Pure-play analytics segment weathers 2008 slowdown; check out key Indian data analytics firms

The analytics vertical weathered the 2008 economic slowdown to evolve as the most attractive segment in the Indian knowledge process outsourcing (KPO) sector in 2011, according to a study by ValueNotes, a market intelligence and consulting firm.

Among the pure play analytics companies, MuSigma topped the Service Provider Evaluation ranking in 2011, with Fractal Analytics and Active Cubes enjoying the second and third positions, said the report titled "Analytics: Financial Performance Review". Manthan Systems and Vehere came in the fourth and fifth places.

MuSigma recently raised funding to the tune of $108 million led by private equity firm General Atlantic. This is the biggest private equity investment till date in the emerging market for analytics services, and follows Mu Sigma's April 2011 round of $25 million, led by Sequoia Capital.

Among others, Manthan Systems is backed by Norwes Venture Partners and Fidelity Growth Partners.

ValueNotes surveyed 12 pure-play analytics companies with operations in India. The top five were selected on the basis of their performance on 10 key financial parameters in the fiscal year 2011.

"The key differentiator between the top 5 pure-play analytics companies and their counterparts is that the latter's performance on employee-based metrics was weak with low revenue per employee and net profit per employee," Arjun Bhuwalka, project manager at ValueNotes, told Techcircle.in.

Bhuwalka, however, added that overall KPO firms are performing well in the current economic climate: "All the sub-segments' total income increased in the period 2007 to 2011; pure-play analytics had the highest 5-year CAGR of 39 per cent though LPO (Legal Process Outsourcing) was not far behind at 30 per cent."

Since 2009, revenue growth slowed down across all KPO sub-segments, except for analytics. Pure-play analytics firms took measures in 2007 to improve profitability and overall performance, and have seen their financial performance improve despite the poor economic environment.

According to Bhuwalka, the biggest challenge for Indian enterprises in Big Data is related to infrastructure and talent. "Big Data consumes a lot of storage, bandwidth and processing speed, and adequate infrastructure will be needed to support its demand. Shortage of skilled workers will be one of the biggest concerns in Big Data as more than a million trained managers and analysts will be needed over the next three years."

India needs to adopt newer technologies like storage visualisation, fluid data and multi-tiered data storage to efficiently manage data storage, he said. Another critical need is to improve the physical infrastructure and leverage the cloud emerging tools such as the cloud.

"The 2008 global financial crisis, in fact, boosted demand for analytics services rather than dampening it. Companies affected by the crisis have adopted data analytics to identify, predict and mitigate business risks witnessed by the crisis. Analytics is heavily outcome based and focused, which helps buyers justify their ROI on outsourcing analytics to improve their performance across functions," said the ValueNotes' project manager.

(Edited by Prem Udayabhanu)