Business and Market Research Outsourcing: Financial Performance Review

2012

ValueNotes Database Pvt Ltd

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High revenue growth muted with economic slowdown

Business and Market Research Outsourcing: Financial Performance

Review

2012 Financial Performance Report Series

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Business and Market Research Outsourcing: Financial Performance Review

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2012 Business and Market Research Outsourcing: Financial Performance Review

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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

4 Expenses ................................................................................................................................... 16 4.1 Operating Cost .................................................................................................................... 16 4.2 Employee Cost .................................................................................................................... 17 4.3 Total Cost Per Employee ..................................................................................................... 19

5 Profitability ............................................................................................................................... 20 5.1 EBITDA Margin .................................................................................................................... 20 5.2 EBIT Margin ........................................................................................................................ 21 5.3 Net Profit Margin ................................................................................................................ 22 5.4 Net Profit Per Employee ...................................................................................................... 23

6 Operating Efficiency .................................................................................................................. 25 6.1 Debtor Days ........................................................................................................................ 25 6.2 Creditor Days ...................................................................................................................... 27 6.3 Debtor Days Versus Creditor Days ....................................................................................... 28 6.4 Net Operating Cycle ............................................................................................................ 28

7 Solvency .................................................................................................................................... 30 7.1 Quick Ratio ......................................................................................................................... 30 7.2 Debt Ratio........................................................................................................................... 32 7.3 Debt/Equity Ratio ............................................................................................................... 33

8 Capital Efficiency ....................................................................................................................... 35 8.1 Return On Capital Employed ............................................................................................... 35 8.2 Return on Equity ................................................................................................................. 36 8.3 Return On Assets ................................................................................................................ 37

9 Service Provider Evaluation ....................................................................................................... 39 9.1 Consolidated Ranking.......................................................................................................... 39 9.2 Revenue Ranking ................................................................................................................ 39 9.3 RPE Ranking ........................................................................................................................ 39 9.4 Total Cost Per Employee Ranking ........................................................................................ 40 9.5 EBITDA Margin Ranking....................................................................................................... 40 9.6 Net Profit Per Employee Ranking ........................................................................................ 41 9.7 Net Operating Cycle Ranking ............................................................................................... 41 9.8 Quick Ratio Ranking ............................................................................................................ 41 9.9 Debt/Equity Ratio Ranking .................................................................................................. 42 9.10 ROCE Ranking ..................................................................................................................... 42 9.11 ROE Ranking ....................................................................................................................... 43

10 Company Profiles ...................................................................................................................... 44


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10.1 Annik Tech .......................................................................................................................... 44 10.2 Beroe .................................................................................................................................. 46 10.3 Dun & Bradstreet ................................................................................................................ 48 10.4 Mott Macdonald ................................................................................................................. 50 10.5 TPI Advisory ........................................................................................................................ 52 10.6 Exevo .................................................................................................................................. 54 10.7 Forrester ............................................................................................................................. 56 10.8 Frost & Sullivan ................................................................................................................... 58 10.9 Prognosys ........................................................................................................................... 60 10.10 Ugam .................................................................................................................................. 62

11 Appendix ................................................................................................................................... 64


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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: Leading Service Providers in the Business and Market Research Outsourcing Segment in 2011 .......... x

Exhibit 1: Global GDP Growth Rate from2007 to 2013 ....................................................................................... 1

Exhibit 2: European Union (EU) GDP Growth Rate from2007 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 BR/MRO 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 as a Percent of Revenue by Service Provider Type ............................................ 17

Exhibit 21: Employee Cost as a Percent of Operating Expense over Five Years ................................................. 17

Exhibit 22: Employee Cost as a Percent of Revenue over Five Years................................................................. 18

Exhibit 23: Employee Cost as a Percent of Revenue by Service Provider Type .................................................. 18

Exhibit 24: Total Cost Per Employee by Service Provider Type ......................................................................... 19

Exhibit 25: Total Cost Per Employee by Service Provider Type ......................................................................... 19

Exhibit 26: EBITDA Margin Over Five Years...................................................................................................... 20

Exhibit 27: EBITDA Margin by Service Provider Type........................................................................................ 21

Exhibit 28: EBIT Margin Over Five Years .......................................................................................................... 21

Exhibit 29: EBIT Margin by Service Provider Type ............................................................................................ 22

Exhibit 30: NPM Over Five Years ..................................................................................................................... 22

Exhibit 31: NPM by Service Provider Type ....................................................................................................... 23

Exhibit 32: Net Profit Per Employee Over Five Years........................................................................................ 23

Exhibit 33: Net Profit Per Employee by Service Provider Type.......................................................................... 24

Exhibit 35: Debtor Days Over Five Years .......................................................................................................... 25

Exhibit 36: Debtor Days by Service Provider Type ............................................................................................ 26

Exhibit 37: Debtor Days Change (YoY) by Service Provider Type ...................................................................... 26

Exhibit 38: Creditor Days Over Five Years ........................................................................................................ 27

Exhibit 39: Creditor Days by Service Provider Type .......................................................................................... 27

Exhibit 40: Debtor Days Versus Creditor Days ................................................................................................. 28

Exhibit 41: Net Operating Cycle Over Five Years .............................................................................................. 28

Exhibit 42: Net Operating Cycle by Service Provider Type ................................................................................ 29

Exhibit 43: Quick Ratio Over Five Years ........................................................................................................... 30

Exhibit 44: Quick Ratio by Service Provider Type ............................................................................................. 31


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Exhibit 45: Quick Ratio Change (YoY) by Service Provider Type ........................................................................ 31

Exhibit 46: Debt Ratio Over Five Years ............................................................................................................ 32

Exhibit 47: Debt Ratio by Service Provider Type .............................................................................................. 32

Exhibit 48: Debt Ratio Change (YoY) by Service Provider Type ......................................................................... 33

Exhibit 49: Debt/Equity Ratio Over Five Years ................................................................................................. 33

Exhibit 50: Debt/Equity Ratio by Service Provider Type ................................................................................... 34

Exhibit 51: Debt/Equity Ratio Change (YoY) by Service Provider Type .............................................................. 34

Exhibit 52: Return On Capital Employed (ROCE) Over Five Years...................................................................... 35

Exhibit53: ROCE by Service Provider Type ....................................................................................................... 36

Exhibit 54: Return On Equity (ROE) Over Five Years ......................................................................................... 36

Exhibit 55: ROE by Service Provider Type ........................................................................................................ 37

Exhibit 56: Return on Assets (ROA) Over Five Years ......................................................................................... 37

Exhibit 57: ROA by Service Provider Type ........................................................................................................ 38

Exhibit 58: Consolidated Ranking of Top Five Service Providers ....................................................................... 39

Exhibit 59: Revenue Ranking of Top Five Service Providers .............................................................................. 39

Exhibit 60: RPE Ranking of Top Five Service Providers ..................................................................................... 39

Exhibit 61: Total Cost Per Employee Ranking of Top Five Service Providers ...................................................... 40

Exhibit 62: EBITDA Margin Ranking of Top Five Service Providers .................................................................... 40

Exhibit 63: Net Profit Per Employee Ranking of Top Five Service Providers ...................................................... 41

Exhibit 64: Net Operating Cycle Ranking of Top Five Service Providers ............................................................ 41

Exhibit 65: Quick Ratio Ranking of Top Five Service Providers.......................................................................... 41

Exhibit 66: Debt/Equity Ratio Ranking of Top Five Service Providers ................................................................ 42

Exhibit 67: ROCE Ranking of Top Five Service Providers ................................................................................... 42

Exhibit 68: ROE Ranking of Top Five Service Providers ..................................................................................... 43


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Research Methodology

About the Financial Performance Report Series These reports have been designed to analyze the financial performance of companies in the

Knowledge Process Outsourcing (KPO) industry. The information in this series will be of interest to

KPO service providers, consultancies, investment firms, and buyers of KPO services. It is aimed at

providing decision makers, analysts and influencers with relevant and actionable insights. The report

will enable service providers to benchmark their performance against their peers. It will help

investors and consultants evaluate the financial health of their service providers. Buyers of KPO

services can use this information to make informed decisions.

Scope of the Report The Financial Performance Report analyzes key financial ratios of companies that constitute the

business and market research outsourcing (BR/MRO) segment. The companies covered in this report

are pure-play KPOs with operations in India. Pure-play KPOs provide services for a specific segment,

process or industry; in this case, the business and market research outsourcing segment. Only

private limited companies that are incorporated in India and that filed annual returns with the

Government of India’s Ministry of Corporate Affairs (MCA) are considered in the report. The

information presented in this report is based on financial statements of companies between the

fiscal period from 2007 and 2011.

In addition, publicly available information and past research by ValueNotes on information

pertaining to the companies’ service offerings and employee strength is used in this report. For more

information regarding ValueNotes’ publications on the outsourced publishing services industry, refer

to the section titled For Further Reading.

Special Notes As per the reporting guidelines of the MCA, private limited companies are required to file their

balance sheets, profit and loss accounts, annual returns and compliance certificates. However, all

the line items in the financial statements are not mandatory.

Financial information in the report is reported in Indian Rupees (INR).

The financial period reported by the company has been considered as is and has not been

adjusted. Companies in the sample have differing report periods such as April to March, and

January to December.

The financial statements of the companies have been computed as reported and

adjustments or normalizations have not been made by ValueNotes.

The analysis in this report uses a data set of those companies that have disclosed all the

pertinent financial information for that particular year required to calculate the appropriate

financial ratio.

Analysis and conclusions regarding industry trends have been made on the basis of available

data from the population of companies in ValueNotes’ sample (refer to Appendix).

The data in this report does not represent the entire business and market research

outsourcing industry, as it excludes multi-service providers and captives. However, we

believe that trends within the pure-play business and market research outsourcing business

will be similar to those of the industry as a whole.


vii Copyright © 2012 ValueNotes Database Pvt Ltd. All rights reserved.

Service Provider Categorization

Exhibit i: Service Provider Categories and Sample Size

The total number of companies that form the

sample for this report is 11. Companies have

been grouped into categories based on their

latest reported total revenue. This has been

done to allow for a more meaningful comparison

of results. The categories, which are based on

annual revenue, are depicted in the adjacent

along with the sample size of each category.

Service Provider Comparison and Ratings The report provides a relative positioning of Indian service providers in the business and market

research outsourcing segment featured in the report. The evaluation is based on their financial

performance on each of the 10 key financial ratios as listed in the exhibit below.

Exhibit ii: Parameters Used for Service Provider Comparison

Parameter

Total Income

Revenue Per Employee

Total Cost Per Employee

EBITDA Margin

Net Profit Per Employee

Net Operating Cycle

Quick Ratio

Debt/Equity Ratio

Return On Capital Employed

Return On Equity

The methodology adopted for considering companies for inclusion in the ranking requires FY 2011

data to be available for calculating at least five of the financial ratios listed above. A relative ranking

is assigned to each company based on their performance on each financial ratio. A single relative

ranking is then given to each company by taking an equally weighted average of each ranking. The

top five service providers are then positioned relative to each other across the ratios listed in the

above exhibit, from 2007 to 2011.

Category name Revenue range

Large INR 500+ mn

Medium INR 100 - 500 mn

Small INR 1 - 100 mn


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The ranking of companies are represented using a four-bar scale. The scale used to denote the

relative positions is shown in the exhibit below.

Exhibit iii: Legend Used for Service Provider Comparison

Abbreviations

The exhibit below includes a list of abbreviations used in this report. For a more detailed explanation

of the financial ratios and how they were calculated, refer to the Glossary.

Exhibit iv: List of Abbreviations

bn Billions

BR/MRO Business and Market Research Outsourcing

BPO Business Process Outsourcing

CSO Central Statistics Office

EUR Euro

FY Fiscal Year

GBP Pound Sterling

GDP Gross Domestic Product

GSAM Goldman Sachs Asset Management

IMF International Monetary Fund

INR Indian Rupee

JPY Japanese Yen

k Thousand

KPO Knowledge Process Outsourcing

MCA Ministry of Corporate Affairs

mn Millions

NASSCOM National Association of Software and Services Companies

OECD Organization for Economic Development

RBI Reserve Bank of India

USD United States Dollar

WB World Bank

WEO World Economic Outlook

YoY Year on Year


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Executive Summary

Please write to us at [email protected] for a complimentary copy of the executive summary.

To purchase the full report and discuss pricing please email [email protected].

More information about the Business and Market Research Outsourcing: Financial Performance

Review report is available here.

http://bit.ly/BRMROFPR

Authors Contributors

Arjun Bhuwalka Sameer Murdeshwar T +91-20-6623 1739 T +91-20-6623 1797 E [email protected] E [email protected]

Deepti Krishnan

T +91-20-6623 1717 E [email protected]

DISCLAIMER: This report is for general information only, and does not constitute a business

recommendation or professional advice. The information in this report has been obtained from

sources believed to be reliable. ValueNotes cannot guarantee the authenticity, accuracy or adequacy

of this information. All views expressed in this report are based on the opinions and judgments of

ValueNotes. Readers are encouraged to consult their own professional advisors before making any

decision based on the contents of this report. ValueNotes accepts no liability for any consequences

arising from the use of this report or the material contained herein.

Given that data is based on the financials of Indian registered companies, some of the overseas

subsidiaries or entities related to the Indian companies have not been included. This may result in

numbers that are discordant with other figures. If any of the companies covered in this report finds

an anomaly, please send an email to [email protected], and we will rectify the data as soon

as possible.

For Further Reading

Market Research Outsourcing: The India Growth Story Date of Publication January 2008

Market Research Outsourcing - Buyer Survey

Date of Publication February 2009

Our Other Reports

Outsourced Publishing Services: Financial Performance Review Date of Publication July 2012

Legal Process Outsourcing: Financial Performance Review

Date of Publication June2012 Banking BPO Services: Getting Back to Basics

Date of Publication March 2012 The Heathcare Payor BPO Landscape In 2011

Date of Publication February 2012 The Pharmaceutical Industry Sourcing Landscape In 2011

Date of Publication January 2012 The Utilities Sourcing Landscape In 2011

Date of Publication December 2011

How Is Outsourcing Fueling The Oil And Gas Industry?

Date of Publication October 2011

Obamacare: Outsourcing Opportunities In Revenue Cycle Management

Date of Publication June 2011

Where Offshore Analytics is Heading in 2011

Date of Publication March 2011

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(services) outsourcing industry – in BFSI, e-learning, engineering, healthcare, legal

and publishing – with an emphasis on knowledge services or KPO.

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Business and Market Research Outsourcing: Financial Performance Review

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