Overview BPO emerging opportunity - June 08 Kazim Ali Khan – Ma Foi Management Consultants Limited

Emergence of BPO - Imperatives Yet-till-now Business Performance : Value creation (Returns, Margins Pressure, costs etc.) Overrun costs and pressure of Stock market performance, bankruptcies etc. Stagnating growth and slowdown in Central Europe, NA etc. Skill Shortage: Rapidly ageing population in most developed countries Countries like China also experiences high % of unemployable population Labor shortages due to automation of processes Productivity: Challenges of cost over runs Cost efficiency of inputs, economies of scale, labor cost etc. What’s emerging to redefine the landscape: Focus on Innovation -IP, Process, Business model (reverse migration, domestic BPO) Process Reengineering and Knowledge management Business opportunities from North American continent and Central Europe

Industry Update BPO has growth more than 35% (CAGR) over the last five years. Export revenues from the IT/ITeS is $11B – 2008E. Employment of about 0.7Mio with about 40% women workforce. As of today total no of BPOs in India are over 1200. The term BPO itself is redefined. Labor arbitrage is the key driver even today. The following are gaining importance: Access to talent Service quality Productivity Time-to-market

Key Verticals as of 2008E (Revenue and Employee base wise) Banking & Capital Markets – Most established will IB has shown slow growth Insurance Technology Telecom Manufacturing Key Services Segment Customer interaction & Support F&A industry specific services Delivery Presence: Extends to 47 cities within India today.

How is the Outsourcing World Shaping Up? Buyers asking for specialization Lean & Reengineering is the catch word to stay efficient and effective – BPOs. BPO is not a catch all term any more. Process Expertise is the key and skill supply is constraint. Wage inflation is going down and not up India remains competitive for another 12 years. PPP is to build ecosystem – Social infra, physical and telecom infra is a must to keep it competitive and attractive besides talent.

Real-time Concern of the BPO Companies 1. Lack of Clarity 2. Concern about Sustainability 3. Talent Crunch/ Attrition 4. Perceived Risk v/s Real Risk

Captive v/s Third Party Owned and operated Created primarily to benefit from labor arbitrage Shared values and vision Inclusive approach (In-house unit) Principals, client and stakeholders End-to-end process outsourcing is possible BCP enabling Best state of operations – Profit center Process efficient SLA/Performance based ownership and operations Process determinant Target oriented Principal and agent relationship End-to-end process mgt is possible but based on factor of time and relationship. Possible but agent dependent Built to deliver efficiency and bill profits.

Customer Business Transformation Framework SHIFT FROM SHIFT TO Cost as a Barrier Loyalty through Good Service Spending Money on Information Winning in the Straight ways SHIFTS TO WIN IN THE FLAT WORLD Cost as a Fuel to growth Loyalty through Faster Innovation Making Money from Information Winning in the Turns

Key Levers – Deliver Business Transformation Creating Value out Of Information Focus on Clients Business Metrics BPR Process harmonization and Alternative Pricing Models Innovative Service Delivery Low Cost Automation Customer Customers Company

ITeS Industry - Movement

LPO Industry – A brief

Paralegal Support: Processing Coding Conversion, etc. Legal Support: Drafting and revising contracts/ agreements for review of attorney. Legal Research on laws including case and statutory law. Legal Counsel: Outsourced legal counsel services for an in-house firm (with or without legal department) or a legal firm, encompass most of the areas: Antitrust, bankruptcy, construction, Corporate, Criminal and civil rights etc. Patent Services: Patent research and analysis Patent application drafting Patent prosecution LPO – India - Today

To Offer a suite of Legal services Investment driven – Capital Knowledge Balance Of- Scale & Complexity Process & Domain Expertise Capability building - Trademark, Immigration, M&A General Ledger Services etc. Critical-to-Succeed – LPO Industry

LPO Confidentiality Issues Not much competition Slower Movement Than Expected Too much Hype Lack of data Protection Lack of Marketing Too many Players Challenges – LPO Industry Low growth than Expected

Future of the ITES Industry & Ways to Combat with the Challenges

Highlights from the Nasscomm Industry Captives with offshore centers have show great satisfaction ( Client satisfaction, process compliance & SLA and Relation management at business area) Aggressive ramp up and step up is likely to be witnessed in majority of the verticals Most clients’ interest has just begun to offshore. Cost efficiency is also a major driver – Bench to floor, Experience v/s freshers, Team leader span and seat utilization, total time spent on floor v/s total time of the agent in office. Key is managing the platform cost, streamline process end to end, sync demand and supply (enhance productivity time) Reducing waste, reducing variability and increase utilization is the new buzzword in the BPO companies BPO companies are keeping in check – Direct cost, product service and IT/Infra cost in a way to keep the industry margins competitive enough.