Executive Summary. Market. Transition Plan. Service Delivery Model. Competition

Transcription

1 ITManaged Services Market India April 2012

2 Executive Summary Market Transition Plan Service Delivery Model The IT Managed Services (ITMS) market in India was valued at INR xxx bn in 20 and is expected to attain a CAGR of 24.5% to reach around INR yyy bn in 2016 Small and Medium Businesses (SMBs) contributed about INR xxx bn in 20 and is expected to shell out INR xxx bn by the end of 20 in the ITMS market Primarily, Managed Service Providers (MSPs) provide services in the form of on premise, remote and cloud based managed services`` The typical process framework followed by client organizations prior to adopting managed services can be enlisted as: Phase I Step 1 Phase II Step 2 Phase III Step 3 Currently, a prominent trend in the ITMS market happens to be associated with the pricing models of adopting the services Major pricing models include: xxx, aaa, yyy, zzz,,,,,, Competition EMC Corporation Cisco India Key Managed Service Providers igate Corporation Dell India 2

3 Introduction Market Overview Remote Managed Services Staff Augmentation vs. IT Managed Services Transition Plan Cost Component Service Pricing Model Market Influencers Major IT Managed Service Vendors Channel Partner Landscape Case Studies Strategic Recommendation Appendix 3

4 The market is here to stay in India wherein it will exhibit steady growth and offer ample business scope to vendors IT Managed Services Market Overview Post economic slowdown, enterprises and small businesses are gradually recovering from the impact and hence are working on bottleneck IT budgets which in turn is persuading them for IT managed service adoption Primarily, services including monitoring and management are the most popular services opted by users Server and network monitoring & management happens to be the two most preferred services opted in the Indian market Effective business strategies can be developed by vendors to tap these two service segments in particular Competition in the market is tensed and vendors in the market are constantly revamping their strategies in order to survive the competition and establish a better market position Hyper active industry verticals such as BFSI, manufacturing and government happen to be the early adopters of ITMS, whereas IT/ITeS and logistics are anticipated to be the upcoming adopters of ITMS On the other hand, telecom happens to rely entirely on IT outsourcing method INR bn IT Managed Services Market Size & Growth a b c 24.5% d e e 2013e 2014e 2015e 2016e 4

5 Market Segmentation Various Categories Market Split Business Segments (20 ) Market Split Service Type (20 ) 19% a b c 4% a b 45% 38% c 58% 36% INR bn INR bn a a b c d e e 2013e xyz 2014e 2015e 2016e b c d e e 2013e xyz 2014e 2015e 2016e 5

6 IT Managed Services MSPs MSPs operating in the ITMS market in India have managed to carve a niche for themselves across various categories in the market This trend in the market can be tabulated as below: Category Managed Service Provider Category 1 MSP 1, MSP 2, MSP 3 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7 6

7 Remote Managed Services India Overview Remote Managed Services Introduction Remote Managed Services (RMS) refers to the management of information technology services from a remote location by a third party service provider under a mutual agreement and objectives Some of the benefits, that can be reaped post implementation of RMS comprise of the following: Benefit 1 Benefit 2 Benefit 3 A 24 x 7 service coverage on complex IT situations, that would otherwise lead to significant losses and prolonged downtime As of now, eminent RMS vendors now offer tailor made solutions for their clients hailing across a varied industry verticals and segments The major vendors operating in the RMS market segment comprise of MSP 1 and MSP 2 amongst others Some Major Remote Managed Services India Service Type 1 Service Type 2 Service Type 3 Service Type 4 7

8 Managed Services Market Insights Vendor Perspective Service Delivery Approach Service delivery approach is the most crucial aspect for a vendor in order to establish a better business and earn significant profitability In lines with service delivery, some of the important factors identified in the market are as follows: Insight 1 Insight 2 Insight 1 The preferred delivery medium in the IT managed services market happens to be xxx Vendors and channel partners jointly xxx so as to increase the sales by a large extent Vendors provide xxx to channel partners which h are further tapped by channel partners for sales Insight 2 The prime challenge faced by channel partners in particular happens to be the issue of xxx, wherein xxx The magnitude of the challenge increases when xxx 8

9 Transition to Managed Services from Staff augmentation Typical Framework Client organization Client organization prior to IT managed service adoption Phase I ABC Phase II XYZ Phase III PQR Step 1 Step 2 Step 3 Step 1 Step 2 Step 3... Step 1 Step 2 Step 3 Third party serviceprovider, hosts all IT infrastructure on behalf of client organization and in accordance with the SLA Vendor organization 9

10 Phase X xyz Identification xyz Phase X Step 1 Step 2 Step 3.a Step 4 Step 3 Step 5 Step 3.b Step 6 10

11 Prime reasons driving the IT managed services market can be chalked down on the basis of their priority and impact Prime drivers propelling the IT managed services market can be illustrated as below: Priority High Priority, Low Impact High Priority, High Impact Driver 1 Driver 2 Driver 3 Driver 8 Driver 6 Driver 4 Driver 7 Driver 5 Low Priority, Low Impact Low Priority, High Impact Impact 11

12 Drivers and Challenges IT Managed Services Market India Drivers Challenges Xxxx xxx 12

13 IT Managed Services Snapshot Vendors Player 1 Player 2 CP 1 Channel Partners Users CP 2 User 1 User 2 13

14 Major Public Companies Summary Net Profit/Loss 200, ,000 Size of the Bubble represents Market Capitalization in INR mn 160, ,000 2,939, , ,000 80,000 60,000 40,000 20, ,296, , , ,080, , , , , , ,000 1,000,000 1,200,000 1,400,000 Total income aaa bbb ccc ddd eee 14

15 Public: Domestic Company MSP(x/x) Company Information Offices and Centres India Corporate Address Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange Productsand Services New Delhi Head Office Category Products/Services Key People Name Designation 15

16 Public: Domestic Company MSP(x/x) Financial i lsnapshot Key Ratios INR mn Total Income Financial Summary Net Profit/Loss INR mn The company incurred a net profit of INR 0.14 mn in FY 2011, as compared to net profit of INR 0.08 mn in FY 2010 The company reported total income of INR 1.1 mn in FY 2011, as compared to INR mn in FY 2010 The company earned an operating margin of per cent in FY 2011, an increase of 1.72 percentage points over FY 2010 The company reported debt to equity ratio of 0.72 in FY 2011, a decrease of 3.22 per cent over FY 2010 Key Financial Performance Indicators Indicators Value (24/04/2012) Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) 1.16 PE Ratio (Absolute) Particulars y o y change ( ) Profitability Ratios Operating Margin % 16.12% 11.13% 12.55% Net Margin % 11.47% 7.90% 8.73% Profit Before Tax Margin % 15.19% 9.69% 10.58% Return on Equity % 10.84% 6.98% 9.66% Return on Capital Employed % 12.90% 7.29% 10.17% Return on Working Capital % % 20.81% 24.23% Return on Assets % 6.39% 4.18% 5.53% Return on Fixed Assets % 77.90% 50.43% 59.37% Cost Ratios Operating costs (% of Sales) % 72.64% 77.14% 75.67% Administration costs (% of Sales) % 31.59% 32.36% 30.94% Interest costs (% of Sales) % 1.05% 1.30% 1.19% Liquidity Ratios Current Ratio 7.00% Cash Ratio 3.45% Leverage Ratios Debt to Equity Ratio 3.22% Debt to Capital Ratio % Interest Coverage Ratio 36.32% Efficiency Ratios Fixed Asset Turnover 4.94% Asset Turnover 5.80% Current Asset Turnover 0.68% Working Capital Turnover 60.50% Capital Employed Turnover 7.20% Improved Decline 16

17 Public: Domestic Company MSP(x/x) Key Business Segments Key Geographic Segments 100% 50% 0% 723,138 78% 5% 13% 4% ,942 76% 5% 14% 4% ,960 75% 4% 17% 4% ,061,703 74% 4% 19% 4% % 50% 0% 54% 31% 11% % 53% 54% 53% 31% 29% 28% 11% 5% 12% 6% 13% % aaa ccc bbb ddd aaa ccc bbb ddd Key Recent Developments Description xxx xxx xxx News 17

18 Major Private Companies Summary Net Profit/Loss 60,000 Size of the Bubble represents Total Assets in INR mn 40,000 20, ,000 20, ,000 40,000 60,000 80, , , , , ,000 Total Income aaa bbb ccc ddd eee fff ggg hhh 18

19 Private: Domestic Company MSP(x/x) Company Information Offices and Centres India Corporate Address Tel No. Fax No. Website Year of Incorporation Head Office Productsand Services Bangalore Category Products/Services Key People Name Designation Note: The list of products and services is not exhaustive 19

20 Private: Domestic Company MSP(x/x) Financial i lsnapshot Key Ratios INR mn Total Income Net Profit/Loss INR mn Financial Summary The company incurred a net profit of INR mn in FY 2011, as compared to net profit of INR mn in FY 2010 The company reported total income of INR mn in FY 2011, as compared to INR mn in FY 2010 The company earned an operating margin of 9.29 per cent in FY 2011 a decrease of 2.06 percentage points over FY 2010 Source: Annual Reports; Databases; Netscribes Analysis Particulars y o y change ( ) Profitability Ratios Operating Margin % 11.34% 4.37% 2.02% Net Margin % 8.51% 9.85% 5.09% Profit Before Tax Margin % 12.04% 13.72% 8.02% Return on Equity % 19.66% 20.24% 9.30% Return on Capital Employed % % 30.00% 14.87% Return on Working Capital % 47.42% 58.43% 29.82% Return on Assets % 19.56% 20.11% 9.17% Return on Fixed Assets % 45.50% 44.12% 19.88% Cost Ratios Operating costs (% of Sales) % 88.58% 95.18% 97.85% Administration costs (% of Sales) N.A. 0.00% 0.00% 0.00% 0.00% Interest costs (% of Sales) N.A. 0.00% 0.00% 0.00% 0.00% Liquidity Ratios Current Ratio 10.06% Cash Ratio 41.24% Leverage Ratios Debt to Equity Ratio 34.00% Debt to Capital Ratio 33.89% Interest Coverage Ratio N.A. N.A. N.A. N.A. N.A. Efficiency Ratios Fixed Asset Turnover 0.78% Asset Turnover 15.45% Current Asset Turnover 13.69% Working Capital Turnover 42.66% Capital Employed Turnover 15.24% Improved Decline 20

21 Private: Domestic Company MSP(x/x) Key Recent Developments Description News Overview Solutions Source: Company Websites 21

22 Channel partners in the ITMS play a pivotal role in the success of a business Maintaining a proper business alliance with channel partners has become the most prominent business model for IT managed service vendors in India The business model is tried and tested and proves to be the substantially lucrative amongst other business strategies t Owing to the importance of channel partners, selection of these partners has become a very vital aspect for vendors and hence setting up of a fixed criteria is currently in vogue An ideal channel partner can judged on the basis of the following attributes xxx xxx xxx xxx xxx xxx xxx xxx 22

23 Channel Partner Selection Process The overall channel partner selection process can be segregated into 6 phases, which can be illustrated as below; 6. xxxx Partnership initiates 4. xxxx 5. xxxx 2. xxxx 3. xxxx 1. xxxx 23

24 Benefits Channel Partners Access to Vendor Community Brand Image Enhancement xxxx Better Profit Margin yyyy zzzz 24

25 Benefits Channel Partners Trend 1 Trend 3 Trend 2 25

26 Major Channel Partners (1/x) ABC XYZ Headquarters Offices Website: Phone No. Fax E mail Headquarters Offices Website: Phone No. Fax E mail Business Highlights Business Highlights xxx xxx 26

27 Case Study x Client Organization xxx Industry xxx Case: Network Management IT Vendor xxx Requirements Solution Benefit xxx xxx xxx Technology Used xxx 27

28 Strategic Recommendations (1/x) xxx xxx xxx xxx xxx 28

29 Thank you for the attention The IT Managed Services Market in India report is a part of Netscribes Information Technology Series. For more detailed information or customized research requirements please contact: E Mail: Milsales@netscribes.com Phone: Netscribes (India) Pvt. Ltd. is dedicated to disseminating information and providing quick insights on hot industries in India and other emerging markets. Track our new releases and major updates in these industries on About Netscribes Netscribes is a knowledge consulting and solutions firm with clientele across the globe. The company s expertise spans areas of investment & business research, business & corporate intelligence, content management services, and knowledge software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one stop shop designed to fulfil clients profitability and growth objectives. Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Netscribes (India) Pvt. Ltd. or Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. 29