Team Members: Jaspal Singh Mrinal Agarwal Ravi Dhanwaria “ T he P aradox O f G rowth”

Acknowledgment We want to sincerely thank the management for their encouragement and guidance. We would not have been able to complete this project without their support : Mr. Nitin Aggarwal Director – Research Services Mrs. Yasmin Ahmed Associate Director – Professional Services Team Mr. Hemant Rathi Associate Director – Consumer Practices Team We would also like to extend our thanks to Mr. Nitin Rohatgi and Ms. Paula Ghosh. We hope that our efforts will help create visibility for Pipal among the corporate fraternity as well as academia .

We want to sincerely thank the management for their encouragement and guidance. We would not have been able to complete this project without their support :

Mr. Nitin Aggarwal

Director – Research Services

Mrs. Yasmin Ahmed

Associate Director – Professional Services Team

Mr. Hemant Rathi

Associate Director – Consumer Practices Team

We would also like to extend our thanks to Mr. Nitin Rohatgi and Ms. Paula Ghosh. We hope that our efforts will help create visibility for Pipal among the corporate fraternity as well as academia .

Contents Introduction Indian KPO Industry About Pipal Research Pipal – Current Business Model The Growth Paradox

Introduction

Indian KPO Industry

About Pipal Research

Pipal – Current Business Model

The Growth Paradox

Introduction – The Growth Paradox High-end Research Low-end Research Skilled Professionals Unskilled Professionals Maintain Leadership Join the race for volumes -vs- -vs- -vs- Pipal has reached its inflexion point, from where it needs to make certain trade-offs to reach the next level

Contents Introduction Indian KPO Industry About Pipal Research Pipal – Current Business Model The Growth Paradox

Introduction

Indian KPO Industry

About Pipal Research

Pipal – Current Business Model

The Growth Paradox

The KPO Industry – Market Size Indian KPO Industry – Total Sales, 2000-11 (Figures in $ billion) CAGR 50.7% CAGR 36.5% Indian KPO industry is estimated to reach $11.2 billion in revenue by 2010-11, from just $3.0 billion in 2006-07

The KPO Industry – FTE (Full Time Employees) Indian KPO Industry – FTE, 2000-11 (Figures in ‘000) CAGR 42.4% CAGR 31.6% Indian KPO industry is forecasted to employ 255,000 individuals by 2010-11, from just 75,000 individuals in 2006-07

The KPO Industry – India’s Share Global KPO Industry – Total Sales, 2006-07 (Figures in $ billion) Global KPO Industry – Total Sales, 2010-11 (Figures in $ billion) 100% = $16.7 billion 100% = $4.4 billion 2006-07 2010-11 India would continue to maintain its leadership position in global KPO industry in the next 3-4 years

The KPO Industry – Hot Destinations Philippines Chile India China Russia Ireland Poland Hungary The Czech Republic Israel

The KPO Industry - SWOT Strength Weakness Threat Opportunities Domain Expertise Small & Medium Enterprises in the US Lack of human force in the US and UK Large Talent Pool Low Labour Costs Success of BPOs Quality Standards Data Security Rising Wages Lack of infrastructure IPR Act, 2005 High attrition rate Supply gap Qualified workforce SWOT

Contents Introduction The KPO Industry – Global & India About Pipal Research Pipal – Current Business Model The Growth Paradox

Introduction

The KPO Industry – Global & India

About Pipal Research

Pipal – Current Business Model

The Growth Paradox

Pipal Research – Key Events 2001 - 03 2004 - 06 Founded by Manoj Jain and Aditya Khanna in the US With a total of 5 employees, it served its first client The company signed contract with new clients Total employees strength reached 30 The company setup its analytics division in Bangalore ICICI OneSource bought 51% stake in the company Total strength reached more than 100 in India Acquired a small company in the US Manoj Jain stepped down as CEO Expanded organically with an employee strength crossing the 200 mark Signed some of the major contracts 2006 - Beyond Founded in 2001, Pipal has emerged as a leading high-value KPO in India 2003 - 04 Consolidation Growth

Founded by Manoj Jain and Aditya Khanna in the US

With a total of 5 employees, it served its first client

The company signed contract with new clients

Total employees strength reached 30

The company setup its analytics division in Bangalore

ICICI OneSource bought 51% stake in the company

Total strength reached more than 100 in India

Acquired a small company in the US

Manoj Jain stepped down as CEO

Expanded organically with an employee strength crossing the 200 mark

Signed some of the major contracts

Pipal Research – Revenue Pipal Research – Revenue, 2005-07 (Figures in Rs. Million) Over the last 2 years, Pipal’s revenue is growing at a CAGR of 91.9%, as compared to the industry growth of 46.0% Source: ‘Annual Report 2007’ – Firstsource Solutions Limited CAGR 91.9%

Contents Introduction The KPO Industry – Global & India About Pipal Research Pipal – Current Business Model The Growth Paradox

Introduction

The KPO Industry – Global & India

About Pipal Research

Pipal – Current Business Model

The Growth Paradox

Pipal Research – Current Business Model Pipal has developed an innovative platform, creating a spot market for customised research and analysis Spot-research Platform ‘ Pipal Answers’ High-quality Research Skilled Professionals

Major Competitors Grail Research Pipal Research Adventity Knowledge Services EvalueServe (EVS) WNS Knowledge Services Pipal is uniquely positioned among its competitors, offering high employee compensation and getting high-value work Employees’ Compensation Types of Research The Smart Cube

Contents Introduction The KPO Industry – Global & India About Pipal Research Pipal – Current Business Model The Growth Paradox

Introduction

The KPO Industry – Global & India

About Pipal Research

Pipal – Current Business Model

The Growth Paradox

Pipal Research – ‘Core Identity’ Should strive to become BIGGER or remain BEST ?? Volume-based Business Value-based Business Current Situation Paradox Contributed around 20% of Indian KPO revenue in 2006-07 Would reach $2.5 billion by 2010-11 Low billing rate as it requires less research and analysis Increase the employee base as graduates can also be employed to perform the job Contributed only 4% of Indian KPO revenue in the same period Would reach $0.5 billion by 2010-11 High billing rate as more extensive research and analysis required Only postgraduate, CAs, CPAs can be employed to perform the job Pipal mainly focuses on high-end and value-based research, on the other hand, its competitors offer a gamut of services, including low-end services e.g. data mining etc Should Pipal include low-end services to grow in size?

Contributed around 20% of Indian KPO revenue in 2006-07

Would reach $2.5 billion by 2010-11

Low billing rate as it requires less research and analysis

Increase the employee base as graduates can also be employed to perform the job

Contributed only 4% of Indian KPO revenue in the same period

Would reach $0.5 billion by 2010-11

High billing rate as more extensive research and analysis required

Only postgraduate, CAs, CPAs can be employed to perform the job

Pipal mainly focuses on high-end and value-based research, on the other hand, its competitors offer a gamut of services, including low-end services e.g. data mining etc

Should Pipal include low-end services to grow in size?

Pipal Research – ‘Strategic Assets’ Should the company relax entry criteria, enabling them to meet the growing demand or continue with their current HR policy?? Current Situation Paradox High Attrition Rate Supply Gap Emergence of other sectors Pipal follows a stringent entry criteria for its new recruits. It conducts a number of technical rounds as well as HR rounds Due to shortage of skilled professionals, the Indian KPO industry can lose its leadership position in next 5-10 years Skilled Professional

Pipal follows a stringent entry criteria for its new recruits. It conducts a number of technical rounds as well as HR rounds

Due to shortage of skilled professionals, the Indian KPO industry can lose its leadership position in next 5-10 years

Pipal Research – ‘Personal Touch’ With an increasing employee base, can the company continue to maintain a ‘personal touch’ with each and every employees?? Current Situation Paradox June 2006 June 2007 Pipal celebrates employees’ special occasions by giving out cards, flowers and gift vouchers to them on their birthday, anniversary or other special personal events It is becoming difficult for the company to offer ‘personal touch’ to each employee, and the employees are losing their personal identity in a rapidly growing organisation

Pipal celebrates employees’ special occasions by giving out cards, flowers and gift vouchers to them on their birthday, anniversary or other special personal events

It is becoming difficult for the company to offer ‘personal touch’ to each employee, and the employees are losing their personal identity in a rapidly growing organisation

Pipal Research – ‘Infrastructural Facilities’ Should Pipal look for bigger facilities to meet future requirement or offer ‘work-from-home’ options to more and more people?? Current Situation Paradox The company opened a new facility in Gurgaon this year, as the rental prices have skyrocketed in the last 1-2 years in Delhi “ We want to hire more and more educated women, who can not go to office due to personal reasons” (Manoj Jain, Founder) Commencement of the metro rail network in certain locations and the plans to connect other destinations within Delhi The MCD's eviction drive has further reduced the availability of legitimate office space in and around Delhi Source: Jones Lang LaSalle Commercial Rent - Per Month / Per Sq ft., 2006 (Figures in Rs.) Delhi Gurgaon

The company opened a new facility in Gurgaon this year, as the rental prices have skyrocketed in the last 1-2 years in Delhi

“ We want to hire more and more educated women, who can not go to office due to personal reasons” (Manoj Jain, Founder)

Commencement of the metro rail network in certain locations and the plans to connect other destinations within Delhi

The MCD's eviction drive has further reduced the availability of legitimate office space in and around Delhi

Pipal Research – ‘Critical Success Factor’ (CSF) Current Situation The company continues to focus on ‘client satisfaction’ and ‘employee retention’, though the dynamic market conditions have started affecting the company policies The success factors works with each other in tandem, hence, an organisation should not focus on any factor as an individual but should consider these collectively Paradox Going forward, where should the focus be?? Quality Customer Satisfaction Intellectual Capital Strategic Relationship Employee Attraction & Retention Critical Success Factor Sustainability

The company continues to focus on ‘client satisfaction’ and ‘employee retention’, though the dynamic market conditions have started affecting the company policies

The success factors works with each other in tandem, hence, an organisation should not focus on any factor as an individual but should consider these collectively