Industry experts from Price Waterhouse Coopers, Tata Consultancy Services and Everest Group will discuss practices best for evolved FAO outcomes, how metrics can improve performance as well as examples of engagements that have taken on an evolved FAO strategy.

1. Today’s webinar is brought to you by
Outsourcing Center
Today’s webinar
Improved Business Performance: Exploring an Evolved FAO Strategy
Synopsis:
Industry experts from Price Waterhouse Coopers, Tata Consultancy Services and Everest Group will discuss
best practices for evolved FAO outcomes, how metrics can improve performance as well as examples of
engagements that have taken on an evolved FAO strategy.
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2. Q&A
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3. Introduction
Katrina Menzigian Vijay Damle Shelly Nichols
Vice President – Research Head – Horizontals BPO Director – Finance
Everest Group Tata Consultancy Services Price Waterhouse Coopers
kmenzigian@everestgrp.com Vijay.damle@tcs.com Shelly.nichols@us.pwc.com
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4. Improved Business Performance:
Exploring an Evolved FAO Strategy
June 8, 2010

5. Agenda
Evolution of FAO
TCS : A PACT t t k your P
to take Processes t th FORE
to the
ectiveness
The PWC Experience
Effe
Efficiency
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Proprietary & Confidential. © 2010, Everest Global, Inc.

6. The FAO market has shown a consistent appeal to
CFOs through various economic scenarios and is
expected to grow 20%+ annually in 2010
Estimate
Snapshot of FAO contracts over time CAGR over the period 2004-2009
Number of new contracts
Pioneer phase Rapid growth phase
81 83 82
65
58 9
9
33
26
20
10 9 56
3 2 6 5
1991- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E1
1996
Snapshot of Active Annual Contract Value (ACV) over time
ACV1 in US$ billion
2.8 3.1
0.4
2.3
1.9
1.5
15
0.8 1.0
0.3 0.5
0.1 0.2 0.2 0.3 0.3
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E1
1 Factual data available till November 2009 and figures for December 2009 are based on Everest Research Institute’s estimates
Institute s
Sample size: 476 contracts signed as of November 2009
Note: Refer to the FAO annual report 2008 (ERI-2008-1-R-0245) for further details
Source: Everest Research Institute (2010)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

7. Market maturity is leading to increased focus on
broader value creation opportunities from FAO
Buyer in early 2000s
Key objectives
Capture labor arbitrage
Ensure price predictability
Protect IP
Workaround information gaps
(e.g. volumetrics, service l
( l ti i levels)
l )
Outsourcing approach
Limited involvement of end
business users
Micro-management of suppliers
Predominantly lift-and-shift and
buyer-driven transformation
Use contract to minimize
perceived risks
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Proprietary & Confidential. © 2010, Everest Global, Inc.

8. Market maturity is leading to increased focus on
broader value creation opportunities from FAO
Buyer in early 2000s Buyer in 2009/10
Key objectives
Key objectives
Reduce Total Cost of Ownership
Capture labor arbitrage
Create pricing flexibility and variability
Ensure price predictability
Leverage supplier and industry best- practices
Protect IP
Create stronger linkage between service levels
Workaround information gaps
and pricing
(e.g. volumetrics, service l
( l ti i levels)
l )
Manage complexity of global delivery model
Outsourcing approach
Outsourcing approach
Limited involvement of end
Multi-tiered governance structure with greater
business users
supplier accountability
li t bilit
Micro-management of suppliers
Push towards supplier-led investments for
Predominantly lift-and-shift and
transformation and continuous improvement
buyer-driven transformation
Drive leverage through contract Ts and Cs
Use contract to minimize
Empower business users through g
p g greater
perceived risks
transparency
Multiple levers are being applied to drive value, including
New operating / delivery models
Value beyond arbitrage
New pricing models
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Proprietary & Confidential. © 2010, Everest Global, Inc.

9. Value created by FAO can be evaluated at multiple
levels
Dimensions of
Everest’s Total Value
Equation (TVE)
Strategic
impact
Process/
business
impact
Direct-cost
impact
Source: Everest Research Institute (2010)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

10. Dimensions of Everest’s Total Value Equation (TVE) for
FAO: Direct-cost savings
Dimensions of
Everest’s Total Value
Equation (TVE) Illustrative savings profile of a typical Key components of
FAO contract1
direct-cost
direct cost impact
Baseline from FAO
Strategic 100
impact Labor arbitrage Ongoing Labor arbitrage
80 improvement
One time improvement
One-time
60
improvements
40
Process/ Ongoing productivity
business
impact 20 improvements
0
Year 1 Year 2 Year 3 Year 4 Year 5
Direct-cost FAO typically generates 30-40% net impact on
impact operational costs (including transition and
governance costs)
1 Illustrative case example for savings in a steady-state offshore operation without considering inflation; it does not include transition
and buyer governance costs
Source: Everest Research Institute (2010)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

11. Dimensions of Everest’s Total Value Equation (TVE) for
FAO: Process / business impact
Dimensions of
Everest’s Total Value
Equation (TVE)
Strategic Value derived by aligning process capabilities more closely
impact
with business needs
Measurable business benefits (e.g., DSO1 reduction, faster
resolution)
Process/
business Improved service l
I d i levels
l
impact
Support of variations in demand
Achieve b t i class standards and process h
A hi best-in l t d d d harmonization
i ti
Direct-cost
impact
1 Defined in Appendix
Source: Everest Research Institute (2010)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

12. Dimensions of Everest’s Total Value Equation (TVE) for
FAO: Strategic impact
Dimensions of
Everest’s Total Value
Equation (TVE)
Value created by impacting business drivers or making
long-term investments for competitive advantage
Strategic
impact
Supporting M&A
Creating new capability (e.g., analytics)
Process/
Customer satisfaction
business
impact Innovation in business model
Creating competitive advantage
Direct-cost Access to new pools of talent/skills
impact
Source: Everest Research Institute (2010)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

13. An advanced FAO value proposition is attracting new
buyer segments and is driving new offerings
1
Investments in
intellectual property
Emerging areas of 2
Differentiated
enhanced FAO
offerings
ff i
value proposition
3
New buyer segments
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Proprietary & Confidential. © 2010, Everest Global, Inc.

14. An advanced FAO value proposition is attracting new
buyer segments and is driving new offerings
1a
Technology-led FAO
1 solutions
Investments in
intellectual property 1b
People and process led
FAO solutions
Emerging areas of 2
Differentiated
enhanced FAO
offerings
ff i
value proposition
3
New buyer segments
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Proprietary & Confidential. © 2010, Everest Global, Inc.

15. An advanced FAO value proposition is attracting new
buyer segments and is driving new offerings
1a
Technology-led FAO
1 solutions
Investments in
intellectual property 1b
People and process led
FAO solutions
2a
Industry-specific FAO
I d t ifi
Emerging areas of 2 2b
Differentiated Specialized process
enhanced FAO
offerings
ff i offerings
ff i
value proposition
2c
End-to-end offerings
3
New buyer segments
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Proprietary & Confidential. © 2010, Everest Global, Inc.

16. An advanced FAO value proposition is attracting new
buyer segments and is driving new offerings
1a
Technology-led FAO
1 solutions
Investments in
intellectual property 1b
People and process led
FAO solutions
2a
Industry-specific FAO
I d t ifi
Emerging areas of 2 2b
Differentiated Specialized process
enhanced FAO
offerings
ff i offerings
ff i
value proposition
2c
End-to-end offerings
3a
Mid-market
3
New buyer segments
3b
Emerging buyer
E i b
geographies
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Proprietary & Confidential. © 2010, Everest Global, Inc.

17. As the FAO value proposition expands, several solution
elements are also changing
Solution element Prevalent model Emerging model
Access to similar Access to scarce + better skills at
1 Skill sets
skills at lower costs lower costs
2 Delivery mode Offshoring Global sourcing
3 Technology role “Tie-and-run1” “Tie-and-run1” + augmentation
4 Pricing structure FTE-based fees FTE/Volume based fees + incentive
Service levels
5 Diagnostic Diagnostic + business oriented
and KPI focus
1 “Tie-and-run” refers to the technology approach wherein the FAO supplier leverages buyer’s existing technology infrastructure and
applications to deliver FAO services
Source: Everest Research Institute (2008)
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Proprietary & Confidential. © 2010, Everest Global, Inc.

18. Key takeaways
FAO solutions may start out focused on achieving short-term gains, but increasingly
involve a broad view towards a larger value proposition for the longer-term
The movement towards the positioning of the finance organization as a strategic
corporate business enabler is taking shape
Buyer organizations are adopting FAO as a long-term management model and are
making the necessary internal investments to optimize that strategy
In order to achieve the full potential of an enhanced FAO value proposition, buyers
will need to take a partnership approach that supports success
The suppliers of FAO services continue to invest in and evolve their offerings in order to
meet the evolving needs of current clients and to compete effectively for new
engagements
Buyers will need ongoing awareness of the FAO supplier landscape and the
differentiated positioning and offerings available
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Proprietary & Confidential. © 2010, Everest Global, Inc.

19. With You Today…
6.3
USD 6 3 B in IT & ITES Revenues
12% from Business Process Servicing
15% Business Processes delivered in
Process as a S i M d l
P Service Model.
• Vijay Damle manages service delivery for F&A,
Procurement, SCM and HRO processes in TCS BPO
Procurement BPO.
• He is responsible for delivering the Certainty Experience
to customers globally.
• Vijay has held diverse roles over his career – starting as
a Finance analyst, and over time has managed Finance,
Production Planning, Transitions and Sales /
Relationship Management
• Email: vijay.damle@tcs.com
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Experience certainty

20. forE : Process Maturity Model – Delivery Characteristics
1 2 3 4
F
Fragmentedd
Fragmented
d O i
Organize
O
Organize R ii li
Rationalize
Rationalize E l
Excel
Excel
• Legacy and disparate • Decentralized modules • ERP enabled customer • Centralized ERP based
systems and varying and localized system master maintenance with Customer master
Customer p g
processes of Customer checks leading to y p
system enabled checks at maintenance process.
Maintenance
i Master maintenance possibilities of unit and regional levels
inconsistencies • Periodic audits on Customer
Master
• Disparate systems for • Order management and • Integrated system from • Integrated billing
order management
order management customer billing modules Order management till
customer billing modules Order management till functionality from Order to
functionality from Order to
and customer billing interfacing and interacting customer billing and invoice generation at
across organization with ERP collections process scheduled intervals
Customer
Billing • Regional variances in • Regional applications with • Common set of • Enabled month close and
processing orders
processing orders limited level of integration applications serving
limited level of integration applications serving accruals on revenue and
accruals on revenue and
global locations with supports business decisions
minimum regional level in sales and Finance.
exceptions
• Manual Cash • Scanned electronic • Work flow enabled and • ERP embedded application
application using
l documents for Manual
d f l integrated with ERP and
d h d bl d l df
enable direct upload from
different screens and Cash Application enable online cash bank remittance file
Cash Physical Documents application to invoices
Application and outstanding items.
• Multiple modes of
remittances leading to ILLUSTRATIVE : AR
additional work load
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Experience certainty

21. forE : Measuring Delivery Certainty
ILLUSTRATIVE : AR
1 2 3 4
Sub Process Measures ‐ SLAs, KPIs Fragmented
Fragmented Organize
Organize Rationalize
Rationalize Excel
Excel
Customer Cycle time for Customer
>3 days 2-3 days
23 1-2 days
12 <1 day
Maintenance Maintenance
% of invoices distributed
< 50% 50-70% 71%-90% >90%
electronically
Customer Billing
% of Credit notes raised to
>10% 5% - 10% 2% - 5% <2%
total invoices
% of auto application < 70% 70% - 80% 81% - 90% >90%
Cash Application % of unapplied payment to
>10% 5% - 10% 2% - 5% <2%
total payment
total payment
% of invoices coming under
>30% 21% - 30% 5% - 20% <5%
query
Customer Service
% of queries closed within
< 80% 80% - 90% 91% - 99% >99%
agreed standard
21
Experience certainty

22. With You Today….
• More than 163,000 people in 151 countries help our
clients succeed.
• Our industry‐focused services in the fields of
assurance, tax, human resources, transactions,
performance improvement and crisis management
have helped address client and stakeholder issues
• Shelly Nichols is Director with PwC and has been
p g
responsible for leading the Finance Business
Services organization
• Prior to her role in Finance, Shelly spent several
y
years in PwC's Information Technology organization
gy g
• She joined PwC after having spent 16 years with
MassMutual Life Insurance Company in a variety of
business and technology leadership roles.
gy p
22
Experience certainty

23. PwC & TCS – FAO Engagement Overview
Phase 1 : Lift & Phase 2 : Improve Phase 3 : Optimal
Shift Performance Services
Transaction‐based
(T&E; AP; AR, Payroll)
Reporting and Allied Processes
p g
(GL, Procurement, Reporting)
Business Finance
(Engagement Accounting)
( )
23
Experience certainty

24. Finance & Accounting Journey at PwC
F t d
Fragmented O i
Organize R ti li
Rationalize E l
Excel
Decentralized Internal SSC Outsourced Partnership
Information &
Insights
Exploit
p
Technology
Optimize
Processes • Engagement related
Optimize Finance
Structure &
S & • Cost allocation
Operations • Standardize Processes, Eliminate • Financial Reporting,
Variations • Contract Lifecyle
• Consolidate AP, AR, T&E • Leverage Talent Pool / Near management,
• Move to Low Cost Location
Move to Low Cost Location shore services
• Expand Technology Deployment
2006 2009 2010
24
Experience certainty

25. PwC– Finance & Accounting Transition Schedule
• Transition Cookbook • NA T&E Go Live Stabilize &
• Due Diligence Kick‐Off Improve
• Infrastructure Build
Steady
• Pilots for Other Geo.
State • Automation & Technology
Leverage
Pilot
Pilot
• AP, AR & Payroll: Aug 09
Transition • Firmwide Finance, Accounting,
Procurement, BAAR: Dec. 09
• Process Measurement
Kickoff • Multi Track Transition
• CAA Assessment
Building
Blocks
Dec 2008 Dec 2009
25
Experience certainty

26. Driving Excellence : FAO Beyond Arbitrage
Unapplied Cash reduced by 60%
Engagement Finance on Handhelds
ess
ctivene
40% improvement in Invoice TAT
40% improvement in Invoice TAT
100 % Roll out of e‐Imaging in Lockbox
Effec
Cross Functional Understanding of Interconnects
Manage Volume Spikes and Dips within same FTE
Manage Volume Spikes and Dips within same FTE
Process Centric Financial Services Organization
Efficiency
26
Experience certainty

27. 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 background information on Everest, please visit:
www.everestgrp.com
www.everestresearchinstitute.com
Thank you for attending today
To ask a question during the Q&A session
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Cli k the question mark (Q&A) button located on the floating tool bar in the bottom right of your
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Be sure to keep the default set to “send to a Panelist”
Then, type your question in the rectangular field at the bottom of the Q&A box and click the send
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