While India continues to be the location of choice for offshoring F&A services, the FAO delivery-location landscape now has a truly global footprint. This webinar will discuss key findings from Everest Group’s latest study around emerging locations in the FAO delivery location landscape.

1. Today’s Webinar is brought to you by Everest Group
Today’s Webinar
Emerging Locations in the FAO Delivery Landscape – The New Frontiers
Synopsis: While India continues to be the location of choice for offshoring F&A services, the FAO delivery-
location landscape now has a truly global footprint. This webinar will discuss key findings from Everest
Group’s latest study around emerging locations in the FAO delivery location landscape
About Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide
reputation for helping Global 1000 firms dramatically improve their p
p p g y p performance by optimizing their back- and
y p g
middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels
organizations with complex challenges related to the use and delivery of global services in their pursuits to
balance short-term needs with long-term goals. Through its practical consulting, original research and
industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and
sourcing models technologies and management approaches. Established in 1991, Everest Group serves
models, approaches 1991
users of global services, providers of services, country organizations and private equity firms, in six
continents across all industry categories. For more information, please visit www.everestgrp.com and
research.everestgrp.com.
For more information, contact Mark Williamson at mark.williamson@everestgrp.com
Proprietary & Confidential. © 2011, Everest Global, Inc. 1

2. Q&A
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right of
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3. Emerging Locations in the FAO Delivery
Landscape – The New Frontiers
Webinar
September 2011

4. Introductions
Saurabh Gupta
Vice President
Everest Group
saurabh.gupta@everestgrp.com
Kuldeep Lulla
Senior Research Analyst
Everest Group
kuldeep.lulla@everestgrp.com
k ld l ll @ t
Proprietary & Confidential. © 2011, Everest Global, Inc. 4

5. In today’s session, we will cover three key aspects of the
expanding FAO delivery-location landscape
 Global sourcing in FAO contracts
 Offshorability of F&A processes
 Direct-cost
Direct cost benefits from offshoring
 Labor arbitrage across source and destination
geographies
Value proposition of global
sourcing in FAO
 New locations that emerged  The expansion of FAO
1
on the FAO delivery-location delivery footprint beyond
landscape in 2009-2010 India
 Spotlight on five emerging  Key factors driving the FAO
locations 3 2 delivery location expansion
Note: For more details refer to our recently published report titled ‘The New Frontiers: Emerging Locations in the FAO Landscape’ available
at http://research.everestgrp.com/Product/11564
Proprietary & Confidential. © 2011, Everest Global, Inc. 5

6. Contents
 Value proposition of global sourcing in FAO
 Expanding FAO delivery footprint
 New FAO delivery locations
 Q&A
Proprietary & Confidential. © 2011, Everest Global, Inc. 6

7. The multi-process FAO market witnessed strong
performance in 2010
Cumulative activity to date xx% Annual growth
Activity in current year
Higher number of new FAO contract signings in 2010 Continued momentum in FAO contract extensions in 2010
compared to 2009 Number of contracts
Number of contracts 18% 66%
15% 580 236
493 87
69%
63 94
142
58
493
430
142
84
2009 2010 2009 2010
~15% growth in active ACV was witnessed in 2010 20%+ growth in overall TCV in 2010
compared to ~10% growth in 2009. The current FAO TCV in US$ billion
market size is US$3.6 billion 21%
Active ACV in US$ billion
13% 28.7
15%
23.7 4.9
3.6
36 2.7
10%
21.0 23.8
3.1
Dec-09 Dec-10 2009 2010
Sample size: 580 multi-process FAO contracts signed as of 2010
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 7

8. Poll Question: How would you describe the current
and near future state of the FAO market?
Source: Live polling conducted during the Emerging Locations in the FAO Delivery Landscape webinar on September 27, 2011
Proprietary & Confidential. © 2011, Everest Global, Inc. 8

9. More than 90 percent of the FAO contracts leverage global
sourcing today
Portion of FAO contracts with offshore component Average FTEs at offshore locations
Number of original contracts Percentage
100% = 396 56
Contracts
completely onshore
Contracts with
offshore/nearshore
component
Sample size: 452 multi-process FAO contracts signed as of 2010
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 9

10. Given that FAO is a mature market today, most F&A
processes have a high degree of offshorability
Offshorability of F&A processes
Percentage
Transaction-intensive processes
p
Judgment-intensive processes
 Accounts
payable
 Accounts
receivable  Offshorability is defined as the
 General p
percentage of in-house scope that
g p
accounting  Payroll can be delivered from an offshore
 Fixed assets  Tax location
 Budgeting/  While transaction-intensive have a
 Management forecasting high degree of offshorability,
reporting and
p g  Treasury and judgment-intensive processes are
analysis risk
i k not offshored as much due to the
management complex nature of activities
 Internal audit  Offshorability of individual F&A
 Capital processes can also vary significantly
70-90 budgeting depending on the buyer context and
specific requirements
50-70
20-40
High Medium Low
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 10

11. Offshoring can provide significant savings on the direct cost
of the entire F&A function
Impact on direct cost of F&A function due to offshoring ILLUSTRATIVE
Indexed to a total direct cost of 100 for onsite operations
Most-likely
scenario
100
 Buyers of F&A services can achieve significant
30-40%
savings from offshore delivery due to labor arbitrage
savings 70-80% and productivity improvements
savings – Labor arbitrage: Labor arbitrage can range from
60-70
30 to 80 percent, depending on the delivery location
mix (onshore versus nearshore versus offshore)
– Potential productivity improvements: Ongoing
initiatives such as process improvements,
improvements
automation, and standardization etc. can contribute
20-30 20 to 30 percent to the cost savings
 Percentage of services offshored is also impacts
savings. In addition, situation-specific factors such as
set up
set-up costs, governance costs, and contract term
determine the actual savings achieved from offshoring
100% onsite 55-60% onsite + 100% offshore2
40-45% offshore2
Note: The savings projections are for a steady-state offshore operation; the scenario is expected to be different in the first one to two years of
the engagement
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 11

12. Contents
 Value proposition of global sourcing in FAO
 Expanding FAO delivery footprint
 New FAO delivery locations
 Q&A
Proprietary & Confidential. © 2011, Everest Global, Inc. 12

13. India continues to be the location of choice for offshoring F&A
services
Inclusion of delivery locations in FAO contracts Number of delivery Number of service
Percentage centers1 providers1
India
Offshore + nearshore
Central and
Eastern Europe
Central/
South America
Southeast Asia
China
Onshore
North America
Western Europe
India is the preferred location for offshoring F&A services. Nearly 55 percent of the FAO offshored F&A
services from India
1 Based on the operational details of 20+ FAO service providers including Accenture, Aditya Birla Minacs, Xerox-ACS, Capgemini,
Cognizant, HP,
Cognizant HP EXL Service, Genpact, HCL IBM iGate Infosys BPO, Intelenet, Steria, Sutherland Global Services, TCS, VWA
Service Genpact HCL, IBM, iGate, BPO Intelenet Steria Services TCS VWA,
Wipro, and WNS
Sample size: 580 multi-process FAO contracts signed as of 2010
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 13

14. However, the FAO delivery-location landscape now has a truly
global footprint
Offshore and nearshore F&A delivery locations
Central and Eastern Europe
Lodz
L d
Wroclaw Warsaw
Dabrowa
Katowice Lublin
Prague Krakow
Brno Bratislava
Budapest
Cluj Varna
Timisoara Sofia Chengdu Tianjin
Bucharest China and Dalian
Casablanca
Tulsa Southeast Asia
Juarez Cairo Chandigarh Delhi NCR Okinawa
Rabat Jaipur
J i
Abu Dhabi India Guangzhou Shanghai
Monterrey Dubai Nasik Pune Hangzhou
Guadalajara Montego Bay Mumbai Kolkata
Hyderabad Manila
Guatemala Costa Rica Bangalore Philippines
Chennai
San Jose Bangkok
Kochi Kuala Lumpur Cebu
Colombo Cyberjaya
Quito
Singapore
Central and South America
Hortolandia
Santiago Belo
Sao Paulo Horizonte Johannesburg
Curitiba Gaspar
Montevideo
Buenos Aires
Note: Based on information of 20+ service providers including Accenture, Aditya Birla Minacs, Xerox-ACS, Capgemini, Cognizant, HP, EXLService,
Genpact, HCL, IBM, iGate, Infosys, Intelenet, OPI, RMS, Steria, Sutherland Global Services, TCS, Wipro, and WNS
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 14

15. Poll Question: Do you leverage locations outside of
India for F&A offshoring/service delivery?
Source: Live polling conducted during the Emerging Locations in the FAO Delivery Landscape webinar on September 27, 2011
Proprietary & Confidential. © 2011, Everest Global, Inc. 15

16. In 2009-2010, expansion of delivery footprint was a major
investment theme among the service providers
Number of FAO delivery Number of delivery centers by region
centers over time Number of centers
Number of centers 2008
2010
India China Southeast Central & Central & North Western
Asia South Eastern America Europe
America Europe
A number of service providers including Genpact, Infosys, TCS, WNS, and Wipro etc. opened new delivery centers in
above geographies during 2009-2010
Note: Based on the operational details of 20+ leading FAO service providers
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 16

17. There are four key drivers behind the FAO delivery-location
expansion
1
Tapping into new
source geographies
4 2
Resource constraints Creating a blended
as established Drivers for FAO onshore-nearshore-
locations near delivery-location
delivery location offshore model to
saturation expansion offer true global
delivery
3
Avoiding location
concentration risk
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 17

18. Contents
 Value proposition of global sourcing in FAO
 Expanding FAO delivery footprint
 New FAO delivery locations
 Q&A
Proprietary & Confidential. © 2011, Everest Global, Inc. 18

19. Over 15 new locations emerged on the FAO delivery-location
landscape in 2009-2010
Offshore/nearshore F&A delivery locations
Dabrowa
Timisoara
Varna Chengdu
Sofia Tianjin
Casablanca
Rabat Ca o
Cairo Jaipur Chandigarh
g Okinawa
Abu Dhabi
Dubai
Guatemala
Bangkok Cebu
Kuala Lumpur
Quito Cyberjaya
Belo Horizonte
Johannesburg
Curitiba Gaspar
Montevideo
Note: Based on information of 20+ service providers including Accenture, Aditya Birla Minacs, Xerox-ACS, Capgemini, Cognizant, HP,
EXLService, Genpact, HCL, IBM, iGate, Infosys, Intelenet, OPI, RMS, Steria, Sutherland Global Services, TCS, Wipro, and WNS
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 19

20. The study focuses on five from such locations
 Jaipur is fast emerging as the next generation BPO destination in India
Jaipur – Low-cost labor, proximity to National Capital Region (NCR) region, unexploited real estate market, and
availability of good analytical skills make Jaipur a viable alternative
– Key F&A processes delivered from Jaipur include accounts payable, accounts receivable, general
y p p p y , ,g
accounting, and other transactional processes
 Montevideo is a late entrant to the outsourcing map, but has attracted the attention of foreign investors due to
a stable economic and political environment coupled with availability of an educated and low-cost workforce
– Its strategic geographic location has also become a significant factor for selecting it as a regional center of
p
business operations
Montevideo – Key F&A processes delivered include accounts payable, accounts receivable, management reporting, and
tax & audit
 Johannesburg, the smallest but wealthiest province of Africa already has a well established domestic
outsourcing market
– It is now increasingly becoming attractive as a Tier-II destination for global offshore outsourcing. This is
attributed to the increased awareness of potential cost savings
Johannesburg – Key F&A processes delivered include accounting, and late stage collections
 Guatemala City is an emerging location for bilingual English-Spanish talent as the wages are higher and
labor supplies constrained in neighboring locations
– A stable economy, strategic location and excellent telecom infrastructure lend this city the potential to
become th b t nearshore l
b the best h location f A
ti for American clients
i li t
Guatemala City – Key F&A processes delivered include accounts payable, accounts receivable, and management reporting
Rabat  Rabat has three natural advantages that make it a highly competitive delivery location for serving Western
Europe
– Low cost and multilingual workforce
– M d
Modern and lib li d t l
d liberalized telecom sector
t
– Geographical and cultural proximity to Europe
– Key F&A processes delivered include accounts payable, accounts receivable, and tax & audit
Source: Everest Group (2011)
Proprietary & Confidential. © 2011, Everest Global, Inc. 20

21. The research includes an in-depth profile of each location
based on a variety of parameters
Risk assessment
Evaluation of each location on parameters such
as geopolitical stability, macro-economic
g p y,
environment, legal and regulatory framework,
safety and security, infrastructure support, and
labor sustainability etc.
Service provider presence
Key third-party providers and captives present at
each location
F&A functional capability
Key F&A processes delivered from each location
Value proposition
Unique advantages of each location in terms of
q g
operating costs, availability of talent pool,
geographic advantage, & infrastructure support
Geography covered and language
competencies
Primary buyer geographies served from each
location and language capability
Proprietary & Confidential. © 2011, Everest Global, Inc. 21

22. Key takeaways
 More than 90 percent of the FAO contracts leverage global sourcing today
 Given that FAO is a mature market, most F&A processes have a high degree of offshorability especially
market offshorability,
transaction-intensive processes. In contrast, judgment-intensive F&A processes are not offshored as
much due to the complex nature of activities involved
 Offshoring can provide significant savings on the direct cost of the entire F&A function, primarily due to
labor arbitrage and productivity improvements achieved by service providers
 India emerged as the global hub for FAO delivery, accounting for nearly 70 percent of the service
providers’ offshore/nearshore FAO headcount. However, the FAO delivery-location landscape is now a
truly global footprint In 2009 2010, expansion of the delivery footprint was a major investment theme
footprint. 2009-2010
among service providers
 There are four key drivers behind the FAO delivery location expansion:
– Tapping into new source geographies
– C ti a t l global d li
Creating truly l b l delivery network
t k
– Avoiding location concentration risk
– Resource constraints as established locations near saturation
 Over 15 new locations emerged on the FAO delivery-location landscape in 2009-2010
g y p
Proprietary & Confidential. © 2011, Everest Global, Inc. 22

23. 2011 FAO research plan (page 1 of 2)
Published To-be published
Topic Goals of the research Planned release
FAO annual report 2011 – Overview of the overall FAO market in 2010 with size & growth of market, March -2011
FAO is Back! contract characteristics, value proposition, service provider rating and market
outlook for 2011
Meter-to-cash BPO As part of its industry-specific BPO research initiatives, Everest Group May-2011
market for Utilities – conducted a study focused around Meter-to-Cash (M2C) BPO opportunity
market webinar assessment and solution trends. This webinar was aimed at helping market
stakeholders understand M2C BPO demand potential, drivers to outsource,
service provider landscape and go-to-market characteristics
FAO service provider In this research study, we analyze the fast-changing global FAO service May-2011
landscape provider landscape and its impact on the FAO market. We focus on service
provider position and market shares, delivery capability assessment, and
modes of differentiation
India-to-India Domestic While India has traditionally been a prominent delivery location for BPO May-2011
BPO market services, it is starting to emerge as a notable source geography as well. In this
study, we focus on the General & Administrative Outsourcing (GAO) segments
(FAO, PO, d
(FAO PO and HRO) of the domestic BPO market and analyze market growth,
f th d ti k t d l k t th
key drivers to outsource, buyer adoption trends, service provider landscape,
and future outlook
Proprietary & Confidential. © 2011, Everest Global, Inc. 23

24. 2011 FAO research plan (page 2 of 2)
Published To-be published
Topic Goals of the research Planned release
FAO service provider Profile 20+ established FAO service providers across various dimensions Jun-2011
profile compendium including overall revenues, FTEs strength, key delivery locations, FAO service
suite, market positioning, overall FAO delivery capability assessment, and
Everest Research perspective on service provider
Top 5 emerging locations Beyond the established locations that feature in most leading FAO service Sep-2011
in FAO providers’ global delivery network, newer locations are making their presence
felt on the FAO delivery map. This study evaluates top five from such locations
and highlights the market state therein
Process maturity models In a bid to continue growing in a competitive market, service providers are Q4-2011
in FAO – Can it be a looking for ways to generate business impact beyond just labour arbitrage.
differentiators for Service Few FAO service providers have developed models to optimize the
Providers? outsourced processes and shift them towards best-in-class performance
benchmarks. This white paper investigates such models and their potential to
create differentiation in FAO market
Industry-specific FAO While FAO is largely considered a horizontal BPO offering, in recent years, Q4-2011
solutions service providers have increasingly shifted their focus on specific industries,
both in terms of service offerings and sales strategy, to drive greater
penetration. This report i
t ti Thi t investigates some such i t
ti t h instances visible i th FAO
i ibl in the
market
Proprietary & Confidential. © 2011, Everest Global, Inc. 24

25. Contents
 Value proposition of global sourcing in FAO
 Expanding FAO delivery footprint
 New FAO delivery locations
 Q&A
Proprietary & Confidential. © 2011, Everest Global, Inc. 25

26. Q&A
 Attendees will receive an email enabling them to download today’s webinar presentation as well as access
a recorded audio version
 For advice or research on F&A services, please contact:
– Saurabh Gupta, saurabh.gupta@everestgrp.com
– Kuldeep Lulla, kuldeep.lulla@everestgrp.com
 For background information on Everest Group, please visit:
– www.everestgrp.com
– research.everestgrp.com
 Thank you for attending today
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen
screen.
This will open the Q&A Panel
 Be sure to keep the default set to “send to All Panelists”
 Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to
submit
Proprietary & Confidential. © 2011, Everest Global, Inc. 26

27. Related Content
Research Reports
 The New Frontiers: Emerging Locations in the FAO Landscape
 FAO Annual Report 2011 – FAO is Back!!
 Global FAO Service Provider Landscape – Competitive Intensity Driving Innovation
 Value Creation through FAO – Perspectives of Mature Buyers
Upcoming Webinars
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 Register
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 Thursday October 13 9:00 a m CDT
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