Global Services 100 Report - Phase I

8/9/2019 Global Services 100 Report - Phase I

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globalservicesmedia.com

The gateway to the global sourcing of IT and BPO services

Shaping the Battleground for gS100 Service providerS

outlook 2010: Slow Start great proSpectS

the growthStory

contract SizeS: the lifeline of the BuSineSSSpread of gloBal delivery centerS

analySiS of riSk ManageMentacroSS SegMentS

hr and eMployeeS SegMent analySiS

JUNE 2010

induStry analySiS & outlook

analySiS of MergerS & acquiSitionS in it ServiceS & BpophaSe

i


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GS100-2010 www. globalservicesmedia.com GlobalServices 3

Special Report

The Global Services 100 study will be published in 5 phases and multiple formats to give

a detailed view of the entire global outsourcing landscape. Below is a table which repre-

sents the various phases, coverage area, formats and publishes dates.

PHASE COVERAGE PUBLISH DATES

Phase I

Industry Analysis & OutlookShaping the Battleground for GS100 Service Providers.............05Outlook 2010: Slow Start Great Prospects................................09The Growth Story........................................................................11Contract Sizes: The Lifeline of the Business..............................13Spread of Global Delivery Centers.............................................14

Analysis of Risk Management Across Segments.......................15HR and Employees Segment Analysis.......................................16Analysis of Mergers & Acquisitions in IT Services & BPO..........17

June 2010

Webinar GS100 Facts & Figures The Story Behind the Numbers 16th July

Phase II

IT Outsourcing Analysis & Trends

Application Dev. & MaintenanceEnterprise ApplicationsOutsourced Product DevelopmentInfrastructure ManagementEngineering Services

July 2010

Phase III

BPO Analysis & Trends

Finance & Accounting OutsourcingProcurement Outsourcing

Human Resource OutsourcingKnowledge Process OutsourcingContact Center and Customer ServiceIndustrySpecifcBPO

July 2010

Webinar Phase II & III August 2010

Phase IV

The GS100 LIST

The GS100 MethodologyThe GS100 ListThe GS100 Category List- Top 10 ITO Providers- Top 10 BPO Providers- Top 10 ADM Providers- Top 10 FAO Providers- Top 10 OPD Providers

- Top 10 Contact Center Management- Top 10 Infrastructure Management- Top 5 Latin America- Top 5 Central & Eastern Europe- Top 5 China- Top 5 Asia (Excluding India)

July 2010

Phase V

THE GS100 REPORT CONSOLIDATED

Over and above 60 pagesAll Phases ConsolidatedExpert Views/Opinions

August 2010

TABLE OF CONTENTS2010 GS100 STUDY
http://tp//www.globalservicesmedia.com/GS100/Home/Webinar-on-%27-GS100-Facts-and-Figures-The-Story-Behind-the-Numbers%27/26/27/9784/GS10070188515%20tp://www.globalservicesmedia.com/GS100/Home/Webinar-on-%27-GS100-Facts-and-Figures-The-Story-Behind-the-Numbers%27/26/27/9784/GS10070188515http://tp//www.globalservicesmedia.com/GS100/Home/Webinar-on-%27-GS100-Facts-and-Figures-The-Story-Behind-the-Numbers%27/26/27/9784/GS10070188515%20tp://www.globalservicesmedia.com/GS100/Home/Webinar-on-%27-GS100-Facts-and-Figures-The-Story-Behind-the-Numbers%27/26/27/9784/GS10070188515


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4 GlobalServices www. globalservicesmedia.com GS100-2010

Phase I: Industry Analysis & Outlook

Shaping the Battleground for GS100 Service Providers ...... 05Outlook 2010: Slow Start Great Prospects .......................... 09

The Growth Story ........................................................................ 11

Contract Sizes: The Lifeline of the Business ......................... 13

Spread of Global Delivery Centers ........................................... 14

Analysis of Risk Management Across Segment .................... 15

HR and Employees Segment Analysis..................................... 16

Analysis of Mergers & Acquisitions in IT Services & BPO ... 17


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Special Report

The recession changed several rules in global sourcing. The GS100 is a study

in how service providers withstood the shocks and adapted.

S B

GS100S ps

by Ed Nair


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hal o 2009. I act, th idustry put up a imprs-siv prormac i th last quartr (Q409) withmarkts total cotract valu (TCV) rachig $24.7

billio, a icras o 47 prct squtially ad8 prct yar-ovr-yar ad th bst quartrly

prormac sic th scod quartr o 2008, ac-

cordig to gurs rom TPI. Howvr, TPIs rportstatd: Full-yar 2009 rsults could ot ovrcom

th markts wak showig durig rst two quar-trs. TCV or th yar dclid 13

prct to $74.5 billio, its lowstpoit sic 2001.

Fruits of a CrisisA moumtal crisis lik a historic r-

cssio has a moumtal impact oth dyamics o th idustry. So did

th rcssio chag svral rulsi global sourcig which ld to wbhaviors both o th clits ad o

th srvic providrs d. I 2010,w s th prmac o ths b-

haviors, which i ct is about st-tig th w agda or ralizig thw ormal, whatvr you call it.

From a cicy poit o viw,buyrs hav b lookig at cosoli-

datig th umbr o vdors thyhav to dal with. At th sam tim,

buyrs hav also startd splittigthir scop ad gagig with broadr st o spcial-ist vdors. This trd kow as multisourcig has

giv accss ad opportuity to may mid-tir v-dors but it has also ld to rductio i valu ad du-ratio o outsourcig cotracts. This has ld to mor

WHen th coomy buckld dow itoa rcssio i 2008, th global out-sourcig idustry still smd vry

robust. Slowly, but surly, th im-pact o th rcssio was lt by th idustry dur-

ig 2009. Compais clammd up o ambitious

tchology projcts that rquird hug outlaysi ivstmt ad CIOs wr orcd to oprat

o costraid IT budgts which largly ocusdo squzig mor bag rom th

bucks that wr spt i th arliryars. Spdig was guidd by dis-crtio ito aras that wr cs-

sary to kp th lights o ad sav-ig costs bcam th drivig actor

i dcisios.Outsourcigs pottial to sav

costs actually hlpd. Srvic provid-rs (vdors) wr orcd to oprati a w viromt i which thy

got paid or busiss outcoms rath-r tha ort. O th BPO sid, a w

o th procsss rlatd to idustrisdirctly actd by th rcssio oridustris dirctly rsposibl or

rcssio (lik mortgag procss-ig, titl maagmt, tc.) almost

vaishd. I othr aras, whrBPO partrships wr alrady u-

dr way, th srvic providrs wrtaskd with dlivrig busiss outcoms at lowrcost. Thr wr vry bright spots i at all i both IT

srvics ad BPO.Th markt rachd a bottom i th rst hal

o 2009 ad th startd rcovrig i th scod

Country % Number o Companies

US and Canada 37

India 33

China 6

Europe 9

Latin America 9

Asia 5

Category Aggregate Revenue 2009 (in $M)

$1M to $10M 55

$10M to $100 M 1,393

$100M to $1B 12,917

$1B + 58,999

Total 73,364

Global Coverage

Industry Size Coverage

Revenue Range % Number o Companies

$1M to $10M 12$10M to $100 M 30

$100M to $1B 45

$1B + 13

Signifcant Sample

The industry put

up an impressive

perormance in the

last quarter (Q409)

with markets total

contract value (TCV)

reaching $24.7

billion, an increase

o 47 percent

sequentially

The Global Services 100 SurveyParticipants Spread


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Special Report


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comptitio amogst vdors.Th rcssio also brought ito ocus may is-

sus rlatd to cotracts, SLAs, prormac ma-agmt, ad pricig. Pric rgotiatios wr

all too commo. Mor importatly, most vdorshad to dlivr udr outcom-basd pricig. Alogwith pricig, practics about risk maagmt ad

govrac wr topics o itrst.Ths aras movd rom big co-cpts to practics. Othr actors ot

rlatd to rcssio lik th pot-tial o cloud computig ad its im-

pact o dlivry o srvics, itgra-tio or covrgc o IT ad BPO,M&As btw srvic providrs,

maturig o srvic providrs romCtral ad eastr europ, Lati

Amrica ad Chia, thratd tochag th ladscap o th srvic-

s idustry.Durig this tir pisod, th sr-

vic providr commuity was both

rsilit ad adaptiv. Th stormsthy bravd wr ar mor svr

tha th os acd by th buyrs.Ths ar th Global Srvics 100compais, th list o 100 compais

that will rlasd i th last phas othis study.

GS100: Recognizing and CelebratingService Provider ExcellenceTh Global Srvics 100 is a ort to rcogiz adclbrat srvic providr xcllc. It lists sr-

vic providrs who possss th maturity to dlivrhigh stadard srvics i IT ad BPO usig th glob-al dlivry modl. Th GS100 srvic providrs pos-

sss may othr attributs that ladto markt ladrship ad th studyis itdd to tak a closr look at

ths.This yar w had ovr 150 com-

pais that participatd i th studyad volutarily shard lot o qua-titativ ad qualitativ iormatio

about thir compais. Th absco a w Tir1 compais lik Ac-

ctur, IBM, H-P, ad Cogizatamogst othrs is xplaid ithr

by thir uwilligss to shar datadu to policy or by thir uwillig-ss to put i th ort rquird to

participat. From a statistical sigi-cac poit o viw, th study rp-

rsts rlvat sampls across allcatgoris (rvu bads) o com-pais. Thror, th obsrvatios

rmai statistically sigicat adcoclusiv. GS

The storms they

braved were ar more

severe than the ones

aced by the buyers.

These are the

Global Services 100

companies, the list

o 100 companies

that will released

in the last phase o

this study


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Special Report


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Outlook 2010:Slow Start,Great ProspectsSluggish demand for new scope projects, continued emphasis on cost reduction , large contract

restructurings, and a wobbly macroeconomic situation in Europe are impeding full recovery of

the outsourcing market. But cloud-based services, a promising mid-market, and healthcare

by Ed Nair

THe rst quartr o 2010 idicatd a 25 pr-ct growth i total cotract valu compard

to th sam quartr last yar. Accordig to1Q10 Global TPI Idx, which masurs commrcial

outsourcig cotracts valud at $25 m ad mor,th total valu o such cotracts stood at $19.5 B.Th story bhid th quartr prormac is itr-

stig: 42 prct o th cotracts wr rwals ocotracts that got xpird or cam up

or rgotiatio. This is a uusuallyhigh umbr accordig to TPI xprts.Said Mark Mayo, Partr & Prsidt,

TPI, Th prvious rcord or this was29% ad it happd way back i 2006.

W didt xpct this umbr to b sohigh or 1Q2010. O raso or this

is that may o ths wr cotractsthat wr supposd to b sigd ith prvious quartr, but wr pushd

out ito this o. Cosqutly, wscop cotracts ll by 15 prct.

First Quarter and BeyondDlvig dpr ito th quartrs pr-

ormac, it bars out that ITO domi-atd th story: applicatio dvlop-mt ad maitac (ADM) ad

ADM combid with irastructursrvics cotributd th major shar to

th total cotract valu. I act, throut o th our mgadals (dals ovr

100M) wr ITO. For th Amricas, th quartr wasa coup with 47 prct o th dals, which madit th bst quartr sic 2006. That said, it was th

mauacturig, travl, trasportatio ad hospital-ity vrticals that litd up th prormac, ulik

usual suspcts lik acial srvics ad tlcom.Th rst o 2010 has got quit a w cotracts

that would com up or rwal but Mark dos

ot xpct th proportio to b as high as i thisquartr. Mark stimats that cotracts with au-

al valu o about $12 B ar du to xpir i 2010.Ths cotracts would gt rstructurd i 2010.

Wh cotracts com up or rstructurig, com-pais look at brakig up th scop to iclud a

w w vdors. May o th Idia vdors arrapig bts hr bcaus wh ths cotractswr sigd, typically v to sv yars back, th

global outsourcig vdors lik IBM ad Accturmasurd up bttr i trms o

capabilitis. Ovr tim, th I-dia vdors hav maturd bothi capabilitis ad i scal ad

ar comptitiv i pricig. Thisxplais th aomaly btw

th rct quartr prormaco larg global vdors ad th

Idia-basd vdors. IBM ad Ac-ctur rportd sluggish rsultswhras TCS, Iosys, ad Cogi-

zat amogst othrs had ar bt-tr prormac ad outlook.

Compais hav ot xactly

startd opig thir purss widad cost rductio cotius to

b th domiat agda i 2010.This works wll i gratig d-mad or chapr Idia-basd ap-

plicatio outsourcig compais.O th BPO rot, compais hav

chagd tracks ad istad o go-ig or larg multi-towr dals,

thy ar lookig or wll-dd projcts that arsmallr i scop ad shortr i duratio. Says Mark,Compais ar takig a stp back ad rthikig

th way BPO work is hadld. Istad o goig too major playr thy ar lookig or a small group

o prrrd supplirs. This is vry much ulikwh compais sigd up larg multi-towr BPOdals. Ovrall, BPO rmaid slow as clits post-

pod trasormatioal dals.europ, ld by UK, has b a importat mar-

On the BPO ront,

companies have

changed tracks and

instead o going orlarge multi-tower

deals, they are

looking or well-

defned projects

that are smaller in

scope and shorter in

duration


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Special Report

kt or outsourcig srvics. Whil th actio isshitig away rom UK to cotital europ, r-ct rports suggst that i th short trm europ

would damp th ovrall outlook or th idustry.Compais lik Cogizat ad Tch Mahidra hav

alrady rportd wakss i europ i th currt

quartr. Rct icidts lik th bailout o Grc,risks associatd with othr europa coomis,

ad othr macrocoomic actors pos a additio-al risk to compais (lik Acctur, Iosys, CSC,

tc.) who hav a substatial ootprit i europ.Ovrall, th rcovry o th outsourcig markt

is slow. Mark says,It is goig to cotiu to com-

back slowly, i ts ad starts, a bit o ITO hr, a bito BPO thr. Ditly, it is ot a yar o bouc-

ig back.

OpportunitiesI a survy coductd joitly by Global Srvics,Horss or Sourcs, ad SSOn, i Jauary 2010 r-

gardig th outlook o th idustry, th ky poitsthat mrgd wr:4Ky aras o icrasd outsourcig scop ar

xpctd to b i aras with havy low-cost la-bor arbitrag support (arshor ad oshor)

sotwar applicatios, call ctr, girigmaagmt, ac & accoutig, aalytics

ad huma rsourcs4 Th middl-markt ($750m-$3000m)is poisd to

b th most activ4Mai drivrs ar cost rductio, dsir to global-

iz busiss opratios ad to trasorm / r--

gir busiss procsss4 Ihibitors ar othr prioritis brought o by th

coomic crisis ad itral politics / rsistac

to chag4Customr-willigss to valuat cloud-basd

busiss utility origs is strog as thy i-crasigly look at hybrid IT/BPO solutios

4 Strog sigs o icrasd adoptio o idustry-spcic BPO solutios, most otably i th Fi-acial Srvics ad Li Scics sctors

Goig orward, o would xpct to s largdals big brok dow ito dals o smallr

scops. This would dirctly act th larg vdorslik IBM ad Acctur but thir losss would b

gaid ovr by som o th largr Idia vdors.Th impact o cloud computig ad cloud-basdsrvics is a sstial covrsatio ths days

i vry IT dal ad i som BPO dals. It wouldtraslat ito ral markt opportuitis durig th

rst o th yar.This yar should b rmmbrd mor or

Obamas historic halthcar bill ad lss or BPs oil

spill. Th ormr holds grat opportuity both orIT as wll as BPO or may yars to com ad 2010

would b th yar wh vdors would start attack-ig th tip o th halthcar icbrg. GS


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THe 2010 GS100 survy participats rpr-

sts about $73 B i rvus. This is a sig-icat masur though it is th aggrgat o

compais o dirt sizs ad thror divrscustomr typs. Accordig to a rct rport byTPI, th Forbs Global2000 compais collctivly

spt $71B i aualizd cotract valu o out-sourcig i 2009.

Sic th compais i th GS100 survy rpr-sts a divrs st o compais, it would b usulto look at growth pattrs across dirt catgo-

ris o compay sizs. Th avrag idustry rvugrowth rat is 15.7 % ovr 2008.

It was dciddly a bad yar or upstarts i th out-sourcig idustry rprstd by compais withaual rvus o lss tha $ 10M. May o ths

compais hav vry arrow spcializatios or thyor udirtiatd srvics lik sta augmta-

tio o projcts, subcotractd programmig ad

othrs. Clarly, this was ithr th yar or suchcompais to gt work rom compais with ma-

tur outsourcig practics or it was th yar to gtwork rom compais who wr vturig out tooutsourc th rst tim.

Thr ar may bright spots o xcllcamogst compais i th rvu rag o $10M

Revenue Growth

Category 2008 (in $M) 2009 (in $M) Growth %

$1M to $10M 48 55 14

$10M to $100M 1,237 1,393 12.6

$100M to $1B 12,298 12,917 5

$1B+ 49,810 58,999 18.4*

Total 63,393 73,364 15.7*due to merger between Stream and eTelecare. Leaving this outlier, the growth rate is 3.5%

The Growth StoryRevenue growth rates across the industry fell to modest levels

by Ed Nair


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Special Report

to $100M. Such compais hav th critical massad th ability to aggrgat rsourcs ito o ormor aras o spcializatio- ot i aras lik ap-

plicatio dvlopmt, product dvlopmt, lowootprit irastructur srvics lik dsktop ma-

agmt, ad othrs. Ths compais ot look

or opportuitis to scal up. I 2009, this group ocompais that traditioally joyd high growth

lvls had to sttl i or taprd dow growth o12.6 %.

Compais i th rvu rag o $100Mto $1B, a wid swath o rvu, mak th mostpromisig group. Ths srvic providrs ar larg

ough to hadl almost two-thirds o th marktopportuitis (i trms o scop, cotract sizs,

tc.) ad thy ar small ough to coctrat thirorts, sk ladrship, ad iovat. Whil ths

compais hav th ambitio to scal up to $1Bad ar costatly skig growth w opportui-tis, thy also go through th xcruciatig pais o

growig up. Uortuatly, ths ar also th com-pais who gt stuck i th mid-tir coudrum.

Th yar was th toughst or this group: a growthrat o 5 % du xtrm pric prssur, uwillig-ss rom compais to had out projcts with w

scop, clits ratioalizig thir vdor portolio,ad a dprssd dmad rom vrticals lik a-

cial srvics, tlcom, rtail, ad CPG amogst oth-rs that wr th maistay vrticals or compais

i this catgory. Amogst th largr compais ( abov $1B) th

growth rat o 18.4% that w s is a aomaly that

stms rom o outlir- th mrgr btw StramGlobal Srvics ad Tlcar. Rad th growth rathr as a vry modst 3.5 %. Such a growth rat coms

o th back o a w o th vdors postig abov

idustry avrag growth rats (XChagig, Wipro,HCL Tchologis), a w o thm postig sigl digitgrowth gurs (Gpact, TCS, Iosys, nCO, CSC,

CGI) ad a w o thm postig dclis i rvus.Th gographical rvu splits or compais

across all catgoris ar arly uiorm. It showsthat north Amrica cotius to b th most im-

portat markt ollowd by europ. Asia ad Lati Amrica ar mrgig markts partly du to localcompais srvig th domstic markt ( ad may

o thm ar rprstd hr) ad th rst du tolarg compais by orig compais. For xam-

pl, a Chis providr lik nusot hadlig thdomstic Chis markt or a IBM Global Srvicshadlig stratgic outsourcig or a Idia bak

would hav highr rvus i Asia.Dspit big th largst markt, th shar o

north Amrica i 2009 has com dow rom what itwas i 2008. This is du to th combid ct o th

rlativ but tmporary sotss o th US markt adth gographic d-riskig stratgis mployd by sr-vic providrs. espcially, may o th Idia vdors

rampd up ocus o th europa markt (which i2009 smd mor stabl) bcaus o th sotig odmad rom US acial srvics sgmt ad th

mid-yar rup-dollar fuctuatios. GS

Top 5 Fastest Growing Companies$100m- $1B

No. Company Country

1 Hildebrando Mexico

2 Aegis Limited India

3 CPM Braxis Brazill

4 VanceIno Technologies China

5 ITC Inotech India

Top 5 Fastest Growing Companies$10M to $100M

No. Company Country

1 Bleum Inc. China

2 Corbus USA

3 Transactel S.A Guatemala

4 eClerx Services Limited India

5 Globant Argentina

Notes:

1. Company revenues and revenue growth rates are not published as per GS100 survey guidelines. Revenue growth rates refect both organic and inor-

ganic growth but excludes internal reorganization o business units that may lead to an upsizing o the company.

2. Fastest growing companies are listed or company sizes $10M-$100M and $100M-$1B only because revenue growth in these two categories are better

evidence o companies quest or growth.

$1M-$10M $10M-$100M $100M-$1B $1B+

North America 60 62 52 57

Latin/ South

America4 5 7 5

EMEA 18 25 29 27

Asia 14 7 9 10Japan 1 0 1 0

Australia 3 1 2 1


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COnTRACTS ar th lili o th outsourcig

busiss: th umbr o cotracts sigiy thgral pac o th busiss ad th siz o

th cotracts (i trms o total cotract valu ad a-

ual cotract valu) dot th ovrall momtumo th idustry.

It is vry clar that cotract sizs o lss tha $50M (total cotract valu) ar th maistay o th i-

dustry. This is mor so or compais i th mid-tir.Th dyamics o th bad o cotract sizs lss tha$50M is ar mor itrstig. Uortuatly, this r-

sarch dos ot or much visibility ito that bad.

Hc, w look at som publishd rsarch rom TPIIc. , a sourcig rsarch ad advisory compay thattracks cotracts o a quartrly basis.

From this, w ca ir that cotract sizs lss tha$25M ar importat or ot oly mid-tir compais

but also or Tir 1 compais. Thr wr arly 600cotracts with total cotract valu o mor tha $25M

i 2009. ITO cotracts clarly lad th way with atlast thr out o our cotracts big a ITO cotract,though this is ot th cas i Fig.1 i th $1B plus cat-

AREA ITO BPO

COMPANY SIZE 1M-10M 10M-100M 100M-1B 1B+ 1M-10M 10M-100M 100M-1B 1B+

CONTRACT SIZES

Less than $50M 197 1203 6260 396 76 337 2404 534

$51M-$99M 5 26 52 16 2 1 44 52

$100 M- $ 299 M 0 16 8 0 0 4 10

201

157

231

145

105

173148

126161

140 128147

12797

142

All Industrywide Contracts ITOBPO

n 2005 n 2006 n 2007 n 2008 n 2009

Average TCV ($M) o Industrywide Contracts >$25M

FIG.1

FIG.2

53%

23%24%

66%

23%16%

68%

18%15%

67%

16%18%

69%

15%16%

Less than $ 100 M $100M-$199M Greater than$200M

n 2005 n 2006 n 2007 n 2008 n 2009

Relative Percent o Total Contracts Awarded by TCV Band

FIG.3

Contract Sizes:The Lifeline of the BusinessContracts below $25 M continue to the most important, even as ITO and BPO contract sizes are

gory bcaus th study sampl

icluds mor BPO compaisi th $1B plus catgory.

Th abov slid rom TPIsprstatio clarly shows that

rom 2006 owards cotractsizs hav b shrikig. Forxampl, i 2009, arly 70%

o th cotracts wr lss tha$100M i TCV compard to

53% i 2005. Th gur alsoshows that 2009 was a toughyar with both ITO ad BPO at

lowst avrag TCV lvl i thpast v yars. GS

In 2009, almost 70% o allBroader Market contracts werevalued at under $100M in TCV.

Both ITO and BPO at lowest averageTCV level in the past fve years.

Quarter # oContracts

> $25 M TCV

Area

ITO BPO

1Q2009 141 101 40

2Q2009 148 118 30

3Q2009 140 108 32

4Q2009 168 110 58

Total 597 437 160

by Ed Nair

Source: TPI Inc.

Source: TPI Inc.

Source: TPI Inc.

Source: TPI Inc.


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Special Report

Spread ofGlobalDeliveryCenters

InDIA, Philippis ad th US ar th thr larg-

st locatios i trms o umbr o popl d-ployd. Idia has a gigatic majority ad havily

polarizs th distributio to th xtt that th um-br o popl dployd i Idia is ar highr thath total o umbr o popl i rst o th 32 cou-

tris. O a idustry-wid basis, this would agaihold tru bcaus compais lik IBM, Acctur,

HP, Cogizat, Capgmii, who ar ot part o thissampl also hav Idia as thir largst locatios. GS

Fig. 1 Top 20 Locations

Note: Figures are based on data rom over 150 companies

Fig. 2 Next 10 Top Locations

Country Total1 India 514157

2 Philippines 97740

3 United States 42808

4 China 34672

5 Canada 32690

6 England /United Kingdom 23494

7 Brazil 10213

8 Germany 9269

9 Australia 8544

10 Mexico 8412

11 Ukraine 5816

12 Russia 5113

13 Belarus 4534

14 Chile 3572

15 Sri Lanka 3317

16 Argentina 3241

17 Malaysia 2868

18 South Arica 2855

19 Singapore 2833

20 Poland 1963

21 Costa Rica

22 Japan

23 Hungary

24 Romania

25 Bulgaria

26 Czech Republic

27 Vietnam

28 Uruguay

29 Ireland

30 Egypt

by Ed Nair


16/20


Note: Figures are based on data rom over 150 companies

GS 100:Analysis of RiskManagement Across SegmentsCross-border project development and management system, automated production control,

resuable assets, and the focus on people is the new mantra for managing risks

by Ashwin Razdan

THe last dcad witssd a substatial growth ioutsourcig. existig srvics providrs volvd

ito bcomig markt ladrs ad may wos took birth to addrss th d o ich markts.

Th daw o rcssio complld th idustry to adoptw practics ad mbrac automatio to improv

productivity at various stags i a projct licycl. Thpatic lvl o th customr droppd. It was impor-tat to dlivr. Hc, srvic providrs (at all lvls)

bga aalyzig risks mor sriously ad built imprs-siv mitigatio stratgis.

Most Bad 1 (with aual rvu btw 1M-10M) compais cotiu to dpd o third-partycrticatio (lik ISO) to maag scurity risks. 46%

o rspodats i this catgory claimd to hav uiqumploy assssmt systm, propritary carr dvl-

opmt systm, ad r crticatio ad ducatioor thir mploys to maag icrasig attritio rat.

A commo pratic oticd across th bad is th usago rward program or mploys. 15% routd projctsto dlivry ctrs at chapr locatios wh labor

costs wt up. O o th avorit dstiatio bigChias tir 2 citis.

Th trd oticd i Bad 2 (compais with a-

ual rvu btw 10M-100M) was sigicatlydirt. Compais dpd highly o tchology to

maag risks associatd with labor ad o-labor op-ratios costs. Ovr 70% hav a systm or productiocotrol whr cost o srvics, projcts ad back oc

is rgistrd. This iormatio is priodically aalyzdad cotrastd with th stimatd budgts or ach op-

ratio, ad actios ar stablishd to cotrol th costlvl, avoidig dviatios rom th stablishd thrsh-

olds. 18% maitai a ddicatd audit tam that sursvry projct tam complis with all policis st by thcompay ad thir clits. employs workig or this

bad ar ot subjct to dsktop ispctios at aytim, ad th audit group prorms radom ispc-

tios priodically. All mploys ar rquird to siga itral nDA ad also clit-spcic nDAs.

Most srvic providrs maag risks by adhrig to

global stadards such as ISO, COPC, CMM ad PCMM.Adoptig ths modls surs that thr ar mcha-

isms dd to captur ay ailurs or o-pror-macs proactivly. Ths moitord mchaisms

iclud tools such as itral ad xtral audits, dash-boards, quality scor cards, maagmt rviws tc.

which surs ailur avoidac i th stadard proc-durs. A w us oli HR systms to statistically pr-

dict ad aalyz th labor cost. Ths costs ar moi-tord ad aalyzd i ral tim at corporat lvl.

Bad 3 (with aual rvu btw 100M-1 B) ad

Bad 4 (with aual rvu o ovr 1B) compais laysigicat ocus o th global dlivry modl. exclltcoordiatio is maitaid btw osit, osit ad

oshor dlivry locatios to produc a low risk, cost -ctiv, prdictabl projct outcom. Ovr 80% o bad

4 compais hav mad sigicat ivstmts i mul-tipl aras to mitigat th risks associatd with labor ado-labor opratios costs. Rus has b idtid as

a itgral part o th orgaizatio stratgy to improvproductivity. Dvlopmt o tools, assts, prototyps

ad rrcs to th sigl sourc o lgacy iorma-tio surs that th projct tams cotiually dlivr

high quality ad cosistt srvics ladig to a lowrcost o sotwar dlivry. Furthr, 40% o rspodatscotiu to hir rsh talt i grat umbrs rom local

uivrsitis to kp labor costs low.Oly a hadul us propritory tools that accuratly

idtiy ad mitigat risk as wll as dtrmiappropriat cotigcy dollar stimats. 5% also usky prormac idicators that provids comprhsiv

ral-tim data ad statistical aalysis o idividualprormac. GS

No. of companies having a system to mitigate various risks.

Risk Factor No. o companies(having a system)*

1 Labour operations Costs/Non-LabourOperations Costs

69

2 Security Risk 82

3 Employee Attrition/ Scalabil ity risks 88

4 Bringing processes onshore due togovernment regulations

54

5 Uneven Perormance 78

6 Risk o SP ailing to deliver 59


17/20


Special Report

HR and Employees SegmentAnalysis

While increase in head count, and emphasis on rewards and recognition program remains thehighlight this year; cultural compatibility/acclimatization for expats and lodging cost, are the

prime restraining factors for moving human resource globally

THe aalysis o HR practics ad mploysdurig th GS100 study, clarly shows sigs o

a rcovrig coomy. Last yar, thr was asubstatial icras i hirig across th srvic pro-

vidr ladscap. Whil th avrag icras i hadcout has b 23% across th rspodt to th

survy; Bad 1 (with aual rvu btw 1M-10M) compais saw th highst growth at 31% adBad 3 (with aual rvu btw 100M-1B) had

th last with 16%.Ovr th last o yar, srvic providrs mad

sigicat ivstmt to dcras th attritio rat.Th top 2 aras or this big a mor comprhsivrward ad rcogitio program, ad icras i bo-

uss. This was closly ollowd by halthcar b-ts ad rotatio amog projct tams. narly 63%

i Bad 1, ocusd o commuity srvic programs whil equity or stock owrship programs ld th

way i Bad 2 (with aual rvu btw 10M-100M) ad 3.

Whil ovr 70% o compais hav a iitial trai-

ig program o ovr 3 wks ad arly 55% hava aual ogoig traiig program or 10 days adabov; arly 5% still cotiu hav th sam or lss

tha 4 days.Th ratio o mploys to HR prsol stads

at 74:1. It is sigicatly highr i th cas o Bad

Average number of days (per year) for

ongoing training

Restraining factors for moving human

resource globally

0

5

10

15

20

25

30

35

Over 15

days

10-15

days

5-9

days

3-4

days

Less then

3 days

0

10

20

30

40

1. LodgingCost

2. CulturalCompatibility/

Acclimatizationfor Expats

3. Housingavailability,

quality andsecurity for

Expats

4. Access tohealth care/

Insuranceplanning

4 (with aual rvu o ovr 1B+) with 117 m-

ploys to a sigl HR prsol, ad 49:1 or Bad1 compais.

Icrasigly, compais hav ralizd th pot-

tial o rotatig thir projct tam across dstiatios.It has ot oly dcrasd attritio rats but i may

ways hacd th skill-sts o high prormig idi-viduals. Howvr, thr ar a umbr o rstraiig

actors or such a campaig. Almost 57% compaisbliv that cultural compatibility/acclimatizatioor xpats is th ladig costrait ollowd clos-

ly by lodgig costs. Though ths actors rmaida cosistt trait amogst compais i Bad 1, 2ad 3, it was ot th cas i majority o th Bad 4

compais. 33% o compais with ovr 1 Billio iturovr thought o housig availability, quality ad

scurity or expats as th prim rstraiig actor.

by Ashwin Razdan


18/20


Analysis of Mergers & Acquisitionsin IT Services & BPOM&As went slow in 2009 but there are signs of accelerated activity in 2010. IT services ac-counts for over two-thirds of the deals in value and domestic deals are in favor over cross-

border ones.

THe pac o mrgrs & acquisitios (M&A)was sigicatly slowr i 2009. Howvr,

with th coomic rcovry gttig groud-d i rality arly this yar, orgaizatios ri-statd thir zst or iorgaic growth. I th last

two moths, dal siz has crossd ovr US $30m

as compard to th avrag dal siz o blow US$20m i th last quartr o 2009 ad rst quartro 2010.

Th ovrall data or M&A icluds sotwar ad

srvics. I th last o yar arly 340 dals wrsigd worth ovr US $18 b. Th umbr o dals

pr moth was withi th rag o 25-35. Th pri-od witssd thr billio dollar dals; largst b-

ig US $5.8 B acquisitio o Sybas by SAP i May2010. Th two othrs wr US $3.9 B acquisitioo Prot Systms by Dll, ad US $1.8 b acquisi-

tio o Omitur by Adob i Sptmbr 2009.

$3.9bn Dell-Perot and$1.8bn Adob-Omniture

$5.8bn SAPSvbase

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10

0

5

10

15

20

25

30

35

40

45

TotalDealValue(US$mn)

#ofDeals

# Deals

Deal Value

by Ashwin Razdan

Feb-10 Mar-10 Apr-10 May-10

$35

$30

$25

$20

$15

$10

$5

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10

$0

AverageDealValue(US$mn)

Period Avg

Avg ExBn$Deals

narly 61% idulgd i domstic dals ovr cross-

bordr os, idicatig that th buyrs ar still otvry op to dals outsid o thir gographis du

to rmot maagmt ad rgulatory cocrs.

54% o th dals hav b i th IT srvics

spac, ollowd by 32% i th BPO idustry. Dals iths sgmts ar yt to pick up ad gratr activity

is xpctd to b s i 2010.US cotius to b a prdomiat coutry i th

M&A activity. Dals i th aras o virtualizatio i-

cludig, SaaS ad cloud computig, ar big co-sidrd. Oshor locatios lik Idia & Chia hav

startd showig icrasd itrst i clit gogra-

phy acquisitios, but th umbr o dals ar stillsigicatly low.

Feb-10 Mar-10 Apr-10 May-10

35

30

25

20

15

10

5

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10

0

#ofDeals

Cross-Border Deals

Domestic Deals

Segment-wise Deal Analysis

BPO

IT Services

IT Consulting


19/20


Special Report

Acquirer Acquirer Country Target Target Country Sector Deal size in $M

July iMedX U.S. Medware U.S. BPO NA

Japan Integralis Germany IT Services 104.9

Saab Sweden Finland IT Services NA

Cegedim France Nomi Group Sweden IT Services NA

August CriticalControl Solutions Canada Canada BPO 2.4

Hobs Legal Docs U.K. Datalex UK BPO NA

Bunker Hill Capital U.S. Nspro Canada IT Consulting NA

MphasiS India India IT Services NA

Sweden Sweden IT Services NA

SpringSource U.S. Cloud Foundry U.S. IT Services NA

Siemens AG Germany Energy4U Germany IT Services NA

October India BPO 0.76

Altair Technologies UK NA

Sparta Consulting Inc USA IT Consulting 38

2B Interactive Netherlands IT Services NA

RIPE B2B Inc. USA IT Services NA

Focus Systems, Inc. USA IT Services NA

India KPO 73.83

November Infosys Technologies India USA BPO 38

Virtusa Corporation USA InSource, LLC USA IT Consulting 7.3

Blue Coat Systems Inc USA India IT Services 5.25

AurionPro Solutions India USA IT Services NA

January Iris Data Services USA Lexsum, Inc USA BPO NA

CA Inc. USA Oblicore Inc. USA IT Services 20

February USA USA BPO NA

Synopsys, Inc USA CoWare, Inc. USA High Tech NA

March UK Digimis Ltd UK IT Services 1

Anametrix Inc USA USA IT Services NA

General Electric Co USA MedPlexus Inc USA IT Services NA

West Corp USA USA IT Services NA

IMI Health Inc USA USA IT Services NA

April On Assignment, Inc USA USA BPO 5.5

MTBC USA USA BPO NA

DJSP Enterprises, Inc. USA Timios, Inc. USA BPO 5.1

India CHCS Services USA BPO NA

Perficient, Inc. USA USA IT Consulting 6

Customer Connect USA Streamlogic Inc USA IT Consulting N/A

Fahlgren Inc USA Grip Technology USA IT Services N/A

Twitter Inc USA Atebits LLC USA IT Services N/A

ConnXion Ventures Ltd Australia KAZ Singapore Singapore IT Services N/A

Prodapt India USA IT Services NA

NTT Communications

Corp.

TietoSaab

Systems

BPO

Management

Services (Canada

Centers)

AIG Systems

Solutions

(AIGSS)

Indust & Financial

System

MultiPlus

Solutions

Ace BPO Services Pvt.

Ltd

BPO/

Services

UBS India Service

Centre Private Limited

(UBS ISC)

McCamish

systems

S7 Software

Solutions Pvt.

Ltd

Silicon Tech

Corporation

Diversified Information

Technologies

Bowman

Enterprises Inc.

K3 Business

Technology Group PLC

Nordic Research

Corp

SKT Business

Communication

Solutions

BoundaryMedical

Inc

The Cambridge

Group, Ltd.

Medical

Accounting and

Billing, Inc.

(MABCO)

Patni Computer

Systems

Kerdock

Consulting

Pacific CrestTechnology


20/20

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