policy and Regulatory environment- The enabling policy

environment in India was instrumental in catalyzing the early phases of growth in

this sector. Policy makers in India have laid special emphasis on encouraging

foreign participation in most sectors of the economy, recognizing its importance

not only as a source of financial capital but also as a facilitator of knowledge and

technology transfer.

Key players in The Indian Outsourcing Industry

The top players in India’s Outsourcing story include Wipro Spectramind, IBM Daksh,

Progeon, Convergys, Genpact, 24/7 customer care and ICICI One source. Claiming top

spot in the BPO sector is Convergys due to continuous investment in technology and

people.

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Challenges- India BPO industry

 While much has been said about the immense opportunities opening up before India’s

BPO players, not much attention has been paid to the challenges facing these

organizations. Some of the challenges, which will have a lasting impact on the Indian

BPO sector, are as follows:

- Talent and Attrition–Cost of Retention have increased

Lately, retaining middle and senior management teams is proving to be a challenge.

There is significant movement at this level between jobs. A year at the middle

management level in any large BPO major is a ticket to senior levels elsewhere. This is a

key risk as it has the potential to derail growth and stability of BPOs. This demand-

supply gap at the top level and also the skill set required for handling scalability and

multicultural integration of operations is an opportunity for experienced expat managers

to move into India operations

- Currency Dynamics

The rupee rise against the dollar is a major test for Indian BPO players as they bill in

dollars for the work done entirely offshore, while expenses are met in rupees. And worst,

the IT expenditure budget of the customer does not increase. According to analysts, one

percent rise in the rupee translates into a 50-basis point negative impact on BPO margins.

However, in the recent past, customers have become receptive to such changes, as they

have realized that only if the outsource is profitable will the outsourcer benefit.  Some of

the BPO companies have convinced some of their clients to bill in rupees instead of the

US dollar. Firms are increasingly focusing on high-margin service lines such as finance

and accounting, legal process outsourcing, risk management services, analytics, advisory

and process re-engineering.

- Extension of the Tax Holiday

Yet another challenge facing the IT-BPO industry is the expiration of the income tax

holiday period in 2009. The extension of the STPI scheme is important for India to

remain competitive on at the global level. Countries such as China and the Philippines are

offering 10-year tax holidays to their IT companies. According to leading analyst firms if

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all the existing challenges are coupled with the expiration of the STPI scheme in 2009,

BPO companies will lose 7-10 percent of business margin. Whether the tax holiday is

extended or not will have a decisive impact on the BPO sector.

At the end of the day, the BPO industry will continue to explore new avenues, including

the global delivery network, to de-risk existing challenges.

Clearly, the Indian BPO sector has significant head-room for growth. The potential five-

fold expansion in the Indian BPO market will bring huge payoffs to the country’s

economy, employment and development. It’s time then for the sector to combat the

challenges and maintain momentum and global competitiveness.

ITES-KPO SERVICES

What is KPO?

At the outset it is important to recognize that KPO (Knowledge Processing Outsourcing),

also referred to as ‘Knowledge Services’, is different from the traditional outsourcing

offerings and approaches. It cuts into traditional “core competency” of many

organizations. Moreover, while cost reduction seems to be the prime motivator of the IT

and BPO waves, “intellectual arbitrage” seems to be the big KPO buzzword.

KPO is a form of outsourcing, in which knowledge-related and information-related work

is carried out by workers in a different company, usually in a different country. Unlike

the outsourcing of manufacturing, this typically involves high-value work carried out by

highly skilled staff. KPO firms, in addition to providing expertise in the processes

themselves, often make many low level business decisions - typically those that are easily

undone if they conflict with higher-level business plans.

KPO calls for the application of specialized domain pertinent knowledge of a high level.

The KPO typically involves a component of Business Processing Outsourcing (BPO),

Research Process Outsourcing (RPO) and Analysis Processes Outsourcing (APO). KPO

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business entities provide typical domain-based processes, advanced analytical skills and

business expertise, rather than just process expertise.

The Knowledge Process Outsourcing is becoming the high valuable interests of

companies for their business strategies and protection of intellectual property rights.

Many experts see that, within the next 10 years, KPO will be the big trend in the

outsourcing marketplace

KPO vs. BPO

KPO is fundamentally different from BPO. KPO is not an extension of BPO as the

premise of a KPO is to include it into a global delivery team, the requisite skills that

support an organization’s core processes. The fundamental reason for BPO is to save

money. But in KPO it is not about saving money. Knowledge workers scarcity is the

main reason for the companies’ off-shoring KPO work. Typical KPO projects are

performed by professionals found in different parts of the world where the work and

responsibility is shared among all the workers. But in BPO, within a business value chain

one ore more steps are striped, sent to offshore locations, performed and integrated back

into the business value chain. There is less involvement between the onshore and offshore

teams. Most of the work is performed by the offshore team based on the predefined set of

rules and instructions given by the organizations. On the other hand knowledge

outsourcing projects are highly collaborative in nature between offshore and onshore

teams. The knowledge process team members in offshore locations have strong technical,

analytical skills; they use their judgment and subjective analysis skills in performing the

knowledge work. So we can say that while KPO is driven by the depth of knowledge,

experience and judgment; BPO in contrast is more about size, volume and efficiency, the

report states.

KPO Opportunities

The KPO market is still in its early stage and it is poised to grow rapidly in the next

couple of years. Following is not the complete list; these are the type of KPO work that

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has been currently outsourced by the companies to offshore locations. (Exhibit 9)

Financial Analysis & Equity Research: More than 60% of KPO work that is being

outsourced falls in this category. Most of the KPO work is going to India which has large

number of graduates with MBA and CA degrees. With their degrees and strong

foundation in Mathematics and Statistics have skills to perform KPO work that are listed

in this category. Companies like Lehman Brothers, ABN Amro, and JP Morgan have

captive centers in India to do financial BPO work.

Following are some of the tasks that are being outsourced in this category:

Corporate Budgetary & Decision Support

Corporate Financial Modeling

Credit Risk Analysis

Company Valuation

Tracking of Stock Market Research and Analysis

Market Research & Business Intelligence: With global competition, increases in wage

and production cost organizations are realizing the market research is an integral part or

the success of their business.

Following are some the tasks that are being outsourced in this category:

Research Report preparation for various markets

Data mining and data processing analysis

Customer sensitivity and pricing analysis

Engineering Research & Development: Several companies like Boeing, Airbus, and

Caterpillar, Intel, Texas Instruments have setup captive centers in India and have been

outsourcing engineering and research work.

Following are some the tasks that are outsourced:

Very Large Scale Integration (VLSI) Design

Chip Design and Development

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Automobile Design

Aircraft model prototype design and development

Pharmacy R&D: More than $40 billion are spent on new Drug research and

development, pharma companies are having tough time in finding quality people to

speed-up their research and development. Generally it takes about 14 years for a new

drug to come to market, the drug companies are in constant pressure to cut down their

time to market. Because of this drug companies are now considering offshoring their drug

research and development to countries like India and China. These countries offer unique

advantage to western drug companies in clinical studies with their vast pool of diverse

and multicultural patients to carry out the work successfully. Following are some the

tasks that have been outsourced in this category:

Clinical Trial Management

Clinical Regulatory Support

Drug Discovery & Chemical Research

Electrocardiogram (ECG) Interpretation Services

Animation Design & Development: Animation outsourcing is in its early stage,

companies in India, China, Korea and Philippines are started doing animation work to US

based companies. The cost of one hour of animation work in US is around $250K and in

other countries it is $60K – 100K. Because of very steep early setup costs not many

companies have setup Animation Studios in other countries. Internal growth of animation

industry because of TV Networks in countries like India will change this trend. Indian

based Companies like Toonz Animation India and Pentamedia Graphics are slowly

targeting US based animation industry to get animation work.

These companies are involved in following types of activities:

2D Animation

3D Animation

Stop Motion

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Legal Process Outsourcing (LPO): Legal Process Outsourcing is also in its early stage

of adoption. India’s jurisdiction has similarities with US and UK; naturally India is

leading in LPO. Companies like Oracle, Sun, and Cisco have been outsourcing Patent

Research work to India.

Following are some of the works that are being outsourced to India:

Legal and IP Research

Reviewing Litigation Documents

Contract Drafting to specific vertical industries

Global KPO market

Various sources of market research predict the KPO industry to be anywhere between

$10 billion to $17 billion by the year 2010. India is expected to capture more than 70

percent of the KPO sector by 2010. Apart from India, countries such as Russia, China,

the Czech Republic, Ireland, and Israel are also expected to join the KPO industry. While

the level of optimism of the industry growth varies, few doubt the fact that the industry

will grow at a staggering rate.

Factors contributing to Global KPO phenomena

The existing capabilities of IT and BPO captives and third-party vendors to

handle outsourced work.

The availability of high quality and often certified talent (as opposed to sheer

numbers) in outsourced locations.

Moves to extend sourcing strategies beyond the comfort zones.

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The relatively standardized nature of the analytics involved in KPO activities.

Global recognition of the standards, qualifications, skills and experience required

to produce analytical functions.

The continuous push towards global sourcing by many banking and insurance

organizations, in the march for greater efficiency and improved economies of

scale.

Improved remote project management capabilities, owing to an increased

sophistication in telecommunications and other enabling technologies.

KPO in India

After the great success BPO, it is now the turn of KPO to make its presence felt. BPO

success in India is encouraging overseas companies eyeing Indian market for outsourcing

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their high-tech knowledge based jobs. According to a report by GlobalSourcing Now, the

Global Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17

billion by 2010, of which USD 12 billion (almost 70%) would be outsourced to India

alone. Indian KPO sector has already taken steps in employing highly educated and

talented people and number of KPO professionals is expected to cross more than 250,000

by 2010 compared to the current figure of 25,000 employees. The graph on the right

suggests that Expected Growth in Global BPO and KPO Markets (2003-2010)

India- a preferred destination for KPO

The Indian workforce is highly literate and they are well-versed with English language,

thanks to Indian educational system. Every year India is producing hundreds and

thousands of English speaking, trained professionals in the fields of IT, Engineering,

Education, Law, Science, Finance, Architecture and other competitive fields.

The Indian advantage primarily lies in the educational and technical qualifications of its

workforce. A survey conducted in 2002 by NASSCOM (National Association of

Software and Service Companies) showed that an Indian ITES-BPO center in banking

and financial service sector, performs better than US and UK based BPO centers in

various categories like the total number of transaction, total number of correct

transactions, total customer satisfaction, number of transaction per hour and the average

speed of answers.

It has also showed in the survey that 45 percent of Indian KPO service providers have the

highest quality certification like Six Sigma (A rigorous and disciplined methodology that

utilizes data and statistical analysis to measure and improve a company's operational

performance, practices, and systems. Six Sigma identifies and prevents defects in

manufacturing and service-related processes.). BPO or KPO in India are getting more

quality conscious and they are frequently improving to have standards that of

internationally accepted. They are in the process of highly acclaimed quality management

standards from International Organization for Standardization (ISO) such as ISO 9002,

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ISO 9001, ISO 9001:2000, ISO 9001:2001 and from the CMM framework to the new

CMMI framework.

Top KPO Companies in India

Global corporations looking to move their higher-end research like market research and

equity research, analytical based services, engineering design, IPR, legal services, remote

education and publishing, India is currently the location of choice.

A number of global organizations have opted for the captive KPO route, instead of

relying on third-party KPOs, to protect their IPRs and patented material. These include

JPMorgan Chase, Merrill Lynch and McKinsey. Several pharmaceutical companies have

set up captive drug-discovery centres in India.

Unlike the benchmarked NASSCOM ranking of Top BPOs, there is no listing of the KPO

companies. Another impediment is the fact that a number of KPO companies in India shy

away from disclosing their revenues. Some of the major KPO companies in India are

Genpact, Evalueserve, Ugam Solutions, WNS, ICICI OneSource, EXL Service and Copal

Partners on the basis of mixed parameters like revenues, number of employees and

market leadership in certain sectors. This list does not include big firms like Wipro,

Infosys or HCL which have large BPO outfits but whose KPO efforts have been

relatively minimal.

Future Scope and Trends

KPMG believes that in the short to medium-term India will remain the prime location for

KPO activity. Delivery centers are likely to follow an interlinked, inter-dependant,

global, “web-like” structure, similar to the one developed for the ITO and BPO sectors.

Language considerations are expected to be a prime factor in establishing KPO centers

outside India.

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Large KPO providers are expected to move to multi-location delivery centers. Research

providers such as Evalueserve (China and Chile) and Amba Research (Sri Lanka) have

already established centers outside of India. Potential benefits include one-country

dependency, developing multi-lingual capabilities and better matching of client time

zones.

Some global financial institutions have their captive units outside of India. These

financial institutes are expected to set up centers outside of India, primarily for

supporting activities in languages other than English, and for services which they believe

could be served better could be served better outside India. Some Greenfield locations

outside India could be promoted by local companies wanting to tap into growing

opportunities in KPO.

In the above stated scenario, several trends and needs are emerging in the outsourcing

activities in India-based outsourcing industry. Few of the emerging trends of the future

are listed below which are likely to shape the future of the outsourcing industry in India.

 

1. Need of Professionals

The increasing growth in the KPO industry necessarily means a quantum increase in the

workforce engaged in providing KPO services. There have been predictions of looming

labor shortages for the Indian outsourcing industry and the beginning of the trend is likely

to be witnessed from the year 2006, at least in KPO. Higher level compensation than

BPO for employers and the high-end work requirements will help KPO jobs to be hot

through 2006. Hiring of professionals such as chartered accountants, doctors, lawyers and

engineers will see sharp rise.

 

2. Consolidation and fragmentation of outsourcing fields in KPO

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The emergence of KPO will see a proliferation and entry of new service providers in the

arena of the industry. The emerging opportunities in knowledge services are attracting a

new breed of entrepreneurs, absolutely professionals like lawyers, chartered accountants,

doctors, engineers, scientists, etc. into the outsourcing business.

 Minimal entry requirements, low infrastructure and set-up costs will encourage the

smaller technically strong companies to establish KPO set-ups. Further, since the

knowledge process outsourcing business is not necessarily scale-driven, smaller business

entities having total strength of around 20 professional are also gaining popularity along

with concept of freelance work. This style of functioning is driving the increasing

fragmentation of service providers.

 

3. Small Towns –New areas joining the outsourcing buzz

India’s status as the No.1 destination in the offshore business is not in doubt. But rising

wage costs and rising attrition in the larger cities coupled with attractive benefits being

offered by many state governments are driving the BPO move to the hinterland.

Various state governments in association and coordination with STPI India are

developing IT/software parks with complete infrastructure to encourage companies to

move to smaller cities. States like Punjab, Chandigarh, Rajasthan, Uttar Pradesh taking

the cue from Maharashtra, Andhra Pradesh and Karnataka, have taken initiatives and

have started investing heavily in IT Parks.

4. Expansion of offshore centres in India

As benefits of offshoring business are becoming evident, large multinational corporations

are expediting the process of spreading the offshore presence. The bulk of this is towards

fully owned captives, driven by two factors. i.e. firstly, the increasing sensitivity towards

data security , IPR, and confidentiality; all of which make captives center to be the most

preferred choice. Added to this, many large companies that have been testing the offshore

waters are looking to plunge into the water in a bigger way. In the recent past several

Fortune 500 and FTE 100 already have established their captive centers in India. The

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trend is to further accelerate keeping in mind the changing forces and dynamics of the

industry. However, after a certain size, the economics of captive offshore centers

becomes unfavorable as compared to contracting and outsourcing to third-party vendors;

and many corporations will prefer this route as they expand in India.

 

5. Acquisitions and mergers to increase

Acquisition and merger activity has reached new heights and is expected to be much

higher in the coming years as a mode of expansion. However, along side mega deals,

large number of small deals shall also become fruitful. This will be driven by acquisitions

in the knowledge services domain, where acquirers will find it worthwhile to enter into

small deals to acquire domain knowledge, new clients and position themselves in this

small, but fast growing segment.

 In the coming years, we expect KPO to become a major target area for acquisitions. KPO

acquisitions and mergers will form the growth strategy of two types of companies:

 • Already existing KPO companies which want to get benefited specific domain

expertise, or clients in a particular area or geographic region

• Multi-service and multi directional BPO companies wishing to climb the value chain by

adding high-end capabilities to their portfolios.

 Deal sizes will be smaller mainly because KPO outfits are normally smaller than CRM

or back-end processing service providers, since their business is dependent more upon

domain knowledge than on scale.

TOURISM AND TRAVEL-RELATED SERVICES

Introduction

Tourism is one of the most important sectors of the world’s service economy. In 1999,

revenues from global tourism were approximately $455 billion, resulting from 657

million tourist arrivals (World Tourism Organization, 2000). It is expected that the size of

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the global tourism market will reach 1,600 million people which is equivalent to 20 per

cent of the world population by the year 2020 (World Tourism Organization, 1997).

Tourism is an integral part of many economies’ services industry and is an important

source of foreign exchange. The labour-intensive nature of the tourism industry also

makes it an excellent generator of employment. In 2002, the travel-and-tourism industry

generated some US$3.3 trillion of GDP and almost 200 million jobs across the world

economy. Approximately one third of this would come directly from the industry itself

and the remainder from the strong linkages to other related sectors such as entertainment,

retail and construction. The growth in global tourism presents attractive opportunities to

countries that are willing to tailor their natural competitive advantages to the dynamic

trends of the global tourism market place.

Global tourism trends

Since the 1950s, when global travel began to be more accessible to the general public, the

number of tourists, worldwide, has been increasing at an average rate of 7.1 per cent per

annum, reaching 657 million tourists in 1999. During the same period, the global

industry’s revenues have been growing at an average rate of 12.2 per cent per annum,

reaching $455 billion in 1999 (World Tourism Organization, 2000). This positive trend is

not expected to slow down any time soon. In fact, in terms of number of tourists,

according to the World Tourism Organization, the global tourism industry is expected to

grow at an annual rate of more than 6 per cent till 2020 (World Tourism Organization,

2000). At the receiving end of the global tourism market place France, the USA, Spain,

and Italy have the lion share of tourist arrivals with a combined share of 30 per cent of

the global tourism market. These countries have succeeded in differentiating themselves

as attractive destinations for the increasingly sophisticated global tourists.

Although seaside and business travel continue to be the two major segments of the global

tourism market, there are some tourism niches that are growing at higher rates than the

industry average due to a growing demand for the local genuine tourism experience. For

instance, the adventure-tourism segment of the global tourism market is growing at an

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annual rate of 8 per cent. Apart from adventure-tourism; rural-tourism, health-tourism

and eco-tourism are also growing at rates higher than the industry average. (Exhibit 10)

Indian Tourism Sector

The year 2004-05 saw tourism emerging as one of the major sectors for growth of Indian

economy, the foreign exchange earnings increased from Rs. 16,429 crore to 21,828 crore

up to December. similarly in the last year, tourism industry registered a growth rate of

17.3% in foreign tourist arrivals, which has been the highest in last 10 years. Foreign

exchange earnings grew at an even higher rate 30.2%.

India's tourism industry is thriving due to an increase in foreign tourist arrivals and

greater than before travel by Indians to domestic and abroad destinations. The visitors are

pouring in from all over the world: Europe, Africa, Southeast Asia and Australia. At the

same time, the number of Indians traveling has also increased. Some tourists come from

Middle East countries to witness the drenching monsoon rains in India, a phenomenon

never seen in desert climates.

Domestic tourists are also fueling the industry's revival. Many of them escape from the

summer heat on the plains to resorts in the Himalayan Mountains. One of the major

beneficiaries this year is Kashmir, where a cease-fire between India and Pakistan has

reduced violence, if not completely, at least enough to help revive the state's sagging

tourism industry.

Among the most favoured tourist destinations in India, Kerala for its scenic beauty, Agra

for Taj Mahal, Khujraho for its sculptures and temples, Goa for its beaches and some

pilgrimages are the most important.

Interesting feature of this growth is that it has come even as global tourism has dropped,

due to the September 11 terrorist attacks in the United States, the outbreak of Severe

Acute Respiratory Syndrome in East Asia, and the Iraq war. Even the disastrous tsunami

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didn't affect India's tourism industry, as tourist arrivals in India rose 23.5 percent in Dec

2004 and tourist arrivals crossed 3 million mark for the first time in 2004. The disaster

was expected to have a negative impact on India's tourism in terms of large-scale

cancellations of tourists to India but nothing of that sort was seen.

Reasons for this boom

There could be several reasons for the buoyancy in the Indian tourism industry. First,

the upward trend observed in the growth rate of Indian economy has raised middle class

incomes, prompting more people to spend money on vacations abroad or at home. Also,

India is booming in the information technology industry and has become the IT center.

Aggressive advertising campaign "Incredible India" by the government has also had

contribution in changing India's image from that of a land of snake charmers, and

sparking new interest among overseas travellers.

Tourism contribution to the Indian economy

It is not hidden that tourism is among India's important export industries. Even with

comparatively low levels of international tourist traffic, tourism has already emerged as

an important segment of the Indian economy.

Tourism also contributed to the economy indirectly through its linkages with other

sectors like horticulture, agriculture, poultry, handicrafts and construction.

Foreign exchange earnings from tourism during 2003-04 were US $ 3,533 million ( Rs

16,429 crore).

Besides being an important foreign exchange earner, tourism industry also provides

employment to millions of people in India both directly and indirectly ( through its

linkage with other sectors of the economy.) It is estimated that total direct employment in

the tourism sector is around 20 million.

Development in Tourism Industry

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India Tourism office at Tokyo won two International Awards in Tour Expo held at Daegu

in Korea for excellent tourism promotion. Indian Pavilion won the Best Booth Design

Award as well as Best Folklore Performance Award competing with major players in

tourism such as China, Japan, Thailand, Malaysia and Canada.

The theme of pavilion was the Buddhist pilgrimage in India. Multi promotional activities

undertaken by Tokyo office drew a large crowd to India Pavilion, which added colours to

the entire travel show. The Korea’s leading newspapers published on the front page the

Incredible India booth’s photographs highlighting various aspects. The live Yoga

performance and Indian traditional snacks at the pavilion were enjoyed very much by the

visitors. (Exhibit 11)

7.5 MEDICAL TOURISM in INDIA

Medical tourism can be broadly defined as the provision of 'cost effective' private

medical care in collaboration with the tourism industry for patients needing surgical and

other forms of specialized treatment. The process of healthcare tourism is jointly

facilitated by the corporate sector involved in medical and healthcare as well as the

tourism industry - both private and public.

Medical tourism has become a common form of vacationing, and covers a broad

spectrum of medical services. Medical tourism mixes leisure, fun and relaxation together

with wellness and healthcare.

A combination of many factors has lead to the recent increase in popularity of medical

tourism. Exorbitant cost of healthcare and medical facilities in advanced countries, ease

and affordability of international travel, favorable currency exchange rates in the global

economy, rapidly improving technology and high standards of medical care in the

developing countries has all contributed their share to this rapid development of medical

tourism.

India has originated as one of the most important hubs for medical toursim. Many people

from the developed countries come to India for the rejuvenation promised by yoga and

Ayurvedic massage however, a nice blend of top-class medical expertise at attractive

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prices is helping more and more Indian corporate hospitals to lure foreign patients,

including patients from developed nations such as the UK and the US, for high end

surgeries like Cardiac ByPass Surgery or a Knee/Hip Replacement.

As more and more patients from Europe, the USA and other affluent nations with high

medical costs look for effective options, healthcare tourism in India is definitely on the

cards for most of them and the fast growing Indian corporate health sector is fully geared

to meet that need.

Not just cost savings or the high standard of medical care facility, but also the waiting

time is much lower for any treatment in India than in any other country. Medical help is

often an emergency and situations can turn worse if the treatment is delayed. While you

might have to wait for several months to get a surgical operation done in the US, in India

things can be arranged within a week.

Why India?

India is a leading player in the medical tourist/healthcare Facilitation industry. It is

increasingly emerging as the destination of choice for a wide range of medical

procedures.

There are numerous advantages of going to India for treatment. Some of the advantages

of going to India for medical treatment are:

Internationally accredited medical facilities using the latest technologies.

Highly qualified Physicians/Surgeons and hospital support staff.

Significant cost savings compared to domestic private healthcare.  Medical

treatment costs in India are lower by at least 60-80% when compared to similar

procedures in North America and the UK. In fact for most surgical procedures the

cost of treatment along with an Indian vacation and the airfares from your home

country to India, are often substantially lower than just the cost of treatment at

home.

No Wait Lists

Fluent English speaking staff

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Options for private room, translator, private chef, dedicated staff during your stay

and many other tailor-made services.

Can easily be combined with a holiday/business trip

Meditation, and Therapeutic Massage. India is an exotic tourist destination offering

everything from beaches, mountains, cosmopolitan cities, quaint villages and pilgrimages

to suit every palate. Rich in history and culture, India has proved to be an oasis in the

modern world, providing complete health and well being, while providing the latest in

technology.

Challenges, future scope and trends

The Indian medical tourism was pegged at US $350 million in 2006 and has the potential

to grow into a US $2 billion industry by 2012. There is a need for developing new

infrastructure for the healthcare sector in view of the tremendous opportunities that are

available for public-private partnership (PPP). A total investment of US $6.5 billion is in

the pipeline for medical tourism industry for setting up affordable hospitals and budget

hotels for patients’ relatives in the country.

Medical tourism industry has large window of opportunities. There is a need to create

low-cost high-quality facilities with a focus on underserved areas. Also required is

creating standards for high-quality healthcare and the need to invest in training and

developing healthcare manpower, besides the need to work with health insurers to

improve coverage.

According to a CII-McKinsey report on this sector, the Indian healthcare sector in the

1990s grew at a compound annual rate of 16 per cent. The study also revealed that the

total value of the sector at present was more than US $34 billion that translates to US $34

34

per capita, or roughly six per cent of GDP. The report estimates India’s healthcare sector

to touch nearly US $40 billion by 2012.

Meanwhile, talking about the problems faced by the medical tourism industry, the biggest

deterrent for foreign investors is the unavailability of a single window clearance system.

The government has assured that it is working towards making a system that would make

investing in India much easier.

The medical tourism industry faced a lot of legal implications, mainly by the doctors,

while treating foreign tourists and asked the hospital management to be more transparent

ensuring profile of doctors’ easy availability. A proper legal framework is required to

deal with unsatisfactory treatment and legal implications which do arise sometimes.

India needs to invest US $60-70 billion over the next five years in hospitals and

healthcare education to expand this sector and reach out to as many people as possible.

In the last 10 years, nearly 80 per cent of the investment in healthcare education has come

from the private sector.

The lack of infrastructure in providing primary healthcare in rural and semi-urban India is

a major concern and called for a policy initiative by the government to encourage the

private sector to play a greater role.

CONSULTANCY SERVICES

Introduction

India has been globally recognized for its fast paced development. The service sector has

been growing at a fast pace and now contributes more than 50% to the GDP.

Management consultancy includes services contracted for and provided to organizations

by specially trained and qualified persons, who assist in an objective and independent

manner, the client organization to identify management problems, analyze such

problems, recommend solutions to these problems, and help, when requested, in the

implementation of solutions.

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Types of Consultancy Organisations

Since the origin of consultancy, the firms have been characterized by diverse functional

areas such as engineering, accounting, law, or banking. Consulting organizations are

generally classified as Management consultancy organizations, Engineering consultancy

organizations and others which include Legal consultancy organizations, Socio Economic

consultancy organizations and financial consultancy organizations.

Clients

Most consultancy assignments originate with the request from the client. A useful

technique for identifying the real decision-maker early in the project is to propose several

reasonable outcomes for the client's problem. The response to these reasonable ideas

indicates whether or not the consultant is dealing with the real client, the decision-maker.

In consulting sector, the clients are broadly classified into different categories i.e.

Government institutions, funding agencies (Bilateral Agencies and Multilateral

Agencies), corporate clients including foreign clients and others like Non Government

organisations.

Drivers for Consulting Services

The demand for consulting services tends to increase with the economic development of

the country. The requirement for consultancy services stems from a diverse range of

clients, largely governed by the large corporate sector and the Government in various

forms, viz, country, institutions, and bilateral / multilateral agencies

Indian Consultancy Industry

After Independence, the Indian Government had focused on investment in core industrial

sector and infrastructure. The investment in these sectors attracted various construction

and engineering companies to explore the business opportunities and contribute their

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expertise in these sectors. Domain experts were required who could provide their core

skill and competence in designing and building the core industry, dams, roads, buildings

etc.

Over the years, as the Indian industry started maturing, the Indian consulting industry

also started expanding, not only in terms of size, but also in terms of the service

offerings. Over the period, specialist consulting advice was being sought by clients in

India and this opened the opportunity for a number of specialist organizations to draw on

their specialist knowledge base and resources to meet the demand for specialist

consulting services.

Size of the Consultancy sector in India

The development of consultancy capabilities and business is directly proportional to

growth in economic and industrial development. Due to the nature of the industry, getting

accurate estimates of its size is difficult. It is estimated that the consultancy business in

India engages about 100,000 persons in about 5000 consulting firms. According to

estimates, the current size of the consulting industry in India is about Rs. 10,000 crores

including exports and is expected to grow at a CAGR of approximate 25% in the next

few years.

Sectoral Coverage / Services

The nature of consultancy services varies in its content and extent. The Reserve Bank of

India classified management and engineering services under other Business Services as

per WTO classification which is indicated in their publication ‘India’s invisibles’. Given

the recent spurt in contributions from the services sector, efforts are underway to provide

accurate estimates of the services industry size, however such efforts may not offer the

expected results, since the consulting industry by nature is very diverse and encompasses

a wide array of services and sectors. Many of the services and sectors overlap and it is not

possible for accurate estimation.

Export Performance of the Indian Consulting Industry

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An analysis of the consultancy contracts secured by Indian project overseas has been

carried out by Exim Bank of India. As per the analysis, the geographical dispersion of

contracts secured during 1995-96 to 2000-01 indicates that consultancy contracts were

secured largely in West Asia which accounted for 39% number wise and 46% value wise

followed by South East Asia and Pacific & South Asia. South East Asia constituted 22%

both by number and by value whereas South Asia was 18% number wise and 16% value

wise. According to the 2002 data of the Federation of Indian Export Organizations

(FIEO), India's share in global trade in services was about 1.3%. India’s share of

consultancy exports is about 0.5% of global trade in services.

Competitiveness of Indian Consultancy Exports

International firms are larger in size and operate across countries which give them market

access to these countries and also the opportunity to tap the market for consulting

business. However Indian consulting organisations are growing with great pace to

compete with international organisations

Local presence in the countries benefits multinational organisations in liaisoning with

clients in these countries with sustained business development resulting better

prospecting record with large expenditure on business development when compared to

Indian firms who largely depend on proactive business development in these countries at

low business development cost.

Government Initiatives

• In the recent period, the trade policy in India reflects the strategic importance of India’s

comparative advantage of trade in services. The services sector has been identified as a

thrust sector for trade policy. The Foreign Trade Policy, 2004-09 has announced the

setting up of Services Export Promotion Council to map opportunities for key services in

import markets and to develop strategic market access programme.

• Some of the key initiatives of the government in promoting exports of consultancy

services are through Market Development Assistance (MDA), Market Access Initiative

(MAI) scheme, proactive EXIM Policy and EXIM Bank schemes.

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• Government also provides exemption on service tax for export of consultancy services.

However due to lack of clarity in the provisions in the present notification, consultancy

export may be affected.

• Income tax exemption under section 80 ‘O’ need to be reinstated to enhance

consultancy export.

Strengths and Weaknesses of Indian Consulting Industry

• The major strengths of Indian consulting organizations include professional

competence, low cost structure, diverse capabilities, high adaptability and quick learning

capability of Indian consultant.

• The major weaknesses of Indian consulting organizations, which has hindered the

export growth of consulting sector in the country, are low quality assurance, low local

presence overseas, low equity base, lack of market intelligence, low level of R&D.

OTHER IMPORTANT SERVICES

Banking

The banking sector is expected to grow strongly in coming years, reflecting buoyant

conditions and the increasingly important role played by banking intermediation in a

liberalising economy. The penetration of financial products, for example bank accounts,

credit cards, and mortgages, is currently quite low by comparison with that in other

developing countries. The market potential in rural India is particularly significant. One

projection is for total banking assets to double by 2010 to US$915 billion, representing a

compound annual growth rate of 15 per cent (Indian Investment Commission 2006). At

the same time, the opportunities that arise in the rural sector in particular may be difficult

for foreign companies to access, involving, as they do, the potential for large numbers of

very small transactions.

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While public sector banks still dominate Indian banking, the opening of the sector since

the early 1990s has enabled the generally more efficient foreign and privately-owned

banks to secure an increasing share of the market – currently around 25 per cent.

Three foreign banks – Standard Chartered Bank, Citibank and HSBC – accounted for 64

per cent of the assets of all foreign banks in March 2005 (RBI 2005a). All three are

expanding their presence in India (Sify 2005). HSBC, whose activities in India are

focused on outsourcing operations, invested US$150 million in India through the first 11

months of 2005. India’s largest foreign bank Citi has surpassed Standard & Chartered to

gain that position.

Telecommunications – a dynamic enabler

Efficient telecommunications infrastructure generates significant spill-over effects in

other sectors of an economy. Modern telecommunications networks facilitate efficient

information exchange among economic units and rapid two-way communication, thereby

lowering search and transaction costs, aiding the coordination of economic activity on a

global scale, and enabling the optimal utilisation of available labour, technology,

products and services around the world. India’s emergence and ongoing competitive

advantage as a global provider of IT–ITES was (and will continue to be) dependent on

the availability of efficient telecommunications infrastructure for electronically

transferring and assessing information.

India’s telecommunications have undergone extensive deregulation and liberalisation in

large part driven by technological developments and the requirements of the IT sector.

Deregulation has helped spur rapid growth and enabled private telecommunications

providers to play an increasingly important role. The communications sector grew at an

average annual rate of 24 per cent over the five years to 2004–05, increasing its share of

GDP from 1.9 per cent to 3.5 per cent. The mobile phone market has grown at

40

extraordinary rates from an initially low base. Over the past five years, the mobile

subscriber base posted 85 per cent growth per annum. Private companies achieved annual

growth rates in their subscriber base of closer to 200 per cent (Indian Investment

commission 2006a). By December 2005, private sector operators had secured 79 per cent

of the mobiles market, while in the fixed-line market they had captured 15 per cent

(Indian Ministry of Finance 2006).

As at November 2005, there were 48 million fixed-line subscribers and 71 million mobile

subscribers (Indian Investment Commission 2006a). Despite the recent rapid growth,

tele-density is still relatively low at around 11 phones per 100 people. Penetration in rural

areas is significantly lower still. However, a number of mobile operators have plans to tap

into the rapid growth expected in rural areas, which is being spurred by the availability of

cheap handsets and a wide array of tariff plans.

Internet usage has increased nearly tenfold since 2000 to reach 50.6 million in 2005, a

penetration rate of 4.5 per cent. However the take-up of broadband has been relatively

slow. By November 2005, there were about 750 000 broadband subscribers (Indian

Ministry of Finance 2006). The Broadband Policy announced in October 2004 had set a

target of three million broadband subscribers by December 2005 and 20 million by 2010

(Indian Ministry of Finance 2005).

Increased mobile and Internet access could make a strong contribution to addressing

regional inequalities and ensuring more broadly based economic development if it

reduces the telecommunications infrastructure divide between urban and rural areas.

Access to telecommunications and information technology in rural areas can facilitate the

provision of basic services such as medical care; enable better access to financial services

and create opportunities for distance learning. Telecommunications networks also act as

an electronic highway, reducing asymmetries of access to market information and

allowing rural businesses and citizens to participate directly in national and global

41

economies. If for example, Indian farmers can access modern telecommunications and IT

to obtain more information about agricultural prices, other markets and economic

opportunities, they are more likely to increase productivity and boost their livelihoods.

THE WAY FORWARD

Implications

The characterisation of the discussed broad role services might play in the development

of the Indian economy would give rise to a number of implications:

• For India’s current development path to be sustainable, it will be important for other

sectors to provide an environment in which the ongoing growth of high-end services can

be maintained.

– This will necessitate expansion in sectors (such as construction, telecommunications,

transport and power infrastructure, financial services, professional services and education

and training) that supply inputs for IT–ITES and other leading-edge services.

– A significant ongoing commitment to regulatory reform and market opening in these

sectors.

– Including reform of foreign investment regulations – will in turn be required to ensure

that constraints on growth do not emerge.

– If the reform effort falters, longer-term economic growth prospects could be placed at

risk. However the dynamics of the system mean there are likely to be strong positive

pressures in favour of reform.

• Reform to date in different services sub-sectors has been variable, so that change in

some of these is likely to be rapid, with economic growth continuing to generate pressure

for productivity improvements.

– Such change will give rise to large-scale requirements for skills and capabilities that

may not currently be available in sufficient quantities in India.

– There are, therefore, grounds to expect opportunities to arise for foreign services

providers.

42

• Companies, all over the world, could benefit from maintaining a strategic understanding

of these developments when considering whether to venture into the Indian market.

Future Trends

Bullish forecasts for long-term economic growth in India vis-à-vis all other major

economies are principally premised on projections of its labour force growing beyond

2050 (unlike China’s, Brazil’s or Russia’s), and its capacity to increase productivity

dramatically through technological ‘catch-up with the West from a lower base level than

China and other large developing economies (Goldman Sachs 2003,

PricewaterhouseCoopers 2006).

But the key question for India is whether the services-led growth that has, to date, mainly

been driven by very rapid expansion of what remains a relatively small part of the

economy – particularly in employment terms – can feed into broader economic

development, sufficient to raise the living standards of all Indians, and not just a

relatively small, educated elite.

It is arguable that rapid expansion in knowledge-intensive services exports could

continue to be a catalyst for India’s economic growth. India’s increasingly outward

orientation is facilitating a more efficient allocation of resources according to the

country’s comparative advantage in the production of knowledge-intensive services. This

specialization, to serve a global market, can provide greater opportunities for economies

of scale, and therefore higher returns. Exporting is an efficient means of introducing new

technologies and gaining exposure to leading-edge production and marketing techniques,

both to India’s services exporters and to the broader economy (ADB 2005). Growth in

services exports encourages savings and capital accumulation; generates the foreign

exchange needed to procure capital goods, oil and other resources; and, by increasing the

supply potential of the economy, raises India’s capacity to import.

43

Perhaps most importantly in the context of India’s services-driven development model,

export-led growth facilitates an expansion of aggregate demand (ADB 2005). The income

generated by India’s knowledge-intensive services feeds into increased domestic demand

in two ways. First, the companies generating international revenue drive a rapid

expansion of demand for production inputs and facilities (including physical

infrastructure and services such as education and training). Second, there are income

multiplier effects. The rising incomes and expectations of those working in the boom

industries helps fuel consumer demand. If sustained, the growth of these high-end

services should create pressure for expanded output from the industries required to

facilitate ongoing expansion at the next level, such as telecommunications, financial

services, education services, and more traditional services such as transport and

construction. Pressure for expanded output in those sectors would intensify further if

India’s relatively capital-intensive manufacturing sector – which has begun to record

growth rates in the vicinity of ten per cent – continues to perform strongly, particularly

given that manufacturing is widely considered to have a substantial multiplier effect on

job creation in services.

44

CHAPTER 3

METHODOLOGY

OBEJECTIVES OF THE STUDY

Economic development has been associated with structural changes in the national

economies. On the path of its economic development, India has reached a level where

there is predominance of service sector and it has become the mainstay of the growth

process especially over the last ten years. Uniqueness and sudden growth pattern of

service sector of India needs to be recognised, understood and analysed with its

implications for long term development strategy and policy. It is against this backdrop,

that the present study has been designed. It is an attempt to study the trends and

implications of the growth of major international services with special reference to the

service sector in India. In short the objectives of our project can be stated down as

follows:

To study the trends and issues of service sectors in India.

To study the development opportunities in IT enabled services.

To study the role of International IT enabled service.

SCOPE OF THE STUDY

Our study focuses on studying the current scenario of the service sector of India. The

study also concentrates on the factors contributing in the growth of the services.

Data Collection

Collecting information from various sources like website, books, journals and

databases.

45

CHAPTER 4

ANALYSIS AND INTERPRETATION

IT Industry-Sector-wise break-up

USD billion FY 2008 FY 2009 FY 2010 P

IT Services 17.8 23.6 30-31

Exports 13.3 18.0 -

Domestic 4.5 5.6 -

Eng Services and R&D, S/W Prods 5.3 6.5 ~8

Exports 4 4.9 -

Domestic 1.3 1.6 -

ITES-BPO 7.2 9.5 11-12

Exports 6.3 8.4 -

Domestic 0.9 1.1 -

Total Software and Services Revenues 30.3 39.6 49-50

Of which, exports are 23.6 31.4 39-40

Domestic 6.7 8.2 ~10

Hardware 7 8.2 -

Total IT Industry (including Hardware) 37.4 47.8 -

Total may not match due to rounding off

*NASSCOM estimates have been reclassified to provide greater granularity

Historical values for a few segments have changed due to availability of updated information

46

Growth in Revenues

Revenue from the Indian IT software and services sector (including the domestic and

exports segments and excluding hardware) touched nearly USD 40 billion during FY 07

and is expected to grow by nearly 27 percent to clock USD 49-50 billion in FY08.

Contribution to GDP in FY 07 was 5.2% up from 4.8% last year. Service and software

exports remain the mainstay of the sector contributing USD 31.3 billion during FY 07,

beating forecast to register a 33% growth. Increasing traction in offshore product

development and engineering services is supplementing India’s efforts in IP creation.

This segment has grown by 22-23 percent to report USD 4.9 billion in exports.

MNC investments reach an unprecedented scale; over USD 10 billion announced in FY

2006-07, to be invested over the next few years.

Global Markets

While USA and UK remain the dominant markets for IT-ITES exports, revenues from

newer markets are growing rapidly

Market FY07 FY08 FY09

Americas 69.40% 68.30% 67.18%

Europe 22.60% 23.10% 25.13%

Rest of the World 8.00% 8.60% 7.69%

Growth Verticals and Major IT companies

BFSI, Telecom and Hi-Tech continue to account for approximately 60% of the market.

Other verticals such manufacturing, retail, transportation, healthcare and utilities are also

growing rapidly. (Exhibit 6)

47

Major IT companies include Wipro, Infosys, HCL, Satyam computer services, TCS,

Plaris software lab Genpact, I-flex solutions are the leading IT companies in India along

with all the major global IT companies like SAP

Employment figures-Software and Services sector

Sector FY 2008 FY 2009

IT Services 398,000 550,000

Engineering Services and

R&D and Software Products

115,000 140,000

  513,000 690,000

ITES-BPO 415,000 553,000

Domestic Market (including

user organizations)

365,000 378,000

Total 1,293,000 1,621,000

*Figures do not include employees in the hardware sector

Domestic Market Matures

Complementing the continued growth in IT-ITES exports and for the first time ever in

FY 2007 showed signs of breaking out of the hardware led growth and the trend of

software and services gaining share is expected to continue. The total size of the domestic

market (including hardware) was USD 16.4 billion in FY 07. Traditionally, this segment

has been led by MNCs. However, Indian firms are gradually gaining ground. Overtime

this segment could become a larger SME play, as the mid-sized firms increase their levels

of IT adoption

48

Going forward

For India to fully capitalize on the opportunity and sustain a disproportionate lead in the

global IT-ITES space, stakeholders need to continue working towards timely and

coherent execution of initiatives to address supply-side concerns across the following

areas:

-Augmenting Talent Supply

-Creating world-class infrastructure

-Strengthening information security

-Enhancing operational excellence

-Providing regulatory support

-Catalyzing domestic market development

-Fostering an ecosystem for innovation

Industry is on track to reach the targeted $60bn in exports by 2010

49

.

CHAPTER 5

CONCLUSION

• While high-end services are a key driver of economic growth, other services have a

critical role to play.

• Broadly speaking, the services driving economic growth in India have either not been

subject to significant amounts of regulation (notably IT–ITES) or have been deregulated

and opened to competition (most prominently, telecommunications).

• Growth in high-end services like IT–ITES has the potential to generate significant spin-

offs, including productivity growth in other services and in agriculture; technological

improvements in manufacturing; and the emergence of a large consumer base with the

discretionary spending power to spur demand and employment growth in key labour-

intensive sectors.

24.1%

34.4%

31.2%

19.3%

23.3%

22.1%

31.4%FY00-07

28.9%FY00-10

23.2%FY07-10

CAGR

10 YR TARGET

ACHIEVED

REQUIRED* Includes IT Software and Services, ES and Products,

and ITES-BPO

TOTAL

Source: NASSCOM

1.9 2.5 2.6 3.96.04.0

6.2 7.7

12.8

23.6

9-10

39-40

FY00 FY01 FY02 FY04 FY06 FY08P FY10^

DOMESTIC MARKET* EXPORTS*

USD Billion

^NASSCOM McKinsey Study 2005

13-15

60

PERIOD

Figures may vary slightly due to rounding off

50

• Financial and other services can be expected to face further pressure to expand

capabilities and improve productivity through reform if these sectors are to play their

critical role in facilitating economic expansion.

• The services sector has a major role to play in absorbing India’s rapidly growing labour

force.

• Restrictive labour laws and a raft of other regulations provide a strong disincentive to

small Indian companies growing above a certain size, and prevent modernisation and

inhibit productivity growth in a number of sectors, including retail, logistics, and legal

and accountancy services.

• Improvements in the delivery of education and healthcare services, particularly in rural

areas, are vital for sustainable growth.

• Services sector developments are facilitating modernisation and development in India.

10. Exhibits

Exhibit 1

Share of Service Sector in the GDP of Different

Countries (in percentage)

51

Source: World Development Indicators, 1998, 2001, and 2005.

Country Year

1980 1999 2003

India 36 46 51

Pakistan 46 49 53

Bangladesh 34 50 52

Sri Lanka 43 52 55

Nepal 26 37 38

Hong Kong 49 85 88

Singapore 61 67 65

Korea 45 51 62

China 21 33 33

Argentina 52 67 54

Brazil 45 61 75

Mexico 59 67 70

South Africa 43 64 65

Kenya 47 61 65

Zimbabwe 50 55 59

USA 64 74 75

Japan 54 62 68

France 62 74 73

World 55 63 68

52

Exhibit 2

Sources: United Nations Statistics Division 2006 for services to GDP data; Indian CSO 2006 for 1999–2000 to 2004–05 services to

GDP data on India; RBI 2005b, Table 3 for pre-1999–2000 services to GDP data on India.

Exhibit 3

Exhibit 4

53

Exhibit 5

Source:NASSCOM

Exhibit 6

54

190,000 230,000 284,000430,114

522,250670,000

830,000

1,058,000

1,630,000

1,293,000

3.0 3.3 4.25.9 5.8

8.310.2

13.215.9

1.8 2.74.0

6.27.7

13.3

31.9

6.3

18.3

24.2

9.8

FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07E

DOMESTIC MARKET

EXPORTS

1.2% 1.4%1.8%

2.6% 2.8%3.2%

3.6%4.1%

4.7%

5.4%

4.8

6.0

8.2

12.1

13.5

16.1

21.6

28.5

37.4

47.8

USD

Billion

Direct

Employ

ment 316

415

553

FY05 FY06 FY07

FY 06

2.1%

3.0%

4.0%

4.2%

7.6%

12.9%

19.8%

38.1%

8.4%

Airlines and transportation

Healthcare

Construction and Utlities

Media, Publishing and Entertainment

Retail

Manufacturing

Hi-tech/Telecom

BFSI

Other

FY 06 2.1% 3.0% 4.0% 4.2% 7.6% 12.9% 19.8% 38.1% 8.4%

Airlines and

transpor

Healthcare

Construction and Utlities

Media, Publishin

g and Retail

Manufacturing

Hi-tech/Tele

com BFSI Other

Source: NASSCOM

Exhibit 7

Domestic ITES-BPO Revenues (INR Million)

Exhibit 8

55

4.66.3

8.4

0

2

4

6

8

10

FY 05 FY 06 FY 07

ITES- BPO Export

Source: NASSCOM

Employees ITES-BPO (in ‘000) Exports ITES-BPO (USD million)

Exhibit 9

Source: KPMG

Exhibit 10

56

International Tourist Arrivals Worldwide and by Region(1991 to 2005)

(Arrivals in Million)

Region 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005$

World

Arrivals 462.7 500.9 515.7 550.3 550.4 597.4 618.2 626.5 652.3 685.5 683.8 702.8 690.9 766.0 808.0

% Change - 8.3 3.0 6.7 0.0 8.5 3.5 1.3 4.1 6.9 0.3 2.8 1.7 10.9 5.6

Africa

Arrivals 16.2 18.0 18.5 18.9 20.0 21.8 23.2 24.9 26.2 28.6 29.2 29.9 30.8 33.4 36.8

% Change - 11.1 2.8 2.2 5.8 9.0 6.4 7.3 5.2 4.9 2.3 2.2 3.1 8.4 10.0

Americas

Arrivals 95.5 102.3 102.1 104.8 108.8 1152.2 116.6 119.5 122.3 128.2 122.2 116.6 113.0 125.9 133.6

% Change - 7.1 -0.2 2.6 3.8 5.9 1.2 2.5 2.3 5.1 4.7 4.5 3.1 11.4 6.1

East Asia/Pacific

Arrivals 56.4 64.2 74.7 80.7 85.6 93.4 93.1 93.2 102.6 114.9 120.5 131.1 119.3 145.4 156.7

% Change - 13.8 10.9 8.0 6.1 9.1 -0.3 0.1 10.1 12.3 4.9 8.8 9.0 21.9 7.8

Europe

Arrivals 282.9 302.3 309.9 334.8 323.4 353.7 371.1 373.7 380.6 389.6 387.8 397.3 399.0 424.5 441.6

% Change - 6.9 2.5 8.0 -3.7 9.7 4.9 0.7 1.8 5.8 0.5 2.4 0.4 6.4 4.0

Middle East

Arrivals 8.4 10.5 10.5 11.1 13.6 13.3 14.3 15.1 20.5 24.3 24.0 27.9 28.8 36.3 39.7

% Change - 25.0 0.0 5.7 22.5 -2.2 7.5 5.6 35.8 13.0 1.0 16.1 3.4 26.0 9.5

57

South Asia

Arrivals 3.3 3.6 3.5 3.9 4.2 4.4 4.8 5.2 5.8 6.4 - - - - -

% Change - 9.1 -2.8 11.4 7.7 4.8 9.1 8.3 11.5 10.3 - - - - -

India

Arrivals - - 1.8 1.9 2.1 2.3 2.4 2.4 2.5 2.6 2.5 2.4 2.7 3.5 3.9

% Change - - -5.5 6.9 12.6 7.7 3.8 -0.7 5.2 6.7 4.2 6.0 14.3 26.8 13.2

Share of India (%)

0.36 0.37 0.34 0.34 0.39 0.38 0.38 0.38 0.38 0.39 0.37 0.34 0.39 0.45 0.49

Source: Indiastat.com

Exhibit 11

Country Rankings for India within World Countries (2002 & 2012)

Particular

2002 2012

Absolute Size Relative Size Growth1 Absolute Size Relative Size Growth2

Personal Travel & Tourism

23 128 24 13 125 2

Business Travel 28 - 58 22 - 2

Government Expenditures

31 154 11 30 154 23

Capital Investment 16 137 22 15 135 5

Visitor Exports 38 115 79 25 107 1

Other Exports 40 104 11 26 97 2

58

Travel & Tourism Demand

24 - 24 18 - 2

T&T Industry GDP 17 119 25 12 115 4

T&T Economy GDP 20 143 23 14 141 3

T&T Industry Employment

2 110 44 2 105 98

T&T Economy Employment

2 139 34 2 134 97

59

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www.nasscom.com

world tourism organisation report

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http://www.recoverdiscover.com/

http://www.igovernment.in/site/indian-medical-tourism-to-touch-us-2-bn-in-2012/

survey and reports: morgan Stanley and KPMG

http://bizwiz.biomarketgroup.com/bw/Archives/

www.rbi.org.in

www.siliconindia.com

www.wikipedia.com

www.icmrindia.com

60