Service Provider Performance and Satisfaction (SPPS) Survey, India, 2013

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1 MANAGEMENT CONSULTING Service Provider Performance and Satisfaction (SPPS) Survey, India, 2013 An Assessment of the Service Providers to the Indian IT Outsourcing Markets Executive Summary kpmg.com/in

2 Foreword While demand for Information Technology outsourcing from large markets in North America and Europe has long been the primary growth driver for India s services industry, an important emerging trend is the steady growth of the domestic market for IT services within emerging markets such as Asia Pacific. The size of the Indian market, growing at over 15 percent year-on-year, is estimated by NASSCOM to be INR 589 billion as of FY2012. As this market sees increased participation from both domestic and international service providers, customers expectations from IT outsourcing have also evolved beyond cost reduction and service quality. In this context, it is imperative to clearly identify and understand the key determinants of customer satisfaction in the Indian market. KPMG Equaterra has been conducting the Service Provider Performance and Satisfaction ( SPPS ) study primarily in the European markets, including Netherlands, UK and other Scandinavian countries. This study evaluates the performance of service providers on a selection of parameters, and rates them on a perception scale. This is the first time that KPMG has conducted the SPPS study for the Indian market. The Indian market comprise not just the local Indian companies but also multi-nationals (MNCs) as well offshore captive centers (Global In-house Centers or GICs). I am optimistic that the findings of the SPPS study would be of great value to customers and service providers alike. Customers could leverage the findings to derive greater value from their IT outsourcing contracts. For the service providers the study is a handy tool enabling competitive benchmarking and improved market positioning. As we work towards increasing the scope of the study, both in depth and coverage, I look forward to your comments and feedback. Thank you. Viral Thakker Shared Services & Outsourcing Advisory, KPMG in India 2013 KPMG, an Indian Registered ship and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

3 Introduction As a first-of-its-kind initiative in the Indian IT outsourcing market, KPMG has initiated the Service Provider Performance and Satisfaction (SPPS) Study. The SPPS Study is a broadranging investigation into organisations satisfaction with the IT service providers they employ. The KPMG SPPS Study has been recognised as the most extensive and representative perception study of the issues of Information and Communication Technology (ICT) outsourcing. What does the study aim to achieve? This study aims to capture the perception of the customers regarding the services provided by their IT vendors. It takes a contract-level view to capture customer perception on a number of parameters of vendor performance. The SPPS study generates insights that enable customers evaluate their vendors better, and vendors to improve their service offering. What is the nature of survey inputs? Participants in the study are asked to rate their outsourcing service providers on a selection of key criteria. Crucially, they only rate those providers that are currently actively delivering services to their organisation. Participation in the study is on the basis of strict confidentiality; the absolute privacy of the respondents is guaranteed, and the research process ensures anonymous use of all the aggregate data, information and comments. This study is conducted with senior management or C-level executives with influence over corporate strategy and third party services decisions. Performance ratings and ranking published in this study are not representative of the actual measurement of deliverables and services, but rather reflect the perception of the respondents on these achievements. This study does not represent the opinion of KPMG in India professionals on the skills, capabilities or performance of any of the outsourcing service providers covered in the research. Who is the study for? The results of the study are used by many leading global and regional service providers to inform their go-to-market strategies, assess their perceived strengths and weaknesses, educate their staff, communicate with the wider market, and fine-tune their market positioning. The end-user organizations use the results as a tool to benchmark their own satisfaction with that of others employing the same service providers. The study also provides the end-user organizations with an opportunity to understand the perceived capabilities of their providers in comparison to the market. What does the study cover? The service providers covered in this study are evaluated on their IT outsourcing contracts. These contracts span Application Management, Infrastructure Management, Managed Network Services, and End User Service Management. The service provider performance measures considered in the study include: service quality, price, risk, relationship management (operational and strategic), governance, innovation, flexibility, and transition. Note: KPMG has decided to show detailed scores for only nine service providers with a consistent number of responses in the survey. Scores of all the thirty-four service providers have been used to calculate the average score for each parameter. Moreover, three service provider categories International, Indian-Large (revenues greater than USD 2.5 billion), and Indian-Medium have been created to generate additional insights KPMG, an Indian Registered ship and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

4 Executive summary Following are some of the key insights generated by the SPPS study: Traditional areas of IT outsourcing continue to show growth potential Both End User Service Management and Infrastructure Management are each being outsourced by 56 percent of the survey respondents. A significant percentage of survey respondents revealed plans of initiating or increasing outsourcing in these areas. Other important service areas like Managed Network Services and Application Management are also likely to see growth in the near future. On an average, customers are satisfied with their service providers Most of the respondents to the survey were either Satisfied or Somewhat Satisfied with their service providers. Only ten percent of the respondents were not satisfied with the services being offered by their IT service providers. The high level of satisfaction is one of the likely reasons for the continued growth of the Indian IT outsourcing market. The performance of the Indian service providers is beginning to match, or even exceed the performance of international service providers Our study revealed that the large Indian service providers (revenues greater than USD 2.5 billion) are performing either at par or better than the international service providers on most evaluation parameters. The survey also indicated that many respondents view their relationship with large domestic service providers as strategically important. However, the medium sized Indian service providers trail the other two categories on almost every parameter analyzed. Service quality should be the key focus of service providers Our survey findings suggest that service quality is the most important determinant of overall customer satisfaction. The importance of service quality can be gauged from the relatively high level of customer satisfaction with the medium sized Indian service providers. In spite of somewhat low scores on most parameters, they do well overall by scoring high on service quality. Performance summary by service provider category 2013 KPMG, an Indian Registered ship and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

5 KPMG in India contacts KPMG Global contacts Viral Thakker T: E: Jehil Thakkar T: E: David Brown Global Head T: E: Stan Lepeak Head of Research T: E: Rajiv Gupta T: E: Sumeet Salwan Director T: E: Punish Mishra Director T: E: kpmg.com/in Latest insights and updates are now available on the KPMG India app. Scan the QR code below to download the app on your smart device. Google Play App Store The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG, an Indian Registered ship and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. Printed in India.