indian it - beyond services
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DESCRIPTIONEvolution of Indian IT Products. A presentation made by Zinnov.
- 1. India IT - Beyond ServicesThis report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted,or reproduced for distribution outside the client organization without prior written approval from Zinnov
2. Agenda 1 Evolution - Indian Software Product Companies 2Current Lay of the Land 3 Success Stories & Emerging Companies 3. Despite its long history, the Indian software product story has largelyremained untold History of Indian Software Product Business HighEarly StageGrowth Stage Acceleration Stage Softek CompilersFlexcube (i-flex)mChekInstaplan TableCurve (Cranes)Arc (Manthan)Muneemji Nikira (Subex) VIS (3d SOC)Easy AccTally IViZNumber of Product BusinessesiViZManthanmChek VegayanSubex 3D Solid InfosysCompressionInnoviti NucleusTally ElitecoreSoftwareSolutions InfrasoftTech Compulink TechnologiesMore than 300 HCL Cranes startups in the last TCSKale4 years RamcoPolaris Consultantsi-flex Systems Wipro Systems Newgen Visionary companies built compilers and applicationIndia excels in banking- Softek software for local marketspecific products requirementLow 1980 19901990 2000 2000 2011 3 4. Due to the recession the number of product companies established YoY had reduced but its fastbouncing back to earlier levelsNumber of companies established India Product business (FY 1990 to FY 2010)Q1 2011 no. shows the new companies growthrate is coming back to pre- 297recession levels 285 209 182 153150 E 136 132 1439095 74 78 7948 3936 36 Till 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total= 2112Note: Only companies with visibility/beta product in the market have been considered in the databaseSource: Zinnov Analysis 4 5. 76% of the total product companies are in the space of Digital and Businessand Productivity Software Categorical Distribution of Indian Software ProductBusinesses 40%36%4% 7%12%1%Business and Productivity SoftwareClient / Desktop,System softwares and ToolsOthersSemiconductorServer / Infrastructure Software and StorageDigitalSource: Zinnov Analysis 5 6. There is a stark difference between Indian start-up ecosystem from that ofdeveloped markets Silicon ValleyIsraelIndiaEcosystemEcosystem Ecosystem Melting pot of global talent Melting point of Jewish talent Strong MNC R&D presence Strong university industry especially from Russia Budding VC/angel communitycollaboration Strong university industry Melting pot for talent from across Mature ecosystem with 50 years ofcollaboration the world (Indian diaspora)history Strong VC and Angel network Strong connect with Silicon Valley Experienced mentors with expertise Higher maturity of the engineers Legacy of entrepreneurshipselling in US marketsdue to military training Strong VC and Angel network Government and defense as beta Presence of management teams customerswith experience in scaling Willingness to sell out in short termbusinesses Strong connect with Silicon Valley Respect for failure Respect for failure Characteristics of the Ecosystems6 7. However, a maturing ecosystem has helped accelerate the growth of home- grown software product businesses over the past few yearsEcosystem for Indian Software Product BusinessMany educational institutes Increased interest and and government bodies are significant investmentsnow actively promotingby VCs in Indian Productentrepreneurship startups 3b3cVentureIncubationCapitalCentersSupport Ecosystem2Over the years, MNC Technology disruption like R&D centers as well asMobile, Cloud and SaaS etcRole Modelshave lowered entry barriersimproved education Companiesand created a level playingsystem has created largeR&D talent poolfield for small companies 1 3a3dTalent Market Development Technology Pool DisruptionsSource: Zinnov Analysis7 8. Agenda 1 Evolution - Indian Software Product Companies 2Current Lay of the land 3 Success Stories & Emerging Companies 9. Synergy of multiple factors have spurred the Startup ecosystem in IndiaEvolving InnovationSecond Initial set of Talentclustersgeneration Exitsentrepreneurs 1 234 We have over Sheer optimism Successful IT We have our initial 2,50,000among the talent; company founders set of people who professionals working Available only in a have started Venture made money from in R&D relatedfew place in thefunds to encourage selling their start ups services across world entrepreneurs and IPOs E.g. Yasu captive centers and Cities such asNarayana murthy, technologies, Valyd service providers.Bangalore have theAzim Premji etcsoftware, Skelta Overall employmentopportunity to software, in silicon valley is only become innovationMakemyTrip 1 million clustersVibrant Domestic Market9 10. Increase in venture investments in Indian companies after the lull duringthe economic crisis of 2008VC Investments in India, 2005 2010 VC Investments by Industry, 20101200180 144 14% 15% 900 1251205% 3% 110*9492 60010%87660 44 740 2% 300540* 508475 268 51% 002005 20062007 2008 2009 2010Mobile RetailHealthcare BFSI Deal Value Number of DealsSW & ITEducation OthersSource: Zinnov Analysis10 11. Some of the key VC and PE investments and exits over the last few years have been in Technology sector (1/2)PE/ VC Top investments/exits in technology companies in IndiaSequoia Capital India Micromax, iYogi, Druvaa Software, July Systems, Axtria, Cognizant, IMImobile, ComvivaHelion Advisors Pvt. Ltd. Azure power(Series B), Jivox, Komli , PubMatic, Kirusa, Zmanda, ngpayCanaan Advisors Pvt. Ltd. Naaptol Online Shopping, iYogi, Chakpak Media, Bharat Matrimony, Cellcast andtechTribeInternational Finance Corp. Azure power (Series B), Sunborne Energy, Applied Solar Technologies, Husk PowerSystems, Auro Mira Energy, Bhilwara EnergyNexus Venture PartnersDimdim (acquired by Salesforce.com), Gluster, Netmagic, Cloud.com, Aryaka, Mistral,Altruist Technologies, Kirusa, Snapdeal, Komli Media, PubMatic, Sedemac, Pranastudios, MapmyIndiaDFJ India Vegayan systems, ItzCash, ClearTrip, mCheck, mGinger, Reva, iYogi, Komli, PubMaticNorwest Venture PartnersAppnomic Systems, Komli, Suvidhaa Infoserve, Quikr, Yatra.com, PersistentSherpalo Ventures Zazzle, 24/7, naukri.com, cleartrip, MapmyIndia, Futurebazaar.com,Matrix partners India One2three.com, asklaila, Quikr, Verse, ItzCash card, vJive NetworksLightspeed IndiaAskLaila, Itz cash card, TutorVistaClearstone venture advisors DigiBee Microsystems, Games2win, BillDeskIntel Capital India Gone public/acquired - Sasken, Subex, Persistent, R Systems, Future software,Deccanet designsCurrent Persistent, Tejas networks, Vignani technologies, July systems, Hellosoft,Collabnet, KLG systel11 12. Some of the key VC and PE investments and exits over the last few years have been in Technology sector (2/2)Key VC investments in Q3, 2010 Illustrative Exits in Last 3 yearsCompanySectorAmount Investors Company Sector Amount Acquirer(USD(USD Million)Million)VM Logix Virtualization UndisclosedCitrix/ Cloud AryakaCloud14Nexus Ventures, OthersNetworks ComputingDimdimCloud/32Salesforce.coCollaboratiomPerfint Medical Devices 7.2 Norwest, IDG Venturesn Healthcare India, Accel IndiaYasu Business Undisclosed SAPRulesNaaptol.com Online Services 7Canaan PartnersManagemen (Shopping) t iLevel SolutionsEnterprise 6Epiphany Ventures,India GamesOnline 4 (18.3%) CiscoSoftwareGaming(Private Equity)Conzerv Energy~8 SchneiderSystemsEfficiency ElectricKomli Media Online Services 6 Helion Ventures, SkeltaBPMUndisclosed Invensys (Advertising) Nexus Ventures, DFJSoftware Software Tyfone Mobile VAS5 Ojas Ventures, Others TechnologyDisplay4 Avigo CapitalFrontiersTechnologySource: Venture Intelligence; Zinnov Analysis12 13. NCR and Bangalore are have around 60% of the Digital CompaniesDigital Product companies103 2split across regions82 57 Total= ~846 13Kolkata 17Deal websites240 GamesNCRMobile NCR Social Networking68 28 14Shopping Media and Entertainment Marketplaces172 Travel and LeisureMumbai Kolkata Mumbai Pune 36 17 Hyderabad23977 Bangalore HyderabadPune 18Bangalore93 47 23 15 8 8 2 1373227Chennai 13 14. Indias capability to address some of the key opportunity areas in the global market is high Domain Investments/ InnovationCompetitiveProduct CategoryTalent Pool Role ModelsExpertise M&A ActivityCapabilityEdgeBFSITelecomERMBusiness IntelligenceSecurityRetailStorageMobile ApplicationsOnline GamingSearch EngineMarketing Capability Very High Very LowSource: Zinnov Analysis 14 15. Indian software products companies have been innovating for bothdomestic and global markets Innovations for Domestic Market Value added services to consumers and monetization viaMass Visibility direct lead generation engine for SMBs/Enterprises Solutions Solutions that enable better teacher,Educationpupil, parent collaboration SMB specific niche applications that SMB Niche address unique vertical or horizontalApplications pain pointsMobile Mobile based applications as a modeApplications for to maximize reachReach E-commerce platforms for products that do not require touch & feel or theE-commerce decision is being made before the purchase 15 16. Tally 9 ERP.NET Mega OpportunitySolution Tally 9. ERP with online-offline sync option. India is a land of Small business with close 59 Tally has 11,000 Channel Partners in IndiaMillion SMEs. Most of these SMEs today Tally has built strong relationships with the CAhave very limited levels of IT Adoption today influencer communityand hence present a huge opportunityOnline-Offline Sync OptionTally .NET Mobile ServerDevices Customer InsightInternet SME customers have connectivity but do nothave continuity of connectivity.Tally UserTally User SME Customers require that they have a faceto a brand and hence there is a need for aBusiness Modelfeet on street to sell the solutions to the endcustomers Solution is charged at an upfront cost that varies Business influencers play a critical role in the between USD 300- USD 800 .purchase