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© Evalueserve, 2005. All Rights Reserved

Emerging Opportunities in India – Presentation by Evalueserve

Dr. Alok Aggarwal

Founder & Chairman

[email protected]

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


Presentation Plan



Evalueserve is…

… a Knowledge Process Outsourcing company that provides Analytics & Research services to small, medium and large companies around the world …


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


• 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


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’s Research Services

Investment Research

Business Research

Market Research

Intellectual Property Research

Data Analytics’Research

Emerging MarketsResearch


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


Presentation Plan



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.


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


• 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


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


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


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%


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…


Presentation Plan



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


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%


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


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


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

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