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.

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 ValueNotes Publications .

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.

• 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.

 

Exhibit i: Service Provider Categories and Sample size

 

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.

 

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

 

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.

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.

 

Research methodology

Executive Summary

1 Macroeconomics 1.1 Global Economy 1.2 Major Economic Regions 1.3 National Economic Performance of Select Countries 1.4 Currency Movements 1.5 Global Capital Markets

2 Industry Insights 2.1 Indian IT-BPO Industry Revenue 2.2 IT-BPO Contribution Towards India’s GDP 2.3 IT-BPO Contribution Towards India’s Exports

3 Operating Earnings 3.1 Total Income 3.2 Revenue Per Employee

4 Expenses 4.1 Operating Cost 4.2 Employee Cost 4.3 Total Cost Per Employee

5 Profitability 5.1 EBITDA Margin 5.2 EBIT Margin 5.3 Net Profit Margin 5.4 Net Profit Per Employee

6 Operating Efficiency 6.1 Debtor Days 6.2 Creditor Days 6.3 Debtor Days Versus Creditor Days 6.4 Net Operating Cycle

7 Solvency 7.1 Quick Ratio 7.2 Debt Ratio 7.3 Debt/Equity Ratio

8 Capital Efficiency 8.1 Return On Capital Employed 8.2 Return on Equity 8.3 Return On Assets

9 Service Provider Evaluation

10 Company Profiles 10.1 Annik Tech 10.2 Beroe 10.3 Dun & Bradstreet 10.4 Mott Macdonald 10.5 TPI Advisory 10.6 Exevo 10.7 Forrester 10.8 Frost & Sullivan 10.9 Prognosys 10.10 Ugam

11 Appendix

Exhibit i: Service Provider Categories and Sample Size

Exhibit ii: Parameters Used for Service Provider Comparison

Exhibit iii:List of Abbreviations

Exhibit iv: Leading Service Providers in the Business and Market Research Outsourcing Segment in 2011

Exhibit 1: Global GDP Growth Rate from2007 to 2013

Exhibit 2: European Union (EU)GDP Growth Rate from2007 to 2013

Exhibit 3: BRIC (Brazil, Russia, India, China) GDP Growth Rate from 2007 to 2013

Exhibit 4: India GDP Growth Rate from 2007 to 2013

Exhibit 5: USA GDP Growth Rate from 2007 to 2013

Exhibit 6: UK GDP Growth Rate from 2007 to 2013

Exhibit 7: Indian Currency Movements from 2007 to 2011

Exhibit 8: Capital Market Performance from 2007 to 2011

Exhibit 9: Indian IT-BPO Revenue from 2007 to 2012

Exhibit 10: Indian IT-BPO Contribution to the National GDP

Exhibit 11: Indian IT-BPO Contribution to the National Exports

Exhibit 12: Revenue and Growth Over Five Years

Exhibit 13: Revenue by Service Provider Type

Exhibit 14: Revenue Change (YoY) by Service Provider Type

Exhibit 15: Revenue of BR/MRO Segment by Service Provider in 2011

Exhibit 16:Revenue Per Employee (RPE) Over Five Years

Exhibit 17: RPE by Service Provider Type

Exhibit 18: RPE Change (YoY) by Service Provider Type

Exhibit 19: Operating Expense as a Percent of Revenue For Five Years

Exhibit 20: Operating Expense as a Percent of Revenue by Service Provider Type

Exhibit 21: Employee Costas a Percent of Operating Expense Over Five Years

Exhibit 22: Employee Costas a Percent of Revenue Over Five Years

Exhibit 23: Employee Costas a Percent of Revenue by Service Provider Type

Exhibit 24: Total Cost Per Employee Over Five Years

Exhibit 25: Total Cost Per Employee by Service Provider Type

Exhibit 26: EBITDA Margin Over Five Years

Exhibit 27: EBITDA Margin by Service Provider Type

Exhibit 28: EBIT Margin Over Five Years

Exhibit 29: EBIT Margin by Service Provider Type

Exhibit 30: NPM Over Five Years

Exhibit 31: NPM by Service Provider Type

Exhibit 32: Net Profit Per Employee Over Five Years

Exhibit 33: Net Profit Per Employee by Service Provider Type

Exhibit 34: Net Profit Per Employee Change (YoY) by Service Provider Type

Exhibit 35: Debtor Days Over Five Years

Exhibit 36: Debtor Days by Service Provider Type

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

Exhibit 38: Creditor Days Over Five Years

Exhibit 39: Creditor Days by Service Provider Type

Exhibit 40: Debtor Days Versus Creditor Days

Exhibit 41: Net Operating Cycle Over Five Years

Exhibit 42: Net Operating Cycle by Service Provider Type

Exhibit 43: Quick Ratio Over Five Years

Exhibit 44: Quick Ratio by Service Provider Type

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

Exhibit 46: Debt Ratio Over Five Years

Exhibit 47: Debt Ratio by Service Provider Type

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

Exhibit 49: Debt/Equity Ratio Over Five Years

Exhibit 50: Debt/Equity Ratio by Service Provider Type

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

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

Exhibit 53: ROCE by Service Provider Type

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

Exhibit 55: ROE by Service Provider Type

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

Exhibit 57: ROA by Service Provider Type

Exhibit 58: Consolidated Ranking of Top Five Service Providers

Exhibit 59: Revenue Ranking of Top Five Service Providers

Exhibit 60: RPE Ranking of Top Five Service Providers

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

Exhibit 62: EBITDA Margin Ranking of Top Five Service Providers

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

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

Exhibit 65: Quick Ratio Ranking of Top Five Service Providers

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

Exhibit 67: ROCE Ranking of Top Five Service Providers

Exhibit 68: ROE Ranking of Top Five Service Providers