Download - 00-Genpact Q1 2010 IR Presentation
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March 2010
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Disclaimer
These materials contain certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities LitigationReform Act of 1995. These statements are based on Genpacts current expectations and beliefs, aswell as a number of assumptions concerning future events. These statements involve a number ofrisks, uncertainties and other factors that could cause actual results to differ materially from those in
such forward-looking statements. These risks and uncertainties include, but are not limited to, aslowdown in the economies and sectors in which our clients operate, a slowdown in the BPO and ITServices sectors, the risks and uncertainties arising from our past and future acquisitions, our ability tomanage growth, factors which may impact our cost advantage, wage increases, our ability to attractand retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, generaleconomic conditions affecting our industry as well as other risks detailed in our reports filed with theU.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K.These filings are available at www.sec.gov. Genpact may from time to time make additional writtenand oral forward-looking statements, including statements contained in our filings with the Securitiesand Exchange Commission and our reports to shareholders. Although the Company believes thatthese forward-looking statements are based on reasonable assumptions, you are cautioned not to pay
undue reliance on these forward-looking statements, which reflect management's current analysis offuture events. The Company does not undertake to update any forward-looking statements that maybe made from time to time by or on behalf of the Company. In addition, you should be advised that ourpast performance is not necessarily indicative of future performance, particularly given the currentglobal economic environment. These statements and other information made available in connectionwith the evaluation of the Company are not all-inclusive and do not contain all of the information that
you may consider material or desirable in evaluating the Company.
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Pramod BhasinChief Executive Officer
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We Have Delivered
Pramod BhasinCEO
13 years at Genpact
Dedicated to best-in-class corporate governance
World-class Board of Directors
11 of 12 directors are independent
Since IPO, we have delivered
Grew revenue 22% annually
Diversified revenue base Global Client revenue
has grown at 100%+ CAGR since 2004
Improved adjusted operating income margin from
15.8% to 17.8%
Continued investment in senior leadership talent
Improved NPS from 39% to 57%
Extended GE contract through 2016 Expanded global footprint
Focus on Execution
Top 20 leaders have 236+ years experience at GE/Genpact
Top 100 leaders have 95% retention in last 3 years
Consistent Sponsorship
Strong Leadership
Tiger TyagarajanCOO
11 years at Genpact
Patrick CognyCEO Europe
5 years at Genpact
Piyush MehtaSVP - Human
Resources
9 years at Genpact
Mohit BhatiaCFO
11 years at Genpact
Mitsuru MaekawaCEO China, Japan
8 years at Genpact
Bob PryorEVP - Sales, Mktg and
Business Development
1 year at Genpact
Note: Net Promoter Score (NPS) signifies the likelihood that a customer would recommend the service in question to others
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Company Highlights
Globalization of Services Driving Growth in Large, Underpenetrated Market
Best in the World at Business Process Management (BPM)
Unique DNA Based on Lean, Six Sigma and Operating Excellence Difficult to Replicate
Global, Diversif ied and Expanding Blue-Chip Client Base Provides Runway for Growth
Bui lding New Science for BPM SEPSM a Huge Competit ive Differentiator
Powerful Combination of High Growth and Predictable, Visible and Resilient FinancialProfile
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Irreversible Trends Driving Global Demand for BPM
IrreversibleTrends
AcceleratingMomentum
Ecosystems ofExpertise
IncreasingClient
Acceptance+ + =
DemographicsGlobalization
ServicesTalent Supply
ChainRedefining Core
vs. Non-Core
Working AgePopulation
Japan 10%
UK 2%
US 7%
Scandinavia 0%
India 23%
Business
Technology
Engineering
R&D
Standardized,consistent, value-
Add
Virtual Supply
Cost Pressures
Partnerships
Social Networks
Domain Knowledge
New economicrealities
Focus on productivity,preservation of cashand working capital
Cost control / marginimprovement
Converting capital tooperating costs
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Globalization of BPM ServicesDrives Attractive, Underpenetrated Market Opportunity
Source: NASSCOM Perspective 2020 Report
$1,500$380
$230
$190
$200
$500
Significant Growth fromNew Opportunities
Core markets2008
Growth in coremarkets
New verticalsin developed
countries
New cus tomersegments
Newgeographies
Potential 2020market size
$ in billions
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At IPO1 Today 2
Employees 26,100 38,600
Operating Centers / Countries 27 / 7 39 / 13
Clients > $5mm3 7 35
Clients > $25mm3
1 4Total Revenue $613 $1,120
3-yr Trailing Total Revenue CAGR 17% 22%
Global Client Revenue $160 $669
3-yr Trailing Global Client RevenueGrowth NM 61%
Adj. Operating Marg in 16% 18%
Significant Progress Since IPO
Note: $ in millions1As of year-end 2006
2009 BusinessUpdate
Added 52 new logos
Grew revenue and improved margins
Continued to aggressively invest in business (SEPSM
, global team)
GlobalClients
60%
GE40%
GlobalClients
25%GE
75%
Revenue Breakdown
2As of year-end 20093Excludes GE
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Differentiated Financial Performance in the Downturn
Genpact -
Global
Clients
Cognizant Genpact EXL WNS TCS Infosys Wipro IBM GS Accenture2
Source: Public filingsNote: Companies who report in non-USD have been converted to USD based on average exchange rate for the reporting period116% adjusted for GE divestiture2Excludes lighting segment
1
CY 2009 Revenue Growth
21.4%
16.4%
7.6%
(0.2%)
2.7%
(2.0%)
5.1%
(6.6%)
(11.8%)
(1.2%)
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USA
China
IndiaMexico
GuatemalaPhilippines
South Africa
Netherlands
Poland
Romania
Hungary
Morocco
Spain
Country of Operation
38,000+ Employees 13 Countries 25+ Languages
One Operating Culture
A Global Approach to Servicing Clients
2006 2007 2008 2009
Countries ofOperation 7 9 12 13
OperatingCenters 27 30 35 39
72%
8%
10%
10%
Revenue by DeliveryCenter Geography
75%
7%
12%
6%
Headcount byGeography
India
Americas
Asia
Europe
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Unique Culture Difficult to Replicate Commitment to delivering high quality service to clients rewards tied to NPS
Process excellence delivered through >1,400 rotations, global assignments and cross functional exposure Increased employee retention with flexibility through work-from-home, leadership development and merit-based variable compensation
Lean-Six Sigma DNA Differentiates Our Service Offering 10,000+ Six Sigma Green Belt-trained employees and 23,000+ Lean-trained employees
300+ BB/MBBs across all levels including operating leadership
1111
Unique DNA and Culture a Huge Differentiator
Attract, Engage and Retain TalentBuilding Domain Expertise &
Capacity for Growth
Able to attract the best in every market
Employee Satisfaction Survey shows huge
engagement Leaders score 89%+ satisfaction
Customer centricity #1
Top 300 leaders covered by stock options
Hired 50+ VPs in 2009 with deep domainexpertise
Sales and BD
Operations
Vertical Industries
Strong domain leadership developmentprograms
Ops, Finance, IT, HR, Commercial Leadership
Rigorous career and succession planningprocess for 3,000+ managers
1Based on Gallup Employee Survey
People and Culture One of the Top 3 Reasons We Win
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Key 2009 Global Client Wins
13
Our Lean Six Sigma DNA
Thought leadership and industry-leading culture of innovation
SEPSM differentiates our service offerings from competitors
Our people and our passion
High win rates up substantially
13
Why We Win
We Win Against the Best in The World
$342
$551
$669
$160
$42
$20
60%
53%
41%
26%
26%5%
2004 2005 2006 2007 2008 2009
Global Clients Revenue and % of Total Revenue
Note: $ in millions
Global Clients 20+ 100 155 264 400
> $5mm N/A 7 18 29 35
> $25mm N/A 1 3 4 4
GC 04-09 CAGR: 101%
GC (ex-GE) 04-09 CAGR: 96%
GC (ex-GE / acquisitions) 04-09 CAGR: 91%
We Compete Against Global Leaders
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Large and Expanding Blue-Chip Client BaseProvides Runway for Growth
Banking, FinancialServices & Insurance
Pharma and Healthcare Manufactur ing
CPG/Retail
Business Services
Others
High-Tech
+ 3 of the 10 Largest Pharma Cos.
+ Leading Devices & Generics Co.+ 2 Leading Healthcare Information Cos.
+ 2 Leading Fortune 500 Insurers+ Leading Global Reinsurer+ Leading Personal Insurer in US
+ Leading US Retail Bank+ Leading Indian Private Bank
+ 2 Leading Global Conglomerates+ Top Global Automaker+ Leading Manufacturers of Doors
+ Global Publishing Co.+ Leading Package Delivery Co.
+ Leading Internet Services Co.+ Leading Supply Chain BPM Co. + Leading Data Management Co.
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$31.2
$18.8 $18.3 $17.9
Genpact EXL WNS Wipro
(BPO)
End-to-End Service OfferingsRanging From Simple to Complex
Enterprise
G
&A
Services
High Value-Add Reflectedin Revenue / Employee
IT
Services
Note: $ in thousands, based on CY 2009
Risk Management Services
Procurement &
Supply Chain
Collections &
Customer Service
Internal Audit
SOX Advisory
Regulatory Compliance
Enterprise & IT Risk Management
Fraud Risk Services
Indirect/Direct Sourcing &Procurement
Demand Forecasting
Inventory Optimization
Fleet & Logistics Services
Service Operations
Early & Late Stage Collections
Analytics/Skip Tracing
Bankruptcy Originations
Customer Care
Technical/Product Support
Customer Acquisition & Sales
Consumer & Commercial Banking
and Lending Operations Application Processing
Underwriting
Claims Management
Mortgage Orientation and Servicing
Payment, Booking and Funding of Loans and Leases
Finance &
Accounting Accounts Payable
Order to Cash
General Accounting
Closing & Reporting
Treasury & Tax
Financial Planning/Analysis
Enterprise Application Services
Enterprise Applications Solutions (Oracle, SAP,Siebel)
Business Intelligence/Data Warehousing
Technology Integration (ADM, BPM, Testing)
IT Infrastructure Management Services
End User Computing/Help-Desk Services
Enterprise Computing
Database & Middleware
Network, Voice & Security Services
Reengineering: Procure to Pay, Record to Close, Inquiry to Order, Order to Cash, Collections, Treasury & Tax
Analyti cs: Marketing, Pricing, Inventory Optimization, Customer Loyalty/Surveys, Contract ManagementPro
cess
Foun
dation
Industry
Expertise
Manufacturing(40%)
(Auto, CPG, Retail, Pharma)
Other(16%)
(Healthcare,Hospitality,
Media, Tech.)
BFSI(44%)
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Operating Excellence Ecosystem
Up-Stream Process 1Focus ImpactProcess 2Down-Stream
$10 $100mm
Smart Enterprise Processes (SEPSM)
+ +
Increasing
ValuetoCli
ent/Genpac
t
Re-engineering (On-shore) / Black Belt Projects (Off-Shore)
$2 $20mm
LEAN / Green Belt Projects
$50k $2mm
Improve
EnterpriseBusinessOutcome
End-to-EndProcess
Improvements
Sub-ProcessImprovements
Operational
Stability
SDF(1) / BPMS(2) / CMP(3) / Alerts
$1 $2mm
InsightsBenchmarks
1Service Delivery Fundamentals (Daily Status Tracker)2Business Process Management System (Genpacts Benchmark for Self Evaluation)3Common Minimum Practices (Performed During Transitions)
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Accelerating Business ImpactSmart Enterprise Processes (SEPSM)
Key Observations About ManagingBusiness Processes
Holistic and granular framework for managingbusiness processes
Highly scientific, enterprise-wide view of processes
Proprietary IP based on analysis of 200 million+transactions across 3,000+ managed processes
Maps client performance at every step of a processand measures against best-in-class standards
Offers solutions including process, analyticsreengineering and focused IT based on achievingbusiness impact
Smart Enterprise Processes (SEPSM) A New Science
Core enterprise level processes cut across functionalsilos
Typical focus is on process efficiency vs.effectiveness
Driving effectiveness delivers 3x 5x benefits overdriving efficiency
Companies lack benchmarks to know how good theycould be
Technology is often not the answer 5070% ofbenefits from process and insights
1717
SEPSM is a unique proprietary methodology that can deliver 2 5xs the impact on
improved cash flow, margins, revenue growth or other metrics.
CFO Suites Insurance Suites Healthcare Suites Enterprise SuitesFinancial Services
SuitesLodging Suites
Source to PayOrder to CashRecord to Report
Application to In-forceP & C Claims
Customer ServiceRequest to RepairHire to RetireEnterprise Risk
CollectionsApplication to DisbursalCommercial lending
Check in to Check outVisit to CashPay to Recover
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Level 1SEPSM
Indirect source to payBusiness Outcomes
Level 2
Keyperformance
measures% spend visible accurately % preferred vendor spend
Spend
analysis
Planning
& PO issue
45% 100%93% 0% 100%67%
Key Insights/
Practices
1% 5%2%
Reduction in Operating Costs
Sourcing Procurement
~3-4 pp deflation can be achieved with 30-40 pp
increase in spend visibility.
30-40% of contracted savings lost due to non
compliance. 100% Cataloguing and no-PO-no paypolicy can reduce maverick spend by 20-40%
Unique Proprietary Framework
End-to-EndProcess
Efficiency Effectiveness
Source to Pay Invoice cycle time Payment accuracy
Total spend reduction
Collections Contact rate Accounts per collector
Gross loss
Application to
In-force
Cost and cycle time of
application processing
Increase placement rate
Revenue growth
Laggard
Leader
Median
18
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Case Studies: SEPSM
A Key Differentiator
* Worldwide Conventions and Business Forums
SEPSM Spearheads Entry Intoa New Vertical
Healthcare Processes
SEPSM Drives Growthwith an Existing Client Global Pharma Company
SEPSM Leads toCustomer Win
Global CPG Company
Deconstructed hospital into
different work flows each
individually optimized to give E2E
impact across:
Patients
Materials
Revenue
Re-engineered all non patient
facing processes to drive impact
Optimize 140 core processes
in < 1 year & Impact 80%of all patient experiences(for Miami Childrens Hospital)
Target of $415 mil lion of
Savings through Source toPay (S2P)
Identified value leakage in
Operating Costs by measuring
variation across geographies within
the company and by benchmarkingversus industry best in class
Created a 3 year roadmap based
on the most significant opportunities
for standardization across short,
medium and long term
Applied Best-in-class
process design to maximizebenefit of ERP investment
Client in process of implementing
global, shared-service, back-office
SAP platform
Genpact leveraged SEPSM process
blueprint to review global design
template and design for best-in-
class processing
Identified metric gaps and linkages
to allow maximum impact to
outcome
15% Increase in MCHs NetOperating Margin
Potential 2010 Impact of$10-15 mill ion
Roadmap to $415 mill ion
Identif ied Working CapitalImprovement of$100-200 mill ion
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Growing Our Pipeline
Strong Trends in Our Business
Growth across all geographies, services,
customer segments and verticals
Win rates at all-time high - newinitiatives (such as SEPSM) drivingpipeline growth
Investment in high caliber, experiencedsales team across the globe with ~20years experience
Doubled European sales team, many with strongindustry and deep domain expertise
Many with senior leadership positions at firmssuch as Accenture and HP
Stable pricing environment
Total contract value of pipeline
up 29% y/y European pipeline up 75% y/y
India-to-India pipeline up 100% y/y
Number of deals also up by 9% QoQ
Sales cycle is steady, deal scopebetter and deal mix strengthening
Avg. deal size increased to ~$10mm,
and about 1/3 are 100 FTE deals
Drive Performance
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Strategies for Growth
Sustained GrowthEngines
M&AMultiple New Entry Points
With Clients
Mining
Marketing, global brand
SEPSM
Re-engineering Consultative selling
Big-ticket, high-volume
Smaller-ticket, high-volume
Customized solutions andprojects
New geographies
India-to-India
China-to-China
Fill the gaps
New verticals andgeographies
Captives
Recent deals: Creditek,ICE, Axis, SymphonyMarketing
Poised for Continued Growth
Innovation Driving Growth Through Cycles
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Mohit BhatiaChief Financial Officer
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Resilient and Durable Business ModelDriving Strong Performance Through the Cycle
481 490 451453
160
342551 669
$1,120$1,041
$823$613
2006 2007 2008 2009
6% 2%(8)%
114%
61%
21%
GEGC1
$199$178
$134
$97
2006 2007 2008 2009
38%
33%
12%
15.8%16.3%
17.1% 17.8%
2009 In Review
Strong organic growth in despite economic headwinds
Growth engine driven by Global Clients GE relationship provides significant stability and
predictability
Diversified model
35 clients over $5mm vs. 29 prior year
Strong and expanding margin profile
Multiple financial levers for margin expansion
Recurring revenue base (80%) and high visibility
Strong balance sheet and cash flows, including
approximately $430mm of liquidity
Note: $ in millions1Global client revenue includes GE divested businesses and acquisitions (GAAP)2Adjusted Income from Operations excludes amortization of intangibles, stock option expense and FMV adjustments
Revenue Mix
Adjusted Income from Operations2
CAGR22%
CAGR27%
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We Manage Our Business for the Long-Term
$235
$254
$271$282
$266 $273 $284
$297
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q/Q GrowthRevenue
Note: $ in millions1Adjusted Income from Operations excludes amortization of intangibles, stock option expense and FMV adjustments
$28
$42
$50
$59
$42$48
$54 $55
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2008 2009
% MarginAdjusted Incomefrom Operations1
2008 2009
Quarterly Revenue and Q/Q Growth Adjusted Operating Income and % Margin
18.3%
20.8%
18.4%18.9%
17.7%
15.9%
16.5%
12.1%2.6%4.2% 4.4%
8.1%
1.3%
(5.7%)
4.1%6.8%
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Flexible Operating ModelDriving Leverage and Capital Efficiencies
$134
$178
$199
2007 2008 2009
% MarginAdjusted Incomefrom Operations 1
SG&A as % of Revenue
Note: $ in millions1Adjusted Income from Operations excludes amortization of intangibles, stock option expense and FMV adjustments2Denotes capital expenditures incurred
Demonstrable Margin ImprovementDriven By Cost Rationalization
Free Cash Flow BeforeCash Interest and Taxes
16.3%17.1%
17.8%
26.5%
24.5%
23.7%
$117
$186$181
2007 2008 2009
CAGR24.4%
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Long Term Target Model
Revenue Growth 20 25%
Organic 15 17%
Vertical Expansion 2 3%
M&A 3 5%
Annual Margin Improvement 50bps
Long-term Targets
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Company Highlights
Globalization of Services Driving Growth in Large, Underpenetrated Market
Best in the World at Business Process Management (BPM)
Unique DNA Based on Lean, Six Sigma and Operating Excellence Difficult to Replicate
Global, Diversif ied and Expanding Blue-Chip Client Base Provides Runway for Growth
Bui lding New Science for BPM SEPSM a Huge Competit ive Differentiator
Powerful Combination of High Growth and Predictable, Visible and Resilient FinancialProfile
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March 2010