Outsourced publishing services in India thrive with financial prudence

The report is the second of a series of financial reports on the knowledge process outsourcing (KPO) sector, an analysis of the key financial ratios of companies that constitute the outsourced publishing services segment.

Knowledge Global Limited (KGL) has topped the service provider evaluation ranking in 2011 and shown strong financial credentials across parameters. KGL has reported the highest revenue, backed by industry leading margins and high returns to its shareholders. Other companies that have stood out for their financial performance are Altivolus Infotech, Integra, Quadrum and KiwiTech.

“KGL represents the financial performance needed by companies in the industry in the current situation,” said Arjun Bhuwalka, project manager at ValueNotes.

According to the report, the revenue of the outsourced publishing services industry in India has seen a 34% decline in the past two years. The revenues of large-sized service providers in 2011 were reported to be less than half of that in 2009. An increase in interest expense has caused the net profit margins of medium-sized companies to be negative despite positive operating profits (EBITDA).

“While the sharp slowdown in revenues has impacted profitability across the outsourced publishing services industry, the larger players have been better able to manage the downturn. Despite being affected by the fall in revenue, they have responded quickly to optimise their financials to maintain healthy margins. This will allow them to emerge stronger in the next growth phase,” said Bhuwalka, further adding, “Medium-sized firms have not been able to do this and if they want to survive the economic crisis, they need to act now.”

The financial performance of the outsourced publishing services providers in India has been affected by the global crisis in the last couple of years. The economic forecast for the next few years has made financial prudence even more critical. The future existence and success of companies in this industry will be influenced by their financial management during these difficult times.

The companies covered in this report are pure-play KPOs with operations in India, which exclusively provide outsourced publishing services.