2010 HRO Market Star Performers on PEAK - NorthgateArinso

Introduction and scopeEverest Research recently released its latest HRO Annual Report, which provides a comprehensiveanalysis of the 2010 HRO market across size and growth, buyer adoption, contract characteristics, andservice provider landscape.As a part of the study, Everest updated its classification of 15+ HRO service providers on the EverestPerformance | Experience | Ability | Knowledge (PEAK) Matrix for HRO into leaders, major contenders,and emerging players. The PEAK Matrix is a framework that provides an objective, data-driven, andcomparative assessment of HRO service providers based on their absolute market success andcapability. Everest also identified five service providers as the “2010 HRO Market Star Performers”based on the relative movement of 15+ HRO service providers on the Everest PEAK Matrix from 2009 to2010.Based on the analysis, NorthgateArinso emerged as a 2010 Star Performer strengthening its position inthe HRO market. This report focuses on NorthgateArinso’s HRO experience and capabilities andincludes: Overview of the 2010 HRO service provider landscape NorthgateArinso’s movement on PEAK Matrix for HRO and key accomplishments in 2010 NorthgateArinso’s HRO services profileIt is important to note that while a service provider’s position on the PEAK Matrix is a useful startingpoint, the results from the assessment may not be directly prescriptive for each buyer. Buyers will needto consider their unique situation and requirements and match them against service provider capabilityto meet their specific objectives 2 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

Service provider landscape – summary Everest classifies 15+ HRO service providers on the Everest Performance| Experience| Ability| Knowledge (PEAK) Matrix into the categories of leaders, major contenders, and emerging players. The PEAK Matrix is a framework to assess the absolute market success and overall capability of service providers  Leaders: Everest PEAK classified Accenture, ADP, NorthgateArinso, Aon Hewitt, and IBM as market leaders. Service providers such as ADP, Accenture, and Aon Hewitt further strengthened their positions as market leaders. Through the acquisition of Convergys’ HRO business, NorthgateArinso transitioned from a major contender to a leader in 2010  Major contenders: ACS, Capgemini, Capita, Ceridian, HP, Infosys, Logica, TCS, Wipro, and Caliber Point are classified as major contenders. Infosys strengthened its position in this category  Emerging players: Genpact, HCL, Neeyamo, and Xchanging are classified as emerging service providers Competitive intensity continues to increase in the HRO market  The current leaders on the Everest PEAK Matrix together account for more than 60% of the total Multi- Process HRO (MPHRO) market in terms of Annual Contract Value (ACV) and ~66% of the total MPHRO contracts  There is stiff competition among several service providers in terms of market share  India-based providers such as TCS, Wipro, Infosys, and Neeyamo gained significant share of new deals in 2009-2010. However, in terms of Total Contract Value (TCV), traditional providers such as ADP, Accenture, Aon Hewitt, and NorthgateArinso account for the majority of the total TCV signed Everest identified five service providers as the “2010 MPHRO Market Star Performers” – ADP, Accenture, NorthgateArinso, Aon Hewitt, and Infosys  The five 2010 HRO Market Star Performers were chosen based on the relative movement on the Everest PEAK Matrix from 2009 to 2010 of 15+ MPHRO service providers  The 2010 HRO Market Star Performers designation relates to year-on-year (YoY) performance for a given service provider and does not reflect on overall market leadership positions 3 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

Everest classifies the MPHRO service provider landscapeinto leaders, major contenders, and emerging players onthe Everest Performance| Experience| Ability| Knowledge(PEAK) MatrixEverest Performance | Experience | Ability | Knowledge (PEAK) Matrix for MPHRO High 75th percentile Leaders Top quartile performance across market success Major contenders and capability(ACV, TCV, new deals, extensions ) 75th percentile 2nd or 3rd quartile performance across market success and capability Market success 25th percentile 4th quartile performance across market success and capability Emerging players Low Low 25th percentile High MPHRO delivery capability (Scale, scope, technology, and delivery footprint)Source: Everest Research Institute (2011) 4 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso transitioned from the majorcontenders to the leaders category in an increasinglycompetitive MPHRO market LeaderEverest Performance | Experience | Ability | Knowledge (PEAK) Matrix for MPHRO Major contender Emerging player High 75th percentile Aon Hewitt Leaders NorthgateArinso Major contenders(ACV, TCV, new deals, extensions ) 75th percentile IBM Accenture ADP Market success HP ACS Capita Ceridian 25th percentile Genpact Capgemini Logica TCS HCL Wipro Xchanging Infosys Neeyamo Caliber Point Emerging players Low Low 25th percentile High MPHRO delivery capability (Scale, scope, technology, and delivery footprint)Source: Everest Research Institute (2011) 5 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

Everest also identified NorthgateArinso as one of thefive “2010 HRO Market Star Performers”MethodologyEverest chose the five 2010 HRO Market Star Performers based on the relative movementon the Everest PEAK Matrix for HRO from 2009 to 2010 of each HRO service provider To assess advancements on market success, we assessed the 2010 performance of each of the 15+ service ServiceMarket success providers on PEAK across a number of provider 2010 HRO Market Star parameters including:  2010 ACV growth Performers 2009  Number of new contract signings  Number of contract extensions  Value of contract signings in 2010 Capability To assess advancements on capability, The top quartile performers on each of we assessed the performance of each the above parameters were identified of the 15+ service providers on PEAK and the “Star Performer” rating was across a number of parameters awarded to the service providers with: including:  The maximum number of top-  Growth in scale quartile performances across all of  Increase in scope of services the above parameters  Expansion of delivery footprint  At least one area of top-quartile  Technology investments performance in both market success and HRO capability advancementsThe Star Performers designation relates to YoY performance for a given service providerand does not reflect overall market leadership positions. Those identified as the 2010 StarPerformers include both leaders and major contenders 6 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso’s strong movement on the EverestPEAK Matrix was enabled by a combination of marketsuccess and capability advancements2010 change in NorthgateArinso’s positioning on Everest PEAK Matrix for HRO NorthgateArinso’s MPHRO market success in 2010  Highest level of inorganic and organic growth in 2010  Eight new multi-process contract signings and extensions resulting in top quartile performance for overall spending in 2010 NorthgateArinso  With the acquisition of Convergys’ HRO Business, itMarket success increased its market share to 14% in terms of ACV and Leaders 2010 9% in terms of number of new contracts signings  Growth drivers in 2010  The strongest growth came from financial services and healthcare  More than 60% of the new contracts were signed in North America, realizing one of its major strategic intents that 2009 led to the above acquisition  Strong traction in the large-market (>15000 employees) largely driven by North American buyers Capability  Outlook for 2011  With the acquired HRO business integrated and a robust NorthgateArinso’s capability growth in 2010 pipeline, we expect NorthgateArinso to do well in 2011  Key areas of capability-related investments in 2010  Delivery footprint: The acquisition of Convergys strengthens its foothold in the North American market. Besides, it has opened up new centers in India and Europe to expand its HRO delivery footprint  NothgateArinso emerged as a star performer in the  Scale: The merged entity scaled up to more than 3,000 FTEs in 2010 2010 MPHRO market transitioning from a major  Scope: NorthgateArinso maintained end-to-end functional coverage contender to a leader on the Everest PEAK Matrix for with wide industry and geographical coverage HRO  Technology: NorthgateArinso continues to invest in enhancing  NorthgateArinso increased its market share to 14% in technology capabilities. With the backbone of SAP technology, the terms of TCV and 9% in terms of new deals signed. It has combined entity offers a broader set of capabilities and offerings. expanded in multiple geographies in both large and mid- Further, its recent collaboration with Siemens offers an extensive market portfolio of BPO products, that include hosting services, on-demand  Continued investments in building scale, service services with euHReka etc. offerings, global delivery footprint, and technology 7 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso (page 1 of 4)MPHRO service capability and strategyCompany profile: NorthgateArinso was created following the acquisition Current MPHRO market segment focus:of ARINSO International by Northgate Information Solutions. Northgate  Buyer segment: Targets the mid-market (3,000-15,000 employees)Information Solutions provided software applications and outsourcing as well as the large market segment (>15,000 employees)solutions. It now has three major divisions focused on the group’s core  Geography: North America, South America, Europe, and Asiabusiness areas: NorthgateArinso, Northgate Public Services, and PacificNorthgate Managed Services. In June 2010, it announced the completionof its acquisition of Convergys’ HRO business Current MPHRO technology strategy:Key leaders (BPO/HRO business): CEO – Mike Ettling  Overview: NorthgateArinso utilizes a platform-based approach andRegional Executives: UK – Simon Caunce; Europe & Latin America – offers its SAP-based, platform-euHReka to global customers (100+Kobe Verdonck; U.S. & Canada – Trey Campbell; Asia Pacific – Gery countries) and its proprietary technology solution, ResourceLinkMesser Aurora, for single-country outsourcing contracts (UK, IE, CA & U.S.)Recent MPHRO transactions:  Technology models supported: April 2010: NorthgateArinso announces a five-year contract with BD Customized Platform- (Becton, Dickinson and Company) Tie-and- Support/ replacement/ based April 2010: NorthgateArinso and Securex join forces to offer an HR run augmentation implementation solution platform to SMBs Dec 2009: NorthgateArinso signs a seven-year, multi-million-dollar    contract to provide global HR software and services to AstraZeneca, a global pharmaceutical company Total HRO delivery FTEs = ~3381Recent HRO-related developments/announcements: Offshore Nearshore Onshore Feb 2011: NorthgateArinso and Siemens IT Solutions and Services (India + China + (Eastern Europe + (U.S. + Canada + enter into partnership S.E. Asia) Latin America) Western Europe) Feb 2011: NorthgateArinso introduces agoHRa for mid-market payroll Dec 2010: NorthgateArinso opens a new global delivery center in ~1501 ~530 ~1350 Hyderabad Mar 2010: NorthgateArinso acquires the human resources Offered as MPHRO solution management division of Convergys Feb 2010: NorthgateArinso acquires Australian HR and payroll solution Offered on a stand-alone basis provider, Neller Pty Ltd. Not offered SERVICE SUITEEmployee Performance Regulatory Global Learning Recruitment Compen- Benefits Payroll HRIS Contactrelations management and mobility and selection sation center compliance 8 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso (page 2 of 4)MPHRO client portfolio MPHRO revenue (ACV) geography mix 100% = US$353 million South America (7%) Asia Pacific North America 9% Europe 55% 29%MPHRO revenue (ACV) industry mix MPHRO current buyer size mix 100% = US$367 million 100% = 23 deals Financial Energy services (3%) 3,000-15,000 High Tech Manufacturing employeesHealthcare 3% 6% 35% 13% 59% 65% Retail 18% >=15,000 employees 9 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso (page 3 of 4)Key MPHRO delivery locations London Newfoundland Katowice Brussels Budapest Cincinnati Dalian Granada Atlanta Jacksonville Mumbai Hyderabad Kochi Manila Kuala Lumpur Sao Paulo Buenos AiresNote: Map not to scale 10 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

NorthgateArinso (page 4 of 4)Everest assessment NorthgateArinso is a leader on Everest PEAK Matrix for MPHRO Delivery capability assessment High Low Assessment dimension Rating Remarks Leaders Scale NorthgateArinso continues to build scale by signing contracts and strengthening delivery NorthgateArinso workforceDelivery capability Scope High scope based on wide functional, Major contenders regional, and industry coverage Technology High IT capability, as well as significant capability investment in HR technology, to create proprietary and ERP-based platforms Delivery Wide global delivery footprint. Increasing footprint strength in offshore locations such as India Emerging players Overall Market success Overall market success Overall remarks:  Coming from a strong European heritage, post acquisition of Global MPHRO market share Percentage Convergys’ HRO business, NorthgateArinso has gained strong 14% 14% capability in North America as well 9%  However, its ability to leverage Convergys’ HRO business, which was built on a different HRO model than the one at NorthgateArinso, needs to be closely watched No. of contracts ACV TCV  Leveraging its portfolio of offerings and strong HR technology Global MPHRO market share over time expertise, it is one of the few service providers that can cater to Percentage share by ACV different buyer segments (mid-market single country, large market 14% multi-country, etc.) through targeted solutions  It is, however, perceived to be less flexible in customizing the 3% 4% solutions given its preference towards standardized platform-based approach 2008 2009 2010 11 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

About Everest GroupEverest Group is an advisor to business leaders on global services with a worldwidereputation for helping Global 1000 firms dramatically improve their performance byoptimizing their back-and middle-office business services. With a fact-based approachdriving outcomes, Everest Group counsels organizations with complex challenges relatedto the use and delivery of global services in their pursuits to balance short-term needs withlong-term goals. Through its practical consulting, original research, and industry resourceservices, Everest Group helps clients maximize value from internal transformations, sharedservices, outsourcing, and blended model strategies. Established in 1991, Everest Groupserves users of global services, providers of services, countries, organizations, and privateequity firms in six continents across all industry categories. For more information, pleasevisit www.everestgrp.com and www.everestresearchinstitute.com. 12 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

Everest Group leads clients from insight to actionContact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada info@everestgrp.com canada@everestgrp.com info@everestresearchinstitute.com +1-416-865-2033 +1-214-451-3000 +1-214-451-3110New York India/Middle Eastinfo@everestgrp.com india@everestgrp.com+1-646-805-4000 +91-124-496-1000 +91-124-496-1100 UK Netherlands & Continental Europe unitedkingdom@everestgrp.com benelux@everestgrp.com +44-870-770-0270 +31-20-301-2138www.everestgrp.com | www.everestresearchinstitute.com | www.sherpasinblueshirts.com 13 Copyright © 2011, Everest Global, Inc. ERI-2011-3-R-0538

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2010 HRO Market Star Performers on PEAK - NorthgateArinso

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