1. www.sganalytics.com An ISO 27001:2005 Company Recruitment challenges in the KPO Industry

2. An ISO 27001:2005 Company TM Agenda  How is a KPO different from a BPO?  Market demand for KPO services delivered from India  Demand and supply challenges for the KPO industry in India ► Recruitment and training are the biggest supply side challenges  Recruitment challenges ► Case study of a KPO analyst working on a project ► The Indian mindset ► KPO resource requirements, are these being met? ► Lack of strong middle management layer ► Are the universities geared towards producing KPO talent?  Addressing talent management : What can businesses do?

3. An ISO 27001:2005 Company TM KPO deals with high value knowledge intensive business activities which require deep domain expertise KPOBPO Outsourcing of knowledge intensive business process and activities Outsourcing of standard business process Value, time to market, scale, flexibility are the primary drivers, then cost Cost is the primary driver Knowledge creation process is not well defined Processes are mostly standardized Industry is evolving and clients are still learning Industry is mature and outsourcing components easily carved out Clients perceive risk of data security and IP leakage Most of the risk have been addressed by infrastructure, processes and contract SLA’s Domain expertise (depth) more important than size Bigger the better: economies of scale is a competitive advantage Finding skilled talent is the biggest challenge Managing attrition is the biggest challenge

4. An ISO 27001:2005 Company TM KPO market size in India can be estimated at 7 bUSD* by 2014 and could employ 180,000 people  Global KPO industry is estimated to grow from 1.2 bUSD in 2003 to 10 bUSD in 2014, representing a CAGR of 21%  India has an opportunity to capture 50%- 70% of the market share, i.e. 5 bUSD-7 bUSD in 2014  Major KPO domains are financial services, legal, healthcare, industrial design, animation and gaming, biotech, clinical trials and drug research  Revenue per employee for KPO services are between 40 kUSD-55 kUSD per year  Demand for KPO resources is estimated to reach 180K in 2014**  90% of KPO’s are expected to be 3 rd party KPO’s Source: Industry whitepapers, Rocsearch, KPO Experts *Market size is an estimate only **The see next slide for supply side constraints CAGR: 21%

5. An ISO 27001:2005 Company TM Recruitment and training are the biggest supply side challenges for the KPO industry  Demand side challenges ► KPO industry is still nascent and potential clients have to be convinced about its benefits ► The recent financial crisis could affect the KPO decisions in the short-mid term ► BUT, in the long term, KPO will become an integral part of doing business as companies restructure themselves  Supply side challenges ► Due to supply side constraints, the KPO industry can hire only 100K resources as compared to projected demand of 180K ► Less than half of the business school graduates would be employable due to lack of skills for KPO jobs ► KPO will have to invest in continuous training for resources to maintain quality

6. An ISO 27001:2005 Company TM Doesn’t understand the market Relies heavily on the quarter filings Forecasts without deep analysis Valuation conclusion has no subjective insight Rehashes previously written reports An average analyst follows the research process but could end up with a weak business case for the investment recommendation www.sganalytics.com | 6 Average Analyst

7. An ISO 27001:2005 Company TM Checks for changes in market condition Uses all primary and secondary sources Forecasts have a solid underlying story Valuation conclusion incorporate subjective insight Documents the business case in the report A good analyst understands the business model and the market to build a strong business case for the investment recommendation www.sganalytics.com | 7 Strong Analyst

8. An ISO 27001:2005 Company TM The Indian mindset: Can we be independent critical and creative thinkers?  This is a controversial point, but does our culture and education system support independent thinking and insight generation capability which is so crucial for the KPO industry?  Key observations from the IT Services industry are: ► Initially, for the Y2K problem and custom software development, we have mostly taken instructions and executed them efficiently ► Overtime, we have built capability facilitating deeper domain expertise and service offerings ► Recently, technology business consulting is emerging as a niche offering, BUT built through strategic cross-border acquisitions  The KPO industry is today where the IT industry was 10 years back…  Does the KPO industry have the luxury to wait for 10 years to build innovative thinking? www.sganalytics.com | 8

9. An ISO 27001:2005 Company TM KPO manpower skills are unique and recruiters need to deeply understand it  The genesis of KPO industry might have been the BPO industry, but by structure these are very different as indicated in the first slide  The key skill requirements for a KPO are: ► The ability to take a business problem and convert it to a set of logical tasks and activities ► The ability to plan time prudently and accurately based on the tasks and prioritize them ► Strong understanding of foundational subjects ► The ability to communicate effectively with the client ► Strong business writing skills in English as well as ability to write for different formats  Does the manpower training and recruitment industry deeply understand these needs? www.sganalytics.com | 9

10. An ISO 27001:2005 Company TM Lack of strong middle management layer is the biggest challenge for KPO’s www.sganalytics.com | 10 Easy to hire fresh talent, but requires long training period Hard to find strong PM level talent in this nascent industry Easier to find senior talent especially with “India Inc” offering career growth

11. An ISO 27001:2005 Company TM Universities need to develop business skills in the students to make them ready for KPO jobs  Universities are doing a good job at the following things: ► Building broad foundational skills in the students for business subjects ► Building toolkit capabilities such as valuation models, Porter’s five forces etc.  BUT, university education is lacking the following things (as applicable to financial services): ► Training students on task/project management skills ► Training on how to understand and evaluate the business model of a company ► Understanding the global economic context that we live in today ► Training for structured business writing and communication ► Training on “how to simplify” complex issues and build practical solutions ► Closer interaction with the business community (this issue goes both ways, i.e. Industry also needs to extend a helping hand to universities) www.sganalytics.com | 11

12. An ISO 27001:2005 Company TM Business can be proactive in talent management by building partnerships externally as well as internally with the employees (1/2)  Hiring good quality raw talent: ► Support local niche finance/economic institutes through funded training programs and projects ► Leverage the results of CAT and JEE as potential screening exams for strong candidates ► Internships to quality local and international students  Hiring experienced talent ► Attracting US/Europe based NRI talent by marketing through Nasscom, TiE, Pan-IIT/IIM network groups ► Identifying domains to build expertise in and hiring domain experts by tapping into industry pools  Employee mentoring program ► “On the job” mentoring for employees from experienced managers in the organization. This process needs to be institutionalized.

13. An ISO 27001:2005 Company TM Business can be proactive in talent management by building partnerships externally as well as internally with the employees (1/2)  Employee career path in the organization ► Building a transparent and visible employee career growth plan personalized by employee ► Establish clear financial incentives tied to promotions and good performance  Employee training ► Institutionalize a rigorous Induction training program ► Ongoing training (in-house learning and external training) ► Grooming experienced technical talent to project management roles which are client facing  Setup ESOP’s and/or profit sharing schemes for the employees

14. An ISO 27001:2005 Company TM SG Analytics has proactively managed the hiring and talent management process www.sganalytics.com | 14 Hiring Rigorous test for financial and analytical capabilities Case studies to test subjective skills Training Global markets awareness (daily sessions) Domain & ContextAnalysis Communication and expression Mentoring Personalized career plan Objective setting quarterly and biweekly monitoring Monthly mentoring session by executive group

15. An ISO 27001:2005 Company TM A confident analyst from SG Analytics! www.sganalytics.com | 15