Long Sales Cycles in Business Process Outsourcing Space Mask Upsurge in Demand: A Wall Street Transcript Interview with Rahul Bhangare, Equity Analyst with William Blair & Company Covering IT & Business Process Outsourcing Companies

67 WALL STREET, New York - January 17, 2014 - The Wall Street Transcript has just published its Staffing & Outsourcing Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Growth in Temporary Staffing Demand - Secular Trend Toward Temporary Staffing - Strong Demand for IT Staffing - BPO Market Trends - Healthy Demand in BPO Space - Cost-Cutting Measures - Steady Growth in Labor Market - Upside Potential in Staffing Sector

Companies include: Cognizant Technology Solutions (CTSH), Syntel Inc. (SYNT), Virtusa Corp. (VRTU), Sapient Corp. (SAPE), Genpact Ltd. (G), WNS (Holdings) Ltd. (WNS), Exlservice Holdings, Inc. (EXLS), The Travelers Companies, Inc. (TRV), General Electric Co. (GE) and many others.

In the following excerpt from the Staffing & Outsourcing Services Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Let's start by introducing yourself with a snapshot of your coverage universe.

Mr. Bhangare: I've been with William Blair for about five years, and I cover the IT services space and business process outsourcing space. Within IT services, I focus on the offshore firms, for example Cognizant (CTSH) and Infosys (INFY). I cover other tier-II vendors as well, including Syntel (SYNT), Virtusa (VRTU) and Sapient (SAPE). Within BPO, I cover Genpact (G), WNS (WNS) and ExlService (EXLS).

TWST: The latter is what we are focusing on today. What's the overall market sentiment for the BPO space right now, and what's behind that?

Mr. Bhangare: In the BPO space I'd generally say demand is healthy, but there are a few dynamics at play right now that have led to some volatility, mainly larger deal sizes. BPO engagements have very long sales cycles, anywhere between six and 24 months, given how core these services are to client operations. So for example, a company cannot run without an accounts receivable function or accounts payable function, so it is relatively risky for a client to transition those processes. They want to make sure that everything has been ground out and working flawlessly before anything transitions fully.

The emergence of larger deals - i.e. more processes being outsourced at once - has lengthened the sales cycle a bit and has had two major effects. One, it reduced the visibility that these companies have, and two, if things aren't necessarily closing in the back half of this year, that will inevitably pressure growth next year.

TWST: What's the outlook in terms of the economy and how that makes next year look for the space?

Mr. Bhangare: Things are looking positive on the economic front, which is good for the BPO players. GDP is looking upward. I don't think the impact from the government shutdown has been as bad as people had initially anticipated. Clients are a bit more comfortable with outsourcing processes as opposed to just outsourcing IT projects, so that's a positive as well. I think even though the economy is looking better, management teams are still being pressured to cut costs, and as long as that pressure to cut costs exists, you will see continued demand for outsourcing services.

TWST: Are there any particular industry trends impacting these companies, such as trends among the client base and their impact?

Mr. Bhangare: Yes, absolutely. Insurance, for example, is a good industry vertical to focus on...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.