the future of knowledge process...
TRANSCRIPT
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential
The Future of Knowledge Process Outsourcing
Marc Vollenweider, CEO Birgit Bauer, Group Manger Business Research Offshoring & Outsourcing Conference SDA Bocconi, Milan, 24 April 2008
Bauer Business Researcch
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 2
Presentation Plan
Evalueserve
KPO Business Models
Make or Buy?
Long-term Growth
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 3
Evalueserve –
the largest third-party Knowledge Process Outsourcing (KPO) company in the world
We are a full service research firm and support companies in North America, Europe and Asia.
Founded in December 2000
2,200+ Full-time Analysts
100+ Fortune 1000 Clients
10,000+ Projects
Centers in India, China, Chile
Research in 65 Languages
Evalueserve Overview
100 IT Innovators
2006
Research and Sales Centers, Romania starting May 2008
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 4
Evalueserve - Services
Investment Research
Data and Financial Analytics
Market Research
Business Research*
Intellectual Property Research
Circle of Experts
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 5
KPO Sectors
KPO Sectors
Equity, Financial, Insurance Research
Data Search, Integration and Management
Research and Information Services in HR
Market Research, Competitive Intelligence
Paralegal Content and Services
Engineering and Design
Animation and Simulation Services
Medical Content and Services
Others
Evalueserve market opportunity
Source: Evalueserve *Others include e.g. Biotech & Pharma and R&D
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 6
Presentation Plan
Evalueserve
KPO Business Models
Make or Buy?
Long-term Growth
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 7
KPO to follow IT model – with a 10-year time lag
IT Industry
KPO Industry
1985
1990
1995
2000
2005
2010
2015
Arrival Western captives
Expansion Indian vendors
Indian vendors surpass captives
Phase I Phase II Phase III Phase IV
Early KPO captives
Rise KPO vendors
Globalization + specialization of
vendors
Indian vendors surpass captives
Rise Indian vendors
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 8
KPO to follow IT model – with a 10-year time lag
Phase I Phase II
Western Companies
SMEs Large companies
No KPO Vendors
No offshoring avenues for SMEs in the market
Setting-up captives
Not cost-effective
SMEs Large companies
Offshoring avenues for SMEs in the market
Setting-up captives KPO Vendors
Services to SMEs + large companies
Western Companies
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 9
Presentation Plan
Evalueserve
KPO Business Models
Make or Buy?
Long-term Growth
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 10
‘Buy’ better in terms of cost, time and quality
Advantage of ‘Buy’ over ‘Make’
Advantage of ‘Make’ over ‘Buy’
Complete IT access rights
Standard compliance practices
vis-à-vis ‘as-needed’ rights
vis-à-vis strict supplier audit procedures
Higher speed + flexibility, reduced management
complexity
Higher profitability, lower costs
Higher productivity, economies of scope
Higher quality, lower attrition
Leadership opportunities No secondary citizen syndrome International quality standards
Domain expertise Processes (KM, productivity, quality control) Geographic coverage
Faster initial set-up Flexibility, control Better long-term employee retention
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 11
-
5
10
15
20
25
30
35
40
45
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
Months in operation
Nu
mb
er
of
FT
Es
Third-partyCaptive
Captive vs. Vendor – Building 40 FTE Research Center
Honey-moon
Stagnation Set-up
0
200
400
600
800
1000
1200
1400
1600
1800
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Num
ber o
f FTE
s
Quarters
Vendor
Captive
Vendors keep growing, captives stagnate
Annual Costs - 40 Billable Professionals Research Center
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2007 2008 2009 2010 2011
Annu
al C
osts
(milli
on U
SD)
KPO Vendor Captive
Source: Evalueserve Analysis *Assumptions: 11 billable professionals in Yr 1, 36 in Yr 2, 40 in Yrs 3+, same effectiveness/quality
Source: Evalueserve Source: Evalueserve
Fully loaded annual costs*
stand-alone 40 FTE Research Centers
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 12
Presentation Plan
Evalueserve
KPO Business Models
Make or Buy?
Long-term Growth
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 13
Growth - Basis
Shift to vendor model
Basis for Long-term growth
Vendor immediately
SMEs Large companies
Captives KPO Vendors
Western Companies
Dual Sourcing
Spin Off
Dual Sourcing
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 14
Growth - Basis
SMEs driving long-term growth
Basis for Long-term growth
US
10 million SMEs in US and Europe 0.5 to 1 million potential KPO clients
UK
Continental Europe
Potential clients
Potential clients
Potential clients
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 15
Growth - Scenario 2010
KPO Professionals 2006 - 2010
Large
SME
Large
SME
KPO models used 2006 - 2010
(Shares of companies)
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential Slide 16
Summary
By 2010 in KPO we expect
the vendor model - ‘Buy’ - to surpass the captive model - ‘Make’ - because better in terms of cost, time and quality
capacity additions by vendors surpass additions of captives
growth of number of KPO professionals from 75.000 to 250.000/290.000
SMEs become the most important growth drivers for vendors
Challenge for vendors to globalize and develop scalable processes.
© Evalueserve, 2008. All Rights Reserved – Privileged and Confidential
Birgit Bauer Group Manger Manager IT & High Tech Group, Business Research
Phone: +91 124-462-1887 [email protected]
www.Evalueserve.com