Everest Group research analysts will highlight the findings of the Market Vista Q1-2011 Report. Insights will include outsourcing transactions activity, captive market dynamics, location and service provider developments. The webinar also features a special topic on the offshore services industry in Brazil.

1. Today’s Webinar is brought to you by Everest Group
Today’s Webinar
Key Market Developments in Q1-2011: Market Vista Report Briefing
Synopsis: Everest Group research analysts will highlight the findings of the Market Vista
Q1-2011 Report. Insights will include outsourcing transactions activity, captive market
dynamics, location and service provider developments. The webinar also features a
special topic on the offshore services industry in Brazil.
About Everest Group
Everest Group is an advisor to business leaders on next generation global services with a worldwide
reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and
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 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
www.everestresearchinstitute.com.
For more information, contact Mark Williamson at mark.williamson@everestgrp.com
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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 your screen. This will open the Q&A Panel
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the send button to submit
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3. Key Market Developments in
Q1-2011: Market Vista Briefing
Webinar
May 12, 2011

4. Introductions
Eric Simonson
Managing Partner, Research
Everest Group
eric.simonson@everestgrp.com
Amneet Singh
Vice President, Global Sourcing
Everest Group
amneet.singh@everestgrp.com
Salil Dani
Research Director, Global Sourcing
Everest Group
salil.dani@everestgrp.com
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5. Context setting
What will you learn from this Webinar?
 Key findings from the Q1 2011 Market Vista report and what they mean for buyers and
service providers
 Highlights of trends across outsourcing and offshoring transactions, captives, location
dynamics, supplier developments, and implications for stakeholders in the global
services industry
 Special focus on the state of the offshore services industry in Brazil and implications for
stakeholders in the global services industry
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6. The increasing complexity of the global services
market has amplified the risk exposure for companies
Factors driving increased risk Examples of risks
Vendor and model proliferation Regulatory risk
Multiple service providers and business Ensuring compliance with regulatory
models guidelines in source and destination
countries across service providers
Large span of functions Performance risk
Typically combination of many IT, BPO Business case risk Managing quality of
and some KPO services Managing wage service delivery, attrition,
inflation without knowledge retention
Increasing scope affecting quality of
Significant proportion of operations now Data security and
service
in low cost locations intellectual property risk
Implementing measures to
Global delivery chain safeguard data and
Services often delivered from multiple intellectual property
Concentration risk
locations with diverse risk footprint
Business continuity risk
Dynamic economies Currency risk
Most delivery locations are emerging
economies going through rapid change ….
Most large companies have capabilities in global risk management. However, the level and type
of risk exposure that is emerging from the globalization of services is unprecedented
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7. Global services leaders are asked to manage global
sourcing risks and deliver improving results
Are there What is the real
What are my opportunities inflation and how
peers doing? to optimize my does it compare to
pricing? price increases in
my portfolio? Are there new
What new service delivery relevant economic
models / service providers are How can I better incentives?
my peers leveraging? manage forex
changes?
What new risks are Are their any new
my service political or macro-
Who are the How are the
providers taking on? economic risks I need
emerging service relative costs
to be aware of NOW ?
providers in my moving across
areas? locations?
Key decisions that global services managers need to support
 Comparison with peers
 Location risk management
 Service provider selection and optimization
 Design of new deals
 Price benchmarking and contract renewals
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8. Market Vista provides continuously updated facts and
analysis every quarter to enable effective management
of global services portfolios
Overall sourcing market Supplier landscape
 Detailed analysis of trends by  Updates on supplier
industry vertical and geography market share,
 Report of transaction volume, capabilities, and
size, and momentum performance
 Perspective on events with  Supplier profiles,
significant industry impact (e.g., including data on:
M&A)  Transactions
 Implications of regulatory  Location footprint
changes  M&A activity
Location data and dynamics Processes and models
 Data on market activity in  Process-level trends
key offshore geographies  Captive set ups,
 Political divestures, and overall
 Macroeconomic trends
 Promotion incentives  Fact-based insights on
 Trends in wage inflation, adoption of emerging
attrition, and arbitrage pricing models
 Data and perspectives on
new opportunity areas
Location Supplier
Quarterly Location Breaking
Primer Insights capability Industry trends
Report database viewpoint
e-newsletter profiles
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9. Agenda
 Key market developments in Q1-2011
 Special topic: Offshore services industry in Brazil
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10. The outsourcing transactions and captive activity
remained healthy in Q1-2011
Index of outsourcing transactions1 Index of offshore captive health1
Number Number
Captive announcements2 = Actual + Planned
Captive divestures = Actual + Planned
533 35 34 35
508
444
18
20 22
17 5 14 13
2 0 0
3
Q1 2010 Q4 2010 Q1 2011 Q1 2010 Q4 2010 Q1 2011
1 Includes only data that has been publicly disclosed
2 Announcements include both new set-ups and expansion of existing captive operations
Source: Everest Research Institute Transaction Intelligence Database
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11. Activity in financial services picked up in North
America with an increased share of BPO transactions
BFSI transactions by buyer geography1 BFSI transactions by function
Number Number
100% = 73 89 94 100% = 73 89 94
5% Both
ROW2 21% 23% 20%
BPO 44%
Rest of Europe 14% 51%
17%
24% 57%
UK 10%
18%
16%
North America 55% 56%
ITO 49%
45%
37% 37%
Q1 2010 Q4 2010 Q1 2011 Q1 2010 Q4 2010 Q1 2011
Industry-level trending analysis included in the Market Vista Industry Trends reports
1 Buyer geography is the buyer location or the signing region associated with the transaction
2 Includes other countries in Asia Pacific, Middle East, Africa, and Latin America
Source: Everest Research Institute Transaction Intelligence Database
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12. Service provider developments | Market Vista Index
service providers
Traditional global service providers Offshore-centric service providers
1
3
2
1 Perot was acquired by Dell in Sep 2009 and has been rebranded as Dell Services
2 EDS was integrated into HP, and the segment is now called HP Enterprise Services (HP ES)
3 Hewitt merged with Aon in October 2010 and the combined entity is now known as Aon Hewitt
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13. Service provider developments1 | Overview
By sequential growth in revenues By sequential growth in operating margins2
(Q4 2010 vs. Q3 2010) (Q4 2010 vs. Q3 2010)
Percentage Basis points (bps)
Capgemini 19.2% Unisys 496
Atos Origin 14.6% Highest growth in Q4 2010 Genpact 435
Accenture 11.5% Atos Origin 318
5.1% Total Market Vista Index service providers 137
CSC 0.8% -168 WNS
-1.0% WNS Least growth in Q4 2010 -242 Convergys
-4.0% HP ES -742 Aon Hewitt
Top events in Q1 2011
Top service providers by number
Top outsourcing transactions by deal value of transactions announced Significant M&A deals
 ArcelorMittal-CSC: US$600 million (5 years)  IBM: 16 deals  ACS-Unamic/HCN: The acquisition will expand
 Centrica-HP: US$400 million (7 years)  CSC: 12 deals ACS’s customer care capabilities in the
 CEVA Logistics-Accenture: US$300 million  HP ES: 11 deals Netherlands, Belgium, Turkey, and Suriname
 Fomento De Construcciones Y Contratas-HP:  Atos Origin: 9 deals  Dell-SecureWorks: The acquisition will expand
US$300 million (7 years)  Capgemini: 9 deals Dell’s portfolio of IT-as-a-service solutions
 Oklahoma Health Care Authority-HP: US$281  IBM-Tririga: The acquisition will accelerate IBM’s
million, 7 years smarter buildings initiatives
1 Analysis includes financials for Mahindra Satyam, which was acquired by Tech Mahindra in April 2009
2 Normalized operating margins excludes ACS, Capgemini, and Dell Services as information is not available
Sources: Company disclosures; websites; press releases; Everest estimates
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14. Leading service providers reported lower mergers &
acquisitions in Q1 2011 while the number of alliances
increased compared to Q4 2010
M&A by service provider category Alliances by service provider category
Number of acquisitions Number of alliances
16 49
41 12
Offshore-centric
service 18
Traditional global providers
service 16
providers 37
5
Traditional global
service 23
5 providers
Q4 2010 Q1 2011 Q4 2010 Q1 2011
Sources: Company websites; press releases; Everest analysis
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15. Offshore location activity reduced in Q1 2011 compared
to Q4 2010 with preference towards Tier-2 cities
Q1 2010 Q1 2011 2010 Quarterly average
Market activity across geographies Market activity across Tier-1 and Tier-2 locations
Number of service delivery centers set up Number of service delivery centers set up
29
24
23
21 21
20 20
18
14
10
9
8
7 7
5
Asia Europe and Africa1 Latin America Tier 1 Tier 2
1 Three delivery centers were set up in Africa during Q1 2011
Source: Everest Research Institute analysis
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16. While Asia continued to account for the majority of
captive market activity, adoption also increased in
newer geographies such as Africa
Europe: 7 captive East Asia: 7 captive
announcements in multiple announcements including
countries Vivante and Yahoo!
Latin America: 2 captive Middle East and Africa: 6 India: 13 captive announcements
announcements including captive announcements including including JP Morgan, Honeywell,
GE Dell, Microsoft, and Nestle and Tesco
Note 1: Indicate announcements related to new captives and expansion
Note 2: All references to captives include only offshore captives
Source: Everest Research Institute analysis
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17. Notable insights: Increase in market activity in Eastern
Europe; service providers beginning to leverage Tier-3
locations in India
Increase in market activity in Eastern Europe Average annual attrition rate in BPO
compared to 2009 and early 2010 2011; Percentage
 Leading players such as ACS, Cisco, Emerson, HP, and
IBM have set-up delivery centers in recent quarters Budapest 8-10
 Increase in demand from source geographies in
Western Europe
 Moderate wage inflation and higher inflation than 2010 Prague 7-9
resulted in higher operating cost for global services
Bucharest 7-9
Leading service providers are beginning to leverage Operating cost per FTE for BPO
Tier-3 cities in India, mostly for domestic market 2011; US$ ‘000s
 Increased traction in Tier-3 cities such as Hubli, Karnal,
Ajmer, Dehradun, and Raipur 16-18
Tier-1
 Advantages include lower cost than Tier-1 and 2 cities,
sizeable labor pool, and higher employee retention
 Challenges around labor pool quality, fewer options of 13-15
Tier-2
good quality infrastructure, and relatively nascent
business environment impacting offshore delivery
9-10
Tier-3
Source: Everest Research Institute analysis
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18. Agenda
 Key market developments in Q1-2011
 Special topic: Offshore services industry in Brazil
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19. Brazil’s IT and BPO markets are evolving differently,
driven by different motivations
Annual graduate pool for IT1 Average annual operating cost per FTE for
2011; ‘000s non-voice BPO2
2011; US$ ‘000s
Sao Paulo 14-16 Sao Paulo 54-56
Buenos Aires 10-12 Buenos Aires 18-20
Monterrey 7-9 Monterrey 29-31
Santiago 5-7 Santiago 36-38
San Jose 1-2 San Jose 28-30
1 Annual graduates from relevant courses for IT
2 Operating cost includes cost of direct salary, benefits, management overheads, facilities, equipment, telecom, etc. Operating costs are
‘blended costs’ that take into account all seniority levels
Sources: Respective Ministries of Education; inputs from market participants; Everest Research Institute analysis
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20. Buyers and service providers are selectively leveraging
Brazil in IT services with Engineering Services/ R&D
emerging as a growth opportunity
Distribution of Forbes 2000 captives and leading Brazil moves into category of Mature
global service providers in Brazil by functions1 locations in Market Vista Location
March 2011; Percentage Heatmap
100% = 51  Joins India, Philippines, and China in an
elite club of countries that have 50+
delivery centers of leading buyers and
IT-ADM 50-55 service providers
 Focus remains on regional delivery for
IT services, across both base and
domain skills
IT-Infrastructure 30-35  Emerging opportunity in
Engineering/R&D services
 Unlikely to be a contender to India in
the 5-7 year horizon
BPO 22-27
Please refer our recent newsletter
“Perspectives on the Maturity of Brazil’s
R&D/ 17-22 Offshore Services Market” for more details
Engineering and insights
1 Total does not add up to 100 as delivery centers serve multiple functions
Note: Analysis assumes offshore delivery across North America and Europe
Source: Everest Market Vista Location Heatmap
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21. Q&A
 Click the question mark (Q&A) button located on the floating tool bar in the bottom right
of your screen – this will open the Q&A Panel
 Be sure to keep the default set to “send to All Panelist”
 Then, type your question in the rectangular field at the bottom of the Q&A box and click
the send button to submit
Upcoming Webinar
Introduction to Enterprise Cloud Economics
Date: Tuesday, May 24, 2011
Time: 9:00 a.m. CDT; 10:00 a.m. EDT; 2:00 p.m. GMT
Presenters: Scott Bils, Partner, Everest Group
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More Information: Visit www.everestgrp.com/category/webinars
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22. For more information
 Attendees will receive an email with a link to download today’s webinar presentation.
A recording of the webinar will be available within 24 hours on our website,
www.everestgrp.com/category/webinars
 For advice or research on outsourcing and offshoring, please contact :
 Eric Simonson, eric.simonson@everestgrp.com
 Amneet Singh, amneet.singh@everestgrp.com
 Salil Dani, salil.dani@everestgrp.com
 For background information on Everest Group, please visit:
 www.everestgrp.com
 www.everestresearchinstitute.com
 Thank you for attending today’s presentation
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