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Zinnov Zones for Digital

This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced
for distribution outside the client organization without prior written approval from Zinnov.
*Zinnovs Global Service Provider Ratings have been rebranded to Zinnov Zones

Agenda
Market Landscape Enterprise
Digital Transformation

Digital Journey of Enterprises

Evolution of Service Provider


Landscape

Zinnov Zones Ratings for Digital

A view on IT investments by enterprises..

Creating an infrastructure
to provide access to
business information and
manage/run business
applications

Traditional IT
Operating System
Enterprise Application Suites
Security Infrastructure
Hardware Support
Network Support
Source: Zinnov Analysis

Evolution of legacy IT
infrastructure, including
both hardware & software,
to align with changing
business requirements

IT Modernisation

Virtualisation and Cloud based


infrastructure
Social Media Applications
Mobile enterprise application
suites
Relational databases and
Analytics, BI applications
Identity management

Investments in enabling
technologies to support
digital use cases and
execute data driven
business processes

Finding newer possibilities


to maximize the customer
experiences and
operational efficiencies

Enterprise Digital
Transformation

Digital Enablement
Service Oriented Enterprise
Architecture
Advanced analytics led enterprise
applications
Big Data Infrastructure
Omni-channel Commerce
Platforms
Digital Marketing Platforms
IoT platforms
Sensors and Beacons technology4
Application Program Interface
Data Lakes
High Performance computing
architecture

Data driven UX Designing


Digital Manufacturing
Artificial Intelligence
Predictive Analytics
Natural Language Interaction
Image Recognition
Robotic Process Automation
Robo-advisors
Near Field Communication
Cryptocurrency
Wearable technologies
Connected ecosystems
Virtual and Augmented Reality

EDT market is estimated to be worth $29 Bn globally and is growing


at over 30% per annum in times of otherwise stagnating IT spend

Global Digital Market Spending and Growth ($ Bn)


Enterprise Digital
Transformation
Spending

136

Enterprise Digital
Transformation
Spending

29

%
36
<
7
<1

227
%
<14

1635

<1%

2015

Source: Zinnov Research

BFSI, manufacturing and


Retail currently constitute
nearly 50% of the overall
market for EDT

845

445

Enterprise Digital Transformation

490

Nearly 40% of the overall


spend is around use cases
pertaining to customer
targeting and engagement

1692

2020
Digital Enablement

IT Modernization

Enterprise digital
transformation spending
forms ~11% of the overall
digital market, rest being
constituted by expenditure
towards digital enablement

Traditional IT

~$29 Bn EDT market currently drives ~$2 Bn


worth of spend with digital service providers
Enterprise Digital
Transformation Spending
2015
Share of
Services
in
Spending

USD

Services
Consumed
Via Digital
Service
Providers

Share of
Indian
Service
Providers

Source: Zinnov Analysis

15

USD

USD

Digital Enablement Spending

2020

Bn

Bn

USD

USD

69
10

2015

Bn

Bn

300-320 Mn
USD 1.4-1.5 Bn

USD

115

USD

USD

2020

15

Bn
USD

Bn

2.3-2.5

250

USD

Bn USD

37

Bn

Bn

6-7.5 Bn

20% realization of the


total addressable
Enterprise Digital
transformation
services market of $70
Bn; 30% realization
expected by 2020
80% expenditure of
services being made
in-house, in addition to
a small share of global
in-house centers
Indian SPs account for
~15% of the services
opportunity currently

NA and Europe are the largest contributors to global digital


spending; Asian market to become the 2 nd largest by 2020

Split of EDT Spend by Geographies

High Concentration of large enterprises


Availability of Top Digital Talent
Large number of Tech Start-ups

High Cost of Digital Talent

High government focus on digital


Availability of Top Digital Talent

High Cost of Digital Talent


Low Economic Growth
Unstable political condition

High IT spending growth


Low cost talent Availability
Major Offshoring and Outsourcing hotspots
Rapid Economic growth

Scarcity of Top Talent


33

68

Europe

38
%

North
America

Manufacturing,
Telecom, Insurance

14

Banking, Retail, HiTech and Healthcare

9
2015.0

1.7

South
America

Middle East &


Africa

Low Economic Growth


Unstable US government
Low share of large enterprises

Source: Zinnov Analysis

43
%

2020.0

Australia
Services, Banking
and Insurance

0.3

Oil and Gas, Mining and


Agriculture

Utilities, Oil and


Gas and Banking
Low cost talent availability
Near Shore Advantage w.r.t US geo

Manufacturing,
Services, Oil & Gas

1.7

0.6

Asia

30
29
%

Start-up hubs, such as Israel


Near shore advantage w.r.t. European
Customers

Geo-political instability

0.6
2015.0

1.5
2020.0

Availability of Top talent


Government focus on digital transformation

Low economic growth


High cost of Digital Talent

Agenda
Market Landscape Enterprise
Digital Transformation

Digital Journey of Enterprises

Evolution of Service Provider


Landscape

Zinnov Zones Ratings for Digital

Top global enterprises are leading adoption of Digital Transformation


initiatives with Forbes 500 companies accounting for 40% of spending
Total Digital Spend contribution from Forbes
Global 500 - 2015

$ 102
Billion

Forbes 500 Digital Spend Contribution Breakup


45%

Forbes
Others;
60%

500 companies; 40%

18%

15%

11%

10%

Spend in USD Billions

Share of Forbes 500


Companies in Global
Digital Spend

0.00%
0-100

100

101-200

200

201-300

300

301-400

400

401-500

50
0

Global Forbes 500 companies by decreasing order of digital spend


Source: Zinnov Analysis

High
Disruption
Medium
Disruption

BFSI

Personal Financial Advisors

Fraud Detection

Internal Threat Detection

Banking Customer Sentiment Analysis

Crowdfunding
P2P Lending
Cryptocurrency
Payment Wallets
Usage based insurance
Insurance Gamification

BFSI

Retail

Media and Entertainment

Data Driven Marketing

Social Media Analytics

Digital Infotainment Solutions

Retail

Automated Warehouse Management

Mobile POS

Personalized marketing

Robotic Sales agents

Customer Churn Analytics

Drone based Delivery

Immersive Virtual Reality


Connected TV
Programmatic Advertising
Online platforms for Aggregated Content

Manufacturi
ng

Travel &
Hospitality

Additive Manufacturing
Predictive Maintenance

Travel and Hospitality

Connected hotels

Predictive Pricing

Personalized marketing campaigns

In-flight VR entertainment

Education
Healthcare

Utilities

Timeline
Source: Zinnov Analysis

Virtual Shops
Retail 3D printing
Ecommerce/Aggregators

Manufacturing

Connected factories

Robotic Workers

Advanced SCM Analytics

Demand Prediction

Virtual Prototyping

Media &
Entertainment

Telecom

Low Digital
Disruption

Stage of Digital Disruption

Disruptive impact of digital technologies and new entrants


has been the highest on BFSI and retail industries

Low Digital Spend

Alternative Lodging Platforms


Aggregated Hospitality & Event platforms
Travel and Hospitality Aggregators

Digital led Business


Enhancements
Business Disruptions
Medium Digital
Spend

High Digital
Spend

Enterprises are rapidly evolving on three key fronts


in order to transform themselves digitally (1/3)

1.

Technology ownership moving beyond the CIO


and CTO
Investments by BUs into digital technology
uptake

ORGANIZATIONAL
READINESS

Technology ownership and budgets


moving beyond CIO & CTO

Stakeholders Within Large enterprises with Leadership role in Digital Transformation Initiatives

Enterprises are increasingly appointing


Chief Digital Officers to own and
implement digital charter for the
organization

APPOINTMENT of Chief Digital Offi cers (CDO) in Large Enterprises globally (2012- 2015)

5%
CIO and CTO
Lead
Technology
Uptake in
Pre Digital
Era
Focus on running the
shop (Support &
Maintenance)

R:
G
A
C
%
>90

13%
25%
28%
30%
40%

New role being


introduced into
Organizations

60%

1600

800
220

380

Digital transformation ownership extending beyond CIO/CTO office has


shifted focus from running the shop to driving significant business
benefit
Source: Zinnov Analysis

10

Enterprises are rapidly evolving on three key fronts


in order to transform themselves digitally (2/3)

2.

DIGITAL
INVESTMENT
S

Set up digital innovation labs and CoEs


Investments into hiring of relevant digital talent

Enterprises across industries are setting


up digital labs to foster innovation and
implement technology
Se t up of digit al labs by Lar ge Ent e r pris e s

6x growth
in 2 years

Despite growth in digital talent,


availability remains low
Enterprises continue to focus on
acquisition and nurturing of talent to
support digital objectives
Global Availabilit y of digit al Talent (000)

65
750

1150

77%
Enterprises
feel that
the talent crunch is
the biggest
impediment to going
digital
50%

34

Estimated shortage of
Data Scientist
professionals globally
in 2015

11
Talent Type

Availability

Hiring Focus

Data Scientist

Key Focus Areas of Digital Labs


ROBOTICS, IoT, ADVANCED ANALYTICS, DESIGN AND EXPERIENCE, BIG
DATA, CYBER SECURITY, COGNITIVE COMPUTING, WEARABLES,
VIRTUAL REALITY

UI/UX Consultant
Domain Experts

Source: Zinnov Analysis

Integration Architects

11

Enterprises are rapidly evolving on three key fronts


in order to transform themselves digitally (3/3)

3.

ECOSYSTEM
LEVERAGE

Partnerships with startups for adoption of digital


technologies
Association with universities with focus on digital

Enterprise are leveraging the exploding


digital start-up ecosystem for adoption of
digital technologies
G r o w t h i n n u mb e r o f d i g i t a l s t a r t - u p s
407

R:
CAG
%
>25

Top Global Academic Institutes

41%

Executives
Executives
from
from large
large
enterprises
enterprises
believe
believe that
that
small
small
businesses
businesses will
will
support
growth
support growth
in
in a
a
partnership
partnership

203

59
12

Universities with high focus on research in


digital technologies are being partnered
by enterprises
Massachusetts Institute of
Technology
University of Cambridge
Imperial College London
Harvard University
University of Oxford

Design
&
Experie
nce

Enhancement of webbased customer


engagement

Use of AI, Wearables


etc. to improve worker
safety

Source: Zinnov Analysis, Start up data from Mattermark

Contextual Knowledge
Management

Internet
of
Things

Cogniti
Robotic
ve
s
Comput
ing

University College London

Stanford University
California Institute of
Technology

Passenger focused big


data

Princeton University

In-store Robotic
Assistants for
Customers

Big
Data &
Analytic
s

Yale
University
Autonomous
vehicle
technology

Wearable robots

and ML applications

12

Agenda
Market Landscape Enterprise
Digital Transformation

Digital Journey of Enterprises

Evolution of Service Provider


Landscape

Zinnov Zones Ratings for Digital

Application engineering, and data management and analytics service


offerings account for ~70% of service providers digital revenue
Digital
Application
Engineering

Digital
SMAC
Applicatio
ns
Robotics
and
Automatio
n

Data
Management &
Analytics Services

Mobile/
Web Apps
Dev

Data
Architectu
re

ETL, Data
Curation

Cognitive
Solutions

BI & Data
Visualizati
on

Advanced
Analytics

Digital Platform
Integration
API
Manageme
nt

Solutions
Integratio
n

Horizontal
Platform
orchestration

Digital Consulting
& Transformation
Services

Design &
Experience
Services
Customer
Experience
Mapping

Customer Maturity
Assessment
Digital Road
map
definition

Use Case
Prioritizati
on

Design on
new forms

U/UX
Developme
nt

Share of Clients*
(2015)

Share of Digital Services by


Service Lines (2015)

31%

8% 4%
17%

38%

33%

Source: Zinnov Analysis


*Figures do not add up to 100% due to overlap among clients across service lines

Digital Application
Engineering
Data Management &
Analytics
Digital Platform
Integration
Digital Consulting Services
Design and Experience
Services

27%
23%
20%
16%
14

Service Providers need to differentiate across five key


aspects in order to become leaders in the digital age
1

Focus on
Digital Talent
Service
Providers must
Hiring

Creation of
Digital
Re-usable
IPs such as
Assets

Leveraging
Digital
Service
Providers should
Ecosystem

undertake initiatives to
upskill internal workforce and
hire top talent from to build
an able digital workforce

products and accelerators


along with a robust lab
network is essential for SPs
to differentiate themselves in
market

enhance their digital


capabilities by partnering
important stakeholders such
as start ups and universities

Six Key Digital Talent


INTEGRATIO
DATA Categories

Advantages of Digital
Labs

Three Stages of SP
collaboration with startup
ecosystem:

SCIENTIST
N
DOMAIN
ARCHITECT
APPLICATIO
EXPERT
UX
N
15-20%
CONSULTANT Approx.
ARCHITECT
higher
experience
in
DEVOPS
digital workforce vs.
ANALYST

17
%
35
%
20
%

IT/ITeS
Higher lateral hiring
by Digital SPs as
compared to IT
Service Providers
Higher median
compensation of
Digital employees
against IT

Source: Zinnov Analysis

Building cross-technology
solutions through inter-BU
Explore and Engage
collaboration
Partner
Development Of IPs
Invest and Acquire
Collaboration with ecosystem
Service Providers
Few SP partnerships
have Design and UX
with universities
focus in their digital
labs
Key areas of collaboration
Of IPs (both
include:
Solutions &
Advanced Analytics |Mind
Accelerators) built
Controlled Robots |Cyber
by
security | Smart city tech |
SPs serve BFSI
IoT | Computer Vision |
clients

70
%

28
%

Design

Agile/DevOps
Agile/DevOps
development
Development

Work on newage delivery


Enterprises
are demanding
models

methodologies help SPs


deliver high quality of
services in a smaller time
frame and reasonable costs

70
%

Multiple GTM Models


being explored by
service providers

Growth in demand
for DevOps skills
over last year

Need for Dev-ops and


Agile

30
X
50
X
22
%

new age delivery models


such revenue sharing, riskreward sharing models
forcing SPs to execute on
these

Increase in speed
of deployment
Reduction in
software failures

Increase in
revenue for clients

Consulting partner Led


Customer as a channel
Delivery team led
3-in-a-box/4-in-a-box model
Digital as a separate P&L

1%

of revenue made through


outcome based contracts

Expected to grow rapidly as


services mature

15

Existing capabilities of Product Engineering Service Providers


provide them a head start in digital services market

Key Advantages of a Product Engineering Vendor Over Incumbent IT Services Vendor

PES vendors have traditionally


engaged with both startup and
university ecosystem to augment
their research capabilities
Source: Zinnov Analysis

Ecosystem
Connects

Digital
Stakeholde
r Connects

Deep connects with engineering


organizations, CTO & BUs as compared
to IT services firms who have traditionally
restricted their engagement to CIOs

Design
Thinking &
Agile

PES vendors were early


movers in Agile, Scrum,
DevOps and Design
Thinking fields

D
New Age
Talent

Customer
Engageme
nt Focus

Zinnov estimates >$100 Bn


spend by 2020 on UI/ UX
capabilities, API management &
application factories, all strong
suits of traditional PES vendors

PRODUCT
ENGINEERING
VENDORS
ADVANTAGES

>10% of global digital spend will


be on new products & services, which
is the prime focus of PES vendors

New
Products &
Services

PES vendors employ a large


proportion of new technologies
and research focussed talent,
which is not the case for traditional IT
services firms

16

Agenda
Market Landscape Enterprise
Digital Transformation

Digital Journey of Enterprises

Evolution of Service Provider


Landscape

Zinnov Zones Ratings for Digital

Zinnov Zones for Digital Analysis Framework

Nurture Zone

Breakout Zone

1 Digital Prowess
Execution Zone

Scalability

Leadership Zone

Scalabili
ty

Scale
Scale of
of Digital
Digital Business
Business
Positioning reflects
the scores on Digital
Prowess and
Scalability

Digital
Digital Clientele
Clientele

Product
Product Engineering
Engineering
Experience
Experience

Digital Prowess
Services Spread, Ecosystem Leverage, Digital Workforce, Digital Assets, Engagement Models

Source: Zinnov Analysis

Services
Services
Spread
Spread

Ecosyste
Ecosyste
m
m
Leverage
Leverage

Digital
Digital
Workforc
Workforc
e
e

Digital
Digital
Assets
Assets

Engagem
Engagem
ent
ent
Models
Models

Scalability
Scale of Digital Business, Product Engineering Experience, Digital Clientele

Zinnov has evaluated participating service providers on two key


areas basis which they were plotted on a 2-dimensional matrix

18

Digital Prowess Parameters explained


Scalability

has further been broken down into three key parameters


as mentioned below-

Cumulative Score on the Scalability parameters defines the vertical


position of Service Providers within the framework

Scale of Digital Business

Total Digital Revenue and Headcount across digital technology service lines | Geographic spread of revenue across key hubs of digital
services demand

Digital Clientele

Width of digital client portfolio | Existence of large marque clients and a higher number of large value accounts within the digital
clientele

Product Engineering
Experience

Revenue and headcount in product engineering services, thus signifying intensity of PES experience (critical for scaling up digital
business due to expertise across product development, design and R&D)

Digital Prowess

is further constituted of five key parameters:

Cumulative Score on the Digital Prowess parameters defines the


horizontal position of Service Providers within the framework

Capability of delivering end to end services across the five key domains of digital technology services, namely a) Consulting b) Design
and Experience c) Application Engineering, 4) Platform Integration & 5) Data Management and Analytics

Services Spread

Ecosystem Leverage

Digital Workforce

Digital Assets

Focus on creation of Digital Labs and Centres of Excellence, Intellectual Property (IPs), products, accelerators, tools and frameworks
across digital technology areas

Engagement Models

Ability to deliver across all types of engagement models including T&M, Fixed Price and Outcome based models, thus catering to digital
native customers | Execution of projects on agile practices

Leveraging digital ecosystem through acquisitions or partnerships with niche technology start-ups and prominent digital technology
platforms | Strong connects with leading universities and academic institutes having focus on research in digital technologies| Relevant
acquisitions in the digital space
Availability of digital skills such as Domain Experts, Data Scientists, UI/UX Consultants & Solution architects | High proportion of lateral
hires and best in class fresh talent | Certifications & Trainings in digital platforms & technologies | Proportion of workforce with PhD |
Avg. experience of Digital Workforce

The cumulative score of enterprises based on the Digital Prowess axis is used for classifying the service providers on one of
the
Nurture Zone
Source: Zinnov Analysis

Zinnov Zones belowBreakout Zone

Execution Zone

Leadership Zone

19

Zinnov Zones for Digital


Overall Ratings

Scalability
Scale of Digital Business, Product Engineering Experience, Digital Clientele

High
Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
EPAM

Tech
Mahindra
IGATE
*
Pacter
a

Hexawa
re

Ascendu
m

Mindtree

Synte
l

GlobalLogi
c
Luxo
ft

L&T
Infotech
Infoga
in

Persistent
Systems

Ness Software
Engineering
Services
Happies
t Minds

Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
positioning does not include Capgeminig details
Services Spread, Ecosystem Leverage, Digital Workforce, Digital Assets, Engagement Models

Source: Data shared by participant companies, Zinnov Research

and is based on IGATE data only

20

Ratings across 5 service lines:


Digital Consulting and
Transformation Services

1
.
2
.

Design & Experience Services


3
.

Digital Application Engineering


Services
4
.

Digital Platform Integration


Services
5
.

Data Management & Analytics


Services Provider

Zinnov Zones for Digital


Digital Consulting and Transformation Services Ratings

Scalability
Scale of Consulting Business, Product Engineering Experience, Clientele

High
Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
Tech
Mahindra
Mindtree
EPAM

IGATE*
Infoga
in

Hexawa
re

Pacter
a

Synte
l

GlobalLogi
c

L&T
Infotech

Ness Software
Engineering
Services

Persistent
Systems

Luxo
ft

Happies
t Minds

Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
Vertical Spread, Ecosystem Leverage, Consulting Workforce, Digital Assets, Engagement Modelspositioning does not include Capgemini details and

Source: Data shared by participant companies, Zinnov Research

is based on IGATE data only

22

Zinnov Zones for Digital


Design & Experience Services Ratings

High
Scalability
Scale of D&E Business, Product Engineering Experience, Clientele

Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
EPAM
Persistent
Systems

IGATE*

Mindtree
GlobalLogi
c

Tech
Mahindra
Synte
l

Pacter
a

L&T
Infotech

Hexawa
re

Ness Software
Engineering
Services

Luxo
ft

Infoga
in
Happiest
Minds
Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
positioning does not include Capgemini details and
Design & Experience Services Spread, Ecosystem Leverage, Design Workforce, Digital Assets, Engagement Models

Source: Data shared by participant companies, Zinnov Research

is based on IGATE data only

23

Zinnov Zones for Digital


Digital Application Engineering Services Ratings

Scalability
Scale of App Engg. Business, Product Engineering Experience, Clientele

High
Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
EPAM
GlobalLogi
c

IGATE*
L&T
Infotech
Synte
l
Ascendu
m
Happies
t Minds
Hexawa
re

Pacter
a

Infoga
in

Luxo
ft
Ness Software
Engineering
Services
Tech
Mahindra

Persistent
Systems

Mindtree

Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
positioning does not include Capgemini details and
App. Eng. Services Spread, Ecosystem Leverage, App. Development Workforce, Digital Assets, Engagement Models

Source: Data shared by participant companies, Zinnov Research

is based on IGATE data only

24

Zinnov Zones for Digital


Digital Platform Integration Services Ratings

Scalability
Scale of Platform Integration Business, Product Engineering Experience, Clientele

High
Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
EPAM

Mindtree
IGATE*
Pacter
a

Synte
l

Tech
Mahindra

Hexawa
re

Infoga
in

L&T
Infotech

Persistent
Systems

Ness Software
Engineering
Services

Luxo
ft

Happies
t Minds
Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
positioning does not include Capgemini details and
Platform Integration Services Spread, Ecosystem Leverage, Integration Workforce, Digital Assets, Engagement Models

Source: Data shared by participant companies, Zinnov Research

is based on IGATE data only

25

Scalability
Scale of Data Mgmt. & Analytics Business, Product Engineering Experience, Clientele

Zinnov Zones for Digital


Data Management & Analytics Services Provider Ratings

High
Nurture Zone

Breakout Zone

Execution Zone

Leadership Zone
Tech
Mahindra
IGATE*

EPAM
Mindtree

Pacter
a
Hexawa
re

Persistent
Systems

Synte
l
Luxo
Ness Software ft
Engineering
Happies
Services
t Minds

L&T
Infotech
GlobalLogi
c

Infoga
in
Innominds

Low
*IGATE was acquired by Capgemini. Current
Digital Prowess
positioning
Data Management & Analytics Services Spread, Ecosystem Leverage, Analytics Workforce, Digital Assets, Engagement
Models does not include Capgemini details and

Source: Data shared by participant companies, Zinnov Research

is based on IGATE data only

26

California Office
3080 Olcott Street
Suite A125,
Santa Clara, CA 95054
Phone: +408-716-8432

Bangalore
69 "Prathiba Complex",
4th 'A' Cross,
Koramangala 5th Block,
Bangalore-560 095.
Phone: +91-8041127925/6

Gurgaon Office:
First Floor,
Plot no. 131, Sector 44,
Gurgaon-122002,
Phone: +91 124 4420100

Thank You

Singapore
Level 42, Suntec Tower
Three
8 Temasek Boulevard
Singapore 038988
Phone:+65 6829 2123

Texas
21, Waterway Ave
Suite 300
The Woodlands
TX-77380 USA
Phone:+1-281-362-2773

Beijing
Meilifang Tower 4,
Entrance 4, 10/F #1003,
11 Beiyuan Shuangying
Road,
Chaoyang District, Beijing
China 100012

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