What does the new year hold for the global services market? In what ways will industry-specific expertise drive service provider differentiation? How will Global In-house Centers (GICs) evolve and what value will organizations expect? What’s in store for cloud and how will the interplay between cloud and traditional IT Services progress? Our panel of experts will offer answers to all of the above questions and more. Our one-hour webinar covered trends and provide an outlook for 2013 for the following areas: Business Process Outsourcing (BPO), Global Sourcing, Cloud / IT Services, Pricing

1. 2013 Predictions: State of the
Global Services Market
January 23, 2013
Live Tweeting #Predictions2013

2. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 2

3. Introductions
Katrina Menzigian (moderator)
Vice President
katrina.menzigian@everestgrp.com
Jimit Arora
Vice President – IT Services
jimit.arora@everestgrp.com
Rajesh Ranjan
Vice President – BPO
rajesh.ranjan@everestgrp.com
H. Karthik
Vice President – Global Sourcing
h.karthik@everestgrp.com
Rahul Gehani
Practice Director – Pricing Assurance
rahul.gehani@everestgrp.com
Proprietary & Confidential. © 2013, Everest Global, Inc. 3

4. Everest Group: 2013 research offerings
Subscription information Market Vista
 If you want to learn whether Global services tracking across functions, sourcing models, locations, and
your organization has a service providers – industry tracking reports also available
subscription agreement or
request information on pricing Banking, financial
Healthcare Finance & accounting
and subscription options, services, insurance
please contact us:
– info@everestgrp.com Information
– +1-214-451-3110 Procurement Cloud Vista
technology
 In addition to published
research, a subscription may Human resources Recruitment process Global sourcing
include analyst inquiry, data
cuts, and other services
Service Provider Transaction
PricePoint
Intelligence Intelligence
Custom research capabilities
 Benchmarking | Pricing, delivery model, skill portfolio
 Peer analysis | Scope, sourcing models, locations
 Locations | Cost, skills, sustainability, portfolio
 Tracking services | Service providers, locations, risk
 Other | Market intelligence, service provider capabilities, technologies
Proprietary & Confidential. © 2013, Everest Global, Inc. 4

5. 2012: Year-in-Review
Same as prediction Similar but with some variations Different than prediction
What we predicted at the beginning of 20121 How has the market fared to date? Comments
1 Pricing pressures will squeeze providers’ While BPO margins did go up
margins, especially offshore, forcing somewhat, IT Services
investment in newer customer-centric margins slipped modestly
solutions and innovative engagement
models
2 Global sourcing leaders will seek new Emerging geos continue to
locations; Emerging geographies will increase – LATAM, Africa,
continue attracting attention Mid East, CEE
3 BPO markets will continue to grow at Rates across BPO vary, but
double-digit rates all remain robust - especially
true in the case of BFSI BPO
4 Service providers will make strategic M&A in this space is about
investments in driving value from cloud building out cloud breadth
services – moving beyond technical and depth – enhanced value
limitations and focusing on client adoption propositions to increase cloud
requirements appeal
1 Everest Group webinar document: 2012 Market Predictions (presented in Dec 2011)
Proprietary & Confidential. © 2013, Everest Global, Inc. 5

6. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 6

7. IT Services | Key 2013 Predictions
“SMAC” (especially MAC) will fuel IT services growth
“Enterprise IT” vs. “Business IT”: Enterprise IT will strike back
“Verticalization” in infrastructure services – an emerging reality
Application services will witness greater appetite for “top-to-bottom” delivery
Market consolidation will blur the lines across service provider categories
Proprietary & Confidential. © 2013, Everest Global, Inc. 7

8. Cloud adoption will accelerate as buyers continue
to realize value from these delivery models
Trend in cloud related global service deals Enterprise Cloud adoption – objective fulfillment
2011-2012; Percentage of deals with cloud Buyer responses XX% Overall agreement %
delivery in scope
N = 88
12% Strongly disagree 2% 1% 1% 2%
Disagree 1% 2% 2% 2% 2% 1% 1% 2%
Somewhat disagree 14%
Neither agree 24%
31% 82% 27%
or disagree
8% 21% 71%
67%
64%
27%
Somewhat agree 21% 24%
38%
4%
Agree 25% 25% 27%
18% 23% 19%
Strongly agree 16%
Met Met Met Met
H1 2011 H2 2011 H1 2012 objectives objectives objectives objectives for
1047 900 704 for cost for flexible for quicker higher
savings infra time to satisfaction of
market business
Majority of adopters are meeting their cloud objectives signaling a confidence shift going forward
Source: Everest Group Cloud Vista (2012); Everest Group – Cloud Connect Survey (2012)
Proprietary & Confidential. © 2013, Everest Global, Inc. 8

9. SaaS modules have been adopted most widely; IaaS
adoption is expected to grow fastest in 2013
Enterprise Cloud adoption trends by cloud layer – Buyer responses IaaS adoption plans – Buyer responses
Already adopted Adopt in distant future
Adopt in near future No plans to adopt 100% = 89
57%
Software as a Service 28%
(SaaS) N= 81
10%
5%
No plans
38% for cloud
Platform as a Service 25% infrastructure
N= 73
(PaaS) 27% 18%
10%
31%
Public cloud 26% Plan to
N= 78 implement
(IaaS) 26% 48%
18% cloud
infrastructure
30%
Private cloud 36% 34%
23% N= 80 Already
(IaaS)
11% have cloud
infrastructure
17%
Hybrid cloud 27%
36% N= 70
(IaaS)
20%
28%
Business Process as 27% More than cost reduction, flexible infrastructure and
a Service (BPaaS) 22% N= 64
reducing time to market are the top two drivers for IaaS
23% growth
Source: Everest Group – Cloud Connect Survey (2012)
Proprietary & Confidential. © 2013, Everest Global, Inc. 9

10. M&A in 2013 will extend beyond conventional
adjacencies as service providers respond to an evolving
demand environment
An evolving demand profile… …causing interesting marriages in the IT services
supply landscape
Regulatory Global MNCs WITCH
compliance
(BFSI,
Healthcare,
Europe)
Tier-2/specialists BPO pure-plays
Drivers for
transformational
IT services
Regional majors Cloud providers
Product vendors Telcos
2013 will witness the emergence of a new “breed” of converged service providers
Source: Everest Group (2013)
Proprietary & Confidential. © 2013, Everest Global, Inc. 10

11. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 11

12. BPO | Key 2013 Predictions
The BPO world will be increasingly vertical
The adoption of SMAC in BPO will increase but will trail the hype; analytics will
be the most sought after services within this stack
Traditional delivery geography will increasingly be the new demand geography
Beyond stand-alone technology capability, provider’s ability to blend it effectively
into the BPO solution will lead to success
A balanced BPO model will be more successful – rise of the AND solution
Proprietary & Confidential. © 2013, Everest Global, Inc. 12

13. Traditional delivery geography will increasingly become
demand geography; profitable service delivery will be the key
FAO deal signing trend Insurance BPO deal signing trend
Number of contracts Number of contracts
100% = 531 81 100% = 74 24
Asia Pacific and Asia Pacific and
10% 9%
Latin America Latin America
27% 29%
North America North America
90% 91%
and Europe and Europe
73% 71%
Up to 2010 2011 Up to 2010 2011-2012
Source: Everest Group (2013)
Proprietary & Confidential. © 2013, Everest Global, Inc. 13

14. A balanced model that harnesses the power of AND
will be more successful
Sourcing
Internal shared services Third-party outsourcing
Scope
Focused End-to-end
Solution
Customized Standardized
Pricing model
Simplicity Impact
Delivery model Onshore Offshore/Nearshore
Proprietary & Confidential. © 2013, Everest Global, Inc. 14

15. To what extent do you expect organizations to
invest hard cash in capturing global services
values beyond savings in 2013?
Priority area – expect significant new
investments in 2013
7%
Area of ongoing focus – will continue to
make strategic investments as previously 65%
planned
Business as usual – no new or additional
investments anticipated
24%
Area of least focus – strategic investments
targeting other areas in 2013
4%
Proprietary & Confidential. © 2013, Everest Global, Inc. 15
Source: Live polling conducted during the “2013 Predictions: State of the Global Services Market” webinar on January 23, 2013

16. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 16

17. Global Sourcing | Key 2013 Predictions
New buyer segments will drive global sourcing
Increased focus on complementing onshore and offshore, not competing
Tier-2 locations to become “must-have” from “good to have”
Growth in GICs coupled with sophistication in sourcing model leverage
Global talent management – an increasing priority
Proprietary & Confidential. © 2013, Everest Global, Inc. 17

18. While a few “wildcards” will emerge, India and
Philippines will continue to reign
NOT EXHAUSTIVE
High end financial
services and IT skills Multilingual
support
Ireland
Bulgaria
Turkey
Significant untapped
potential
Emerging R&D
destination Vietnam Low-cost
Colombia
alternative for IT
Peru
Attractive costs South Africa Preferred location
and Spanish for UK voice; large
language skills domestic market
Proprietary & Confidential. © 2013, Everest Global, Inc. 18

19. Tier-2 locations to become “must-have” from “good
to have”
Proportion of Tier-2/3 cities in new delivery center set-ups 2011
2011-20121; Percentage 2012
84
 Stronger imperative for
Tier-2/3 cities in 2013, will
50 53
become a “must-have” for
40 service providers
37 37
 Share of Tier-2/3 locations
in incremental demand will
increase, especially in
APAC and Latin America
Asia Pacific Latin America CEE
Predictions for 2013
1 Includes analysis from Q1-Q3 (January-September) 2012
Note: Tier-1 cities are mature cities for global services delivery, typically characterized by large talent pool and significant market activity. Examples include Bangalore
(India), Shanghai (China), Metro Manila (Philippines), Sao Paulo (Brazil), Mexico City (Mexico), and Krakow (Poland)
Tier-2/3 cities are upcoming cities for global services delivery, typically characterized by relatively smaller talent pool and lesser market activity. Examples include
Jaipur (India), Dalian (China), Cebu (Philippines), Curitiba (Brazil), Guadalajara (Mexico), and Lodz (Poland)
Proprietary & Confidential. © 2013, Everest Global, Inc. 19

20. Delivering value beyond cost savings will become a
strong imperative and mandate for GICs
What should GICs deliver over the next three years?
GIC responses Parent responses
Percentage of total respondents Percentage of total respondents
Primarily focus on delivering
current cost savings and
meeting/exceeding expectations 18 37
on service levels
Strive towards delivering other
forms of value1 in addition to 66 60
maintaining cost savings
Focus on delivering other forms
of value, even if it means 15 4
reducing focus on driving cost
advantage
1 Standardize processes or systems across the enterprise, create new services/products, etc.
Proprietary & Confidential. © 2013, Everest Global, Inc. 20

21. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 21

22. Pricing | 2013 Predictions
IT pricing is expected to be stable
Adoption of fixed-price models will strengthen in IT deals
BPO pricing is expected to have a positive bias
Prevalence of hybrid pricing structures will increase in BPO deals
Proprietary & Confidential. © 2013, Everest Global, Inc. 22

23. Prices of ITO services are expected to remain stable or
decline marginally at offshore as well as onshore
locations
Trend in blended FTE price at offshore (India) IT-ADM EXAMPLES
Indexed
104
102
100 100 100
100 99 99
98
98
96
Q3 2011 2011 2011
H2’ Q4 Q1 2012 Q2 2012 2012 2012
Q3 Q4 2012E Q1 2013 2013 2013
H1’ Q2
Trend in blended FTE price at onsite (U.S.)
Indexed
104
102 101 100 100 101
100 100
100
98
96
Q3 2011 2011 2011
H2’ Q4 Q1 2012 Q2 2012 2012 2012
Q3 Q4 2012E Q1 2013 2013 2013
H1’ Q2
Source: Everest Group PricePoint
Proprietary & Confidential. © 2013, Everest Global, Inc. 23

24. BPO pricing is expected to increase at offshore as
well as onshore locations
Trend in blended FTE price at offshore (India) VOICE-BPO EXAMPLES
Indexed
106
104 103 103 103 103
102 101
100
100
98
Q3 2011 2011 2011
H2’ Q4 Q1 2012 Q2 2012 2012 2012
Q3 Q4 2012E H1’ 2013Q2 2013
Q1 2013 Est.
Trend in blended FTE price at onsite (U.S.)
Indexed
104
102 101 101 101 101
101
100
100
98
96
Q3 2011 2011 2011
H2’ Q4 Q1 2012 Q2 2012 2012 2012
Q3 Q4 2012E H1’ 2013Q2 2013
Q1 2013 Est.
Source: Everest Group PricePoint
Proprietary & Confidential. © 2013, Everest Global, Inc. 24

25. ITO and BPO deals would be characterized by the
adoption of more sophisticated pricing models
Fixed price adoption trends in ITO deals Distribution of pricing Composition of hybrid
models in PO pricing structures
2008 Number of contracts Frequency of inclusion
2011
2013 Est. 100% = 290
Only
gainsharing Managed
48% 46% 89%
service fees
41% 44% 44% Only
36% 36% FTE-based 3%
32% 15%
Hybrid
46% Gainsharing
pricing 71%
Only 36%
managed
service fees
FTE-based 44%
Provider A Provider B Provider C Provider D
 Buyers are preferring fixed-price engagements  Buyers and service providers are realizing multiple objectives by
to control the overall IT spend adopting hybrid structures which combine input-based, output-
 Service providers are keen to adopt fixed-price based and outcome-based pricing models
to maintain profitability
Proprietary & Confidential. © 2013, Everest Global, Inc. 25

26. Areas of coverage
 Introductions and “2012: Year-in-Review”
 IT Services
 Business Process Outsourcing (BPO)
 Global Sourcing
 Pricing
 Summary and Q&A
Proprietary & Confidential. © 2013, Everest Global, Inc. 26

27. Macro-Themes for 2013: Summary
 Buyer satisfaction validating the concept
The realities of SMAC are taking hold  Adoption pace varies by market, IT layer,
buyer segment
 Relevant across IT Services and BPO
The march toward verticalization continues  Driving services provider differentiation and
supporting buyer competitiveness
 Expanded capabilities the target
M&A more about chess than checkers  Consolidation will lead to newly formed
competitive landscapes
Global sourcing continues pushing the  Clients seeking varied options for integrating
variety & complexity of delivery models geos, models, processes, etc.
 Cost and margin pressure will challenge
Pricing remains in a dead-band, with
providers, but buyer demand will be the
limited movement on either side
key price driver
Proprietary & Confidential. © 2013, Everest Global, Inc. 27

28. Q&A
To ask a question during the Q&A session
 Click the question mark (Q&A) button located on right side of your screen. This opens Q&A
 Be sure to keep the default set to “send to All Panelists”
 Type your question in the box at the bottom of the Q&A box and click the send button
 Attendees will receive an email with instructions for downloading today’s presentation
 For advice or research, please contact:
– Katrina Menzigian, katrina.menzigian@everestgrp.com
– H. Karthik, h.karthik@everestgrp.com
– Rajesh Ranjan, rajesh.ranjan@everestgrp.com
– Rahul Gehani, rahul.gehani@everestgrp.com
– Jimit Arora, jimit.arora@everestgrp.com
Stay connected
Websites Twitter Blogs
www.everestgrp.com @EverestGroup www.sherpasinblueshirts.com
research.everestgrp.com @Everest_Cloud www.gainingaltitudeinthecloud.com
Proprietary & Confidential. © 2013, Everest Global, Inc. 28

29. Check out our blog for the latest perspectives
on global services
Experts in the global
services terrain
www.sherpasinblueshirts.com
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30. Related content
 Market Vista: Q3 2012
 Webinar Deck: Global In-house Centers vs. Service Providers: Who is Winning?
 PricePoint Q2 2012 Update: Points to Consider in the Pricing of Outsourcing Services
 Enterprise Cloud Quarterly Review: Q3 2012
 IT Services Landscape - Market Size, Trends, and Buyer Insights
 Finance and Accounting Outsourcing (FAO) Annual Report 2012: Signaling Towards Maturity
 Procurement Outsourcing (PO) Annual Report 2012: Steadily Marching Forward
 Multi-process Human Resources Outsourcing (MPHRO) Annual Report 2012: Continued
Reinvention
Proprietary & Confidential. © 2013, Everest Global, Inc. 30

31. 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 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 research.everestgrp.com.
Proprietary & Confidential. © 2013, Everest Global, Inc. 31

32. Everest Group
Leading clients from insight to action
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Proprietary & Confidential. © 2013, Everest Global, Inc. 32