Pure-play Engineering Services Outsourcing (ESO) service providers achieved a CAGR of 7% in the period FY2007 to FY2011, in a study conducted by ValueNotes. This study covers the financial performance of pure-play ESO firms, principally in the Indian ESO industry. The report includes service provider profiles of 13 ESO firms, along with their service offerings, key financial ratios, shareholding patterns, and names of directors. For more details visit: bit.ly/ESOFPA
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Table of Contents Research Methodology ......................................................................................................................vi Executive Summary ........................................................................................................................... ix 1 Macroeconomics ......................................................................................................................... 1 1.1 Global Economy .................................................................................................................... 1 1.2 Major Economic Regions ....................................................................................................... 2 1.3 National Economic Performance of Select Countries ............................................................. 4 1.4 Currency Movements ............................................................................................................ 7 1.5 Global Capital Markets .......................................................................................................... 8
2 Industry Insights .......................................................................................................................... 9 2.1 Indian IT-BPO Industry Revenue ............................................................................................ 9 2.2 IT-BPO Contribution Towards India’s GDP ........................................................................... 10 2.3 IT-BPO Contribution Towards India’s Exports ...................................................................... 10
3 Operating Earnings .................................................................................................................... 12 3.1 Total Income ....................................................................................................................... 12 3.2 Revenue Per Employee ....................................................................................................... 14
5 Profitability ............................................................................................................................... 21 5.1 EBITDA Margin .................................................................................................................... 21 5.2 EBIT Margin ........................................................................................................................ 22 5.3 Net Profit Margin ................................................................................................................ 23 5.4 Net Profit Per Employee ...................................................................................................... 24
6 Operating Efficiency .................................................................................................................. 26 6.1 Debtor Days ........................................................................................................................ 26 6.2 Creditor Days ...................................................................................................................... 28 6.3 Debtor Days Versus Creditor Days ....................................................................................... 29 6.4 Net Operating Cycle ............................................................................................................ 29
8 Capital Efficiency ....................................................................................................................... 37 8.1 Return On Capital Employed ............................................................................................... 37 8.2 Return on Equity ................................................................................................................. 38 8.3 Return On Assets ................................................................................................................ 39
Table of Exhibits Exhibit i: Service Provider Categories and Sample Size .................................................................................... vii
Exhibit ii: Parameters Used for Service Provider Comparison .......................................................................... vii
Exhibit iii: Legend Used for Service Provider Comparison ............................................................................... viii
Exhibit iv: List of Abbreviations ...................................................................................................................... viii
Exhibit v: Top Five Service Providers in the Engineering Services Outsourcing Segment in 2011 ......................... x
Exhibit 1: Global GDP Growth Rate from 2007 to 2013 ...................................................................................... 1
Exhibit 2: European Union (EU) GDP Growth Rate from 2007 to 2013 ............................................................... 2
Exhibit 3: BRIC (Brazil, Russia, India, China) GDP Growth Rate from 2007 to 2013.............................................. 2
Exhibit 4: India GDP Growth Rate from 2007 to 2013 ........................................................................................ 4
Exhibit 5: USA GDP Growth Rate from 2007 to 2013 ......................................................................................... 5
Exhibit 6: UK GDP Growth Rate from 2007 to 2013 ........................................................................................... 6
Exhibit 7: Indian Currency Movements from 2007 to 2011 ................................................................................ 7
Exhibit 8: Capital Market Performance from 2007 to 2011 ................................................................................ 8
Exhibit 9: Indian IT-BPO Revenue from 2007 to 2012 ........................................................................................ 9
Exhibit 10: Indian IT-BPO Contribution to the National GDP ............................................................................ 10
Exhibit 11: Indian IT-BPO Contribution to the National Exports ....................................................................... 10
Exhibit 12: Revenue and Growth Over Five Years ............................................................................................ 12
Exhibit 13: Revenue by Service Provider Type ................................................................................................. 13
Exhibit 14: Revenue Change (YoY) by Service Provider Type ............................................................................ 13
Exhibit 15: Revenue of ESO Segment by Service Provider in 2011 .................................................................... 14
Exhibit 16: Revenue Per Employee (RPE) Over Five Years ................................................................................ 14
Exhibit 17: RPE by Service Provider Type ......................................................................................................... 15
Exhibit 18: RPE Change (YoY) by Service Provider Type.................................................................................... 15
Exhibit 19: Operating Expense as a Percent of Revenue For Five Years ............................................................ 16
Exhibit 20: Operating Expense Change (YoY) by Service Provider Type ............................................................ 17
Exhibit 21: Operating Expense as a Percent of Revenue by Service Provider Type ............................................ 17
Exhibit 22: Employee Cost as a Percent of Operating Expense Over Five Years ................................................ 18
Exhibit 23: Employee Cost as a Percent of Revenue Over Five Years ................................................................ 18
Exhibit 24: Employee Cost as a Percent of Revenue by Service Provider Type .................................................. 19
Exhibit 25: Total Cost Per Employee Over Five Years ....................................................................................... 19
Exhibit 26: Total Cost Per Employee by Service Provider Type ......................................................................... 20
Exhibit 27: EBITDA Margin Over Five Years...................................................................................................... 21
Exhibit 28: EBITDA Margin by Service Provider Type........................................................................................ 22
Exhibit 29: EBIT Margin Over Five Years .......................................................................................................... 22
Exhibit 30: EBIT Margin by Service Provider Type ............................................................................................ 23
Exhibit 31: NPM Over Five Years ..................................................................................................................... 23
Exhibit 32: NPM by Service Provider Type ....................................................................................................... 24
Exhibit 33: Net Profit Per Employee Over Five Years........................................................................................ 24
Exhibit 34: Net Profit Per Employee by Service Provider Type.......................................................................... 25
Exhibit 35: Debtor Days Over Five Years .......................................................................................................... 26
Exhibit 36: Debtor Days by Service Provider Type ............................................................................................ 27
Exhibit 37: Debtor Days Change (YoY) by Service Provider Type ...................................................................... 27
Exhibit 38: Creditor Days Over Five Years ........................................................................................................ 28
Exhibit 39: Creditor Days by Service Provider Type .......................................................................................... 28
Exhibit 40: Debtor Days Versus Creditor Days ................................................................................................. 29
Exhibit 41: Net Operating Cycle Over Five Years .............................................................................................. 29
Exhibit 42: Net Operating Cycle by Service Provider Type ................................................................................ 30
Exhibit 43: Quick Ratio Over Five Years ........................................................................................................... 31