Everest Group experts, Katrina Menzigian and Saurabh Gupta, will discuss the status of the FAO market and what buyers and suppliers must do to develop a strategic plan for 2010, including contract, supplier, and market evaluations.

1. Today’s webinar is brought to you by
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Today’s webinar
FAO Growth in 2010: Key Opportunities and Challenges
Synopsis:
Everest experts, Katrina Menzigian and Saurabh Gupta, will discuss the status of the FAO market and what
buyers and suppliers must do to develop a strategic plan for 2010, including contract, supplier, and market
evaluations.
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3. Introduction
Katrina Menzigian Saurabh Gupta
VP-Research Research Director
Everest Groupp Everest Group
p
kmenzigian@everestgrp.com sgupta@everestgrp.com
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4. FAO Growth in 2010: Key
Opportunities and Challenges
April 6, 2010

5. Agenda
FAO definition and research methodology
Market size, growth, and buyer adoption
Evolution of contract characteristics
Supplier landscape
Outlook for 2010
5
Copyright © 2010, Everest Global, Inc.

6. Our research is guided by a framework that
distinguishes multi-process FAO from single process
finance and accounting (F&A) transactional services
Strategy
Judgment-intensive
Transaction-intensive
F&A
strategy
Capital budgeting
Internal audit
Budgeting/forecasting
Treasury & risk management
FAO
(multi-process) Management reporting & analysis
Regulatory reporting & compliance
Tax
T F&A
Fixed assets transactional
General accounting services
Accounts receivable (single process)
Payroll Accounts payable and T&E1
Everest’s analyses include multi-process FAO contracts with a minimum of two F&A processes,
over US$1 million in Annualized Contract Value1 (ACV), and a minimum contract term of three
years
Everest analyses include all FAO contracts signed as of November 2009
1 Defined in Appendix
Source: Everest Research Institute (2010)
6
Copyright © 2010, Everest Global, Inc.

7. Everest’s FAO research is based on two key sources of
proprietary information
1
Proprietary Everest database of ~450 multi-process FAO Suppliers covered in the analysis
contracts (updated annually)
The database tracks the following elements of each
multi-process FAO contract:
Buyer details including industry, size, and signing region
Contract details including TCV ACV term start date
TCV, ACV, term, date,
supplier FTEs, and pricing structure
Scope including coverage of buyer geography and coverage
of functional activities
Technology including core F&A technology, supplier-
provided tools (if any), ownership, and maintenance
Global
Gl b l sourcing including delivery l
i i l di d li locations and l
ti d level of
l f
offshoring
2
Proprietary Everest database of operational capability of
20+ FAO suppliers (updated annually)
The database tracks the following capability elements for each
supplier:
Key leaders
Major FAO clients and recent wins
Overall revenues, total, and F&A employees
Recent F&A related developments
FAO revenue split by geography, industry, and client size
lit b h i d t d li t i
FAO delivery locations
FAO service suite
Quality certifications and credit rating
F&A related technology capability
Note: We continuously monitor the market and update the above list to include emerging suppliers such as Arvato Consero HOV
Arvato, Consero, HOV,
NCO and Quatrro
Confidentiality: The Everest Research Institute takes our confidentiality pledge very seriously. Any information we collect that is contract specific
will only be presented back to the industry in an aggregated fashion
7
Copyright © 2010, Everest Global, Inc.

8. Agenda
FAO definition and research methodology
Market size, growth, and buyer adoption
Evolution of contract characteristics
Supplier landscape
Outlook for 2010
8
Copyright © 2010, Everest Global, Inc.

9. The annual ACV growth of the FAO market in 2009 slowed
due to the prevailing economic uncertainty
New FAO contract signings in 2009 decreased FAO contract extensions in 2009 increased
Number of contracts Number of contracts
67%
13%
129
24%
483
418 65 35% 52
82 77
20
Cumulative activity
418 till date
336 77
57
Activity in current year
2008 2009E 2008 2009E xx% Annual growth
Active ACV as of December 2009 increased Cumulative TCV in 2009 increased
by 11% to US$3.1 billion by 13% to US$23.5 billion
Active ACV in US$ billion TCV in US$ billion
13%
20%
23.5
20.8 2.7
3.2
20% 11%
2.8 3.1 20.8
17.6
Dec-08 Dec-09 2008 2009E
Sample size: 476 multi-process FAO contracts signed as of November 2009
Note: Complete data available up to November 2009. Estimates used for full year
Source: Everest Research Institute (2010)
9
Copyright © 2010, Everest Global, Inc.

10. 2010 promises be a stronger year for FAO
2009 reflections 2010 outlook
Growth was muted for most suppliers especially in Sales pipelines of major suppliers are stronger
the first half of 2009 “Expect one or two new contract signings before end
“First half of the year (2009) was slow, picked up in
First slow of year (2009)
(2009)”
last quarter” “Saw pick-up beginning in Oct 09. 2010 looking good
“Win rates consistent, but overall volumes down” – resources are fully engaged”
“Glad to see 2009 end” “If we compare our FAO/PO pipeline to our other
“In 2009 there was a high level of uncertainty and service lines we see a much stronger pipeline”
decisions were delayed or not being made” “Robust pipeline for next year – four to five RFP’s in
Jan/Feb
J /F b 2010”
Primarily attributed to the prevailing economic “Largest pipeline across BPO in FAO – around 50-
uncertainty 55%. From a demand standpoint, it is looking good”
“Sales cycle has become unpredictable due to slow
decision making” Backed by the pent-up demand in the market and
“Companies have multiple cost cutting initiatives organic growth
hence it depends whether outsourcing is a priority or “Pent-up demands is creating traction now”
not” “We are seeing relatively faster decisions now”
“Initial severance costs is becoming an issue for “Existing clients will be one of the key growth drivers”
buyers to enter new contracts” “Existing client base continues to evolve and further
“In general, there were significant drops in budgets penetration targeted”
and outsourcing volumes g impacted due to
g got p “Besides the tough economic situation and cost
g
business downturn” cutting, companies in need to rationalize SG&A
spend”
As the global economy revives, most suppliers are reporting stronger sales pipelines. Everest expects growth in excess
of 20% for 2010, and the multi-process FAO market is expected to reach nearly US$3.7 billion in ACV
Source: Everest Research Institute (2010)
10
Copyright © 2010, Everest Global, Inc.

11. FAO is increasingly pervasive across all buyer segments
1
Buyer Industry Adoption of FAO across industries continues to grow
Manufacturing, CPG, retail, and hi-tech continued to be
aggressive in 2009. Telecom and pharma are the emerging
sectors
Significant pent-up demand for 2010 in financial services
2
Contract The U.S. continues to dominate. New contract signings in Europe
signing region (both UK and Rest of Europe) were slightly lower than 2008
Asia Pacific started to emerge in 2009 registering YoY TCV
growth of ~45%
Buyer
adoption
3
Geographic FAO continues to be increasingly globalized – both in terms of
scope contract signings as well as geographic reach
Nearly 70% contracts signed in 2009 had a regional or global
scope
4
Buyer size FAO is no longer the prerogative of large enterprises
However, the adoption by mid-market has not sustained the
momentum gathered in 2006-2007
2010 will be an interesting year for this segment as several
solutions like platform based FAO targeting the mid market
platform-based mid-market
emerge
Source: Everest Research Institute (2010)
11
Copyright © 2010, Everest Global, Inc.

12. Agenda
FAO definition and research methodology
Market size, growth, and buyer adoption
Evolution of contract characteristics
Supplier landscape
Outlook for 2010
12
Copyright © 2010, Everest Global, Inc.

13. AP, AR, and GL continue to be the most mature F&A
processes. At the same time, the breadth and depth of
other F&A processes has grown considerably
Degree of outsourcing of F&A processes over Transaction-intensive processes
time 2006-2007 vs. 2008-2009 2008-2009
2006-2007
High
g Pioneer Emerging
g g Mature Judgment-intensive
Judgment intensive processes
cess ownership transferred to
Accounts payable 2008-2009
2006-2007
Depth of outsourcing scope
Accounts receivable
p
General ledger
FAO supplier)
Payroll Analytics
F
(Degree of proc
Regulatory
Tax reporting &
compliance
Low Internal audit
Low High
Frequency of inclusion
(Percentage of transactions)
Sample size: 472 multi-process FAO contracts signed as of November 2009
Source: Everest Research Institute (2010)
13
Copyright © 2010, Everest Global, Inc.

14. The nature of FAO contracts is changing
Distribution of FAO contracts with end-to-end Type of end-to-end scope in FAO contracts
scope over time Frequency of inclusion
Number of contracts
P2P in FAO contracts
P2P in PO contracts
100% = 336 137
End-to-end P2P 9% 73%
19%
scope
46%
P2P has emerged as the
most mature end-to-end
Traditional O2C 29% process and is outsourced
piecemeal 81% either as a part of a FAO
scope or a PO contract
54%
R2R 20%
Up to 2007 2008-2009
Sample size: 473 multi-process FAO contracts signed as of November 2009
Source: Everest Research Institute (2010)
14
Copyright © 2010, Everest Global, Inc.

15. The role of technology in FAO has evolved from the
basic “tie-and-run” model to an “augmentation” model
Different flavors of technology in FAO and role of supplier
Increasing role of technology in FAO
Tie-and-run Technology Core F&A technology Platform-based
augmentation replacement/ FAO
implementation
Limited role of Supplier-provided IT infrastructure and/or Pre-integrated
technology where tools that serve as core F&A application applications and
supplier plugs into “add-ons” around implementation pre-built
the buyer’s existing
buyer s the periphery of the bundled with FAO processes,
processes owned
systems to deliver existing systems to services. Technology by supplier, with
services address specific ownership resides with pricing built into
gaps buyer the FAO contract
F&A
outsourcing
services
Enabling tools
& technologies
Core F&A
processing
system(s)
Traditional Prevalent
model model
Source: Everest Research Institute (2010)
15
Copyright © 2010, Everest Global, Inc.

16. The delivery location landscape has matured
significantly and FAO has evolved to a truly global
delivery footprint
Offshore and nearshore delivery landscape for FAO
Central and Eastern Europe
Katowice
Wroclaw Lodz
China and South East Asia
Dublin Lublin
Prague Brno Krakow
Bratislava Cluj
Braga Budapest
p Bucharest
Lisbon
Li b Sofia
S fi Dalian
Central and South America India
Chandigarh Gurgaon Shanghai
Guadalajara Juarez New Delhi Hangzhou
Jaipur
Monterrey St, John Hong Kong
Bridgetown Nasik Kolkata
Mumbai Hyderabad Guangzhou
Guatemala City Montego bay Pune
Bangalore ChennaiBangkok Manila
Costa Rica Kochi
San Jose Colombo Kuala Lumpur
Singapore
Sao Paolo Hortolandia
Santiago
Curitiba
Buenos Aires
Most established suppliers today have coverage across the key delivery regions for FAO – India, Central & Eastern
Europe, China & South East Asia, and Central & South America
Sample size: Based on operational details of 18 FAO suppliers including Accenture ACS Capgemini Cognizant Compass BPO HP EX
Accenture, ACS, Capgemini, Cognizant, BPO, HP,
Service, Genpact, HCL, IBM, iGate, Infosys BPO, OPI, Steria, TCS, VWA, Wipro, and WNS
Note: Onshore locations are not included in this analysis
Source: Everest Research Institute (2010)
16
Copyright © 2010, Everest Global, Inc.

17. FAO pricing structures are evolving from pure
FTE-based models to hybrid models
Bundling of pricing structures in FAO Composition of hybrid pricing structures
contracts over time in FAO contracts
Number of contracts Frequency of inclusion
100% = 321 105 123
Hybrid 16% FTE-based 93%
22%
27%
Transaction
20% 10%
-based The interest in
16% transaction-based pricing
Transaction- has increased recently
40%
based
b d but not a lot of contracts
have been signed on it
FTE-based 64% 69%
57% It is becoming increasingly
important to build an
p
Gain-sharing 74% incentive structure for the
suppliers as buyers try to
expand the value that they
can extract from FAO
Up to 2007 2008 2009
Sample size: 427 multi-process FAO contracts signed as of November 2008
Source: Everest Research Institute (2010)
17
Copyright © 2010, Everest Global, Inc.

18. Agenda
FAO definition and research methodology
Market size, growth, and buyer adoption
Evolution of contract characteristics
Supplier landscape
Outlook for 2010
18
Copyright © 2010, Everest Global, Inc.

19. Everest classifies the FAO supplier landscape into leaders,
major contenders, and emerging players on the Everest
Performance| Experience| Ability| Knowledge (PEAK) Matrix
| p | y| g ( )
Everest Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO
75th percentile
High
Leaders
Top quartile performance
across market success
Major contenders
and capability
ercentile
2nd or 3rd quartile
performance across market
success and capability
75th pe
Market success s
(Active ACV)
rcentile
M
25th per
Emerging players
4th quartile performance
across market success
and capability
Low
Low 25th percentile High
FAO capability
(Scale, scope, technology,
(Scale scope technology and delivery footprint)
1 Suppliers scored using Everest proprietary scoring methodology given in Appendix
Source: Everest Research Institute (2010)
19
Copyright © 2010, Everest Global, Inc.

20. Several suppliers noticeably enhanced their market
standing, effectively intensifying competitive forces in
the FAO market
Everest Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO
75th percentile
High
Leaders
TCS, Wipro and WNS Genpact IBM
further closed the gap Accenture
on the PEAK leaders
ACS
ercentile
Capgemini Leader
Major contenders Steria Wipro Infosys BPO Major contender
WNS Emerging p y
g g player
75th pe
Market success s
VWA HP
(Active ACV)
TCS
EXL Services OPI
Intelenet 2009 saw Infosys BPO
rcentile
Cognizant
crossing over from
major contenders to
Cognizant,
Cognizant EXL and
M
25th per
leaders category on
l d t
Emerging players Intelenet moved from the PEAK
Patni emerging players
HCL category to major
iGate
KPIT Cummins contenders
Compass BPO
Low
Low 25th percentile High
FAO capability
(Scale, scope, technology,
(Scale scope technology and delivery footprint)
Source: Everest Research Institute (2010)
20
Copyright © 2010, Everest Global, Inc.

21. The leaders account for 70%+ of the overall FAO
market in terms of ACV
Global FAO supplier market share in 2009
Number of contracts, TCV and active ACV in US$ billion
100% = 2.8 21.6 476
1%
Emerging players 2% 4% 4%
4%
Established major 5% New major contenders
enders
contenders (Cognizant, EXL, and
ajor
21% 20%
Intelenet)
te e et)
Ma
(OPI, Steria, TCS,
(OPI Steria TCS
conte
VWA, Wipro, WNS) 34%
8%
9%
9% New leaders
( osys
(Infosys BPO and HP)
Oa d )
Leaders
Established leaders
(Accenture, ACS, 68%
64%
Capgemini, Genpact,
and IBM) 48%
Active ACV TCV Number of contracts
Sample size: 476 multi-process FAO contracts signed as of November 2009
Source: Everest Research Institute (2010)
21
Copyright © 2010, Everest Global, Inc.

22. Successful suppliers from all segments were able to
fine tune their capability mix to the 2009 market
requirements
Type of FAO related investments reported in 2008-2009
Percentage of events reported
Mergers & 11%
acquisitions
18%
Partnerships
& alliances 11%
4%
15%
Internal 13%
11%
investments 9%
7%
Technology-related Process/operational Captive/provider Delivery footprint Internal
excellence related acquisition expansion reorganization
Sample size: Operational details of FAO suppliers
Source: Everest Research Institute (2010)
22
Copyright © 2010, Everest Global, Inc.

23. Everest identified five suppliers as the “2009 FAO
Market Star Performers” based on their relative
movement on Everest PEAK Matrix for FAO
2009 FAO Distinguishing Distinguishing features 2009 change in
Market Star features of 2009 of 2009 capability positioning on Everest
Performers market success advancements PEAK Matrix for FAO
Highest level of inorganic Smart investments across people,
growth in 2009 with 10 new multi-process process, technology, and delivery
Strengthened
contract signings footprint in 2009. Improved win rates
leadership position
considerably through greater
Top quartile performance for overall
credibility and innovative deal
spending in 2009 and contract extensions
structuring
Highest level of organic and inorganic g
g g g growth Among the highest level of investment
g g
in 2009 with 10 new multi-process contract in F&A technology with acquisitions
signings and 20+ extensions such as SPSS, Red Pill, and Cognos. Strengthened
Continued strong delivery capability leadership position
Top quartile performance for overall
and new internal initiatives pushed up
spending in 2009 and contract extensions
the win rate
Top quartile performance for ACV growth
growth, Posted ~40% FTE growth invested in
40% growth,
Transitioned from
T iti df
overall spending in 2009, and new contract fCOEs, and made significant
major contenders to
signings investments to build add-on tools and
market leaders
platforms for the FAO market
Top quartile performance for overall market Posted 50% FTE growth, announced
spending in 2009 several partnerships to expand
process capability established training
capability, Closed the gap with
academy and competency centers, market leaders
expanded capabilities of BASE))), and
expanded delivery footprint
Top quartile performance for overall market Achieved 25% FTE growth in 2009,
Amongst the strongest
success including ACV growth, overall invested to enhance process and
p
performance in major
j
spending i 2009 and 2009 extensions
di in 2009, d t i technology capability, and expanded
t h l bilit d d d
contenders category
delivery footprint beyond India
Source: Everest Research Institute (2010)
23
Copyright © 2010, Everest Global, Inc.

24. Agenda
FAO definition and research methodology
Market size, growth, and buyer adoption
Evolution of contract characteristics
Supplier landscape
Outlook for 2010
24
Copyright © 2010, Everest Global, Inc.

25. Outlook for 2010
2010 promises be a stronger year for FAO than 2009
Everest expects growth in excess of 20% for 2010
End-of-term activity in FAO will be a key growth driver
There is a significant pent up demand in financial services, which could be a key growth driver in 2010
pent-up
Beyond the U.S., we expect contract signings in the domestic Asia-Pacific market as well as rest of Europe
to rise
2010 will be an interesting year for the mid market as well as the SMB segment as several targeted
solutions like platform-based FAO emerge
The captive model will continue to be under the scanner in 2010
Contract characteristics are set to evolve in the near term to support a cost+ value proposition
As the current pool of FAO contracts mature and as new, but savvy clients enter the market, more
emphasis will be put on achieving business outcomes from FAO
Changes in pricing structures to reflect hybrid models will be a key indicator of how suppliers and buyers
are shaping these new value propositions
Areas of future investment are likely to include technology tools & platforms as well as process maps and
methodologies
Suppliers will push to differentiate themselves in an increasingly crowded market
Everest expects to see ongoing movement between the major contenders and leaders segments
Key attributes that will lead to FAO supplier success include
— Identification and refinement of target market
— A continued focus on meeting client needs in terms of both global delivery capacity and global service
support
— The ability to bring innovative technology and process solutions that more closely impact business
outcomes
25
Copyright © 2010, Everest Global, Inc.

26. Q&A
Attendees will receive an email with a link to download today’s webinar presentation. To access a
recorded audio version of this webinar, please contact Mark Williamson,
mark.williamson@everestgrp.com
For advice or research on FAO, please contact Everest:
Katrina Menzigian, kmenzigian@everestgrp.com
Saurabh Gupta, sgupta@everestgrp.com
For background information on Everest, please visit:
www.everestgrp.com
www.everestresearchinstitute.com
Thank you for attending today
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