Indian IT-BPO Industry: Building FutureReady Organizations

Chennai, 28-29 July 2010

Key Topics

• Past Decade – Employment Facts and Impact

•HR’s four levers to build “Future Ready” Organizations

• Sustained Investment in Training

•Opportunities for Career Growth

•Managing People Challenges effectively

• Ensuring Cost Competitiveness

•NASSCOM Initiatives

6X increase in direct employment;3Xincrease in the share of organized private sector

430

2,300 2,500

FY01 FY10 FY11P

Dire

ct e

mp

l oye

es

('00

0)

45% of total incremental urban employment in the last decade

~6x

By 2020 - Direct employment of 10 million; Indirectemployment of 20 million

Employment opportunities for diversesections of the society

Livelihood forEconomicallybackward

Empowering theyouth

Bridging thegender divide

EmploymentbeyondUrban areas

Employing theDifferently abled

~5% of the IT-BPO workforce fromeconomically backward sections ~5% of the IT-BPO workforce from

economically backward sections

Industry average age-27 Industry average age-27

~37% women employees in FY09; account for45% of fresher intake ~26% of the female employees are chief wage

earners

~37% women employees in FY09; account for45% of fresher intake ~26% of the female employees are chief wage

earners

~58% of the IT-BPO workforce is from tier2/3 cities

~ 56% employees are chief bread earners

~58% of the IT-BPO workforce is from tier2/3 cities

~ 56% employees are chief bread earners

~60% of companies provide employment todifferently abled people ~60% of companies provide employment to

differently abled people

•Young demographics

•Changing aspirations ofIndia’s youth

•Created high paying jobs

•Setting new standards ofwork environment

By 20205 mn womenemployees4 mn directemployees intier 2/3locations

*NASSCOM Evalueserve survey findings, 7500 participants pan India

Leading transformation in Tier 1 cities;extending impact to Tier 2/3 locations

By 2020: 4.1 mn incremental direct jobs in tier 1 locations; 3.8 mnincremental direct jobs in tier 2/3 locations

EmploymentGenerated

EnhancingtheEducationsystem

• Direct employment - 1.9 million• Indirect employment - 7.3 million

• ~ 2X growth in FY05-09 in engineeringcolleges and technical graduates

–58% of the total engineeringcolleges

–62% of the total intake oftechnical graduates

• Direct employment- 1.7 lakh• Direct dependents supported- 4X

• 1.7X growth in FY05-09 inengineering colleges andtechnical graduates

–Number of engineeringcolleges- 985

–Number of technicalgraduates - 508,000

• Skill Development trainings intier 2/3 locations

TIER 1 TIER 2/3

Morocco

SpainUSA

MexicoGuatemala

Global and Diversified workforce(nos) 2007 2008 2009

Countries ofOperations

~48 ~52 ~60

Operating Centers 340 ~400 ~460

Poland

FinlandGermanyHungaryNetherlandsRomaniaSweden

South Africa

Philippines

2.2 million employees;~60 countries35+ Languages; 5% Foreign Nationals

IT-BPO Exports revenue by Geography, FY2010

Australia

Russia

Sri Lanka

France

Italy

Canada

China

New Zealand

Brazil Tanzania

Taiwan

UK & Ireland

Egypt S. Arabia

Japan

Argentina

* Illustrative list of countries represented above

India

NASSCOM TOP 20 IT-BPOEMPLOYERS in INDIA FY09-10

7

Rank Company1. Tata Consultancy Services2. Infosys Technologies Ltd

3. Wipro Ltd

4. Cognizant Technology SolutionsIndia Pvt Ltd

5. HCL Technologies Ltd6. Genpact Limited7. MphasiS Ltd8. Intelenet Global Services Ltd*9. Tech Mahindra Ltd

10. Aegis Ltd

Rank Company

11. Capgemini Consulting India PvtLtd.

12. WNS Global Services (P) Ltd*

13. Firstsource Solutions Ltd*

14. CSC India Pvt Ltd

15. 3i Infotech Ltd

16. Hinduja Global Solutions Ltd*

17. L&T Infotech

18. Patni Computer Systems Ltd

19. Exl Service.com (India) Pvt Ltd*

20. Aditya Birla Minacs Worldwide Ltd*

Note:• This list is based on the India-based FTE headcount of firms with IT-BPO operations in India, as reported to NASSCOM in its annual survey.• Based on publicly available information, few other MNC's such as Accenture, Convergys, HP India and IBM would have also featured in this list.However, as they have not participated in the survey, we do not have all the required details and are unable to rank them.• Most companies on this list are engaged in IT as well as BPO. Companies marked with an * indicate pure-play BPO firms.

Industry in the process of buildinghigh energy workforce focused on future aspirations

• Tier 1 focus in India • Tier II and rural opportunities

• Largely domestic workforce • Multicultural workforce, 15-20% foreignorigin

• Indian policies and processes • Global policies and processes

• Delivery-centric management withlimited career focus

• Multiple, specialized domain expertise

• “Generalist” skill set • Domain-specific business knowledge

• Talent pool focused on delivery • Talent pool with value add capabilitythrough innovation, analytics, ER&D

Future Decade

• Tier I delivery focus in India • Tier 2/3 and rural opportunities

Past decade

Key Topics

• Past Decade – Employment Facts and Impact

•HR’s four levers to build “Future Ready” Organizations

• Sustained Investment in Training

•Opportunities for Career Growth

•Managing People Challenges effectively

• Ensuring Cost Competitiveness

•NASSCOM Initiatives

Sustained investment in training

BPO IT Services

CollegePostCollegePre College

Efficiency

Certification

-Analytics

-F&A

-HR

-Insurance

MOREINTENSIVE NAC SPECIALIZA

-TIONMOREINTENSIVE

NAC-TECH SPECIALIZATION

College

Post

College

Pre College

Efficiency

Certification

Within college andoutside-Engg, RIM, Testing

Investing in training through structured training programs;affiliation with academia; In-house universities

Industry supplementing theEducation system

Spend of USD 1.4 Billionon training activities inFY09

5% of total annualemployee time spent ontrainingAverage trainingperiod for new employees –14-16 weeks

Average training period forexisting employees – 2weeks

45% of training spend onnew employees- USD 630Million

Average amount spend ontraining new employees=USD 4350- 40% of cost ofan average engineeringcourse

Spend of USD 1.4 Billionon training activities inFY09

5% of total annualemployee time spent ontrainingAverage trainingperiod for new employees –14-16 weeks

Average training period forexisting employees – 2weeks

45% of training spend onnew employees- USD 630Million

Average amount spend ontraining new employees=USD 4350- 40% of cost ofan average engineeringcourse

Break-up of Human Capital Management costs

* Other Costs include training for existing employees, employee welfare, salaries for trainingstaff, training material costs

45%

55%

New Hire Training Other Training*

100%=USD1.4Billion

EmploymentGeneration -Urban andRural

Language,Process, S&M

skills,Research &Analytics

Process andVertical

specialists

Emerging as a “Skill Factory” –Introducing/upgrading new skills

IndustryReady

FutureReady

Domain skills across sectors:BFSI, Healthcare, Retail,Telecom, Consulting (IFRS),etc.

Customer facing skills: Clientinteraction, sales & marketing,customer service, voice/accenttraining, etc

Domain skills across sectors:BFSI, Healthcare, Retail,Telecom, Consulting (IFRS),etc.

Customer facing skills: Clientinteraction, sales & marketing,customer service, voice/accenttraining, etc

Domain skills across sectors:BFSI, Healthcare, Retail,Telecom, etc.

Cross-platform skills: SAP,Oracle, Java

Technical skills: Mainframe, Dotnet, J2EE, Open Systems, etc

Domain skills across sectors:BFSI, Healthcare, Retail,Telecom, etc.

Cross-platform skills: SAP,Oracle, Java

Technical skills: Mainframe, Dotnet, J2EE, Open Systems, etc

Domain skills across sectors:Aerospace, Automobiles,Energy, Telecom, etc

Services: Plant engineering,Sustainability/Green, Energy,Infrastructure engineering, etc

Domain skills across sectors:Aerospace, Automobiles,Energy, Telecom, etc

Services: Plant engineering,Sustainability/Green, Energy,Infrastructure engineering, etc

IT ServicesIT Services BPOBPO ER&DER&D

Industry investing in vibrant careergrowth; retooling employee skill sets

MULTI SKILLING

DEFINEDCAREER PATH

Competency Frameworks

Expertise across end to endindustry value chains throughjob rotations

Funding/reimbursement offurther education; certificationprograms

Cross skilling/multi-skilling/up-skilling across technology /platforms / services

Competency Frameworks

Expertise across end to endindustry value chains throughjob rotations

Funding/reimbursement offurther education; certificationprograms

Cross skilling/multi-skilling/up-skilling across technology /platforms / services

Career Architecture maps

Internal job rotations

Continuous improvementprojects

Best practice sharing

Career Architecture maps

Internal job rotations

Continuous improvementprojects

Best practice sharing

GLOBALEXPOSURE

Cross cultural integrationand Best practice sharing

Joint training programs

Cross polarization of projectteams

Global compliance group forglobal integration

Cross cultural integrationand Best practice sharing

Joint training programs

Cross polarization of projectteams

Global compliance group forglobal integration

BUILDINGLEADERSHIPPOOLS

Strong domain leadershipprograms to understandcore business functions

• Ops, Finance, IT, HR,Commercial Leadership

Rigorous career andsuccession planningprocess

Global Leadership Cadreprogram; shadow boarding;accelerated career pathprogram

Strong domain leadershipprograms to understandcore business functions

• Ops, Finance, IT, HR,Commercial Leadership

Rigorous career andsuccession planningprocess

Global Leadership Cadreprogram; shadow boarding;accelerated career pathprogram

Industry taking significant measuresto manage challenges effectively

• Monetary benefits: Retention bonus, rewarding meritocracy, ESOP’s

• Non-monetary benefits: Continuous skill development; innovation culture; accelerated

growth track, job rotation

•Build/expand capacity to lead cross-functional initiatives and projects

•Succession planning process

Employeeretention

• Pre hire orientation, Buddy program, Rigorous One-on-One, Family Connect

program, Townhall, Attrition tracker Significant employee engagement - Rewards & Recognition, effective communication

(company newsletters, social media, internal blogs), CSR

• Industry consistently features high in work/employee satisfaction surveys

• Employee referrals

High Attritionlevels

Attractingright talent

Leadershippipeline;trained middlemanagement

Annual Incremental engineering fresher addition, ‘000, FY01-09Annual Incremental engineering fresher addition, ‘000, FY01-09

• Cumulative fresher addition (FY01-09)

IT- 684,000

HR pivotal in maintaining Industry’scost competitiveness

•Hiring Fresher's

• Average Fresher

to lateral ratio –

70:30

•Just-in-time hiring

•Build vs Buy

•Hiring from Tier 2/3

cities

•Alternative talent

pools – increasing

ratio of non-

engineers

2845

3045

34

106

156168

73

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

IT fresher addition

IT fresher addition

Key Topics

• Past Decade – Employment Facts and Impact

•HR’s four levers to build “Future Ready” Organizations

• Sustained Investment in Training

•Opportunities for Career Growth

•Managing People Challenges effectively

• Ensuring Cost Competitiveness

•NASSCOM Initiatives

Short Term(0-12 months)

Medium Term(12-24 months)

Long Term(24 months onwards)

• Finishing Schools: Focus onsoft skills and domaincompetencies andcertifications andassessments

• NAC, NAC-Tech

• Finishing Schools,Establishing New IIIT - Phase I

• Vocational Skill Development• NAC, NAC-Tech

• Establishing New IIIT-Phase II

• Scaling up PhD program• Vocational Skill

Development• NAC, NAC-Tech

• Industry-Academia Facultymentorship programs (CSR)

• National Faculty DevelopmentProgram

• Industry-Academia Facultymentorship programs (CSR)

• National FacultyDevelopment Program

• Education Web ofCollaboration

• Research Study• Participation in Key

Government policy Initiatives(NKC) & (NSDM) etc

• Events (Forums, IT Seminars,Summits)

• Education Web ofCollaboration

• Participation in KeyGovernment policy Initiatives

• Education Web ofCollaboration

• Participation in KeyGovernment policyInitiatives

STUD

ENTS

FACU

LTYO

THER

S

NASSOM initiatives – broad based andaligned to Industry aspirations

Thank You

Industry initiatives to build a futureready organisation

Infosys’ TechnicalUniversity - Continuoustraining to employees

• Foundation programs forengineers and non-engineers

• Project Management CoE• Higher education scheme

through distance learningprograms or certification

EXL Insurance Academy –Experts from insurance industryin India, U.S. and U.K.

• Certification programs forbeginner, intermediary andadvanced

• Specialized trainings likeWorkers’ Compensation,Premium Audit, etc.

L&T’s CareerDevelopment Framework -Seven career tracks withdetailed job descriptions

• Employees design theirdevelopment plans based onindividual aspirations &opportunities available

• Mobility across inter/intratracks

• Competency development

Mphasis’ AARAMBH – NewJoinee trained all aspects of adepartment

An HR employee spends 3months each working onevery aspect of HR–improvesproductivity and multi taskingabilities

Innovation at MahindraSatyam – Ideate – Innovate –Productize - Innovation forExcellence Award

• Organization wide Innovationcontest to generate novelideas

• Investment Council evaluatesand invests in new ideas

• Oversees/monitors progresson approved investments

Genpact’s “Storefronts”- Retail hiring in tier 2/3 cities

• Spread across 20 cities inIndia

• Candidates walk in directlyfor interviews; suitable onesare hired on the spot

• Candidates also get to knowabout Genpact’s business