Investor Presentation August, 2017
Disclaimer Certain statements in this presentation concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in the BPM industry including those factors which may affect our cost advantage, wage increases, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-timeframe contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Hinduja Global Solutions (HGS) has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. HGS may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. 2 HGS Confidential – www.teamhgs.com August 21, 2017
HGS Overview
About the Company HISTORY Part of the Hinduja Group, in the BPM business since 2000 Erstwhile HTMT, IT & BPM business demerged October 1, 2006 Rebranded as HGS in 2008 SNAPSHOT FINANCIAL DETAILS (FY 17 & Q1 FY 18) CAGR of 19% in Revenue over last 5 years FY 17 Q1 FY 18 Revenue INR 37,110 Mn ($ 555 Mn) INR 9,272 Mn ($ 144 Mn) 66 Worldwide Centers EBITDA INR 4,424 Mn ($ 66 Mn) INR 1,002 Mn ($ 16 Mn) 44,900 + employees (as on 30 th June 2017) EBITDA Margin (%) 11.9% 10.8% 187 active clients for the BPM business Free Cash flow/EBITDA 48% 75% (additionally over 618 clients for Payroll & HRO Net Debt/Equity Ratio 0.15 x 0.09 x Business) at the end of Q1FY18 Gross Debt Reduction INR 1,953 Mn INR 594 Mn Net Debt Reduction INR 1,883 Mn INR 792 Mn 4 HGS Confidential – www.teamhgs.com August 21, 2017
HGS Core Capabilities to Enable the Unified Customer Experience Analytics Customer Experience Customer Marketing Digital Enablement Assessment Experience and Digital Strategy Enablement Customer Experience Social Media Services Services Strategy Engagement Digital Experience Digital Marketing Strategy Customer Interaction Transformation Voice Solutions Digital Assist – chat, Analytics & Insight email, video Consumer Business Transaction Servicing Social Care Interaction Services Services Mailroom Solutions Business Solutions Innovation 5 HGS Confidential – www.teamhgs.com August 21, 2017
Relatively diversified business portfolio Almost all HGS day to day activities relate to consumer transactions and interactions Healthcare/ Insurance Consumer Products Telecommunications Financial Services 58 Million transactions, 10 Supporting many consumer Providing extensive consumer Only credit card issuer to win electronics manufacturers and Million calls, 2.7 Million emails support for land lines, the J.D. Power Award for per annum distributors from purchase to wireless, satellite, IPTV, hi- customer experience 6 post-warranty servicing speed internet – from consecutive years driven by Annual claim payout of $11.5 supporting the consumer HGS’s best in class NPS Multi-channel service over billion USD and $1.3 billion from the point of purchase to customer service - supporting USD recoveries initiated for 4 telephone, white-mail, email, end of service all aspects of consumer financial of the Top 10 healthcare text and social media for a CPG transactions HGS ranked as a leader by payers and several large client Providing support to a large hospitals/health systems in the Nelson Hall in Customer Provides services in the area if US management service for Pubic sector financial services automation analytics and Telecommunication, Cable company in UK for their channel management to and Satellite. operations enhance customer experience Contributes 46.9% of HGS Contributes 21.9% of HGS Contributes 12.7% of HGS Contributes 8.3% of HGS Revenue Revenue Revenue Revenue Share of revenue by vertical based on Q1 FY 18 results 6 HGS Confidential – www.teamhgs.com August 21, 2017
How have we grown Revenue Trend Core Business Revenue Acquired Business Revenue 37,110 33,282 28,076 25,048 10,762 9,645 8,544 8,713 26,348 23,637 19,532 16,335 FY 14 FY 15 FY 16 FY 17 7 HGS Confidential – www.teamhgs.com August 21, 2017
Revenue Composition Revenue by Verticals Offshore/Near-shore to Onshore Revenue by vertical Offshore/Nearshore to Onshore Telecom & Technology Consumer Products Healthcare BFS Others Onshore Offshore/Nearshore 10% 10% 12% 15% 16% 7% 8% 7% 8% 8% 37% 40% 42% 47% 48% 28% 42% 35% 46% 47% 16% 14% 13% 14% 63% 60% 13% 58% 54% 53% 32% 28% 27% 23% 22% FY 14 FY 15 FY 16 FY 17 Q1 FY 18 FY 14 FY 15 FY 16 FY 17 Q1 FY 18 8 HGS Confidential – www.teamhgs.com August 21, 2017
Revenue Composition Revenue by Delivery Revenue by Originations Revenue by Originations Revenue by Delivery INR USD GBP CAD India Philippines USA UK Canada Jamaica 3% 2% 5% 11% 11% 12% 10% 13% 18% 10% 23% 18% 22% 7% 9% 9% 7% 10% 10% 11% 11% 10% 10% 23% 25% 27% 27% 27% 66% 67% 19% 18% 66% 63% 19% 59% 17% 15% 36% 34% 30% 27% 25% 16% 14% 11% 8% 8% FY 14 FY 15 FY 16 FY 17 Q1 FY 18 FY 14 FY 15 FY 16 FY 17 Q1 FY 18 9 HGS Confidential – www.teamhgs.com August 21, 2017
Revenue Composition Voice to Non-Voice Mix OPEX seats & Owned Seats Voice to Non-Voice Mix OPEX Seats & Owned seats Digital CRM Transaction processing Voice CRM Owned Seats Seat for Opex % of Opex Seats 15.2% 73% 73% 74% 77% 79% 13.9% 12.6% 12.3% 6,406 5,668 5,021 4,830 3,723 24% 24% 23% 21% 9.7% 19% 35,624 35,248 34,981 34,592 34,445 4% 4% 3% 3% 2% FY 14 FY 15 FY 16 FY 17 Q1 FY 18 June 16 Sept 16 Dec 16 Mar 17 June 17 10 HGS Confidential – www.teamhgs.com August 21, 2017
Revenue Composition Client Concentration Client Concentration Top Clients Top 20 Clients Top 5 Clients 78% 77% 73% 72% 71% 52% 50% 50% 46% 46% 19% 18% 16% 15% 13% FY 14 FY 15 FY 16 FY 17 Q1 FY 18 11 HGS Confidential – www.teamhgs.com August 21, 2017
Strong and Tenured Client Relationships 18% Top Client 27% Others Top 20 clients Client contribute 72% of the Concentration Total Revenue 11% Clients 11-20 32% 12% Clients 2-5 * Based on FY’17 Financials Clients 6-10 Strong Client relationships demonstrated by tenured and multi- geography engagements 12 HGS Confidential – www.teamhgs.com August 21, 2017
BPO/BPM Market
The BPO/BPM Marketplace Marketplace Dynamics Demand Environment Total BPM market is over $160 billion In-house BPM 4 times the size of the outsourced BPM market Next 5 year CAGR for BPM expected to be 5.9% (Gartner Q1, 2013 forecast) Billion Dollar Plus players in this are still only a handful, who grew between 5% to 20% Essentially a large, fragmented but growing market, enough for everybody to play in Source: Gartner 14 HGS Confidential – www.teamhgs.com August 21, 2017
Global BPO/BPM Market: Industry Estimates for Growth Global BPO Market Global BPO Market by Geo 11.5 193 10.6 9.8 23.9 183 9.1 22.9 174 8.1 22.1 166 In Billions of $ 8.3 21.4 158 20.2 In Billions of $ 40.8 18.5 153 39.1 37.5 36 35.5 36.3 116.7 110.6 104.9 99.9 94.7 89.7 2015 2016 2017 2018 2019 2020 North America EMEA APAC LATAM 2015 2016 2017 2018 2019 2020 Source: Gartner BPO Revenue Forecast 2013 -2019 15 HGS Confidential – www.teamhgs.com
North America BPO Spending Macro Market Overview U.S. BPO End-User Spending Canada BPO End-User Spending (US$ bn) (US$ bn) 105.6 5.0 90.4 85.5 4.2 4.2 In Billions of $ In Billions of $ 2015 2016 2019 2015 2016 2019 Gartner Forecast: IT Services by Geography, 2014-2020 16 HGS Confidential – www.teamhgs.com
Europe – UK BPO Spending Macro Market Overview Europe BPO End User Spending market Europe BPO End User Spend Forecast – by BPO Segment (US$ bn) 100% 37.5 11.5 13.4 80% In Billions of $ 60% 40% 23.3 25.7 34.9 20% 34.1 0% 2015 2020 Traditonal BPO BPaaS 2015 2016 2019 UK BPO End User Spending market UK BPO End User Spend Forecast – by BPO Segment (US$ bn) 100% 21.5 6.7 7.8 80% In Billions of $ 60% 40% 13.2 14.6 20% 19.9 19.9 0% 2015 2020 Traditonal BPO BPaaS 2015 2016 2019 Gartner Forecast: IT Services by Geography, 2014-2020 17 HGS Confidential – www.teamhgs.com
Philippines and Jamaica as Delivery Destinations
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