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© Evalueserve, 2005. All Rights Reserved
Emerging Opportunities in India – Presentation by Evalueserve
Dr. Alok Aggarwal
Founder & Chairman
Alok.Aggarwal@evalueserve.com
June 15, 2005
© Evalueserve, 2005. All Rights ReservedSlide 2
Presentation Plan
Evalueserve – An Overview India’s Emerging High-Tech Industry Capital Markets & Other Emerging Opportunities
© Evalueserve, 2005. All Rights ReservedSlide 3
Presentation Plan
Evalueserve – An Overview India’s Emerging High-Tech Industry Capital Markets & Other Emerging Opportunities
© Evalueserve, 2005. All Rights ReservedSlide 4
Evalueserve is…
… a Knowledge Process Outsourcing company that provides Analytics & Research services to small, medium and large companies around the world …
© Evalueserve, 2005. All Rights ReservedSlide 5
Achievements ….
Founded & Commenced Operations
First major client signed up
Acquired the IP of CommNOW in USA
Achieved profitability
12 Client-Execs, 23 support & 205 Professionals
26 Client-Execs, 94 support & 650
Professionals
22 Client-Execs, 78 support & 450 Professionals
12-’00 07-’01 03-’02 12-’02 12-’03 12-’04 06-’05 08-’05 12-’05
After achieving profitability, EVS has been doubling every year and hopes to do so until December 2006!
Goal: To have 5,500 billable professionals by December 2010.
Expected: 35 Client-Execs, 100 support &
900 Professionals
EVS-Shanghai Research Centre
Will be Operational
© Evalueserve, 2005. All Rights ReservedSlide 6
• Chairman• PhD, Johns Hopkins in EECS• BTech (Elec) IIT Delhi• Ex-Director of IBM (16 years,
US/India)
• VP Marketing and Sales• IBM Marketing & Sales Executive• Managed worldwide B2B Sales
Group• Managed worldwide Supply Chain
Sales Group
Management Team
• President & CEO• MBA, INSEAD• Masters in Telecommunications
Engineering, ETH Zurich• Ex-Partner at McKinsey
• COO & VP Operations• MBA, Carnegie Mellon• BTech (Mech.) IIT Delhi• Ex-Engagement Manager,
McKinsey & Co.
Alok Aggarwal Marc Vollenweider
Robert Daigle Ashish Gupta
© Evalueserve, 2005. All Rights ReservedSlide 7
North America• Dr. Alok Aggarwal, NY
• Robert G. Daigle, ME
• David E. Cooley, CT
• Andrew Adelson, MA
• Donald Kruszenski, CA
• Edmund Voyer, NY
• George Sawyer, CA
• Marty Perelstein, CA
• Mahesh Bhatia, CA
• Ravi Prakash, CA
• Sumathi Pundit, Canada
Evalueserve• Holding company registered at
Bermuda
Europe• Marc Vollenweider, AT & CH
• Mike Taylor, UK
• Amie Stark, UK
• Ollie Snelling, UK
• Geoff Simmons, UK
• Prajeet Patel, Nordic
• Tomas Backman, Nordic
• Hedda P Moller, BENELUX
• Jean Francois Lengelle, France
• Reinhard Lorek, Switzerland
• Urs Dommann, Switzerland
India• Ashish Gupta, Delhi-Gurgaon
• 650 professionals
• Infrastructure, HR, IT, Finance, Logistics
Asia-Pacific• Daniel Sadhu, Singapore
• William Kemmery, Australia
Truly Global
Marketing and Sales, Front-end on client
projects
Operations, Service Back-end Offices
Israel• Laurence Neumann
Brazil• José Edson Bacellar, Brazil
© Evalueserve, 2005. All Rights ReservedSlide 8
Evalueserve’s Research Services
Investment Research
Business Research
Market Research
Intellectual Property Research
Data Analytics’Research
Emerging MarketsResearch
© Evalueserve, 2005. All Rights ReservedSlide 9
Six Service Lines with Strong Synergies
Market Research
• Design, Conduct, Analysis of Surveys
• Experience of more than 15,000 surveys so far
• B2B surveys including– Spending Decision Criteria
• B2C surveys including– Consumer Preferences and Behaviour– Decision Criteria
Intellectual Property
• IP Research and Analysis
– Patentability Assessment Search
– Technology Due-Diligence
– Patent Landscape analysis
– Patent drafting and filing
Data Analytics’ Research• Financial Modeling for Fixed Income and Hybrid
Instruments • Market Risk Analysis• Credit Risk analysis• Asset Liability Management• Usage Pattern Analysis
Investment Research
• Valuation of public and privately-held companies
• Creating/ Updating/ Maintaining/ Auditing Valuation Models
Business Research
• Market Studies & Segment Analysis
• Commercialisation and Business Plans
• Company, Industry Profiles & Analysis
• Product & Value Chain Analysis
• Updating Databases & Existing Research
• Newsletters (outsourcing and off shoring, telecom, financial services)
Emerging Markets Research• Opened EVS’ Shanghai Research Center that
will be operational in August 2005 • Research on India and China• Cover 8 Languages in addition to English and
Indian languages: German, French, Spanish, Italian, Chinese, Portuguese, Japanese and Korean
© Evalueserve, 2005. All Rights ReservedSlide 10
Presentation Plan
Evalueserve – An Overview India’s Emerging High-Tech Industry Capital Markets & Other Emerging Opportunities
© Evalueserve, 2005. All Rights ReservedSlide 11
IT off-shoring Revenues for Apr. 1, 2003 – Mar 31, 2004 were $17 Billion approximately
Country Number of Export-focussed IT
Professionals
IT Export Revenues
(million $)
Canada** 30,000 2,100
China** 42,000 1,680
CIS & Eastern European countries 9,000 265
India* 212,000 7,560
Ireland** 60,000 3,840
Israel 15,000 900
Mexico, South Africa, Latin America 4,000 135
Russia 8,000 285
The Philippines 5,000 170
Total 385,000 16,935
*In addition, nearly 58,000 Indian IT professionals with H1B and L1 visas in US, UK etc. generate revenues of $3.88 Billion.
** For Canada, China, and Ireland, this number also includes those IT professionals who work in manufacturing and software producing companies that export products to other countries.
© Evalueserve, 2005. All Rights ReservedSlide 12
Current cost of all business elements with remote location potential
Savings generated by new business models
288
429
141
Price of procuring the service from a low cost location such as India
Customer interaction services
Finance & accounting
Translation, transcription, etc.
Engineering & design
HR services
Data search, integration & management
Remote education
Legal content & services
Medical content & services
Others (Pharma, R&D etc.)
Total
33
15
1
5
44
18
Non- IT Services – 2008
Source: NASSCOM-McKinsey Report, 1999
15
1
1
8
141
Prediction: Global off-shoring opportunity in business processes (non- IT) will be $141 Billion by 2008
© Evalueserve, 2005. All Rights ReservedSlide 13
• According to Evalueserve, global off-shore BPO (non-IT) revenue in FY 2003 was $8.9 Billion and this industry will grow at 30% CAGR (during 2004-2010).
• According to NASSCOM- McKinsey report, the BPO (non-IT) opportunity for 2008 is $141 Billion but Evalueserve estimates that only $54.6 Billion will be realized by 2010, and 2.12 million people in low-wage countries will be thereby employed.
• About 1.07 million of these people will be employed in India by 2010.
Offshoring Opportunity and Realized Revenues (bn USD)
Total Offshoring Opportunity Realized Revenue
$54.6 Billion
$141 Billion
However, only 39% of the total off-shoring opportunity is likely to be realized even by 2010
© Evalueserve, 2005. All Rights ReservedSlide 14
IT Industry
Insurance
Industry
Programming and Maintenance
Services
Project Implementation
Package Implementation
System Integrations
IT-led- Business Strategy
100% off-shoring possible
80:20 or (100-x) : x delivery model
Contact Centers & Customer Support
Claims Processing &
Policy Servicing
Underwriting & Asset
Management
Knowledge Process Operations: Domain Expertise required
Examples of two industries – low end to high end
© Evalueserve, 2005. All Rights ReservedSlide 15
Opportunities Description 2003 2010 CAGRCustomer Interaction Services Call centers -- Helpdesk,
telemarketing, sales support
5.4 17.8 18%
Finance & Accounting Data entry, mortgage, claims processing, payroll processing, receivables
1.5 13.0 36%
HR Services Recruitment processing, payroll processing
0.5 8.0 49%
Translation & Transcription Medical transcription, translation of foreign language documents
0.3 1.0 31%
Total ($Billion) 7.7 39.8 26%
Low-end services are likely to grow from 7.7 Billion in 2003 to $39.8 Billion by 2010
© Evalueserve, 2005. All Rights ReservedSlide 16
Knowledge Process Outsourcing likely to grow from $1.2 Billion in 2003 to $16 Billion by 2010Opportunities Description 2003 2010 CAGR
Equity, Financial, Insurance Research
Equity research, Accounting reports
0 0.4 N/A
Data Search, Integration & Management
catalog and database creation, updating & mgmt.
0.3 5.0 50%
Research and Information Services in Human Resources
Compensation, modeling and benchmarking
0 0.2 -
Market Research, Competitive Intelligence
Industry reports & data 0.02 0.4 54%
Engineering & Design CAD/CAM, plant designs 0.4 2.0 29%
Animation and simulation services
E.g. simulation of new designs for cars, engines
0.1 1.4 46%
Paralegal Content & Services Research in case law etc. 0 0.3 N/A
Medical content and services Remote diagnosis, etc. 0 0.3 N/A
Remote Education, Publishing Professional education, etc. 0 2.0 N/A
Biotech & Pharmaceuticals CROs, drug discovery etc. 0.28 3.0 40%
Research & Development Other non-IT areas 0.1 1.0 39%
Total ($Billion) 1.2 16.0 45%
© Evalueserve, 2005. All Rights ReservedSlide 17
Services Low-end Services High-end Services
Price per hour $11 $24
Total Annual Revenue per professional per annum (every 2000 hours)
$22,000 $48,000
Total Employment Opportunity
820,000 250,000
Total Revenue Generated $18 Billion $12 Billon
India provided $3.5 Billion of BPO and KPO (but non-IT) services in 2003 and is expected to grow at a CAGR of 36% during 2004-2010. Hence, it is likely to earn $30 Billion in 2010 by providing these services.
India is likely to earn about one-third in higher end services and so may other countries…
© Evalueserve, 2005. All Rights ReservedSlide 18
Presentation Plan
Evalueserve – An Overview India’s Emerging High-Tech Industry Capital Markets & Other Emerging Opportunities
© Evalueserve, 2005. All Rights ReservedSlide 19
Other Growth Areas
Pharmaceuticals Specialty Chemicals
Exports to grow from $12 billion/year to $30 billion/year by 2010
Exports to grow from $2 billion / year to $14 billion / year by 2015
– $10 billion domestic market growing at 6% per year
– $4 billion export market growing at 20% per year
– Investment opportunities driven by CR&Ms (contract research & manufacturing)
– India has the largest number of US FDA approved plants outside the US
Exports from $1 billion/year to $25 billion/year by 2015
CR & MS opportunity of $5 billion over the next 5 years
Source: Made in India, A CII-Mckinsey Report, Oct 2004
6870
100
USA China India
Civil,Instrumentation,Others
Piping andPackaging
Equipment
© Evalueserve, 2005. All Rights ReservedSlide 20
Other Growth AreasAuto Components
– Exports grew at CAGR of 26% between FY99 and FY04
– According to ACMA, this will grow at CAGR of 38% until 2015
TextilesIndian Auto Components Market ($ 5bn revenues)
Unorganised, 20%
Organised OEM, 48%
Organised Exports, 16%
Organised Replacement Market, 16%
Exports to grow from $12 billion/year to $30 billion/year by 2010
Exports from $1 billion/year to $25 billion/year by 2015
BeforeATC
Rest of Americas, 16%
Rest of the World, 24%
Hong Kong, China, 9%
Mexico, 10%
EuropeanUnion, 5%
Chinese Taipei, 4%
Philippines, 4%Indonesia, 4%
India, 4%
Bangladesh, 4%
China, 16%
After ATC
China, 50%
Indonesia, 2%
India, 15%
Hong Kong, China, 6%
Rest of Americas,
5%
Mexico, 3%Thailand, 3%
Philippines, 2%
Rest of the World, 10%
Bangladesh, 2%
Sri Lanka, 2%
© Evalueserve, 2005. All Rights ReservedSlide 21
Other Growth Areas
Telecom Banking and Insurance
Total asset size of the Indian banking sector is estimated at around $270 billion
– India is the fourth largest telecom market in Asia after China, Japan and South Korea. –The Indian telecom network is the eighth largest in the world and the second largest among emerging economies.– Growth in the telecom industry is estimated to lead to an expenditure of over $50 billion over the next six years ending 2010 –The Indian telecom market size of over US $ 8 billion is expected to increase three fold by 2012.
Growth in the telecom sector is estimated to yield an expenditure of over $50 billion by 2010
– Total asset size of the Indian banking sector is estimated at around $270 billion– Total deposits amount to $220 billion and foreign exchange reserves of more than $130 billion– Estimated market potential of premium income of $80 billion
© Evalueserve, 2005. All Rights ReservedSlide 22
Expected Growth of Price and Earnings
7%
Real GDP
Growth Rate
20%
Growth rate for BSE’s SENSEX – next four
years
3%
Non-agriculture GDP growth i.e.
for manufacturing &
services
5%
Expected Inflation
BSE Sensex earnings are expected to grow at 20% per year for the next four years
5%
Increase in P/E Ratio
from 13 to 16
© Evalueserve, 2005. All Rights ReservedSlide 23
SENSEX: Under-invested & Attractive
– Under-invested • 15% of market controlled by foreign investors compared to 20% in Malaysia; 20% in China and
40% in Korea and Taiwan
– Under-represented• India has 5% weightage in the MSCI EM Index while Korea is at 20%, South Africa at 14% and
Taiwan at 12%
– Trading at Low P/Es• Bombay’s SENSEX has been trading at P/E ratio of 13 as compared to an average of 16 during
last 15 years• China’s stock market trading at P/E of 20• By 2009, SENSEX is likely to be trading at P/E ratio of 16
– Expected Growth of Sensex• SENSEX was at 6,400 in March 2005• Expected to go to 13,300 by March 2009, I.e., a growth of 20% per year
© Evalueserve, 2005. All Rights Reserved
Emerging Opportunities in India – Presentation by Evalueserve
Dr. Alok Aggarwal
Founder & Chairman
Alok.Aggarwal@evalueserve.com
June 15, 2005
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