MANAGEMENT DISCUSSION AND ANALYSIS Outlook for IT Industry in 2015 and Review of 2014 FY2014: Exports grew by 13% - net addition of USD 10 billion; Domestic market below guidance at 10% FY2015: Exports to grow by 13-15%; Domestic market - 9-12%; Industry to add revenues of USD 13-14 billion Driven by an improvement in the global economic climate and rise in the technology spend, in FY2015, NASSCOM expects the industry to add overall revenues of USD 13-14 Billion to existing industry revenues of USD 118 billion. Export revenues for FY2015 is projected to grow by 13-15% to reach USD 97-99 bn. Domestic revenues for the same period will grow at a rate of 912% percent and is expected to reach INR 1250 - 1280 billion during this year. India is now becoming home to a new breed of startup companies focused on high growth areas such as mobility, e-commerce and other vertical specific solutions - creating new markets and driving innovation. A gradual revival in consumer confidence leading to return of discretionary spending, and increased demand from US and Europe will help drive exports this year. While US continues to be the largest geographic market for India, accounting for 62%, the highlight for the year will be revival in demand from Europe, which is estimated to grow at 14% in FY15. Indian IT-BPM continues to remain the highest impact sector for India among all industries with the highest relative share in India's GDP and exports among all services industries. The Indian IT sector will leverage collaboration, innovation, technology shifts and build a transformational agenda for India. It will create a market not only in India but globally that will serve as technology differentiator for customers shifting from cost to innovation. The sector will continue to impact India through job creation, foreign exchange, exports and position India as global IT-BPM partner. The Indian IT-BPM sector continues to be one of the largest employers in the country directly employing nearly 3 million professionals, adding over 160,000 employees FY2014 - Review Despite challenges in the global market, Indian IT-BPM industry sustained its growth trajectory and is expected to clock export revenues of USD 86 billion with a Y-o-Y growth rate of 13 per cent. Domestic market also witnessed YoY growth rate of 10% taking the domestic revenues to INR 1150 billion. FY2014 can be characterized by rapid evolution, expansion of verticals and geographic markets, attracting new customer segments, and offering a considerably wider spectrum of solutions. • Industry export's estimated at USD 86 bn - growth of 13 per cent • Domestic revenues were INR 1250 - 1280 billion - growth of 9.7 per cent • Industry added 160,000 employees - direct employment - 3.1 million; indirect employment- 10 million Way Forward - FY2015 • Strong Buyer Confidence: 78% of decisions makers feel confident of planning for investment and growth in 2015 • Global IT spending projected to grow faster in 2015- IT by 3.9 per cent, BPM by 5.9 per cent; • Increased contract volume for global sourcing • Industry revenues expected to reach USD 130 billion • Disruptive technologies, digitization and entrebrneurship to fuel growth • Future of industry- Collaborate, Connect, Co-Create specifically tailored business models IT Industry trends-2015 • CompTIA's consensus forecast projects worldwide IT industry growth of 5.0% in 2015 with a upside of 7.3%, a notable increase over the brvious year's forecast of 3.4%. Executives expect the U.S. growth rate to nearly mirror the global rate • The forecast is most bullish for the growth prospects of the IT services category and the software category. The hardwarecategory is projected to grow at a relatively slower rate. Factors such as commodity pricing, the shift from on-brmises infrastructure to cloud infrastructure, software-defined-everything and the plateauing of the red-hot mobile devices category contribute to this sentiment. • IT services are projected to grow at the fastest rate. IT services often have the potential to command higher margins, customer stickiness, and add-on sales opportunities, making them attractive to tech firms small and large. The "everything-as-a-service" phenomenon has captured wallet-share and mind-share across all four categories within the classification framework. Technology and Channel Trends - 2015 • From a technology standpoint, many of the trends from brvious years will enter a new phase of maturity in 2015. • Businesses will begin using cloud and mobile to build advanced systems. • The ability to manage data will become a critical and highly demanded skill. • The potential of many connected devices and sensors will lead to new areas of opportunity. • And over it all, security will have to change as technology evolves to drive new business prospects. • Business transformation will remain the buzz word of the moment • Channel firms will continue to assess the direction of their companies in the direction of cloud computing, mobility, managed services, big data, social media. 2015 IT Industry trends - India Online retailing, cloud computing and e-commerce continue to lead to rapid growth in the IT industry. The number of mobile internet users in India is expected to reach 213 million by June 2015, according to Internet & Mobile Association of India (IAMAI) and IMRB International, today. According to the report, there were 173 million mobile internet users in India in December, 2014. The online shoppers community is expected to reach to 65 million in 2015 as compared to 40 Million in 2014. Indian IT & ITeS Report 2015 Indian IT spending is forecast to reach $73.3 Billion in 2015 up by 9.4% from $67.1 Billion in 2014 making it the 3rd largest IT market in Asia Pacific by 2016 and 2nd largest by 2018. IT services is forecast to grow at 15.7% and software services by 14% in 2015 Indian IT and ITeS sector is expected to maintain a growth of 12 - 14% in 2015 and achieve revenue of USD 225 Billion by 2020 <http://www.business-standard.com/article/news-cm/india-s-it-spending-to-rise-9-4-to-us-73-3-billion-in-2015-gartner->114101600889_1.html Export brdictions of the industry India's IT and BPO sector exports are expected to grow by 12-14 per cent in F'Y16 to touch US$ 110 billion - US$ 112 billion, according to Nasscom. How mobiles/ tablets are driving growth of IT sector "Mobility most likely will be the trend to look forward to the next year. Mobile commerce would be huge as more and more people access Internet through tablets and smartphones. Most companies are looking at enhancing their mobile brsence," according to Mr Sundeep Malhotra, Founder and CEO, HomeShop18.Com As smartphones and tablets continue to proliferate, companies will need to embrace multi-channel commerce strategy in 2014. How cloud computing is booming in the current IT industry in India The cloud has really extended the possibilities of IT in India. The factors that drive most organizations to adopt cloud computing is cost and faster innovation. Business agility is also one of the results of cloud computing. Cloud computing this year would entail the unique collection of services, web destinations and connectivity that could become the home of computing and communication activities. Mobile devices are already connected by applications via the cloud. In the future, India will see this amplify dramatically as applications interconnect to control multiple devices and networks of devices to operate autonomously. Indian Government initiative The government has recently approved the National IT Policy as well as the National Electronics Policy, which aims to increase revenues of IT and ITeS industry and make the country a manufacturing hub for electronic goods. The policy will promote innovation and development of applications and solutions in areas like localization, location-based services, mobile-value added services, cloud computing, social media and utility models. Key Industry Segment: U.S. IT Industry The IT industry can be segmented into a number of sub categories. One common break divides the industry into a grouping of hardware, software and services and a grouping of telecommunications, which includes broadband services. IT Spending According to Gartner, Worldwide IT spending is on pace to total $3.8 trillion in 2015, a 2.4 percent increase from 2014 Relevant Business Segments for GSS: Managed Services The horizon is bright for Managed Services business in 2015. Recent research from Kaseya shows that 90 percent of MSPs say that they expect to increase or maintain managed service pricing for next year. So demand isn't slowing down by any means and businesses are clearly seeing some growth. The emphasis will be on Network Support and Monitoring. The research from Kaseya showed that the three categories that have shown the most dramatic increases in growth are "Network and Connectivity Support, Monitoring Client IT Service Levels, and Cloud Monitoring." There will also be an increasing convergence of Business Services and IT; whether a client is a financial institution, a university or a healthcare provider. IT Infrastructure & Operations (I & O) The brssure on IT to optimize costs and develop next generation skills in parallel has become very critical. The cost brssures require relentless focus on standardization, consolidation and service delivery. There will be reliance on using budgets effectively to exploit new technologies like Cloud Computing. Thus, I&O are building strategies to drive new shared services models and requirements with the need to develop and manage flexible infrastructure emerging as the top priority. Remote Infrastructure Management (RIM) services Remote Infrastructure Management (RIM) is a large and growing market for IT service providers, MSPs, Managed Hosting & Co-location companies. Gartner brdicts that by 2014, ninety percent of all North American companies will be using Remote Infrastructure Management services. With revenue experiencing more than 40% growth on average. India-based providers are still in the early stage of maturity in RIM capabilities as they continue to invest in automation and intellectual property. RIMS - Workload Automation With 2014 being another year of growth and change for the workload automation industry, as the industry continues to evolve and mature, we are seeing workload automation becoming a key staple for most enterprises in 2015. According to leading technology analysts, 2015 promises to continue the trend of digitalizing business and as a result, to keep up with business demands and handle the diversity of technologies and applications, IT automation is responding with new solutions and capabilities. Some of the top brdictions for Workload Automation in 2015 include - 1. Consolidation of Point Tools - Moving away from a disjointed element approach and adopt a combrhensive automation solution to handle end to end workflows to address higher costs and agility issues. 2. Cloud Resource Management Capabilities - Expanding beyond the traditional scheduling of workflows and executing processes by focusing on identifying the amount of resources that are needed to successfully complete the workflow. 3. DevOps and Improved Collaboration - streamlining and automating DevOps processes to facilitate collaboration between Developers and Operations using br-templated job steps and reference plans minimizes time spent scripting and performing repetitive processes Ecommerce and Portals Development As online transactions hit 20-year milestone, According to Bigcommerce, Worldwide B2C ecommerce revenues will reach $2 trillion in 2015. E commerce as a segment of the total retail market is growing at 30 percent per year. Based on research conducted across its more than 55,000 clients, and combined with third-party research from Sagence, Inc., Bigcommerce report also brdicts that the U.S. small and medium business ecommerce market will exceed $100 billion in total sales in 2015. SharePoint / Office 365 Cloud-based Productivity Suites are set for strong penetration in Enterprises on a worldwide basis. Worldwide revenues from Cloud-based Productivity Suites will grow to $5.9 billion by year-end 2016. This rebrsents an average annual growth rate of 38%. In terms of installed base (i.e. user seats) Microsoft Office 365 currently rebrsents 39% of the market for Cloud-based Productivity Suites, this is expected to grow to a 47% market share by year-end 2016 With SharePoint's release of New On Premise 'SharePoint 15' and 'Office 365' Taking over as the 'Portal on cloud, there are tremendous opportunities as a Microsoft solutions provider for collaboration products. It is also a reality that with support to older versions of SharePoint coming to a near halt, a multitude of opportunities for SharePoint deployment, migration and upgrade (both on Premise and Cloud) are foreseen as hunting ground for System Integrators. Mobility According to Computerworld's recent survey, Mobility Solutions including Mobile apps and upgrading or replacing applications will consume a large chunk of 2015 IT budgets. This area also rebrsents the most potential for innovation, as business scramble to connect consumers with products and services in as many ways as can be imagined. Mobile spending for 2015 will include new investments in RFID technology, remote access tools, Wi-Fi, mobile/wireless devices and mobile device management systems. Expect the majority of spending will be on the infrastructure and custom application development for various platforms. Companies also plan to spend on technology to support bring-your-own-device programs — most notably the systems necessary to provide secure mobile access to internal systems. Gartner says, by 2017, over 70% of mobile development spending will be outsourced. Healthcare - Revenue Cycle Management (RCM) A Healthcare Delivery Organization's (HDO) revenue cycle is bound to the larger healthcare reimbursement system that links providers to payers. As a healthcare provider seeks payment for delivered services, it submits claims to public and private payers, or, in some cases, bills patients directly. Those entities process the claims for payments, further review or denial. There are often intermediaries such as clearinghouses between providers and payers to facilitate and streamline electronic transactions. Even after significant attention to transaction quality, challenges remain in ensuring the claim information sent to the payer matches what the payer needs to justify and provide payment. If information is missing or incorrect, there can be significant delays in resolving issues and receiving payment. Complicating the process is a detailed set of eligibility and reimbursement rules across multiple payers. Providers seek payment from a long list of payers with different rules and guidelines. A claim that meets one payer's guidelines will not necessarily meet a second payer's guidelines. The complexity compounds with the introduction of many different incentive, reimbursement and payment models, and those are changing at an accelerating pace in the industry. The relationship between the provider and payer revenue cycles is actively evolving with healthcare market changes, reform and new regulatory requirements. The implication is that there is a high risk of losing control of revenue management processes and, therefore, a significant disruption of the revenue flow to HDOs. Healthcare systems in many countries are struggling with escalating costs, inconsistent quality and lack of access to timely care. Business and technology leaders of healthcare delivery organizations (HDOs) worldwide are struggling to confront fundamental changes in the industry across both financial and clinical arenas. As HDOs grow in size, complexity and reach, they are focusing on the strategies and technologies that enable the organization to scale and leverage financial and clinical information to drive patient engagement, performance / quality and to deliver new operating models. Fifteen cents of every US healthcare dollar goes toward revenue cycle inefficiencies. Of the $2.7 trillion the country spends annually on healthcare, $400 billion goes to claims processing, payments, billing, revenue cycle management (RCM), and bad debt in part, because half of all payer-provider transactions involve outdated manual methods, such as phone calls and mailings. With passage of the Patient Protection and Affordable Care Act (ACA), the US government signaled intent to move healthcare toward a more consumer- driven model, which will entail a corresponding evolution in hospital revenue cycles. GSS overview GSS Infotech is one of the fastest growing managed IT Services companies, headquartered in Hyderabad, India. Founded in1999, GSS Infotech operates worldwide through its offices in USA and India. A pioneer in managed IT Services, GSS Infotech offers Infrastructure and Application management services and solutions to customers across the globe. Over the years, GSS Infotech has established itself as a brmium provider of IT service and solutions. With over 50 "Fortune 100" customers and works with over 100 "Fortune 1000" organizations covering Telecom, Banking and Financial Services, Insurance, HealthCare and Retail industry segments. As part of an expansion program which took place from 2004 through 2010 GSS Infotech grew rapidly, acquiring a number of companies in North America that offered complimentary technology competencies to further increase the range of services and therefore value GSS provide to our customers in the continental United States. GSS Infotech - A Snapshot • One of the fastest growing Managed IT Services company • A Global organization with operations in US and India • Strong Business Acumen with Technology Leadership • World-class delivery engine delivering solutions to Fortune 500 companies and Global 1000 companies • SEI- CMMi Level-5 company, ITIL compliant processes, ISO 9001 and 27001 certifications • Ranked in Forbes Asia's best 200 under $ 1 billion companies in 2010 for the third consecutive year after 2008 and 2009 • Global Operations Command Centre (GOCC) and remote delivery centre in Hyderabad, India • Empowering SMEs globally, through 5 Business /Development Centres • Best-in-class top tier technology alliances and domain intensive Centres of Excellence • 7 Acquisitions in the last six years Global Footprints • Around 800 people across 5 near shore and offshore development centres • Leveraging strategic acquisitions to enhance delivery capabilities • North America and Asia Infrastructure Management GSS Infotech Infrastructure Management Services provide clients with a flexible, yet affordable suite of services that provide more efficient infrastructure management at much lower TCO than traditional models of IT delivery. Strengt hand Depth Our services range from complete environment management, to monitoring and maintenance of specific elements of the infrastructure including: distributed servers, network and security devices, desktop, and helpdesk. Innovation We leverage our expertise in new-generation cloud based transformation models to optimize your IT roadmap and provide you with innovative methods of IT services delivery. GSS Infotech's transformation labs enable technologies such as Virtualization and the Cloud to optimize IT Infrastructure, and in parallel lower investment, improve performance, and increase reliability. Blended Delivery With blended onsite/offsite service delivery models, advanced toolset, ISO frameworks, and ITIL consulting group, GSS Infotech enables organizations to improve the quality and stability of IT operations. By outsourcing the management, on going support and maintenance of business critical infrastructure we help our clients focus their resources on driving mission critical projects. Monitoring and Management • Using our in-house developed integrated dashboards and toolsets we monitor defined parameters within a client environment. • High automation ensures real time alerts guaranteeing immediate attention. • Fully integrated with the GSS Infotech ticketing system, our monitoring systems issue automatic notifications based on brdetermined hierarchies. Network and Security Services • GSS Infotech Network and Security Services converge to provide a total defense against Security threats. Companies need their entire network infrastructure to work together to ensure access to information assets, systems and resources, but also to protect them against security vulnerabilities, risks and threats. • GSS Infotech ensures protection against data disruption, intrusions, confidentiality exposures, and other vulnerabilities through restricted identity and access management, firewall and security alert systems, and penetration testing and compliance services. • GSS Infotech adopts "best practice" standards with cutting edge security innovation, access management, vulnerability assessments and intrusion detection to provide integrated network management and security services for WAN, LAN and datacenter. We take care of the security so you know your network is safe. Networking Services • Managed LAN and WAN • Network Design and Architecture • Network Monitoring and Security Security Services • Firewall & Security Alert Services • Identity and Access Management (IAM) • Intrusion Detection/Prevention • Vulnerability/Penetration Testing • Audit and Compliance Services • VPN Services - IPSec and SSL Service Desk Service Desk provides your users with a single point of contact for all IT related questions, incidents and requests. We develop a holistic and innovative plan to realign how your users contact the Service Desk and take full advantage of self-service features. This not only assures business continuity and higher work for cemobility, but also reduces cost. Service Desk acts as the nodal point between service providers and end users. The users are proactively informed of all relevant service actions that will affect them. Our proactive and integrated work bench delivers high quality service desk support 24x7 with rapid performance management and incident reporting. Infrastructure Solutions Our complete range of infrastructure services can help you build and manage highly available, reliable IT infrastructures capable of meeting the dynamic needs of your business. Virtualization Service Virtualization helps you improve the efficiency, agility and availability of IT resources and applications. We help you optimize your IT resources through a virtualized IT infrastructure that drives down hardware, power, and cooling and management costs. Whether you are just starting down the path of virtualization, or aspire to increase your virtualization ratio, GSS Infotech can help. Building on a wide range of expert-level services including strategy and planning, migration, consolidation, implementation and ongoing support, GSS Infotech creates solutions that fit your business from the desktop to the datacenter. • Server Virtualization • Desktop Virtualization • Application Virtualization • Network Virtualization • Storage Virtualization • File Virtualization • Data Virtualization Application Development and Maintenance Services GSS Infotech utilizes its strong proficiency in technology, infrastructure management, and cloud enablement practices to deliver high-performance applications while lowering the costs of development and management. We offer 360 degree full service platform for development, maintenance, cloud enablement and testing. Our core competencies are Microsoft technologies, J2EE, Java, mainframes, databases, mobile and enterprise applications. • Custom Application Development: Proven track record in development of Web, desktop, kiosk and mobility applications, web services, and portals. • Cloud Solutions: Get the right strategy for cloud adoption through our visioning & assessment services, SaaS readiness assessment, platform deployment etc. • Application Maintenance and Support: Rapid and reliable support services including service desk, incident management, bug fixes, performance monitoring and tuning, database support & maintenance, etc. • Application Transformation: Seamlessly upgrade versions of your existing apps and make them compatible with other platforms. • Testing Services: Functional/Regression Testing, Performance Testing, Security Testing, Test Automation etc. Testing GSS Infotech is a CMMi Level 5 company. Our Quality Management System (QMS) covers both the business and delivery process is certified to ISO 9001 QMS, ISO 27001 ISMS, and ISO 20000 ITSM standards. The intrinsic behavior of any IT application is greatly influenced by the maturity of the testing and development protocol. The GSS Infotech Quality Management System (QMS) is available online 24x7 to all employees to support process compliance and brdictable delivery to all customers. We leverage Six Sigma methodology for driving continuous improvements in processes and customer satisfaction. Performance Testing • Performance test consulting • Load testing • Stress testing • Soak testing • Volume testing • Recovery testing • Scalability testing Functional Testing • End-to End Testing Solutions • System & Integration Testing • User Acceptance Testing • SOA / Web Services • Usability Testing • Compatibility Testing Test Automation • Core Test Automation • Automation Consultancy Infrastructure Testing • Testing Assessment • Managed Services • Independent Validation Services Retail Testing • Ecommerce Testing • Point of Sale Testing Security Testing • Application Penetration Testing • Compliance Related Testing • Risk Based Application Testing • Analysis and Certification Testing • Software Testing • System Integration Testing • End to End Testing • Automated Testing • Test Case Management • Healthcare Validation and Testing Quality Assurance Services • Process Performance Modeling • Process Definition & Assessment • Testing Center of Excellence • Six Sigma • Metrics Management GSS Alliances: GSS' well-integrated network of leading global technology partners contributes significantly to its IT Service and Solution offerings. The collaborative endeavors not only addresses key business and operational challenges, but also deliver high performance and assure global reach and end to end solution offerings for customers. GSS infotech's Delivery Excellence Framework Integrates best-in-class quality metrics, process improvement frameworks and systems Aligned with CMMI Level 5, ISO and Six Sigma requirements Ground-up, enterprise-wide adoption Measurable business impact for customers The Global Development Center (GDC) of GSS at Hyderabad, India, has matured processes, methodologies and templates in place fostering Standardization across projects delivery. GSS developed a unique Quality Management System, called as QPLEDGE™ (Quality, Process and Learning EDGE framework), which is aligned with SEI CMMI-DEV v1.2, ISO 9001: 2008, Information Security Management Systems (ISO 27001:2005) and IT Service Management (ISO 20000:2005). This QPLEDGE is the key enabler in delivering high quality outcomes at an agreed upon service levels. The word, QPledge™ symbolizes our pledge to provide Quality Solutions and Services to the internal and external customers. GSS employees undergo mandatory training on this framework, which consists of the required processes and best practices for different SDLC methodologies such as Waterfall and Agile. To foster continuous improvements culture across processes and projects, GSS has initiated Six Sigma program to enhance analytical skills of the resources and deliver sustainable business results to our customers. Six Sigma GB training and certification is enabling data-based approach with use of various analytical tools for effective decision making leading to process and service improvements. Competencies gained through process standardization and knowledge enhancements have resulted in 100% compliance to the defined processes which are helping us deliver brdictable levels of Quality to our esteem customers. Opportunities: a) Emerging technologies like Cloud Computing, Mobile Solutions and big-data provide good growth opportunities b) Increase in US IT spending c) Partnering with various firms for business development Threats: a) Project lifecycles are growing shorter in many technologies b) Niche players in mature market segments are strong competition c) Technology space is changing fast and existing workforce needs to be re-trained. Risks and Concerns 2014-15 risks a) Changes in the demand for IT products and services, particularly in the banking and financial services sectors; c) Fluctuations in the rate of exchange of major foreign currencies; d) Competition in India, the United States and other international markets from other IT product and service companies, which among other things affects the Company's ability to penetrate its target market segment; e) Identification and integration of acquisition targets; and Management of differing regulations and taxation for our global operations. g) The aforesaid factors and a number of other future developments may affect the Company's results of operations, financial condition and cash flow in future periods. Further, the Company believes that other developments that may affect the Company's future results of operations, financial condition and cash flow may among other things include: h) Acceptance of the Company's service offerings in the domestic and international markets; i) Pricing brssures for the Company's IT services due to continued competition from other IT products, services and transaction services companies; j) Capital expenditure and related financings; k) The Company's ability to expand international operations; l ) Gain or loss of significant customers; m) New strategic partnerships or mergers/acquisitions; and obtaining funding for additional acquisition opportunities and their working capital requirements. o) Internal controls and adequacy p) Your company has a combrhensive information security policy covering multiple components, viz., logical security, physical security, organizational information assets and process security, thereby maximizing the benefits of Information Systems for data protection and customer privacy, while minimizing the risks of offshore software outsourcing. q) Your company confirms to Information Security Management System standards as per the ISO 27001:2005 with monthly Internal Quality Audits and Yearly External Certification/Surveillance Audits by TUV. r) Your company has network firewalls, anti-virus protection at various levels, encryption methodologies, authentication and access controls & Intrusion Detection Systems. Also we enforce strict compliance and disabled CD/DVD ROM, USB drives and all other removable storage devices on PCs as per the ISMS policies. s) Your company conducts employee background screening, information security education and regular training on IP protection to all its employees working on various projects. t) Your company has documented business continuity and disaster recovery plans u) Your company has appointed an independent audit firm, M/s. Sriramamurthy and Co., Chartered Accountants, conduct quarterly internal audit and verify internal controls and its adequacy in the areas of operations, HR, Legal/Secretarial and Finance and Accounts. Their report is placed and discussed in the audit committee, and there are no adverse observations made by the firm post their review |