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May 4, 2012 Proprietary and Confidential 1
Agenda
Time
2:00-2:05 Introduction
2:05-2:45 Phaneesh Murthy, CEO
2:45-3:05 David Kruzner, EVP and Co-Head of Consulting & Solutions
3:05-3:25 Sean Narayanan, EVP and Chief Delivery Officer
3:25-3:35 Break
3:35-3:55 Satish Joshi, EVP and Head of Product and Engineering Solutions
3:55-4:15 Srinivas Kandula, EVP and Head of Human Resources
4:15-4:35 Sujit Sircar, EVP and Chief Financial Officer
4:35-4:40 CEO Summary
4:40-4:55 Break
4:55-5:50 Q&A Session
5:50 - 7:00 Management Mixer
May 4, 2012 Proprietary and Confidential 2
Safe Harbor Statement
• The following presentations will contain forward-looking statements that reflect management’s current view, projections and estimates regarding, but not limited to, our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs relating to our business and the markets in which we operate. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change.
• There are a number of risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. These risks include, but are not limited to, general economic conditions, the level of market demand for our services, the highly-competitive market for the types of services that we offer, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, currency fluctuations and market conditions in India and elsewhere around the world, and other risks not specifically mentioned herein but those that are common to industry.
• The following presentation contains non-GAAP financial measures as defined by the Securities and Exchange Commission. Reconciliations of these non-GAAP measures to their comparable GAAP measures are available on the company’s website at www.igate.com. These non-GAAP measures should only be used to evaluate iGATE's results of operations in conjunction with the corresponding GAAP measures, and should be considered supplemental in nature, and not as a substitute for or superior to GAAP results.
May 4, 2012 Proprietary and Confidential 3
PHANEESH MURTHY Chief Executive Officer
iGATE Corporation Value creation through differentiated business model
May 4, 2012 Proprietary and Confidential 4
Agenda
Outsourcing Industry Overview
iGATE Overview
Acquisition of Patni and Successful Integration
Growth Strategy - Investing in Our Future
Summary
May 4, 2012 Proprietary and Confidential 5
Global Trends Details
Macro economic and demographic trends
World GDP growth for 2011 and 2012 estimated at 2.7 percent and 2.5 percent
Shifting centres of economic activity – GDP of Asia and Europe will converge
Working age population shrinking is key
Social and environmental trends
Increased internet and mobile connectivity transforming the way people live and interact
Increasing consumption and associated supply gap in key natural resources (e.g. oil, water) creating need for resource efficient and climate change solutions
Business and technology trends
Buyers are moving towards integrated technology and operations outsourcing
Shift in industry structures and higher regulatory control
Corporate boundaries being redefined (e.g. open innovation, extended supply chain)
Technology radically transforming the way traditional corporations and governments function
Opportunities Developed markets are still attractive from
cost rationalization perspective Rise of largely untapped market segments Geographies: India and China, US is still
huge market Verticals: Public sector, Healthcare Customer Segments: Second wave of
outsourcing
Risks
Shift in existing market segments driven by Cannibalisation of existing services (e.g.
SaaS replacing production support) Spend consolidation Automation
Regulatory control in source markets, hence slowdown in adoption
Prevailing global megatrends present new opportunities and risks for the industry
Outsourcing Industry Overview
May 4, 2012 Proprietary and Confidential 6
1150
645
309
153
605
1125
599
293
147
586
Engineering and R&D
Hardware
Packaged Software
Business Process …
IT Services
2010 2011
$ 1.7 Tn*
Worldwide IT-BPO Spend1
$ Bn
Global Sourcing Market Size
$ Bn
62-64 70-72
2010 2011
IT Sourcing Business Process Outsourcing
102-106 114-118
12%
IT-BPO Contracts by TCV Bands2
16 14 149
197 212
663
2002 2005 2008 2011
USD1 billion+
USD 100-199 million
USD 25-99 million
(Nos)
16.1
5.7
14.7
23.8
26.8
17.5
5.1
6
17.1
25.2
Others
Healthcare & Pharma
Telecom & Media
Manufacturing
Financial services
2010 2011
IT – BPO Contracts by Verticals
$ Bn
Grew nearly 2x of global technology spend growth in 2011, Decisive shift towards smaller deals in the range of $25-100M
Key Trends Globalization continues with offshore diversification and increasing focus on IP and platforms
Vertical expertise is a key strategy, with attention on the largest categories (BFSI, Government, Telco, and Healthcare)
Positive change in perception and acceptance of value proposition of mid-size players
Sourcing still the major hurdle to adoption of newer models and vendors
Fortune 1000 companies who have not offshored much revisiting their offshoring strategy
Offshore ITO spending expected to double in the next 5 years
Overall BPO spending expected to increase 20% from 3% of total ‘outsourceable’ work
Increasing momentum in strategic and defensive M&A
Global Sourcing
Source – 1 - Everest, Gartner, IDC,NASSCOMO 2 – TPI( Contracts with TCV >25M USD
Outsourcing Industry Overview
May 10, 2012 Proprietary and Confidential 7
89.7
27.3 19.1 31.9
64.1
42.0
15.9 12.5
US (Tier II) China Philippines Mexico Brazil Czech Republic
India India (Tier II)
Operating Cost Per FTE for Transaction BPO Services1
(2011,$‘000)
119.6
37.5 24.3
49.4 74.8
58.3
22.9 20.4
US (Tier II) China Philippines Mexico Brazil Czech Republic
India India (Tier II)
Operating Cost Per FTE for IT Services
(2011,$‘000)
Leader in cost/quality competitiveness amongst key global sourcing locations – cost savings of around 50 percent
Wage inflation being offset by strong operational cost efficiencies
Widening Pyramid1
8.4 11
2005 2011
($’000)
Stable Entry Salary Levels
Number of freshers grew three times during 2004-10
Senior
Mid Level
Entry Level
220
570
1,980
(Mix of Tier 1 and II/III College Graduates
(‘000 Nos.)
2005 2011
Gro
win
g S
kil
l Level
Among all global sourcing locations, Widening employee pyramid & stable entry level helped keeping employee cost in control
India continues to be the preferred global sourcing destination
Entry level salary growth remained flat during the past six years (CAGR of 4.6 per cent)
Diversity at entry level keep a check on entry level salaries Source – 1 - Everest,, KPMG,NASSCOMO 2 – TPI( Contracts with TCV >25M USD
Outsourcing Industry Overview
May 4, 2012 Proprietary and Confidential 8
Maturity
Shared, Managed Services
Business Tech. Mgmt.
Monetisation of Assets/Platforms
SaaS
Cloud, Mobility Social
Agile Methodology
Verticalised CoEs
Pay-per-use, Risk and Reward Models
Verticalisation Innovation Transformation
Shared, Managed Services
SLA-Driven
Agile Methodology
Cloud, Platform Solutions
Test Labs, CoEs
Pay-per-use
Differentiation
Asset-Lite
Shared, Services
Resources Sharing
Test Labs
Emergence of Managed Services
Process Excellence
Asset-Heavy
Dedicated/ Captive Model
Time and Material
Staff Augmentation
Labour Arbitrage
Shift to Managed Services Model
Shift to “Pay per use” Model
<2004 2004-2007 2007-2009 2009-2012
Companies are moving towards business outcomes
Valu
e
Business Outcome pricing is rare today but is increasingly the model of choice. In Forrester’s Enterprise IT Services Survey, approximately 25% of firms stated moving to output-based pricing models as a critical or high priority –
Forrrester in Business Outcomes based pricing models drive results in Packaged application Implementations- April 2010
Outsourcing Industry Overview
May 4, 2012 Proprietary and Confidential 9
Growth through native models
• Historically companies who have grown through native models have managed to extract disproportionate value over a long period of time
• However companies struggle to change course to adopt newer business models once they gain large size and scale
1990 1970 2010
Can Microsoft adopt Google’s business model?
Offshoring wave Integrated tech & ops Technology outsourcing
Outsourcing Industry Overview
May 4, 2012 Proprietary and Confidential 10
Agenda
Outsourcing Industry Overview
iGATE Overview
Acquisition of Patni and Successful Integration
Growth Strategy - Investing in Our Future
Summary
May 4, 2012 Proprietary and Confidential 11
iGATE - Corporate Overview
Full spectrum Technology, Business Process Outsourcing and Consulting Services firm helping customers achieve business outcomes
Vertical mix
Geography mix
22%
31% 35%
6% 4% 2% Banking & Financial
Services
Insurance, Healthcare & Life Sciences
Manufacturing, Retail, Distribution & Logistics
Communications, Energy & Utilities
Media,Entertainment,Leisure & Travel
Public Sector
80%
14%
6% Americas
EMEA
APAC
Incorporated in Dec, 1993 Headquarters: Fremont, CA Delivery Centers in Bangalore, Mumbai, Pune, Chennai,
Hyderabad, Noida, London, Australia and Mexico, EL Paso Listed on the NASDAQ (IGTE) 27,000+ employees 300+ clients globally including top Fortune 500 blue chip clients Healthy client mix: Top client – 12%, Top 5 – 37%, Top 10 –
47% Diversified customer base – Two $100+ million customers, 22
$10+ million customers, and 42 $5+ million customers
219 193 281
779
FY' 08 FY' 09 FY' 10 FY'11
Revenue ($M)
iGATE Overview
1- Patni revenue aggregated from 16th May’11
1
May 4, 2012 Proprietary and Confidential 12
We are now a $1 Bn+ company and equipped with the desired platform to realize our vision and mission
Five Values drive the iGATE vision
Citizenship Innovation Passion Respect Excellence
Changing the rules
to deliver high-
impact outcomes for
a new technology-
enabled world
$ 3 Bn. In revenues by 2017
30% of all revenue from outcomes based pricing
Amongst the Top 3 best employers in India
No. 1 in Earnings growth
iGATE Overview
May 4, 2012 Proprietary and Confidential 13
iTOPS : iGATE’s Outcomes Driven Model
iGATE Proposition
Integrates technology and operations
Outcomes based pricing
Takes on the People, Process and Technology Risk and investments
Provides the flexibility to ramp up / ramp down
Client Benefits
Pay for Results, IT spend clearly linked to business outcome
Client and iGATE work on the same incentives
Insulated from the technology risk
Fixed costs are “variable-ized”
Organizations moving towards integrating technology and back-office operations and creating Executive positions responsible for technology and operations outsourcing
Acknowledgement of iTOPS-type variable pricing model by large vendors and industry analysts
Emergence of pay-as-you-use models like cloud computing, SaaS, iTOPS
Recession has shown the value of pay-as-you-use models to customers
iGATE Overview
May 4, 2012 Proprietary and Confidential 14
Shared Services Operating Model Value Proposition
Repeatable iTOPS Solutions across multiple clients
Thought Leadership
Over-the-horizon
Intellectual Property (IP) Integrated
technology platform Next-Gen process
re-invention/Lean Six Sigma Deep domain and
process expertise
Transformational Impact
Repeatable output Predictable unit cost Shared Operational risk
management Shared business risk
through partnership Low switching cost
On-Demand Platforms
Scalable talent &
capabilities in an on-demand solutions Embedded agility Plug-and-play
simplicity Engaged talent for
continuous improvement Transparent cost
structure
Outcomes-based Engagements
Outcomes-based
pricing Billed on realized
outcomes Lower transaction
costs via the ‘Cloud’ Reduced Capex with
dynamic capacity allocation
Committed to deliver the highest order of value
iGATE Overview
May 10, 2012 Proprietary and Confidential 15
Over the last 5 years, iGATE has successfully transformed Into Best in Class performer
iTOPS is a more attractive long-term offering due to client stickiness and margin profile
iGATE is the first outsourcing provider to offer outcome-based solutions through iTOPS
iTOPS successfully implemented in top clients; which has been an excellent reference
Transformed iGATE from a staffing firm to a full service outsourcing/project and advisory firm
Success In Higher Value-
Added Services
iGATE has consistently ranked among top employers Industry-leading brand recognition to attract top talent
Ability to Retain Top Talent
iGATE increased operating margins from –9% in 2004 to 19% in 2010 Historical focus for iGATE’s transformation was based on better price realization, onsite-
offshore mix and improving resource efficiency
Improved Financial
Performance
Significant experience with corporate restructuring, from spin-off to divestiture Delisted Patni Computers from the Indian Stock Exchanges recently Earlier had successfully delisted the Indian subsidiary (iGATE Global Solutions) from Indian
Exchanges
Streamlined Corporate Structure
iGATE Overview
May 4, 2012 Proprietary and Confidential 16
Agenda
Outsourcing Industry Overview
iGATE Overview
Acquisition of Patni and Successful Integration
Growth Strategy - Investing in Our Future
Summary
May 4, 2012 Proprietary and Confidential 17
iGATE acquisition of Patni - largest Leverage Buyout in offshore technology industry
Transaction highlights
Deal Size - $1.5Billion
Acquisition funded through $330M of preferred equity from Apax partners and $770M debt in the form of senior notes
Further raised $265M for delisting of Patni from Indian stock exchange
Key Value proposition
Catapulted iGATE to a $1Billion+ revenue company with over 27,000 in employees
Firmly positions iGATE as a top-player in the highly-fragmented global IT industry
Strengthened presence across several verticals including Banking & Financial Services, Insurance and Healthcare, Manufacturing & Retail, Communication & Media and Utilities
Increased access to global customers and entry into new geographies
Provided the opportunity to cross-sell services to a broader client base
Acquisition of Patni and Successful Integration
May 4, 2012 Proprietary and Confidential 18
Key Highlights of the successful integration
Did not lose a single client following the acquisition for reasons of change of control
Did not lose any key executives and employees
Met analyst EPS estimates
Buy/Outperform rating from most of the analysts
Stakeholder feedback: post acquisition Integration1
“Did not see any impact in my local
Patni team, so it was managed
well from my perspective. iGATE
has been proactive in bringing
newer models and ideas.”
CXO, F1000 client
“Mutual benefit to both organization and
customers. Limited overlap of solutions /
offers. Well managed integration and
external communication. Good early
leadership decisions made. Clear
strategy.”
CXO, Global client
“iGATE Patni came to us quickly
following the announcement. They
answered all of our questions
throughout every layer of our
organization.”
Global Major Client
Source: 1 – HfS 360 Assessment: iGATE Patni, Mar’12 2 – TNS Customer Delight Survey, Feb ‘12
Acquisition of Patni and Successful Integration
May 4, 2012 Proprietary and Confidential 19
iGATE has met every operational goal well in advance in spite of complex integration
Achieved margin targets (Gross Margin /EBITDA target - 40%/25%) six quarters in advance
Achieved cost synergies of approximately $32M per annum against the targeted synergy of $30M
Attrition has come down significantly from sub 30% to 16% currently
Increased utilization rates to more than 75%
Rationalized long list of non-strategic accounts with less than $1 M revenue from 372 to 301 which resulted in higher operating efficiencies
Expect to be earnings accretive by end of this year
Acquisition of Patni and Successful Integration
May 4, 2012 Proprietary and Confidential 20
Agenda
Outsourcing Industry Overview
iGATE Overview
Acquisition of Patni and Successful Integration
Growth Strategy - Investing in Our Future
Summary
May 4, 2012 Proprietary and Confidential 21
iGATE
The next phase of journey entails focusing on the goals we have set for 2017
Tier
1 F
irms
Tier
2 F
irms
2017 2011
1-10 -100
Tier 1.5 company with $1 Bn revenues
Deep expertise in select industries (such as BFS, Insurance, Mfg., M&E etc.)
Well diversified client base Prequalified for large
contracts (>$20MM) Execution excellence Solution centric approach
3-30-3-1
Well-established and proven Tier-1 capabilities
Focus on large end-to-end engagements
Established differentiation through business outcomes based model
Leading player by capability in 2 verticals and serious player in 3-4 verticals
Preferred technology partner to most Fortune 1000 companies
Move up the value chain (R&D) More efficient sales engine Larger ecosystem of
alliances/partnerships Highly respected brand offering
unique solutions in the marketplace
Diversified Industry & Client base
Established capabilities and well-differentiated offerings
Investing in Our Future
iGATE
May 4, 2012 Proprietary and Confidential 22
Key Growth Drivers
Investing in Our Future
• Account mining through robust account management framework
• Cross-sell : Newer services in existing accounts
• Expand into underpenetrated areas in existing markets
• Through iTOPS solutions which generate large multi-million deals viz. TPA, IDP, Radar solution, etc
• Enter new F1000 customers with the differentiated business model
Differentiated Product & Engineering Solutions
• Diversification into new verticals such as Public sector, Media, etc
• Expansion into newer markets such as Australia, etc
Short Term Medium Term Long Term
Gro
wth
Tra
ject
ory
Margins will be maintained while the investments are made.
May 4, 2012 Proprietary and Confidential 23
Agenda
Outsourcing Industry Overview
iGATE Overview
Acquisition of Patni and Successful Integration
Growth Strategy - Investing in Our Future
Summary
May 4, 2012 Proprietary and Confidential 24
Engagement
Excellence Industry
Leadership
Employee Practices
Service Delivery
‘Outsourcing Excellence Award’: Royal Bank of Canada ‘IT Supplier of the Year, 2010’: Weyerhaeuser ‘Strategic Supplier of the Year’: Genworth Financial ‘Best Supplier for FY 2009-10’: Toshiba
Mitsubishi
‘Best 20 in Insurance’: IAOP’s Global Outsourcing-100, 2010
Lead ranking in Financial Services: Fintech-100, 2010
Lead ranking in Customer Satisfaction: Black Book of Outsourcing, 2010
Lead ranking as Global R&D Service Provider: Zinnov Management Consulting, 2011
BPO Excellence Awards: ‘Operational Excellence and Quality’, and ‘Social Change Agent’, 2010 ‘Case in Point Platinum Award‘: Overall Case
Management Excellence in Healthcare, 2011
Dataquest- IDC, 2011: iGATE ranked 3rd ‘Best Employer” 3 years in a row Fourth Employer Branding Awards, 2010: Patni
winner for ‘Innovative retention strategy’
Reinforcing our commitment to all-round excellence
Summary
May 4, 2012 Proprietary and Confidential 26
David Kruzner EVP and Co-Head of Consulting & Solutions
iGATE Corporation Solution & Consulting
May 10, 2012 Proprietary and Confidential 27
Changing the rules to deliver high-impact outcomes
for a new technology-enabled world
Executing The Vision->Mission->Strategy
iGATE Vision
Working with our CxO Clientele
$3Billion in Total Revenue
30% Revenue - Business Outcomes
Disrupting Markets
Integrated Client Engagement Model
Our Mission & Strategy
Market Facing Thought Leadership
Integrated Operating Model
Strategy, Advisory, and Thought Leadership at Vertical/Horizontal Intersection
Large , Scalable and Reusable iTOPS Solutions (Whitespace)
Innovative , Point Solutions on Proprietary Platforms (IP)
High impact, Transformational Business Outcome Models
Executing Our Strategy
Ideation through Client Advisory Councils, CxO Forums and Academia/Futurists
Solutions and
Consulting
May 10, 2012 Proprietary and Confidential 28
Consulting: An Integrated Operating Model Our DNA (Sales/Delivery/Consulting)
Executive Office CXO’s
Enterprise Consulting
Innovative, Point Solutions
Micro-Vertical Expertise
Top Down Account Mining
Emerging Practices & Tech Platforms
Ope
ratio
ns
iTO
PS P
latfo
rms
Technology
Centers of Excellence
Future Best Practices (WFM, O2C, P2P)
Connect and Discover Extend and Expand
Transition & Program Management
Emerging Technology and Mobility Strategy
Emerging Business & IT Operating Models
Customer Experience Centers
Predictive Analytics & Business Modeling
Account Mining & Management
Deliver on the
Promise
Build Outcomes Journeys
Delivery Higher Throughput with Less
Innovative Platforms and Solutions
Anticipating Regulatory Implications/Actions
Translating Market Trends in Client Context
Leveraging CxO Networks &
Connections
May 10, 2012 Proprietary and Confidential 29
iTOPS Solution Development Process Ideation -> Investment -> Deployment
Customers & Industry PoV
Alliances & Partners
Advisory, Strategy Consulting & Thought
Leadership
Analyst Organizations
Ideation portal (Internal)
iTOPS
Solutions Development Framework
iSDF
Scalable, Repeatable,
Outcomes Based
Minimum 70% IP from iGATE
Revenue at $50M or greater
(3-5 years)
Gross Margins In excess of 50%
High Volume, High Transaction Processing
iTOPS Solution Criteria
Point Solutions with high Customer /Industry Impact
Scalable, Repeatable Solutions as Shared Services
"Game Changing" Solutions (Shared Services)
Pay for Results from Strategic Customers
Integrated Tech & Ops Platforms – Industry Based
Focused on Target client base
Academia & Industry Associations
May 10, 2012 Proprietary and Confidential 30
Solution Concept
Market Research
Value Proposition
Solution Description
Market Assessment
Competitive Analysis
Capability Analysis
Alliance Requirement
Risk Profile
Development Plan Marketing Strategy Resource Plan Financial Pro Forma Risks Mitigation plan Business Case
Solution Development
GTM Readiness
Knowledge transition
Sales and delivery training plan
Marketing Plan Maintenance and
Upgrade Plan Customer Metrics Win/Loss Analysis Sales Plan & Strategy
Solutions Development Framework “iSDF for iTOPS”
Solution Definition & Investment Plan (4-8 weeks) Solution Development & Go to Market (3-6 months)
Stage 0 Concept
Stage 1 Assessment
Stage 2 Detailed
Planning
Stage 3 Development
Stage 4 Go To Market
G1 G2 G3 G4
Five-Stage Solution Development & Governance Process
Ensures Executive Governance at Major Stages Product/iTOPS Management, Delivery, Sales, Marketing, Research & Analysis, Finance, HR, Legal
Concept Document Solution Assessment Report
Business & Investment Case
Report
Sales, Marketing and Training artifacts
Market Based Solutions
Sales Pipeline Completed Solution
May 10, 2012 Proprietary and Confidential 31
Resolving High Risk & High Cost Data Silos
Global Reference Data operations
Client / Entity Masters
Counter Party Exposures
Credit Risk
Replace inefficient mortgage platforms
Reengineer entire workflow
End to end from file set-up, processing, underwriting, closing to funding
Fully compliant with Regulatory standards
Integrated Clinical Trial Data R&D platform
Accelerates cycle time across all R&D Silos
Operational Cost Reduction
Reduced Time to Market by Months to Years
Transform Policy & claims Insurance administration for:
Legacy blocks / closed block
New product introductions in the US
End- to- End , Integrated, Cloud based Platform
End-to-End Mortgage Platform with BPO
Integrated Oracle Platform with Proprietary modules for clinical trials administration and reporting
End-to-end servicing for Insurance Industry
Reduced CapEx & Opex Cost
Reduced Risk by Group
Faster Time to Market
Enables Revenue Optimization
Enhanced Scalability
Per funded loan pricing
Reduction in process cycle time
Cost Reduction per file
Better quality throughput
Managed Service:
Reduced clinical trial operational expenses
Reduced time-to-market
Reduced Medical Loss Ratios, Reduced Administrative Costs as a percentage of Premium
Today’s iTOPS Solutions
IDP TPA RDS Mortgage Servicing
VP
IP
B/O
May 4, 2012 Proprietary and Confidential 32
Shared Vertical iTOPS Soluton Third Party Administration (TPA Platform)
Senior Health: Medicare Supp, Medicare Advantage, Med Part D
Life, Annuity & Pensions
Disability Insurance
Long Term Care and Other Health (dental, hospital, cancer)
Cor
e Fo
cus
area
s
More than 1000 Registered Nurses
National discount Provider Network
El Paso, TX
Pensacola, FL Weston, FL
CHCS US Delivery Centres
Global Operations
Full Service: Third-Party Administrator in Insurance
Business Outcomes: Reduced Medical Loss Ratios, Reduced Administrative Costs as a percentage of premium
Industry leading experience
Authorized across all 50 States
Over 1 million policies / lives Serviced
Over 350,000 policies under Full Administration
31 Carriers administered on one platform
Multi-lingual Call Center Specialists managing 1.2 million calls annually
Noida
May 4, 2012 Proprietary and Confidential 33
Growing Existing Accounts through cross-industry thought leadership and Advisory Services to embark on client’s Outcomes journey.
Growing New Business in new accounts through trusted CXO relationships
Creating New Avenues of growth through unique, Point Solutions from our iSDF process addressing key pain points in both new and existing markets.
Innovating and Building Shared Services platforms for the future.
Key TakeAways Creating The Future…..2014 and Beyond
Solutions & Consulting is about:
2012 Market Creators
2014unique and Market Leaders
2016 Market Innovators
May 4, 2012 Proprietary and Confidential 35
SEAN NARAYANAN
Chief Delivery Officer
iGATE Corporation Delivering Business Outcomes
May 4, 2012 Proprietary and Confidential 36 Proprietary and Confidential 36 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 37
Vertical delivery structure helps us in creating and delivering value to our customers
Delivery Structure
Process Outsourcing (BPO)
Consulting
Enterprise Solutions
Development & Maintenance
Verification & Validation
Infrastructure Management
Insurance, Healthcare & Life
Sciences
Banking and Financial Services
Manufacturing, Retail, Distribution
and Logistics
Communication, Energy and
Utilities
Media, Entertainment,
Leisure & Travel
• Focused on differentiated industry capabilities • Business process-related solutions that are cost-effective and faster to implement • Investments in IP- driven solutions
Life and Annuities
Property and Casualty
Healthcare
Re-Insurance
Life Sciences
Automotive
Hi-Tech and Electronic
Consumer Packaged Goods
Retail
Logistics and Transportation
Process and Discreet
Telecommunications – wire, wireless, cable, broadband
Enterprise Mobility
OSS/BSS
Smart Metering
Energy Analytics
Asset Management GIS
Program Planning and Production
Media Asset and Content Management
Content Distribution
Gaming, Theme Parks and Hospitality
Publishing
Wholesale Banking
Mortgage Banking
Retail Banking
Capital Markets
iTOPS iTOPS iTOPS iTOPS iTOPS
May 4, 2012 Proprietary and Confidential 38
We bring our organizational capabilities together through an integrated core team for strategic customers
Delivery Structure
iTOPS
Integrated Technology & Operations –
iTOPS Manager
Research & Innovation
•Centers of Excellence •Tech. Consulting
•Research and thought leadership
Client Services •Client-centricity and
building deeper relationships
•Subject and thought leadership
Quality Process Consulting
•CMM 5, ISO 9001, Six Sigma, ITIL, Kaizen,
COPC •Independent audits
Resource Management &
Training •Cross trained multi skill
talent availability •Customized training to
meet business needs Domain Group
•Vertical specific domain Business Analysts
•Translate domain needs into Technology
Solution Design Group
•Customer centric solutions and value
proposition •Org-wide best practices
and competencies
ENTER
PRISE SYSTEM
IN
TEGR
ATION
APP
LIC
ATIO
N
DEV
ELO
PMEN
T A
ND
M
AIN
TEN
AN
CE
BUSINESS PROCESS OUTSOURCING
CONSULTING
May 4, 2012 Proprietary and Confidential 39 Proprietary and Confidential 39 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 40
We enable customers to optimize their business through Integrating Technology and Operations…
Integrating Technology and Operations
iTOPS
Features Value • End to end
responsibility for the process & technology
• Guaranteed availability of transactions
• Sustained value & y-o-y cost reductions
IT BPO
• Stand alone IT and BPO services
• Arbitrage of lower cost resources
• One time cost reduction
• Access to large multi-skilled resource pool
iTOP
S
Model
• Business transformation tools bundled in for efficiency gain
• iTOPS model providers better solutions to our customers problems
• Single ownership of people, process and technology
• Shared CAPEX, reduced fixed cost • High focus on quality and efficiency
Traditional M
odels
May 4, 2012 Proprietary and Confidential 41
… and aligning our solutions to their business outcomes
Del
iver
y E
nabl
ers
• Development / Implementation, Reengineering / Upgrade, Testing
• Maintenance
• Process Definition and Set-up; Improvements
• Implementation/Refresh and Hosting
• Monitoring/Management
Per Invoice processed, L/C processed, Funded loan, etc.
Per Application, Report, Test Script, etc.
Per Device - Service Catalog
SaaS
Shared Risk/Reward
Business Benefits based SLA
Implement Best-in-breed Solutions – Oracle Advanced Collections, Trade Finance, Mortgage, Insurance
Increased Automation iGATE Solutions – OCR, Workflow, Document Mgmt, ePartner, Web Portal
Process Re-engineering
Delivery team rationalization - COSM Shared Services – F&A, Reporting Factory, Remote Monitoring
Business Transform
ation
Processes/Ops: F&A, Procurement, Sales Order Mgmt, Trade Finance, etc.
Business Layer
Applications Layer Custom / Packages
Infrastructure Layer
Outcome based Models
Efficiency & Integration
Business Outcome Alignment
Cocoon Model - Accelerators, Training, Quality & Resource Management
Governance Goals alignment
Talent Pool & Management iTOPS skills, High Avg. Experience, Flexible
Resourcing
Info Security ISO 27001
Project Mgmt & Control Automation, Real time tracking
Continual Improvement Six Sigma, Kaizen
Business / Technology Alliances Automation, Industry Solutions
Integrating Technology and Operations
May 4, 2012 Proprietary and Confidential 42 Proprietary and Confidential 42 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 43
We have created a cocoon model bringing Research & Innovation, Training and Quality together
Delivery Efficiency and Effectiveness
PRODUCTIVITY & EFFICIENCY
• Integrated process and technology curriculum linked with technology and quality cocoon
• What to hire and what to train linked to resource management
• Frameworks and code generators • Re-usable component repository • Standardized Tools & Integrated
Dev Environment
• Working closely with demand planning model
• Forward linkage with revenue and backward linkage with training and recruitment
RESOURCE MANAGEMENT: Customer timeliness
TRAINING: Optimal skills for engagements
TECHNOLOGY COCOON: Consistent environment
QUALITY COCOON: Ensuring consistency in work
• CoEs to provide consulting support • Reviews & Testing certification
program • KM Forum to share best practices,
ideas etc.
May 4, 2012 Proprietary and Confidential 44
PRODUCTIVITY & EFFICIENCY
We focus on margins by continuously improving operational efficiency through usage of innovative tools
• Effective PYRAMID MANAGEMENT by multi skilling & cross training
leading to lesser dependency on lateral hiring for advanced skill sets
• Faster deployment by ensuring right skilled resources based on business
needs
• Enhanced OPERATIONAL EFFICIENCY through
effective governance & controls
• Internal project dashboard to track all critical projects and
take timely action to resolve issues
• Resource management dashboard
to track various parameters and
improve utilization by monitoring
revenue forecast, bench and attrition
• Ensure bench resource aligned to
business requirements leading to
OPTIMAL UTILIZATION
• Achieve business excellence through various process improvement initiatives
like VALUE INNOVATION (VI), iLSS (Integrated Lean Six Sigma)
Delivery Efficiency and Effectiveness
May 4, 2012 Proprietary and Confidential 45 Proprietary and Confidential 45 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 46
A host of trends imply the industry is moving towards a utility model
Market Research Led Innovation
Trend Opportunity
Emerging Trends
• Cloud Based Outsourcing
• Enterprise Mobility
• Big Data & Extreme Information
• Reduced dependence on labor by 10%-25% in the next 3-5 yrs
• Growth in Transformation and System Integration opportunities
• Mobility and Big Data to offset shrinkage in traditional ADM revenue
Enterprise Resource Planning • Resurgence in demand; shift in revenue from maintenance / upgrade to solutions / configuration / integration
BPO
• Greater adoption processes on standard platforms (like SAP/Oracle) supplemented by point solutions (where ERPs do not exist)
• Next wave of outcome based delivery
Infrastructure Management
• Services like RIM to continue to grow; significant shift likely due to
change from asset ownership to Infra as a service
Alternate ‘Offshore’ for Service Delivery
• India continues to be the hub for North Americas
• Eastern Europe as a hub for Continental Europe
• China as the hub for Japan and China
May 4, 2012 Proprietary and Confidential 47
Our Research & Innovation team helps our customers appropriately adopt and lead with these models
Solution based on Emerging Trends • Enterprise Mobility • Social Analytics • Cloud Computing • Big Data & Extreme
Information
Enabling Innovations • Run end to end idea
campaigns & workshops covering capturing, evaluating, selecting and rewarding ideas
• Programs to encourage employees to generate ideas
Develop Delivery Innovations • Develop reusable components,
frameworks & tools • Enhance automation • Smart programming
Mine and Proliferate Innovations • Mine promising
innovations - Proliferate innovations and tools across engagements & service lines
• Technology evangelization
Creating Value Proposition • Business Analysis &
Incubation • Industry Thought
Leadership Research & Innovation
Value to Service Lines • Develop new ways of
delivering services • Improve profitability &
productivity
Market Research Led Innovation
May 4, 2012 Proprietary and Confidential 48 Proprietary and Confidential 48 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 49
Our services are also aligned to Business Outcomes
Customer Outcomes
Successful execution of automated test scripts
Reducing testing cycle time
Successful month/year close within defined
period
Data consolidation, reduction in latency, and
single version of the truth
Product Engineering
Services
Application Development
& Maintenance
Verification & Validation
(V&V)
Enterprise Solutions
Infrastructure Management
Services
Meeting business SLA’s for key business applications
Implementation / Refresh and Hosting - Per device maintained
Monitoring / Management - Service Catalog based;
Successfully resolved trouble call
Maintenance - Per Application
Maintained
Development, Implementation,
Reengineering, Upgrade - Per
Report
Pre defined outage limits; zero
downtimes during critical
business cycles
Business Process
Outsourcing
F&A - Per Invoice processed
Mortgage Fulfillment - Per
Funded loan
Loan servicing - Per Loan
Serviced
Closed Block - Policy
Administered
Value engineering to guarantee compliance with
environmental standards
Reduction in regression testing time
Enhancement in product performance
May 4, 2012 Proprietary and Confidential 50
Recent wins that are a testimony to the relationship built on customer centricity & aligned business goals
Customer Outcomes
May 4, 2012 Proprietary and Confidential 51 Proprietary and Confidential 51 May 10, 2012
Agenda
Delivery Structure
Integrating Technology and Operations
Delivery Efficiency and Effectiveness
Market Research Led Innovation
Customer Outcomes
Key Takeaways
May 4, 2012 Proprietary and Confidential 52
• An integrated delivery model that enables convergence of technology and operations
• Our traditional services are aligned to customer business outcomes
• Consistency in delivery through creation of a cocoon model
• Non-headcount based delivery through iTOPS shared services platforms
• Focus on margins through operational efficiency and innovative tools
Key Takeaways
Key Takeaways
May 4, 2012 Proprietary and Confidential 54
iGATE Corporation Product and Engineering Solutions
Satish Joshi EVP and Head of Product and Engineering Solutions
May 4, 2012 Proprietary and Confidential 55
Product and Engineering Solutions (It’s Engineering! not IT)
Services
End to end product development and product life cycle management
Research & Evaluation
System Development and
Integration
Verification & Validation
Sustenance & Maintenance
Engineering Design
Electronic Design
May 4, 2012 Proprietary and Confidential 56
Global R&D spend continues to grow
CAGR 3.02 %
• Global ER&D spend grown at 12% in last 4 years will be $1.4 Trillion by 2020, growth slowing down but R&D outsourcing growing fast
• R&D spend for US and Europe to increase but at slow rate. Emerging markets driving incremental spend, China will lead the market followed by India/Russia.
$ 1400 billion
Source : Computerworld.com, Nasscom Strategic review 2012, Press Search
May 4, 2012 Proprietary and Confidential 57
Vertical R&D intensity
Growing Verticals (in 2020) - Contribution of more than 50% in R&D spend. - ER&D offshoring to India will be 35% from these verticals.
Automobiles and Parts
Source : EU Tech Scorecard report, Financialexpress.com, Press Search
May 4, 2012 Proprietary and Confidential 58
Product and Engineering Solutions (It’s Engineering! not IT)
Research & Evaluation
System Development
Verification & Validation
Sustenance & Maintenance
Electronic Design
Engineering Design
Services
End to end product development and product life cycle management
Automotive Electronics
Medical Electronics
Industrial Automation
Storage Networks & Computing
Consumer Electronics & Communication Protocol Stacks - H.323, IP Phone, Streaming, QoS Audio/Video/Imaging Mobile & Wireless, Handset platforms Digital Camera, DTV, Set Top boxes Office equipment – Printers, Scanners Business Equipment – POS terminals, Bar code
readers/printers, Sales automation devices etc
Under the hood – ECUs, Vehicle Sub-Systems Body Electronics Onboard Network – LIN, CAN, MOST, 802.11 Telematics and Navigation systems In-Car Audio/Video Systems
• Network/Resource management, Access Management • Storage Components – SCSI, RAID, FC, IP, SNMP • File Systems & OS - CIFS, NFS, SAMBA, IPC • Hardware Platforms, Boards, HBAs, Controllers, Drives • Network Appliances, Routers, Switches
• Field Devices, Instruments • Intelligent Components – PLCs, RTUS, Controllers • SCADA, HMI, DCS • Building Automation, Plant Automation • Railway Electronics
Monitoring Equipment Diagnostic Equipment Therapeutic Equipment
Enterprise Platform Software • Shrink-wrapped, Platform/OS, CASE tools, Testing Tools • System s/w, Application F/W & Enterprise s/w • PLM/PDM & CAD/CAM/CAE s/w • Banking & Financial Services, Insurance, Telecom • Hospitality, Energy & Utilities, Manufacturing and Healthcare
May 10, 2012 Proprietary and Confidential 59
iGATE Patni : A leading R&D Service Provider
Overview
iGATE Patni ranks among Top 3 Service Providers in Global R&D Service Providers’ Rating, a comprehensive rating and analysis for the top R&D Service Providers in India, China, Russia and Eastern Europe conducted by Zinnov Management Consulting
May 4, 2012 Proprietary and Confidential 60
Partnering for Innovation
The Rio Tinto India Innovation Center
Scope: Development of Technologies for the “Mines-of-the-Future” • Remote Minining operations • Safety • Logistics • Yield Optimization • Cross-Domain lateral innovation (useability, imaging, Safety, Data mining
and analytics, Wireless technolgies etc) Scale : 0 350 people center in the first year
potentially 60-80 Million revenue over 5 years for iGatepatni
May 10, 2012 Proprietary and Confidential 61
Neuro navigation Simulation System, a pre-operative surgical
planning system, which simplifies planning for complex procedures such
as Deep Brain Stimulation (DBS). This software integrates multiple patient
data sets, including CT, MR and microelectrode recording data, to assist in
charting the best course for entry to deep brain target location
Partnering for Innovation
May 10, 2012 Proprietary and Confidential 62
Partnering in development of an Electronic Train Management
System that integrates new technology with existing train control and
operating systems to enhance train operation safety. It helps prevent track
authority violations, speed limit violations and unauthorized entry into
work zones – all of which reduce the potential for train accidents.
Partnering for Innovation
May 10, 2012 Proprietary and Confidential 63
Self Healing Storage Network Solution that enables monitoring health of storage systems, servers and network devices using the alert-based health monitoring system; reducing the number of service requests by analyzing and filtering the alerts optimally; and leveraging the event filtering and correlation functionality to aid proactive self-diagnosis and healing.
Partnering for Innovation
May 4, 2012 Proprietary and Confidential 64
Winds of Change –2011 : Customer-speak!
• Industrial Machinery Manufacturer – Redesign for Indian markets
• Medical Imaging Systems Manufacturer – Cloud Solution to be hosted and run jointly to provide Imaging as a
service
• A Mining Company – Innovation Center to leverage cross industry knowledge to create
technology for the Mines of the Future (Saftey, Useability, Automation, Analytics)
• Plant Automation Systems and Equipment manufacturer – Real-time analytics and reporting of shop-floor data for intelligent
plant monitoring
“Cross-domain” knowledge integration
May 4, 2012 Proprietary and Confidential 65
• Expansion of Geographic Footprint – Europe:
• Automotive, Industrial Automation, Medical , Specifically in Scandinavia: Plant Engineering, Marine, Heavy Machinery
– Japan • Automotive, Industrial Automation, Medical, Consumer Electronics
Drivers for Growth
• Expansion of Market Scope: New Branded Services/Solutions – Value Engineering & Obsolescence Proofing : Especially in the Industrial
Automation and Medical Devices Market – Reengineering for emerging markets – Automotive Functional Safety & ISO 26262 Compliance – Packaged/Stadardized Sustenance services with “skin-in-the-game” outcome
based models in the Storage/ISV markets
• Cross Sale Opportunities within Existing Client Base Manufacturing (Esp. High-Tec) customers:
• Through Engineering, New technology and Product Development solutions • Partnering/Joint product re-engineering/Product support opportunities • Jointly addressing opportunities in Product Lifecycle Management and
Manufacturing Execution Systems Management
May 4, 2012 Proprietary and Confidential 66
Summary
• iGate an acknowledged leader in several sectors of the R&D and Engineering solutions market
• Investments in Industrial Automation & Heavy Engineering, Medical Technologies, Automotive, Computing technologies etc continue to grow
• Product and Technology adoption for emerging markets an important investment focus for our customers and prospects
• Large relatively untapped potential in Europe and Japan
• Synergies for cross-sale into other dominant verticals in iGate’s Enterprise IT portfolio
May 4, 2012 Proprietary and Confidential 68
iGATE Corporation Outcome-based & iTOPS-focused Human Resource Management Model
Srinivas Kandula EVP and Head of Human Resources
May 4, 2012 Proprietary and Confidential 69
Organizational Grade Pyramid
Workforce Demographics
Employee Strength*: 27116
Average Age*: 29 Years
Gender Diversity*: 3:1 (Male Female ratio)
Average experience*: 51 months *As on March 31, 2012
May 4, 2012 Proprietary and Confidential 70
Workforce Demographics (…contd)
25.52%
74.48%
Female
Male
Gender Diversity Snapshot of Employee Academic Qualifications
Diversity (based on employee Nationality)
Other geographies: - Austria - Belgium - Brazil - Finland - France - Indonesia - Italy - Turkey
Australia
Canada
China
Dubai
Germany
India
Ireland
Japan
Malaysia
Mexico
Netherlands
Singapore
South Africa
Sweden
Switzerland
UK
USA
Others
May 4, 2012 Proprietary and Confidential 72
iGATE- Outcome-based 5C Model of HR
Our Compensation model follows a 3-fold holistic approach
May 4, 2012 Proprietary and Confidential 73
iGATE- Outcome-based 5C Model of HR
GREEN BUILDING AWARD
May 4, 2012 Proprietary and Confidential 74
iGATE- Outcome-based 5C Model of HR
iGATE Career Planning
Management System
May 4, 2012 Proprietary and Confidential 75
iGATE- Outcome-based 5C Model of HR
Code of Business Conduct & Ethics
May 4, 2012 Proprietary and Confidential 76
iGATE- Outcome-based 5C Model of HR
iGATE iTOPS Competency Model iGATE iTOPS-focused Behavioral & Leadership Competency Model Proficiency Levels
May 4, 2012 Proprietary and Confidential 77
iGATE – Outcome-based Recruitment Process
A stringent set of activities undertaken as part of the Recruitment framework, including Paper-pencil tests and Technical panel interviews ensure a selection rate of 3%
The iGATE Recruitment Model • An in-built capability to
screen and process over 50000 candidate profiles per Quarter
• Team is equipped to hire 5000 employees per Quarter across geographies
The iGATE Recruitment Framework
May 4, 2012 Proprietary and Confidential 78
iGATE – Retention Management
Attrition numbers
Industry Average iGATE
16 – 25% 16.5%
Organization-wide
Employee Satisfaction
Scores
Overall Satisfaction
87%
May 4, 2012 Proprietary and Confidential 79
iGATE – Culture Foundation
Our Values Flexibility & Discretion
Openness & Transparency
Fairness & Equity
Citizenship for a Better Community
Innovation for Constant Improvement
Passion for Our Customer's Success
Respect for the Individuals
Excellence in all Our Operations,
Without Compromising on Core Principles
May 4, 2012 Proprietary and Confidential 80
HIGHLIGHTS • Outcome based and iTOPS Enabled- 5C HR Model
to significantly contribute to achieve 3-30-3-1 mission
• More focus on performance and competency
enhancement through iGATE’s specific people development practices
• Creation of iTOPS workforce
• To be the Best Employer in all major Geographies
May 4, 2012 Proprietary and Confidential 81
iGATE - Rewards & Accolades for HR Practices
SMART WORKPLACE AWARDS
May 4, 2012 Proprietary and Confidential 83
Sujit Sircar Chief Financial Officer
iGATE Corporation Enhancing Shareholder Value
May 4, 2012 Proprietary and Confidential 84
Agenda
Significant Milestones
Way Forward
Financial & Operational Challenges
May 4, 2012 Proprietary and Confidential 85
9.6%
19.9% 20.7%
25.8%
17.1%
21.0%
25.4% 26.0%
FY'07 FY'08 FY'09 FY'10 Q2'11 Q3'11 Q4'11 Q1'12
32.3%
37.6% 39.1% 40.2%
34.7% 36.9%
40.3% 40.2%
FY'07 FY'08 FY'09 FY'10 Q2'11 Q3'11 Q4'11 Q1'12
4.7%
12.1%
19.9% 22.9%
12.9%
16.9%
21.4% 21.3%
FY'07 FY'08 FY'09 FY'10 Q2'11 Q3'11 Q4'11 Q1'12
202 219
193
281
170
266 268 263
FY'07 FY' 08 FY' 09 FY' 10 Q2'11 Q3'11 Q4'11 Q1'12
Revenue and Margin Trend
** Corresponding GAAP EBITDA for the periods are 9.9%, 16.9%, 20.7%, 22.1%, 11%, 19.3%, 24.3%, 24.1%
Revenues ($ M) Gross Margin
Non GAAP Operating Margin * Non GAAP EBITDA **
* Corresponding GAAP OM for the periods are 4.7%,12.7%,16.8%,18.9%,5.7%,14.2%,19.2%,18.3%
May 4, 2012 Proprietary and Confidential 86
Highest EPS Growth in the Industry
17%
30%
19%
33%
-10%
41%
-20%
-10%
0%
10%
20%
30%
40%
50%
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Infosys Cognizant Syntel EXLS WNS iGATE
2006 2007 2008 2009 2010 2011 EPS CAGR
Fully
dilu
ted
EPS(
$)
EPS
CAG
R(%
)
May 4, 2012 Proprietary and Confidential 87
Agenda
Significant Milestones
Way Forward
Financial & Operational Challenges
May 4, 2012 Proprietary and Confidential 88
71.6%
54.3% 55.3% 55.7% 58.1%
28%
46% 45% 44% 42%
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12
FP T&M
Margin expansion through operating levers like utilization, SG&A leverage and expansion of employee pyramid
23.8% 21.1% 20.7%
18.3% 16.7% 17.1%
2006 2007 2008 2009 2010 2011
SG&A Cost 1 (%)
Offshore Leverage & Utilization (IT services) Contract Type (IT Services)
5.2 4.8 4.5 4.3 4.3 5.1
2006 2007 2008 2009 2010 2011
Average experience (in years)
48% 49% 48% 46% 48%
80% 77% 77% 78% 79%
80.0% 79.1% 80.9% 77.4% 75.4%
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12
Off Revenue % Leverage Utilization
1- SG&A % is excluding D&A, Acquisition and severance cost)
May 4, 2012 Proprietary and Confidential 89
Agenda
Significant Milestones
Way Forward
Financial & Operational Challenges
May 4, 2012 Proprietary and Confidential 90
Debt Situation
476
1,036
560
272
Cash Position Total Debt Net Debt EBITDA *
Debt is ~2x of EBITDA*
* 1Q12 non-GAAP EBITDA of $68M annualized; corresponding GAAP EBITDA is $63M
Values in $ M
May 4, 2012 Proprietary and Confidential 91
Cash Management
Other items after EBITDA:
Tax @30%
Income on investments @9% on invested cash (85-90% of total cash)
Movement in working capital - ?
Impact due to forex movement - ?
Future Commitments:
Facility expansion - $120M in next three years
Other capex - $20M per annum
Interest - $80M per annum
Cash flow will increase as revenue from the current base increases.
Cash flow Item Approx Annual amount ($M)*
Remarks
Non-GAAP EBITDA 272 1Q ‘12 run rate
(+) Income on investments 38 USD yield could be different based on currency movements
(+/-) Movement in working capital
?
(+/-) Impact due to forex movement
?
(-) Tax 45 ~ 30% ETR
(-) Interest 80
(-) Facility expansion 40 1/3rd per year
(-) Other maintenance capex
20
Net cash generated on current run-rate basis
125
* All numbers are indicative and based on assumptions mentioned based on current run-rate
May 4, 2012 Proprietary and Confidential 92
Tax Management
Tax holiday schemes in India IT/ITES Industry:
Software Technology Park (STP) scheme provided for 100% tax holiday for 10 years which was sunset on 31st March 2011;
Special Economic Zone (SEZ) scheme provides for 100% tax holiday for first 5 years, 50% for the next 5 years followed by 50% for another 5 years subject to fulfillment of certain conditions;
Currently iGATE has five SEZ development centers claiming tax holiday with a seating capacity of 5,212 spread across 620K sq ft of area
Proposed SEZ development centers: Mumbai and Pune with a seating capacity of 30,500 spread across 3206K sq ft of area
Particulars CY 10 CY 11
STPI revenues 51.69% 11.79%
SEZ revenues 9.00% 10.50%
Non exempt revenues* 39.31% 77.71%
Total 100% 100%
ETR 12% 29%
*Revenues from subsidiaries and US which are not eligible for tax holiday
0%
5%
10%
15%
20%
25%
30%
35%
2007 2008 2009 2010 2011
Infosys Wipro HCL Tech TCS iGATE
ETR Benchmarking
May 4, 2012 Proprietary and Confidential 93
Forex Markets – Currency movements
Challenging Macro Environment resulting in such excessive currency movements
Rupee is seeing additional pressure due to twin deficits - Current account and fiscal deficit
May 4, 2012 Proprietary and Confidential 94
Forex Management
We manage our exposure on rolling 12 month basis
Our policy is to hedge on the basis of net exposure and through simple instruments
Protect our benchmark rate through ‘Value-at-Risk framework” Successful in protecting benchmark rate through
various cycles of currency movements
No exponential impact due to hedging – generally a trade off between operational gains & hedging gain/loss on account of currency movements
Business performance is significantly impacted by forex volatility;
Every 1% change in USD-INR rate impacts Operating margins by 25 - 30 bps
Dealing with basket of currencies due to global footprint; revenue split by billing currencies:
USD – 75%; CAD – 10%; GBP – 7%, EUR, AUD, JPY - ~2% each
Main operating Items impacting Fx Gain Loss:
Exchange rate prevailing at the time of billing
Receivables & Payables revaluation
Revaluation of cash balances in currencies other than base currency
Other Liability items which are revalued: Term Loan – $ loan but usage in INR, INR
amount in Escrow account
PCFC – to be settled with USD inflows, in the interim, revaluation results in gain loss
Some other non-cash liabilities
Our Hedging Policy
Excessive currency volatility has increased the business risk Substantially
Various Elements impacting Forex Gain Loss in P& L Statement
Mar-12 Dec-11 Sep-11 Jun-11
367 M 406 M 486 M 374 M
Hedge book position in last 4 quarter( USD Eq.)
May 4, 2012 Proprietary and Confidential 95
Summary
Highest EPS growth in the industry in last five years
Still possess lot of operational levers to enhance margins
Net debt position comfortable at ~2X EBITDA
Simplified capital structure post delisting of Patni
Tax and Forex challenges could pose headwinds to earnings
May 4, 2012 Proprietary and Confidential 97
Emerged as a key player in the industry with the acquisition of Patni Created discontinuity in the market with its innovative business outcomes model Delivery and cost transformation through leveraging greater scale efficiencies in operations and
shared services Enhance large deal sourcing and conversion by building differentiated capabilities Growing Existing Accounts through cross-industry thought leadership and Advisory Services to
embark on client’s Outcomes journey. Growing New Business in new accounts through trusted CXO relationships Creating New Avenues of growth through unique, Point Solutions from our iSDF process
addressing key pain points in both new and existing markets. Innovating and Building Shared Services platforms for the future. An integrated delivery model that enables convergence of technology and operations Our traditional services are aligned to customer business outcomes Consistency in delivery through creation of a cocoon model Non-headcount based delivery through iTOPS shared services platforms Focus on margins through operational efficiency and innovative tools
Key Takeaways
Summary
May 4, 2012 Proprietary and Confidential 98
Growing Existing Accounts through cross-industry thought leadership and Advisory Services to embark on client’s Outcomes journey.
Growing New Business in new accounts through trusted CXO relationships
Creating New Avenues of growth through unique, Point Solutions from our iSDF process addressing key pain points in both new and existing markets.
Innovating and Building Shared Services platforms for the future.
Key TakeAways Creating The Future…..2014 and Beyond
Solutions & Consulting is about:
2012 Market Creators
2014unique and Market Leaders
2016 Market Innovators
May 4, 2012 Proprietary and Confidential 99
iGate an acknowledged leader in several sectors of the R&D and Engineering solutions market Investments in Industrial Automation & Heavy Engineering, Medical Technologies, Automotive,
Computing technologies etc continue to grow Product and technology adoption for emerging markets an important investment focus for our
customers and prospects Large relatively untapped potential in Europe and Japan Synergies for cross-sale of P&ES into other dominant verticals in iGate’s Enterprise IT portfolio Outcome based and iTOPS Enabled - 5C HR Model More focus on performance and competency enhancement through iGATE’s specific people
development practices Creation of iTOPS workforce To be the Best Employer in all major Geographies Highest EPS growth in the industry in last five years Still possess lot of operational levers to enhance margins Net debt position comfortable at ~2X EBITDA Simplified capital structure post delisting of Patni Tax and Forex challenges could pose headwinds to earnings Lower equity base through leverage gives significant upside to equity holders over long term as
the company continue to de-leverage
Key Takeaways
Summary