Recruitment challenges in the KPO Industry

1. Recruitment challenges in the KPO Industry

2. 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. KPO deals with high value knowledge intensive business activities which require deep domain expertise

4. KPO market size in India can be estimated at 7 bUSD* by 2014 and could employ 180,000 people CAGR: 21% Source: Industry whitepapers, Rocsearch, KPO Experts *Market size is an estimate only **The see next slide for supply side constraints 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 3rd party KPO’s

5. 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 average analyst follows the research process but could end up with a weak business case for the investment recommendation Average Analyst

7. A good analyst understands the business model and the market to build a strong business case for the investment recommendation Strong Analyst

8. 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?

9. 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?

10. Lack of strong middle management layer is the biggest challenge for KPO’s

11. 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)

12. 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. 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. SG Analytics has proactively managed the hiring and talent management process

15. A confident analyst from SG Analytics!