Roadmap 2012: Capitalising on the Expanding BPO landscape, Peter Bendor-Samuel, Chief Executive Officer, Everest Group & Outsourcing Center

Roadmap 2012 – Capitalizing on the Expanding BPO Landscape NASSCOM India Leadership Forum February 15, 2008

Ganesh Lakshminarayanan

MD, Dell International Services

Pavan Vaish

CEO, IBM Daksh Business Process Services

Raman Roy

Founder, Chairman and MD, Quatrro

Simon Fanning

Strategic Sourcing Programme Director, Deutsche Bank

Peter Bendor-Samuel

CEO, Everest Group

Panel members

Everest is a global firm that helps leading companies capture value from services Value from services Service providers Service enablers Service recipients Everest provides

Information (data and tools)

Insight (research)

Advice (consulting)

Recently, Everest partnered with NASSCOM to produce a comprehensive report on the Indian BPO industry NASSCOM-Everest India BPO Study Roadmap 2012: Capitalizing on the Expanding BPO Landscape Covers all major vertical and horizontal BPO segments Based on extensive interaction with senior leadership at provider and buyer organizations Leverages Everest IP in multiple practice areas Comprehensive coverage Detailed and fact-based Multiple perspectives Everest knowledge Detailed bottom-up analysis based on process-level data from large part of the industry

The Indian BPO industry has experienced robust growth Source: NASSCOM-Everest India BPO Study (2008) India BPO exports revenues and employment FY 2004-2008 Employees (’000s) Revenues (US$ billion) Large number of processes delivered Multiple industry verticals served Global customer base Part of a global ‘eco-system’

Over the next five years, there is an addressable opportunity of US$220 – 280 billion for Indian BPO Addressable opportunity for the Indian BPO industry by vertical 2012; US$ billion Total India BPO market opportunity Others 1 Travel Retail Technology Manufacturing Telecom Insurance 2 Banking and Capital markets 1 Other industry verticals include energy/utilities, media and pharmaceuticals 2 Includes Life and Pension, Property and Casualty and Health Source: NASSCOM-Everest India BPO Study (2008)

The large addressable market creates the opportunity for the industry to grow faster Addressable opportunity for Indian BPO industry by 2012 US$220-280 billion Source: NASSCOM-Everest India BPO Study (2008) Even a 50% growth rate will only help capture 1/5 th of the total opportunity by 2012

Capturing this opportunity is critically important for India as a nation ~11 ~30 ~50 India BPO export revenues and growth estimates US$ billion Current momentum (28-30% CAGR) Accelerated momentum (45-50% CAGR) ~11

At stake is:

2.5% of India’s GDP by 2012

2 million direct additional jobs

Source: NASSCOM-Everest India BPO Study (2008) US$ 39 billion

Multiple internal and external constraints need to be managed Sustainable economic model Viable value proposition Talent shortage Supporting infrastructure Internal Competitive challenges Changing buyer expectations External Source: NASSCOM-Everest India BPO Study (2008)

Overall, eight key action themes emerge Future action themes for Indian BPO industry Source: NASSCOM-Everest India BPO Study (2008) Protect India’s cost advantage to ensure that buyer interest, adoption and growth are sustained 1 Create ‘BPO hubs’ with the enabling physical and social ‘eco-system’ to drive BPO-led growth broader and deeper within India 2 Shape an ‘integrator’ role for the Indian BPO industry in the emerging global services supply chain 6 ‘ Up-shift’ the third-party and captive value proposition to effectively deliver against changing buyer expectations 5 Increase employability and access untapped talent pools by creating greater linkages between the current education system and the needs of the BPO industry, and facilitating the development of BPO-specific education models 3 Encourage the growth of domestic BPO to enhance the competitiveness of Indian industry, create additional employment and facilitate development 4 Communicate the true performance and potential of the industry to a broader set of stakeholders, including buyers, employees and Government 7 Help buyers embrace the overall opportunity of India’s BPO industry in a more meaningful way 8

BPO hubs with enabling ‘ecosystem’ are required to successfully operate in Tier 2/3 cities Developed educational setups Quality healthcare facilities Hotels Security Shopping and entertainment options Create BPO hubs in Tier-2/3 cities Developed transportation infrastructure Affordable housing and real estate International connectivity Telecom / Internet connectivity Utilities (Power, gas, sewage etc.) 2 Source: NASSCOM-Everest India BPO Study (2008) Physical infrastructure Social infrastructure

Increased activity for domestic BPO business can deliver benefits on multiple counts Potential opportunity of US$15-20 billion by 2012 Evolve non-arbitrage based value proposition Hedge against U S dollar revenues Tap alternate talent pools Bring in over one million additional resources to the labour pool Buyers can derive significant value on account of capital avoidance, access to talent, access to global best practices and increased management bandwidth Act as a natural hedge against forex fluctuations

Significant opportunities in BFSI, Telecom, Media, Retail and Government verticals

Large unfulfilled demand for Customer Interaction and F&A services in addition to vertical-specific processes

Source: NASSCOM-Everest India BPO Study (2008) 4

Providers can adopt several routes to “up-shift” value proposition 1 Center of Excellence Source: NASSCOM-Everest India BPO Study (2008) Changing accountability Process Business Simple rules Judgment Complex rules COE 1 Dominant view of “value add” Changing capability/ distinctiveness Task Quality Standards Changing the type of work 5