Dave Clarke General Manager Vertex

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• Dave Clarke General Manager Vertex
• India BPO Market Overview
• August 04

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Background
gt1 billion people (growing at 1.7 p.a)
at least 20 significant languages
three urban concentrations in world top ten
c2.2 m graduates every year c100,000 engineering
graduates every year
history of British presence in India
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Offshore Marketplace Key Messages

• Indian BPO market continues to grow dramatically
  and evolve
• Competitor landscape is changing with pure play
  offshore players emerging as strong competition
  for global BPO providers
• Vertex BPO transitioning to operate using a truly
  global delivery model
• With increased focus on sophisticated customers
  and offerings including moving from replication
  based approach to a more sustainable end game
  model i.e. high end services
• All players global and offshore will have to
  successfully address operations and people issues
  in the future

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BPO in India
Size of circle corresponds to number of qualified
workers
High
Ireland
Australia
Singapore
Location attractiveness Infrastructure Communicati
ons Other basic infrastructure Country risks/FDI
incentives Incentives for investments Political
environment Time-zone attractiveness
UK
China
Philippines
Mexico
Low
Low
High
People attractiveness Quality, Cost,
Qualifications Knowledge of English
Source McKinsey analysis
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Indian BPO market continues to grow dramatically
and evolve

• BPO revenues accounted for US 3.6 billion in
  revenues, up from US 2.5 billion in 2002-03
  recording a 54 growth over last year
• Total headcount in the industry was at 245,500 as
  of March, 2004.
• By the year 2008, the segment is expected to
  employ over 1.1 million and witness similar
  growth levels (upwards of 50)

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BPO opportunities

• Billing services
• Accounting transactions
• General accounting
• Tax consulting compliance
• Risk management
• Financial reporting analysis
• Financial management

• Database marketing/ customer analysis
• Telesales/ Telemarketing
• Inbound call centre
• Web sales and marketing

Customer Care
Finance

• Benefits administration
• Education and training
• Recruiting and staffing
• Payroll services
• Hiring administration
• Records management
• Other HR services

• Tax processing
• Claims processing
• Asset management
• Document management
• Transcription and translation
• Supply chain management
• Procurement

HR
BPO Opportunities
Supply Chain Administration
Payment Services
Content Development Research

• Credit/Debit card services
• Cheque processing
• EDI
• Other transaction processing

• Engineering
• Design
• Animation
• Network consultancy and management
• Biotech research

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What is BPO? - Sophisticated customers and
offerings
Low cost labor
Access to highly skilled labor pool
Common corporate functions
Knowledge services and decision analysis
Research and development
Back office
Customer contact
Increasingly complex transactions

• Basic data
• entry
• Application forms
• Data conversion
• Transaction processing
• Document management

• Customer relations
• Call centers
• (inbound and outbound)
• On-line
• customer
• service
• Telemarketing
• Document management

• Shared
• corporate services
• Finance/
• accounting
• HR
• Procurement
• IT
• Helpdesk
• Maintenance
• Infrastructure
• Applications development

• Research
• services
• Customer
• analysis
• Portfolio
• analysis
• Claims
• processing
• Risk
• management
• Credit underwriting

• Content development engineering and design
• New product design
• Design specs
• Pilot/
• prototypes
• Testing
• Production design and optimization

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Competitor landscape is changing
BPO start-ups (funded primarily by VCs)
7,000 heads
4,000 heads
4,000 heads
Global BPO providers having an Indian offering
BPO arm of Indian IT services players
BPO players in India
4,500 heads
8,000 heads
4,700 heads
10,000 heads
9,800 heads
3,000 heads
1,200 heads
BPO businesses of large Indian business houses
1,200 heads
2,500 heads
4,000 heads
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BPO providers are transitioning to operate a
truly global delivery model
Global Delivery Model
Global Resource Pool

• Creating a global resource pool with appropriate
  skill-sets available to deliver high-class
  services to clients (matches cost Vs skill)

• Creating knowledge capital across the globe as
  compared to operating in silos restricting
  knowledge to few centers

Global Knowledge Base

• Creating world-class delivery centers across the
  globe which are virtual, integrated and offers
  seamless service whilst leveraging on cost of
  delivery

Integrated Delivery Center

• Creating an environment which makes the best of
  cultural diversities/ differences

Managing Cultural Diversities
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Vertex provides a global model
People Management (Talent development retention)
Global Organisation
Seamless Interface (client relationship/
management)
Best Practices (Process Technology)
Unifying Values
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India BPO - Cost Structure
At Par
2-2.5 Times
50-60 Lower
Improved ROI through higher asset utilization and
lower operating costs
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Drivers for Offshore Delivery

• Firms can realise cost savings of between 40-60
  by offshoring various business processes. Free up
  resource/capacity/capital for other value
  creation activities.eg sales and marketing,
  research and product development etc

Financial Benefits
Access to Resources

• Offshoring provides firms access to a huge global
  talent pool.
• This helps firms overcome skill shortages by
  using skilled offshore workers.

Competitiveness

• Cost savings, increased flexibility and
  utilisation of skilled workers enables UK firms
  to improve their competitiveness in global
  markets.

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Transition modelling key areasto cover to
enable day 1 benefits

• Poor UK process poor offshore process. Model,
  document and bed in change in UK
• New services offshore need equal attention to
  onshore operations
• Training and support needs to understand
  cultural differences
• Management support essential
• Build on strengths
• Invest in the delivery over long term
• Test and trial new processes
• Create communication channels
• Make decisive moves

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Vertex transitioning What do we do to make it
work for our clients?

• Understand the business. UK process experts and
  India process managers work together to deliver
  documented processes.
• Plan and develop a recruitment profile
• Develop and deliver robust infrastructure
  support, data centre to desktop and telephony.
  Create necessary resilience against distance
  issues
• Train trainers, training best delivered via India
  trainers for local cultural and live support
• Create quality culture in training to deliver UK
  level from day 1. Need to set high standards,
  dont go for same as approach.
• Set up trial/nursery/development group for
  putting right all errors/services before roll out
• Create sla/olas for all areas so there is no
  ambiguity
• Monitor and manage the operation with additional
  UK support to offset against the savings.

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Shift Cost Sensitivity
Source Mckinsey
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Advantage India
Source Mckinsey
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Offshoring adds significant competitive advantage
to UK firms and to the UK economy