Outlook 2012: Understanding the State of the Industry in the Coming Year

Outlook 2012: Understanding the State of the Industry in the Coming Year 15th December 2011 Atul Vashistha ChairmanAtul Vashistha Neo GroupChairmanNeo Group www.GlobalSupplyRiskMonitor.com www.NeoGroup.comSince 1999

Neo GroupTrends 2012Demand OutlookOperating ModelsM&APricingWages/ HiringRisk ManagementRising Geographies © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 2

NEO GROUPSERVICES ADVISORY GOVERNANCE / PROGRAM RISK MANAGEMEN T SERVICES - MONITORING Exclusively focused on superior outcomesthrough global services, RESEARCHoutsourcing and related issues © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 3

TRENDS 2012MY VIEWS • Demand outlook expected to improve in 2nd half • Insourcing, managed services models dominate • Professionalization of Outsourcing • M&A continue but yield little benefits • Pricing expected to be flat • Hiring & Utilization will strengthen • Wages will rise creating margin pressure • New Geographies will take market share away from traditional locations • New opportunities: Cloud and Mobile © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 4

BUYERSMATURING Optimal Demand Management Innovation - key to transformation – beyond SLAs  Greater emphasis on collaboration  New and improved vendor partnering Increasing focus on Risk & Governance New destinations: moving beyond India Professionalization of talent Models evolve – insourcing, managed services, utility Rise of the mid-sized buyer © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 5

BUYER TRENDS TO WATCHIN 2012  Operating Models going retro:  Frustrated with supplier rising costs, governance challenges and uneven performance, insourcing is being explored by more clients  Continued hiring and attrition challenges and overall governance requirements will accelerate buyers to move to managed services models  Professionalization of Outsourcing:  Supplier management and governance challenges will help clients recognize the need to have professionally trained managers.  Programs such as COP from IAOP, and workshops from companies like Neo Group will be leveraged more.  Recognition of clear differences in sourcing and managing the services category vs. product categories will lead to higher importance of sourcing leads and vendor managers. © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 6

SUPPLIER TRENDS TO WATCHIN 2012 M&A continue but yield little benefits Wages will rise creating increased pressure on supplier margins Pricing expected to be flat in spite of many upward pressures Utilization will strengthen next year, increasing staffing challenges on fast ramp initiatives Managed services move beneficial Geographic expansion to serve diversified needs ↯ Local ↯ Global © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 7

TRAPUNCLEAR SUPPLIER DISTINCTION No clear methodology adopted to distinguish suppliers; especially in a multi-sourcing environment Perception that existing supplier/vendor best suited for all outsourcing functions, can be dangerous In-depth analysis of supplier domain expertise and exposure critical to successful outsourcing Establish effective framework to demarcate functions and processes a supplier is most suited for © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 8

TRAPNOT FOCUSED ON COLLABORATION Maintaining a ‘Client-Vendor’ relationship instead of a ‘Partnership’ – not sustainable for long in a managed/shared services model Joint involvement and participation of client in key operational activities of supplier is critical to business transformation Sustained innovation becomes reality in collaborative relationships Effective knowledge management between all stakeholders essential to gain competitive advantage © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 9

NEED FOR PROACTIVERISK MANAGEMENT Proactive Risk Management is critical to continued growth of industry:  Greater attention to the diversity of one’s geographic portfolio  Increased attention to monitoring of risk and compliance related to disruption at supply locations and the supplier base  Real-time alerts and monitoring of events, and their disruptive impacts  Sorry for the plug but Neo’s Global Supply Risk Monitor web-service (globalsupplyriskmonitor.com) 16-12-2011 © 2011 Neo Group Inc. All rights reserved. 10 Reproduction of this document or any portion thereof without prior written consent is prohibited 10

RISE OF NEW AND EMERGINGLOCATIONS Rising Geographies take market share away from traditional locations but the pie is growing:  New destinations continue to take a share of an expanding pie  Eastern Europe & Central and South America are surging  Buyers will increasingly utilize existing suppliers Global Delivery Models to provide time zone coverage and realize true 24x7x365 support  Offshore players will continue to expand and/or setup operations in new geographies, such as Brazil, Poland, China, Mexico, and Colombia etc © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 11

CURRENT HOT SPOT:WORKFORCE PROFILE Poland Belarus Russia • Excellent programming Skills • Highest Universities in EE • Excellent Software Skills • Large universities graduate poolCanada • Large IT Workforce • Small Labor Force • Large IT workforce• Excellent education system • Largest Labor Pool in EE • Suitable for Niche Operation • Capable for large operation• Productive IT workforce • Excellent Education System • Smart & hard worker • Promising IT labor market• Capable for complex project • Multi-lingual Skills Set• Shortage of IT labor supply • Promising ITO & BPO labor market Ukraine China • World class programmers • Large IT workforce Czech Republic • Smart & hard worker • Improving Project Manager Level • World class IT skills • Creative workforce Skills • Very small IT graduate • Good number of colleges & • Very limited labor forceUnited States Romania Universities • Shortage of IT labor pool• World class IT workforce • Multi-Language Skills • Capable for large operation• Capable to manage most complex • Highly Skill Worker • Promising labor market Colombia project • Large graduate pool • Promising IT O & BPO Philippines• Excellent education system • Huge labor force labor market • Large workforce• Shortage of IT labor supply • Bi-lingual skills • Huge graduate poolMexico • Promising Labor supply • Fluent in English• Good education system • Promising labor market Israel Vietnam• Large IT graduate pool • Highly qualified IT• World class IT skills set Egypt • Large workforce graduate • Large labor force • Large # of universities• Excellent bi-lingual skills • Excellent IT Skills• Capable for large operation • Good education graduate turnout • Suitable for small system • Good IT SkillsGuatemala , Panama, Honduras, operation • Multi-lingual skills • Promising IT labor marketCosta Rica, Peru, Chile • Limited IT labor supply • Potential labor market Malaysia • Highly qualified graduate pool Brazil • Excellent IT skills • Good for higher end services • High turnout of IT graduates • Good education system • Excellent bi-lingual • Huge Labor pool India • Limited labor supply • Small workforce • Good people skills and • Large IT workforce • Limited labor supply Uruguay availability • World class IT skills • Limited IT workforce • Quality human capital • Excellent IT education system Argentina • Small Population • Capable for large operation • Capable for large operation • Large labor pool • Higher end IT Skills • Promising IT labor market • KPO, BPO, Call Center skills labor pool • Bi-lingual capacity (English & Spanish) • Suitable for small operation • Amazing IT labor market • Good for large contact center operation • Small IT graduate turnout • Stable workforce in the long-run • Shortage of IT labor supply Promising labor Pool Shortage of labor pool © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 12

CURRENT HOT SPOT:SPECIALIZED FUNCTIONS Belarus Russia • Embedded Software • Embedded Software Poland • Engineering Services Canada • Engineering Services • Multi-Language Call Center • Product Development • IT Services • IT Services • Shared Services BPO • R&D, Systems Integration • R&D, ADM • Product Development • F&A BPO • Web Development • Medical Transcription • R&D, Systems Integration • IT Application Services • KPO, BPO Voice and Non-Voice Ukraine China • Engineering Services, • Engineering Services • IT Services • F&A BPO Czech Republic • Product Development • IT Services, • Infrastructure Management • Systems Integration • Product Development,United States • Multi-Language Call Center • R&D, Software Testing• R&D • IT Services, R&D Romania • Clinical Trial• Product Development• Embedded Software • Business Analytics,• Engineering Services • F&A BPO, HRO, Philippines• ADM, IT Services etc Colombia • Financial Analytics, • Call Center (English and some • Back Office Operation • IT Services, R&D Spanish),Mexico • IT Application • Multilingual Contact • Contact Center, F&A BPO,• Back Office Operations, • Bi-Language Contact Center Center, Procurement BPO, • IT Services, LPO,• Call Center (English, Spanish), • Medical Transcription• Embedded Services, Israel• Engineering Services, • Hi-Tech Services Egypt Vietnam• IT Services, R&D, • R&D • Embedded Software • Embedded Software• Software Testing • IT Services • IT Services • IT Services, R&D • Clinical Trials • Medical Transcription • Software Testing Multilingual Call Center Malaysia • Product development • Call Center (English, Mandarin),Guatemala , Panama, Honduras, • Software TestingCosta Rica, Peru, Chile • F&A BPO, IT Services, Brazil • Technical Helpdesk • Call center (English & Spanish) • IT Services • Back Office Operation • R&D, ADM India • F&A BPO • Software Development • Software Development • Financial Analytics • Product Development • Engineering Services Uruguay • Call Center • IT Services Argentina • Call Center (Spanish) • Back Office Operation • Engineering Services • Bi-lingual call center services • Infrastructure Management • Embedded Software & Services • F&A BPO • IT Services • Clinical Trial • IT Services • Product Development • Medical Transcriptions © 2011 Neo Group Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited 13

Atul Vashistha Chairman, Neo Group atul@neogroup.com  Click to edit Master text styles •Second level Neo Group Global Headquarters 6200 Stoneridge Mall Road, 3rd Floor – Third level Pleasanton, CA 94588, USA • Fourth level • Fifth level Amsterdam, Netherlands Austin, Texas Bogota, Colombia Bangalore, India London, UK Sao Paolo, Brazil www.NeoGroup.com www.GlobalSupplyRiskMonitor.com Sydney, Australia14 2011 Neo Group Inc. All rights reserved. Reproduction or anyNeo document or any portion thereof without prior written consent is prohibited © © of this Group All rights reserved Reproduction of this document 2011 portion thereof without prior written consent is prohibited www.NeoGroup.com

Outlook 2012: Understanding the State of the Industry in the Coming Year

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