Elix-IRR research on outsouring trends in Financial Services

1. Trends in FS Outsourcing &
Offshoring 2008-2010
September 2010
Version 2.0
©Elix-IRR Ltd

2. Index
Chapter Page
1. EXECUTIVE SUMMARY 3
2. INTRODUCTION 4
3. WHAT
• Overall Growth in BPO, ITO and KPO Services 5
• The FS Industry is the Biggest Consumer of Offshore Services 6
• ITO Trends in FS 7-8
• BPO Trends in FS 9-10
• KPO Trends in FS 11-12
4. HOW
• Operating Model 13
• Operating Model for ITO 14
• ‘Invisible’ Sourcing – Software Houses in ADM 15
• Operating Model for BPO 16
• Operating Model for KPO 17
• Captives in India 18
• Future Trends 19
5. WHERE
• Growth in Major Offshore Geographies 20
• The Rise of Nearshoring 21
• Emerging & Niche Delivery Centres 22
• Future Trends 23
5. WHO
• Selection of Key Activities by Institution 24
• Deal Profiles 25-31
• Future Trends 32
6. APPENDIX
• Further Information Available Upon Request 34
• Contact Us 35
2 ©Elix-IRR Ltd

3. EXECUTIVE SUMMARY: Outsourcing Trends in the FS Industry
 Financial Services (FS) accounts for almost a third of all offshore services,
The FS industry is outsourced and captive
the largest user of  ITO and BPO still represent the bulk of the outsourcing activity, but the frequency and
offshore services and awareness of KPO opportunities within FS companies is growing
usage continues to  While overall offshoring and outsourcing has continued to grow, BPO outsourcing has
grow faltered in last 2-3 years – for example, Financial services companies put more BPO
deals on hold in 2009 than any other sector (Morrison Foerster, 2010)
 Average size of outsourcing transactions has declined in last 3 years
 Most FS companies now maintain a ‘multi-sourcing’ approach to ITO and BPO
Operating model  Existing captive centres continue to be exploited by those that have kept them but
diversification several high profile examples of banks exiting the captive market (Citi, UBS)
continues but overall  Few new captives expected – FS companies preferring to outsource or co-develop
trend away from Centres of Excellence (CoE) with 3rd parties (e.g. Barcap in Kiev)
captives  Noticeable examples of banks in-sourcing tasks in both BPO and ITO space – DB from
HCL, Barclays from Accenture - point to continued dissatisfaction with outsourcing services
 For FS, India is still the dominant destination, particularly for ITO services, however,
Increased location Eastern Europe has become increasingly prevalent for ITO and BPO
diversification,  Significant increase in use of nearshore sites in US (Florida, Carolina, Texas) and UK (N.
especially to Ireland, Scotland) for processes considered high value or high risk in the BPO and ITO
nearshore space, or where data protection regulation prevents full offshoring
 Emerging offshore centres in China, SE Asia, S America and Africa expected to play
more significant role in next 3-5 years as arbitrage is eroded by inflation for traditional sites
Sources: Elix-IRR analysis, DataMonitor 2010, TPI 2009., press releases
3 Copyright Elix-IRR Ltd

4. Introduction
This analysis takes the form of:
 An overview of the trends in outsourcing and offshoring by major financial
institutions in the last 3 years, covering the following dimensions
 What (functions outsourced / offshored)
 How (form of offshoring and outsourcing)
 Where (popular and emerging locations for delivery)
 Who (summary of major outsourcing transactions by major Financial
Services (FS) players and outsourcers)
 Supporting data for the current outsourcing landscape for the FS Industry
4 ©Elix-IRR Ltd

5. WHAT: Overall Growth in BPO, ITO and KPO services
FS companies have continued to outsource and offshore throughout the downturn though
at a slower rate than in previous years, mirroring the broader outsourcing market
Growth in Offshore Services, 2007-2010E
 The IDC reports that outsourced offshoring
$B generated $30 billion in revenues and had grown
300.0 by 25% during 2007-09
26%
250.0
CAGR  However, most activity has been an extension of
existing deals or services – relatively few major
new transactions
200.0
KPO
(58% CAGR)  Datamonitor reports that the value of new
150.0 ITO offshoring deals signed in the last quarter of
(10% CAGR)
2008 fell by 38%, when compared to the
BPO
100.0 (29% CAGR) previous year
 NASSCOM, the Indian software association,
50.0
revised offshoring growth downwards for the
2009 period
-
2007 2010 E
Source: Elix-IRR analysis of OECD, Gartner and BCG data2008--2009
5 ©Elix-IRR Ltd

6. WHAT: The FS Industry is the Biggest Consumer of Offshore
Services
Offshore Services Consumption, 2009
Business
Services, 5%
Pharmaceutical & Media &
Entertainment, Financial
 FS accounts for almost a third of all offshore services,
Healthcare, 5%
Services, 32%
Retail, 5%
3%
outsourced and captive
Travel &
Transport,
7%
 Over 75% of FS institutions are outsourcing
 almost 40% of FS institutions are outsourcing
Energy, 11% across multiple domains
Manufacturing,
Telecoms, 12% 20%
Source: CGGC Study, 2010
 the remaining 25% of FS institutions not
Offshoring Activity Survey of FS Institutions
outsourcing are predominantly niche players in
Other (inc.
private banking and insurance
IT KPO), 8%
(Infrastructure, Combination of
ADM), 13% Back Office, IT
and/or Other,  ITO and BPO still represent the bulk of the activity but
38%
the frequency and awareness of Knowledge Process
Outsourcing opportunities within Financial Services
companies is now significant (8% of respondents to the
Deloitte study)
Back Office
(HR, F&A,
Procurement Not aware of
etc), 15% any, 26%
Source: Deloitte study on financial institutions, 2008
6 ©Elix-IRR Ltd

7. WHAT: ITO Trends in Financial Services
ITO remains a key cost lever for FS but consolidation and optimisation has driven much of
recent activity
Change in the use of nearshore and offshore
capability for the FS Sector, 2009 Demand for IT outsourcing and offshoring has remained strong and is
growing for the FS industry across all major Western European
markets
ADM  e.g. JP Morgan increased outsourcing to India by 25% to
$400mil p.a.
 Barclays – creation of IT CoE in Kiev, Ukraine
Use of nearshore locations has increased for higher value IT tasks
 Growth of IT delivery centres in low cost US locations e.g.
Texas, Florida and Virginia
End User Mgt
 Citi – expansion of Belfast (N. Ireland) delivery centre
Basic services such as call centre and remote infrastructure
management offshoring are reaching saturation
Infrastructure High level of vendor consolidation to top tier Indian players by FS
institutions in order to:
 Reduce costs by leveraging scale while maintaining service
quality
 Mitigate risk / exposure to small vendors
 e.g. Citi RightSourcing preferred vendor program
Source: Equa Terra – Trends in FS Industry across W. Europe, 2009
7 ©Elix-IRR Ltd

8. WHAT: Future Trends in ITO
 Infrastructure: Cloud computing as next wave of Infrastructure sourcing – removing
the assets from the institutions
 ADM: Moving up the value chain for AD – Business requirements definition and
design offshoring and outsourcing
 Service Management: New standards and service models for ITO where current
models are perceived as failing
1 Copyright Elix-IRR Ltd

9. WHAT: BPO Trends in Financial Services
Overall BPO slowed in the FS sector, but new opportunities in FS specific process
offshoring are catching up with the more traditional BPO functions
BPO Adoption* by Functional Area in FS
 Industry-wide, post 2008 the market for offshoring BPO has
struggled. For 2009, the BPO market’s total contract value
60%
fell 38% to $18.5 bn, its lowest level since 2001 (TPI, 2009)
50%  Financial services companies put more BPO deals on hold
in 2009 than any other sector (Morrison Foerster, 2010)
38%
36%
 However, growth is forecast to resume from 2010 onwards -
the BPO market is forecast to hit $450bn by 2012 (Nelson-
Hall,2009)
 As organisational confidence grows ‘higher value’ functions
are increasingly being considered for outsourcing /
offshoring (Everest), e.g.
4%
 Performance management for HRO
 Management reporting and analysis for F&A
 FS specific processes were increasingly targeted as an
offshoring opportunity by major players across this period
*Note: % of respondents in the survey who outsource some or all of this function
Source: BPO Trends in FS Industry, Equaterra 2008
9 ©Elix-IRR Ltd

10. WHAT: Future Trends in BPO
 BPO - FS Specific
 Expansion into Front & Middle Office functions
 Commercialising Back Office processing engines – major banks as service providers
 Move back onshore for failing functions – potentially some institutional client service
 BPO – Generic
 Procurement outsourcing growth - separation of Strategic Sourcing and Fulfilment functions
 Accessing improved ERP system capabilities in the marketplace
 F&A - management reporting and analysis
1 Copyright Elix-IRR Ltd

11. WHAT: KPO Trends in Financial Services
The Research, Analytics and Market Data Management market is still immature but this
immaturity presents growth opportunities for FS companies
India KPO Market
12 300
KPO Export
 Whilst KPO is still a high growth and diversifying industry
10 250
area, we believe that most industry predictions from
Total FTE's Employed 2008-2009 will be revised down significantly
8 200  The majority of large capital markets banks have
established either a captive or outsourced capability for
6 150 some basic research functions
4 100  Competition has intensified in this sector as niche
players have been increasingly challenged by the major
2 50 BPO providers who are growing or acquiring KPO
capabilities
0 0
2006-07 2007-08 2008-09 2009-10 2010-11
 e.g. Cognizant bought out UBS’ captive as part of a
wider delivery centre acquisition
Bank/In-House Research Traditional BPO Firm with
 India has been the most common destination for KPO
Department Expansion to KPO Professional KPO Firm
Goldman Sachs Progeon Evalueserve services but increasingly Philippines, China, Ireland and
Morgan Stanley Genpact Amba Research Mexico are emerging as alternative destinations
JP Morgan WNS Irevna
UBS Nipuna Copal Partners  Citi – Expanding KPO operations in Philippines by
Deutsche Bank Office Tiger Aranca
SAP EXL Lexadigm 30% (2009)
GE Wipro IP Pro
Intellevate Accenture Roc Search  Credit Suisse captive services in Poland (Wroclaw)
IBM Mphasis Market Rx
DataMonitor Infosvs Inductis
11 ©Elix-IRR Ltd

12. WHAT: Future Trends in KPO
 Diversification of research services - Product structuring, end-to-end research
production
 Growth of legal offshoring for FS
 KPO is BPO - most KPO processes become integrated into wider BPO capabilities,
not viewed as distinct discipline
 Major BPO outsourcers cannibalise KPO specialists
1 Copyright Elix-IRR Ltd

13. Major activity
HOW: Operating Model areas
‘More of the Same’ - Outsourcing and offshoring growth 2008-10 has been along more
mature / considered lower-risk models. Most major players maintain a ‘mixed portfolio’ of
operating models in ITO / BPO
Prevalent FS Sourcing Operating Models
Captives Dedicated Labour Out -Tasking Managed Transformational Commercialise
Service Augmentation Service Outsource Assets
Centre
ITO
BPO
BPO
KPO
NOTE: This picture is oversimplified – many banks straddle multiple operating models
13 ©Elix-IRR Ltd

14. Major activity
HOW: Operating Model for ITO areas
Prevalent FS Sourcing Operating Models
Captives Dedicated Labour Out -Tasking Managed Service Transformational Commercialise  As the most mature area of
Augmentation Outsource Assets
Service Centre
outsourcing and offshoring, ITO
demonstrates the broadest spectrum
DB
of operating models
 Most major institutions operate a
mixed portfolio of strategies across
ADM and Infrastructure, including:
 Captive
 Dedicated / co-managed
 Managed service
 Full service outsourcing is most
prevalent in infrastructure services
 ADM services are still perceived as
core in banking sectors especially and
Most of the large banks Significant consolidation to UBS and Citi have both sold retained on a more task or FTE-
who developed captive major Indian players such Indian IT Delivery Centres to governed basis
centres in the last decade as Wipro, Infosys, TCS, Indian Outsourcers  High level of consolidation to major
have been increasing the Cognizant As Indian players try to expand
scope of these centres to vendors
Some banks also taking into the West, we also see some
improve onshore / offshore functions back in house  Invisible outsourcing to software
sale of assets in Europe – e.g.
ratios– e.g. Deutsche Bank, from outsourcers – e.g. Citi data centre in Dusseldorf to houses (see next slide)
Credit Suisse Barcap Wipro
14 ©Elix-IRR Ltd

15. HOW: ‘Invisible’ Sourcing – Software Houses in ADM
In response to pressures on headcount and IT development budgets, IT divisions are relying
increasingly on development and support services by 3rd party software houses
Cause Effect
 FS IT divisions have been set  Use of 3rd party software houses to develop and
aggressive overall headcount support own product – for trading platforms and
reductions over the last 2-3 years specialised products it is more difficult to source
staff on the open market or via basic outsource
 Increased scrutiny of IT consulting and providers
development spend  Leads to creep in discretionary software spend
(disguised in the short term by amortisation)
 Tighter procurement controls  IT divisions are unable to develop in-house
capabilities due to lead times and investment
 Focus on short term cost reductions vs.
requirements
Long term capability development
 Typical vendors for Capital Markets banks would
 Perceived risk of giving include:
bespoke/specialist software products to  FS-specific packaged software vendors
generic outsourcers (MiSys, SunGard)
 Specialist CMB platforms (e.g. Igefi, ION
Trading)
 ERP giants: Oracle, SAP
15 ©Elix-IRR Ltd

16. Major activity
HOW: Operating Model for BPO areas
Prevalent FS Sourcing Operating Models
Captives Dedicated Labour
Service Centre Augmentation
Out -Tasking Managed Service Transformational
Outsource
Commercialise
Assets
 Few examples of ground breaking
changes in the BPO space 2008-10;
FS institutions have, as with ITO,
FAO
continued to leverage existing models
in trusted locations
 Those who already have offshore
HRO
delivery centres have been able to
leverage those investments e.g.
 Citi has added Procurement / P2P
Procurement
functions to its offshore F&A centre
in Eastern Europe
CMB  SocGen have increased the scope
FS Specific
of their HRO in India
 Back office processes for capital
markets remain dominated by captive
Capital Markets back office Majority of banks have Deutsche Bank remain centre solutions
processing is still mainly achieved basic offshoring of unusual in the BPO  Multi-national banks are looking to
done by captives their HR and F&A functions – space having outsourced leverage their investments in
Deutsche Bank has started for example Citi has extended the majority of its processing platforms by selling
to shift some activities back the scope of its Eastern Europe procurement to
site to take on the majority of Accenture. Other players
services to smaller players and hedge
from HCL to its own
delivery centre (DBOI) to basic accounting activities have predominantly gone funds / asset managers
realise process efficiencies Full outsourcing of FS specific the captive route
and improved service processes is mainly confined to
retail and insurance industries
16 ©Elix-IRR Ltd

17. Major activity
HOW: Operating Model for KPO areas
Prevalent FS Sourcing Operating Models
Captives Dedicated Labour Out -Tasking Managed Service Transformational Commercialise
Service Centre Augmentation Outsource Assets
 KPO is the smallest and least mature
area of outsourcing but is growing in
`cv
popularity as banks try to reduce the
Research and
Analytics cost of their research functions in an
effort to reduce cost to service clients
 UBS has led the way in building an
offshore analytics function in its Indian
Market Data delivery centre but has since spun the
function off to Cognizant
 Small outsourcers have gradually
been acquired by larger players such
as Cognizant, TCS and GenPact
 Given the nature of these functions
Growing area for capital KPO has ‘jumped’ a Given perceived high there is little immediate appetite for
markets banks for development stage – as the value nature of
provision of basic FTE counts involved are processes involved, it is
outsourcing anything more than basic
investor research to typically small, FS institutions unlikely banks will full tasks; ‘judgement-based tasks’ remain
support analysts, and have tended to either add into outsource research largely onshore with high cost analyst
also management of their existing captive centres services as this is seen resources
market data services or go directly to outsource as a differentiator
(library management, model
admin, subscriptions)
17 ©Elix-IRR Ltd

18. HOW: Captives in India
The longevity and effectiveness of the captive offshore centre model continues to generate debate
Operations in Indian Captive Delivery Centres (2007-09)
 Captive centres continue to come
under pressure from large-scale
outsourcers, particularly the Tier 1
Indian players
 Both Citi and UBS have disposed of
significant captive assets in the last 3
years
 However, as the figure shows, many
companies have continued to
Source: Evalueserve – Captives in India, 2009 leverage their existing captive centres;
 IT; most mature area of outsourcing therefore least change. Even so, more  as a cost-effective method to
roles have been pushed into existing captives e.g. Deutsche Bank increase offshoring with low
 BPO; activity least consistent – some banks have decided that outsourcers
investment (Deutsche Bank)
are more cost effective (e.g. Morgan Stanley HRO to Hewitt) but those with
 to retain control on higher value
significant offshore delivery have increased offshore ratios (e.g. Citi F&A
functions (Citi)
and Procurement in Hungary)
 to enable the realisation of process
efficiencies in onshore / offshore
 KPO as the newest offering has shown most growth in captive services;
handoffs (BNP Paribas, Deutsche
 Nervousness about outsourcing skills previously seen as core so
Bank )
have opted for building captives (e.g. Citi)
 Poor outsourced service quality (e.g. Credit Suisse now manage
Irevna directly)
18 ©Elix-IRR Ltd

19. HOW: Future Trends
 Future of ‘captive’ and dedicated service centre models uncertain but overall likely to
decrease (i.e. Few expected ‘new’ captives)
 Trend to exit of captives/co-branding in IT
 Commercialisation of Back Office processing captives for the large banks
 Continued lack of convergence on single strategy
 Service Management capability as a differentiator
 For FS Back Office processing (onshore / offshore integration and streamlining)
 For IT (multi vendor management for value)
1 Copyright Elix-IRR Ltd

20. WHERE: Growth in Major Offshore Geographies
Growth in outsourcing revenues ($B 2008-10)
E. Europe China
 Major outsourcing centres have
continued to grow over the last 3 years
14%
CAGR
 For FS, India is still the dominant
45%
CAGR 4.2 6.3 7.1 destination, particularly for ITO services
5.5
2
2.7  However E. Europe has become
increasingly prevalent,
 Basic BPO (F&A – Citi,
2008 2009 2010E 2008 2009 2010E Procurement – Deutsche Bank,
Citi)
 ITO – BarCap new CoE in Kiev,
Ukraine
 Philippines is increasingly popular for
front line support, especially in SE Asia
due to strong English language
India Philippines capabilities relative to India or China and
low labour cost
 China is comparatively unexploited by
34% 11 FS – whilst most major banks have
38% CAGR
CAGR 21 6.1 7 some offshoring there, this is largely
11 15
confined to the support of Asian
business units (e.g. Hong Kong)
2008 2009 2010E 2008 2009 2010E
Sources: Everest (10), KPMG (09), NASSCOM (09), McKinsey (08)
20 ©Elix-IRR Ltd

21. WHERE: The Rise of Nearshoring
Secondary locations in home countries or locations in nearby countries with lower labour
and real estate costs
Nearshore site examples Rationale
USA
 To maintain service quality and proximity of
 New Jersey – multiple management for ‘higher touch’ or sensitive services
 Colorado – Wells Fargo and processes benefitting from:
 Florida – Citi, Deutsche Bank  Language
 Texas - Amex  Culture
 Canada - Citi, Deutsche Bank, Morgan  Lower knowledge transfer costs and attrition
Stanley rates
UK  Easy to ‘parachute in’ management
 Citi has invested significantly in its Belfast centre to
 Belfast (N. Ireland) - Citi take advantage of significant UK government
 Dublin (ROI) - multiple subsidies provided, temporarily putting arbitrage on
 Edinburgh – RBS, HBOS a par with medium cost offshore sites such as
 Derby – Citi Prague
 Birmingham – Deutsche Bank  Major Indian vendors are now trying to enter this
 Newcastle – Tesco Bank space, buying data centres and other sites in W.
Europe and US – the objective is to compete on
service with major outsourcers such as IBM,
Accenture and HP
21 ©Elix-IRR Ltd

22. WHERE: Emerging & Niche Delivery Centres
South America
 Mexico, Costa Rica, Panama: Popular for BPO and also call centres for Spanish
language services
 Chile, Colombia, Argentina; Spanish-language services to US and Spain (e.g. Citi
Delivery Centre in Colombia) - Chile in particular is viewed as a stable environment
without the hyperinflation issues previously seen in Argentina and Brazil
 Uruguay – niche BPO provider for the banking industry in Montevideo
 Brazil: Growing as an IT service provider, particularly Curitiba (‘Silicon Valley of
South America’) but the majority of services are still consumed by the domestic
market due to language issues
Africa and Middle East
 South Africa is popular for BPO from the UK due to language and time zone (e.g.
Morgan Stanley asset management). Seen as the FS centre for Africa but has infra-
structure and security concerns
 Egypt is the leading emerging outsourcing provider in Northern Africa
 Morocco, Tunisia and Algeria are developing language specific offshoring capabilities
for the French market, largely in the contact centre space – (e.g. SocGen, BNPP)
 Jordan has grown as an offshore centre for Middle Eastern / Arabic businesses – solid
ITO capabilities though limited talent pool and language constraints
22 ©Elix-IRR Ltd

23. WHERE: Future Trends
 Nearshore growth (e.g. US/UK Tier 2 locations) to continue
 Rise of emerging locations such in SE Asia (Vietnam, Indonesia) and N. Africa
(Egypt)as lower cost alternative to India and E. Europe
 ‘Double’ offshoring – Indian centres to offshore own operations to lower cost
centers
1 Copyright Elix-IRR Ltd

24. WHO: Selection of Key Activities by Institution
Sale of Indian Service Centre to Cognizant
 Consolidation of ADM to major Indian players
 Sale of Indian IT captive (2008) and German data centre (2010, in
progress) to Wipro, Sale of BPO captive to TCS (2008)
 Continued offshoring of F&A and Procurement to its Budapest delivery
centre
 Renegotiation of 7 year deal with IBM for infrastructure services
(mainframe, midrange)
 Integration of infrastructure outsourcing deals for MS and Smith Barney
merger
 Global Managed Service outsourcing of Networks to Verizon (2009)
 Aggressive offshoring of Equities trade processing functions to India
 Some outsourced BPO processes brought back in-house (from HCL
service to DB captive in India) to improve service and efficiency
 Transformational infrastructure outsource with Microsoft and HP to
leverage cloud computing capabilities and drive down costs (first for FS
industry)
24 ©Elix-IRR Ltd

25. WHO: Deal Profiles Index
1. UBS-Cognizant sale of Indian Service Centre
2. Morgan Stanley infrastructure deal with IBM
3. Citi Indian BPO captive sale to TCS
4. American Express cloud computing deal
5. Zurich Financial Services Infrastructure outsource
6. Barclay’s exit of Accenture ADM contract
7. iPSL JV renewal by HSBC, Lloyds TSB and Barclays
25 ©Elix-IRR Ltd

26. WHO: UBS-Cognizant Sale of Indian Service Centre
Company Summary
 UBS disposed of its Indian Service Centre to
Cognizant
 Services include ITO (remote infrastructure
management), BPO (Wealth Management and
Asset Management back office processes), and
KPO (research and analytics for the Investment
Bank – c. 50FTEs)
Scope
 Stated objectives of UBS are to :
 2,000 FTEs
 Reduce time-to-market
 Multi-Year
 Expand service delivery
 ITO, BPO, KPO
 Enhance productivity, operational
 Dedicated service centre operated by efficiency and quality
outsourcer
Location Provider
 Hyderabad, India
26 ©Elix-IRR Ltd

27. WHO: Morgan Stanley Infrastructure Deal With IBM
Company Summary
 IBM provide utility infrastructure services to
Morgan Stanley’s Individual Investor Group
and Discover Financial Services.
 Deal is a renegotiation of 2004 contract
 IT services are provided by grid computing from
IBM’s data centres on an ‘on demand‘ pricing
Scope model providing MS with greater flexibility as
consumption changes
 2,000 FTEs
 Applications previously run on mainframes will
 $575m contract value (est.) now be provided on a grid computing basis,
and is paid for on a usage basis which MS
 5 year extension claims will save $millions p.a.
 ITO and helpdesk  IBM have also been selected to help MS
integrate the IT infrastructure of the Smith
 Managed Service Barney business recently acquired from
Citigroup
Location Provider
 Various (IBM datacentres) inc.
 UK
 USA
27 ©Elix-IRR Ltd

28. WHO: Citi BPO Captive Sale to TCS
Company Summary
 Citi sale of their BPO subsidiary, Citi Global
Services Limited (CGSL), based in Mumbai
 Includes multiple FS specific processes across
Citi’s retail and capital markets businesses
 One of the largest captive offshore centres in
existence at over 12,000 FTEs
Scope  Citi released $500m in cash to help its balance
 12,000 FTEs sheet and capital ratios
 $2.5bn contract value (est.), TCS paid $505m  Citi has committed to at least $2.5bn in
for the CGSL business revenues over 10 years –revenues at time of
sale were c.$280m per year
 10 year contract (2008-2018)
 Continuation of Citi’s strategy to divest captives
 FS specific BPO – previously sold CGIS IT India delivery centre
to Wipro
 Dedicated service centre
Location Provider
 India - Mumbai
28 ©Elix-IRR Ltd

29. WHO: American Express Cloud Computing Deal
Company Summary
 HP EDS is managing the American Express
end-user desktop computing environment and
its global voice and data networks
 EDS will provide on-site services for about
60,000 employees in more than 130 countries
 In addition, HP and American Express have
Scope partnered with Microsoft to deliver cloud
computing technologies for Amex - Microsoft’s
 $125m contract value Business Productivity Online Services - which
could revolutionise how infrastructure services
 5 year deal (2009-2014) are consumed and charged for and dramatically
reduce costs.
 Infrastructure services, including cloud
computing services  This will also serve as the test case for many
FS institutions nervous about security and
 Transformational outsourcing reliability issues associated with the new
technology
Location Provider
 Global – 130 countries
 Remote management services will be from EDS’
offshore centres
29 ©Elix-IRR Ltd

30. WHO: Zurich Financial Services to CSC
Company Summary
 CSC provide data centre and IT infrastructure
managed services to Zurich Financial Services
(ZFS).
 CSC support ZFS’s global service desk, local
on-site support and software packaging.
 Relationship between ZFS and CSC dates back
Scope to 2004.
 1,000 FTEs  The contract is designed to transform ZFS's
existing data centre environment into a fully
 $2.9bn contract value (est.) modernised, flexible and highly virtualized
operation.
 11 year contract (2009-2020)
 Depending on the country specific agreements
 ITO, Infrastructure entered into, up to 1,000 ZFS employees will
potentially move to CSC during the first half of
 Managed Service 2010.
Location Provider
 Various - CSC will cover the group’s IT
operations in the UK, US, Canada, Switzerland,
Germany, Italy and Spain.
30 ©Elix-IRR Ltd

31. WHO: Barclays and Accenture (Non Renewal of Deal)
Company Summary
 Barclays opted against the renewal of their
existing AD outsourcing deal with Accenture.
 Barclays have decided to bring several
outsourced functions back in-house recently
 Ended outsourcing deals with EDS and
Siemens in 2006 & 2008 respectively
Scope  Ended Getronics desktop support
 230 FTEs contract in 2009
 £400m contract value (est.)  Barclays looking to improve resource flexibility
and lower costs associated with developing and
 6 year contract terminated (2004-2010) maintaining software applications.
 ITO, Application Development  Accenture still being used by Barclays as they
continue to provide consulting and IT solution
 Captive – insourcing of outsourced service services.
Location Provider (terminated)
 Global – onshore and offshore delivery
resources
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32. WHO: Future Trends
 Indian players (Wipro, TCS, Infosys, Cognizant etc) to become global players to
challenge established players such as Accenture, IBM, HP
 Niche outsourcers (e.g. KPO) to be subsumed into scale players
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33. APPENDIX
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34. Further Information Available Upon Request
Below is a screenshot example of our detailed report on outsourcing and offshoring
transactions available upon request:
Sources: DataMonitor Knowledge Center, 2010, Press search, BusinessWeek, Elix-IRR client experience, Pillsbury Global Sourcing client experience
For interest in viewing this additional report, please contact us at: info@elix-irr.com
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35. Contact Us
For further information on the research, please contact the following persons at Elix-IRR:
• Gerard Soames
Partner
Tel: +44 (0) 208 123 3858
Email: gerard.soames@elix-irr.com
• Anthony Potter
Principal
Tel: +44 (0) 208 1231687
Email: anthony.potter@elix-irr.com
Elix-IRR is a Sourcing Advisory and consulting firm, with offices in London and New York, focused on providing
business support through the entire sourcing lifecycle for large-scale outsourcing and other complex sourcing
transactions. Elix-IRR combines technical, operational and supply-chain capabilities, supplemented by extensive
outsourcing advisory operational experience across all aspects of the sourcing process. With deep experience in the
buy-side, sell-side, legal and advisory aspects of sourcing initiatives we provide high-impact services to FTSE 100/
Fortune 500 and middle-market clients across the complex strategic sourcing landscape and guide our clients in making
the right supplier choices.
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