Business Process Management-India’s Success Story

• Manufacturing• Healthcare• Government

Verticals

• F&A• Analytics and Legal• Procurement Services

Service Lines

• RoW• Continental EuropeGeographies

Global BPO Industry- Cause for Concern

516

932 835

Q2 2011 Q12012 Q2 2012

Key growth areas till date in 2012

Total ACV of BPO contracts (USD Mn)

• Continental EuropeGeographiesQ2 2011 Q12012 Q2 2012

Total number of BPO transactions

160132

107

Q2 2011 Q12012 Q2 2012

Key concern areas till date in 2012

• BFSI• TelecomVerticals

• Customer Interaction Services• HRO

Service Lines

Geographies• US• UK

Global megatrends are witnessing winds of change

New technology trends to create further opportunities (e.g., Big data analytics and social media, Verticalisation, Platform based services, Non linear models etc)

Global Megatrends – Key Drivers

Demographic shifts, social and environmental trends to create hitherto unseen opportunities- 80% of incremental opportunity to come from non core markets

2012- Major Highlights

High Competition: Increasing competition as service providers expand capabilities, add skills and focus on account optimization

Growth in GICs: GIC set-ups and expansions during 2012 has so far largely driven by

the technology and manufacturing sectors

Transformation: Wide array of services (verticals, sectors, geographies, customer

centricity) involving wide array of stakeholders- CEO/ CIO, Legal, HR etc

New Value proposition: Expertise, standardization, impact on top line revenues, effective pricing solutions, technology enabled solutions etc

New wave: Larger “horizontal” deals continue to lose buyer interest in favor of more specialized and vertical specific solutions

India’s position in the global BPM sourcing landscape

India’s share of the global BPM sourcing market

Number of companies offering BPM services in India; All top 15 BPM players offer platform solutions

1

36%

500+

The Industry in India is achieving excellence

Number of companies offering BPM services in India; All top 15 BPM players offer platform solutions

Number of MNCs and global in-house centers doing BPM out of India

Number of countries serviced by India

Number of languages served

500+

200+

~66

35+

BPM 1.0(1995 – 2000)

BPM 2.0(2000 - 2005)

BPM 3.0(2005 - 2011)

BPM(2011 & Beyond)

BPO to BPM- The time is now!

Productivity Improvement / Innovation Disruptive InnovationDisruptive Innovation

Transferring basic data entry work to cost effective

locations

Even though work continued to come to these locations with the addition of certain newer ones like Philippines and Brazil, it

would still not count as disruptive

Emphasis on Cost efficiencies / Productivity

Emphasis on greater depth and breadth while

embracing the “globalization” of delivery capacity

Emphasis on value added end-to-end

solutions and inclusive growth esp. in Tier II/III

cities

Emphasis on Platform Multi tenancy, Non

linear revenue growth and utilization of same

resources across multiple clients

We are at the threshold of another wave of Disruptive innovation which possesses the ability to create a new market, new brand and value proposition

• Specialization• Process reengineering• Technology enabled

Platforms• Domestic BPM -

E-governance, Rural BPM

• Cost• Quality• Productivity• Era of GICs

• Real time processing & voice

• Multi faceted service offering

• Era of 3rd party off shoring

Transformation- from Business Process Outsourcing (BPO) to Business Process Management (BPM)

Off-shoring/ Outsourcing Business Process Management

• Lift and shift to low cost destinations

• Off shoring - key cost arbitrage driver

• Low domain intervention

• Revenue model linked to Business outcomes

• End-to-end services offered including

Consulting, BPR, Strategic decision

• Labor arbitrage the sole proposition

• Focus on Delivery Efficiencies,

Operational improvement

• Productivity enhancement thru Quality

Improvement process

• Revenue Model linked to operational

SLAs

support system

• Business Transformation and

Optimization are the drivers

• Usage of Platform based solutions

leading to Non linear models

• Value based pricing

• Global delivery model

2000- 2010 2010 & beyond4

414

876

FY06 FY12

2.1x

Despite global slowdown, Indian BPM Industry has been experienced substantial growth

Employment (‘000)

BPM Revenues (USD billion)

162.6x

CAGR13 per cent

• CAGR growth of 16 per cent in revenues, 13 per cent in employment over last 6 yrs• India bucking global trend- YoY growth of 16 per cent (selected BPM companies) in Q1FY13 over Q1

FY12 is indication of a strong year for India• Lean and mean- focus on organizational efficiencies driving growth

Source: NASSCOM, exports only

6

FY06 FY12

4.8

5.7

Jun-11 Sep-11 Dec-11 Mar-12 Jun-12

Revenue per Employee USD(‘000)

YoYGrowth

19 per cent

CAGR16 per cent

BPM- Necessitated by Teutonic shifts in client expectations and delivered services

1Piecemeal outsourcing to End-to-end services

Lights on services to Quasi-consulting services2

Lift and shift to Best practices3

2010- Till date

4 Labor arbitrage to Business Transformation

Efficiency to Business Outcome Impact5

6 Disaggregated to Integrated (tech+process) services

Indian BPM Market- Elimination of work

Eliminate Work

• Role reengineering

• Integrate technology capabilities to eliminate work• STP (Straight through processing)• Value added reporting / analytics• Business assurance

Transformation

Indian BPM business goal today- elimination of work

• Six sigma • Benchmarking• Technology augmentation

Do it Differently

Do it Cheaper

Do it Better

GO

AL

Activity Benefit

Cost Saving

• Global delivery model• Front end automation• Adaptive operating model

• Role reengineering• Shop floor automation• Process & org restructuring• Inter & Intra industry best practices

Efficiency Improvement

New age solutions - key differentiating enablersfor Innovation

KeyInnovations

Focus on technology deployment

• Services through a mix of re-engineering skills, and technology-enabled platforms

• Harmonize technology with new set of processes

• Platforms, Shared services and Cloud computing

Compelling process innovations

• Greater breadth and specialization across key verticals – BFSI, Telecom, Healthcare

• New business processes to increase efficiency and productivity

Technology

TREND # 1: NEW AGE BUSINESS CENTRIC SOLUTIONS

Innovations

Some business model innovations

• New pricing models & delivery mechanisms to suit client needs

• Fixed T&M to transaction based pricing model

Business Model

Innovation Internal Processes

Alternate Business Models

Technology

IBM built real-time staff utilization & productivity tracking platform

Cloud based services to widen target customer base and service portfolio with effective use of in-built technology

With launch of Smart Enterprise Processes (SEP), Genpact has introduced a proven, scientific model that delivers the benefits of effectiveness in addition to efficiency and focuses on client- specific business outcomes

WNS Analytics Decision Engine (WADE)

WADE enable organizations to scale the 4 stages of analytical maturity to achieve their long-term growth targets. It provides insights that drive intelligent and sustainable growth in companies through outcome-based transformational solution

Think Global act local - emerging as multinationalswith global delivery capabilities

Ireland

(nos)-BPM 2011

Countries of Operations

~60

Operating Centers ~300

Global Footprint

Acquiring

Talent

• Global Worforce•Multi language

Offering Local

Solutions

• Local business understanding•Customer specific

solutions

TREND # 2: GLOBAL DELIVERY

Languages Served ~35

Egypt

Philippines

Eastern Europe*

Chile

Shanghai

Mexico

Closer to

Customers

• Similar time zones • Easy to offer 24-

hours support• End to end service delivery

Bermuda

Costa Rica

Sharing Best

Practices

• World class Global networks

• Exchange of better ideas and opportunities

South Africa

El Salvador

This box is shifted

a bit please make

the change

Industry building vertical specific capabilities; key benefits- Non Linear Growth, Customer Stickiness, and differentiation

2002 20122007

Integrated Players

• Geographic expansion and scale: Sales presence in Western countries and delivery centers in low cost countries (East Europe, APAC)

• Geographic expansion and scale: Sales presence in Western countries and delivery centers in low cost countries (East Europe, APAC)

• Build vertical capability: primarily in industries like Healthcare, BFSI , Telecom, Retail and Travel

• Continued investments in horizontal capabilities like analytics

• Build vertical capability: primarily in industries like Healthcare, BFSI , Telecom, Retail and Travel

• Continued investments in horizontal capabilities like analytics

Observations

• BPM Verticalization over the past few years has been accompanied by investments in capability development

• Both broad-based players and IT-BPMs have used

TREND # 3: VERTICALIZATION

Pure-play

• Enhance horizontal offering: investments in analytics, HR, F&A providers

• Enhance horizontal offering: investments in analytics, HR, F&A providers

analytics

• P&L responsibility around verticals

• Broader set of offerings

• Investments in vertical platform capability

analytics

• P&L responsibility around verticals

• Broader set of offerings

• Investments in vertical platform capability

and IT-BPMs have used M&A route to build vertical capabilities

• Developed ability to impact business outcomes for clients through enhanced domain capabilities

Non Linear Growth

Customer Stickiness

Price Premium

Non Linear Growth

Customer Stickiness

Price Premium

Benefits

Adoption of Verticalization has lead to higher than average growth for industry players

BFSI Focused BPM Supplier(Verticalization initiated in last 5 years)

India BPM IndustryLarge BPM Supplier(Verticalization initiated in the last 5 years)

~40%

20% 24%

~12%~ 20%

TREND # 3: ContinueP

Lack of Verticalization leads to moderate growth post 2009 to just maintain the Industry Average

Experienced strong topline growth through adoption of Hyper Verticalization

Continued strong growth even while industry growth is relatively low

201120102009200820072006

Revenue

201120102009200820072006 201120102009200820072006

~20%

Case Study: A full scale execution of Verticalized processes

Verticalization process Impact on Performance

• Higher market success

Company background

• Supplier is one of leading BPMs in India that provides significant vertical specific solutions • >50% of the work done by the Company is very specific to the verticals• The company had enough scale in both horizontal and vertical processes

• Invested in sales and business development team with domain

TREND # 3: ContinueP

− Increase in revenue realization

− 50% jump in establishing new client relationships

• Increase in financial performance on account of improved offerings

• Increase in sales expenditure due to investments in capability development

development team with domain specific experts

• Planned and executed acquisition with focus on developing capabilities in target verticals

• Identification of middle management leaders to drive new business model and for training

• Consistent communication across the organization on the need for change

Customer service increasingly evolving to Multi-channel ; collaboration required to service cross touch points

TREND # 4: CRM (relation) to CEM (experience) to CCM (collaboration)

Technology effecting rapid transformation of India’s contact centers

• Blend of voice and live-chat (text based) – real-time chat, email, web

• Technology decreasing costs and call volume; improving customer

• Multiple channel communication

• Unified communication technologies that allow integration of voice with business processes and collaboration

• Web engagement, particularly Web retention and Web conversion

Key Trends

Opportunity Areas

TREND # 4: ContinueP

call volume; improving customer service

• Providers developing expertise in niche areas – growth to specialised voice services

• Virtual “agent anywhere” routing and secure calling

• Enterprises moving to hosted contact centres

• Social media interactions – help build better customer relations

• Increasing diversity and sheer number of products and services available in the consumer market

• Consumer demand for speed and multichannel media

• Security certifications and client concerns about privacy

Opportunity Areas

Case Study: A move from Agent led to Agent assisted solutions

Process and Execution Impact

Company background

• Drishti-Soft is an innovator in customer interaction management for contact centers with its IP-based solution AMEYO

• Provide solutions across various verticals including: BFSI (MOSL, India bulls), E-Commerce (Flipkart, Jabong), Entertainment (BookMyShow), Aviation (Indigo), Logistics (Startrek), Healthcare (Fortis) etc

• Has won several awards including “NASSCOM Innovation Award” and “IP Contact Center - Technology Pioneer Award” & “Innovation Award” from TMC Labs

TREND # 4: ContinueP

• Agent Assisted IVR Improves the quality of interactions with consistent experience

• Provides efficient cost management by utilizing lesser skilled resources

• Agent Assisted IVR is flexible according to different business requirements and can be fully automated to use with a third party application rather than an agent

Source:

• Traditionally an IVR is implemented for a self-help process, to enable interesting capabilities

• One such application is when a lower skilled agent interacts with a customer through guiding of recorded prompts without the customer realizing the difference

• A contact center may use Agent Assisted IVR to multiplex interactions of Agents into concurrent customer calls

Benefits to clients

• Enhanced Customer Satisfaction with consistent Interaction Quality

• Cost Reduction

“Impact Sourcing” - sustainable, balanced and profitable

Concept:

• An off shored outsourcing concept, which involves leveraging availability of talent at the base of the pyramid, with limited opportunity for sustainable employment, to provide high-quality, information-based services to domestic and international clients

Nature of work:

Already a US$4.5 billion market globally employing 144,000 people and has the potential to be a $20 billion

Already a US$4.5 billion market globally employing 144,000 people and has the potential to be a $20 billion

Future Opportunities

TREND # 5: SUSTAINABLE SOURCING

Impact Sourcing

• Manage “Micro work” in a kind of virtual assembly line e.g., data entry, digitization, back-office processes search engine optimization support etc

potential to be a $20 billion market by 2015, directly employing 780,000 socio-economically disadvantaged individuals

Emergence of new possibilities for Impact Sourcing in new emerging markets where BPM activities have been initiated

potential to be a $20 billion market by 2015, directly employing 780,000 socio-economically disadvantaged individuals

Emergence of new possibilities for Impact Sourcing in new emerging markets where BPM activities have been initiated

Benefits:

• Harness underserved locations where the purpose is to utilise local talent for running processes. These organisations are often called Impact Sourcing Service Providers (ISSPs), that operate in non-urban areas and underserved urban areas

• Subcontracting work to ISSPs in alternate locations for cost-effectiveness/ setting up own ISSPs to gain a wider reach even from underserved areas

Case Study: Creating a new business model through Impact Sourcing

• Uses a direct delivery model, contracting with BPM buyers directly for work performed in its IS centers

• Through a decentralized system, the company has the capacity to quickly ramp up for larger projects due to its virtual workforce bench.

• 4 centers in Andhra Pradesh, India, located in underserved villages with between 1,000 and 15,000 inhabitants

eGramIT- A direct delivery IS modeleGramIT- A direct delivery IS model

Nature of workNature of work

TREND # 5: ContinueP

• Provide a range of services to its domestic and international clients• Basic digitization services, product profiling, image editing, bill and payment processing, voice

services, and knowledge-based basic tasks such as translations, research, data gathering etc

Nature of workNature of work

• Provide services for a cost that is about 40 percent lower than prices charged for comparable work by urban BPMs

• Workforce is comprised of rural university graduates who earn $80 to $340 per month, with wages are almost on par with city salaries, resulting in extremely low attrition rates of around 4 ~5 percent as contrast to BPM attrition rates in urban India of approx 35~40 percent

Competitive advantagesCompetitive advantages

Customer centricity- moving to the next orbit

1Exploring potential areas of opportunities around customer centric business objectives

Encouraging clients to adopt new technology, tools and practices2

TREND # 6: CUSTOMER CENTRICITY

Creating a commercial model that offers wide range of solutions to multiple clients across the value chain

3

4 Creating a commercial model that incentivizes both parties to drive value

Setting up customer cells for better connect5

Availability of diverse and high skill talent is helping India to maintain its global leadership

• Market Research• Business Research

• Communication & soft skills • Attitude to excel• Combination of-

�Knowledge�Skills, and �Attitude

Over the

TALENT HIGHLIGHTS

52

12

TALENT PROFILE (per cent)

• 37% Market share• Quality Excellence, Six sigma, Lean certified•Young and passionate workforce• ~900,000 Employees•Global centers- 300+

100%= 876,000

BPM Leader of the World

• Business Research• Survey Analytics• Data Analytics• Quasi consulting• Legal Process Outsourcing

• Young and highly qualified professionals

• Over two million English speaking graduates every year

• Excellent education based infrastructure

• To do attitude

Over the years, India is

poised to maintain its

dominance in BPM IndustryCOMPARATIVE ADVANTAGE

TO INDIA

54

15

7

5

Grads - Non-Engg CAs/ CPAs

Lawyers MBAs

Docs (MBBS/ MD) Linguists

Others• 70% Market share• USD 2.8 Bn revenues• ~100,000 employees

in over ~100 firms• Strategic, high value add,

Quasi consulting services

Knowledge Services Hub

Future opportunities exists across emerging markets and new technologiesQ

•Proliferation of mobility, social media, Cloud, Big Data & Analytics

•Adaptability, consumerisation, integrated approach

•Tweaks in business models to offer customer centric solutions

•End Consumers: Enriched user experience; accessibility and

availability at lower costs

•Enterprise Customers: End-to-end integrated transformational

service delivery; optimisation and outcome based business SLAs

Emerging Technologies

Customers

•Blended service delivery approach – meeting customer expectations

•Flexible pricing models ((fixed T&M to transaction based pricing

model; building core capabilities and adding business value

•Expand beyond core developed markets (US, UK)

•Explore Domestic market: Tier II/III/IV locations

•Other emerging markets (APAC, Middle East, Africa)

service delivery; optimisation and outcome based business SLAs

Markets

EngagementModels

•Delivery models- a way to achieve excellence

• Custom hybrid delivery model that fits business goalsDeliveryModels

QAnd Opportunities exist across 3 pillars of delivery excellence

▪ What are the best ways to systematically identify new growth slivers (e.g., consumer analytics in credit cards sales)?

▪ How can you develop a competitively differentiated value proposition for the growth slivers?

Strategic focus

▪ How can BPM organizations debottleneck frontline sales Sales and

By driving initiatives across the three

19-Nov-12

▪ How can providers truly impact client’s performance on business outcomes?

Operations excellence

debottleneck frontline sales productivity?

▪ What are the key shifts in account mining capabilities to have a greater share of wallet?

Sales and commercial excellence

across the three dimensions, companies can uplift sales by 5-7% points and improve margins by 4-6% points

Delivery excellence needs Innovative solutions

Organizations need to come up withsolutions that result in

“Re-architecting the Product-Price-Performance Equation”

&“Enabling Value Creation”

Exploring New Market Segments

Implementing Innovative Business Models

1 2

The 2 approaches which can be utilized to achieve this are :

for its customers

Focusing on Small & Medium businesses (SMBs) by providing revenue enhancing platform based solutions

Implemented through Innovative Service delivery through Software as a Service(SaaS), Platform as a Service(PaaS) & Infrastructure as a Service(IaaS) model

India showcases a core competitive advantage in Big Data offerings

Indian IT and analytics players are gaining maturity to serve the Big Data opportunity

Telecom and financial services verticals are early adopters of Big Data technologies

Key Trends

OPPORTUNITY # 1: BIG DATA

~0.2

1.1-1.2

India Big Data outsourcing opportunity2011 – 2015E, USD billion

India Big Data outsourcing opportunity,by category, 2015F, Percent

24%-27%

73%-76%

Pure-play Analytics firms

Integrated IT/ BPM players

100%= ~USD 1.1 billion

* 10 petabytes and aboveSource: Deloitte; industry reporting; CRISIL GR&A analysis

2012: Big Data market to grow manifold

�

�

�

India’s business opportunity in Big Data outsourcing is estimated at ~USD 90- 100 in 2011 expected to reach ~USD 200 - 205 million in 2012, showing a growth of over 110%

IT services segment is expected to be the major contributor to the Big Data services market accounting for about 82% with analytics accounting for the remaining

The domestic demand for Big Data implementation is still at an embryonic stage

Data opportunity

�

The opportunity for Indian service providers lies in offering services around Big Data implementation and analytics for global multinationals

~0.1

~0.2

2011E 2012E 2015F

73%-76%

Source: CRISIL GR&A analysis Source: CRISIL GR&A analysis

Increase in venture funding

Indian companies expanding overseas presence

Partnership with foreign

players

M&As to gain Big

Data capabilities

Big Data Analytics is gaining momentum in the Industry

• In Dec 2011, MuSigma raised USD 108 million to grow its Big Data analytics business

• In May 2012, Nuevora, a Big Data analytics firm that

• In July 2012, MuSigma announced plans to expand in new markets and grow its employees to over 2,800,primarily analytics professionals, in the next

• Big Data players like AbsolutData and MuSigma expect M&As to be a key focus area in the industry, to build capabilities (Jun ’12)

• In June 2012, Capgemini partnered with SAS to launch a campaign in UK focusing on Big Data and analytics

OPPORTUNITY #1: ContinueP

Data analytics firm that operates an analytics CoE in India secured its first round of institutional funding from Fortisure Ventures- Nuevora plans to use

the proceeds to develop a suite of cloud-based business-processes-as-a-service (BPaaS) analytics applications

Source: Industry reporting; CRISIL GR&A analysis

professionals, in the next year

• TCS opened a Silicon Valley Customer Collaboration Center to bring the benifits of emerging technologies like Big Data, analytics and mobility to enterprises across all industries

• In July 2012, Alten Group, a European provider of technology consulting and engineering announced plans to make strategic acquisitions in India in areas of Big Data analytics

• In July 2011, HCL opened a co-innovation lab in Singapore, along with Eli Lilly to create innovative applications using business analytics and cloud computing in the healthcare space

Indian service providers undertake several growth avenues

Marketing Analytics industry has started gaining an increased prominence

Marketing Analytics potential for India (in $ billions)

0.2

1.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Newer digital platforms are increasingly becoming relevant for marketing decisions

Marketing Analytics is top on the agenda of CXOs

Key Trends

Marketing Analytics is increasingly being leveraged real time for execution support

OPPORTUNITY # 2: MARKETING ANALYTICS

02012 2020

Value chain of analytics work being delivered from India

�

�

�

Modelling: Market Assessment, CRM and Marketing Effectiveness

Reporting/ Visualization: Metrics Reporting , Dash boarding and Ad-hoc analysis

Data Management: Data Integration, ETL services and Digital Data Integration�

End User App: Real Time Digital Feeds, User Developed Models and Interactive Dashboards

� Infrastructure: Data Sourcing, Data Warehousing, Tools and Technologies and Organizational Development

leveraged real time for execution support

Analytics

Client

A few successful cases of marketing analytics solutions being delivered from India

Marketing

� A global confectionary company

� The analytical challenges were to:

� Quantify drivers

� Evaluate future

Illustrative

Lead Propensity

� An automotive OEM in US

� The analytical challenge was to:

� Build Predictive model for

Cross Sell

� Leading Banking Group

� The analytical challenge was to:

� Optimally sell Fixed Deposits

Segmentation

� Nationalized bank in the Gulf Region

� The analytical challenge was to:

� Identify ideal group of

Impact

28

� Evaluate future scenarios

� Prescribe actions

� Conducted Marketing Mix Modelling for their biscuits brand in order to grow top-line

� Recommendations from the model increased client's net revenue by $21 million

model for incoming leads

� Predictive model to classify lead into hot, warm, cold

� Tool to deliver real time hot leads developed

� Auto sales went up by 12% across dealerships within 3 months

Fixed Deposits (FD) to customers

� Identified behavioral differences between customer segments

� Ranked the Checking and Saving customers based on their needs for FD products

� Enhanced ROI through reduced cost of capturing 80% of customers by half

group of customers

� Identify segments that generate higher revenue

� Expected increase in revenue: At least 40% based on making the right offers to every segment

Indian BPM Industry is ahead on the growth curveand addressing a few challenges will lead to newer opportunities

Competition

• Rising

• Enhanced value propositions• Differentiated approach strategy

Infrastructure

Talent

Customers• Infrastructure support for movement to Tier III/IV locations

• Special policies for location of centres in locations beyond the current five locations

• Creating career paths, global talent pool

• Specialized domain/vertical expertise

• Training cost• Driving cost competitiveness

• Rising expectations

• Focus on customer centric solutions

• Domestic market scalability

• Enhanced user experience

To Summarize

SUMMARY

• Despite global economic uncertainties, the Indian BPM industry reaffirms its leadership.

• Industry has strong fundamentals, premier global sourcing destination, resilient, demonstrated ability to change.

• Industry undergoes fundamental transformation- from business process outsourcing to business process management

30

outsourcing to business process management

• Outsourcing models changing- – driven by new technologies, new business models and solutions, new buyer segments and solutions around emerging markets

• Opportunities around big data, analytics and legal services expected to drive future growth

• Customer centricity and delivery excellence creating additional business