Global Services Digital Magazine October Issue 2

GSOctFINAL01:Layout 1 10/20/2010 1:21 PM Page 1

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DIRECTORY OF SERVICES
E. Abraham Mathew
President
Ed Nair
Editor
ed@cybermedia.co.in
Satish Gupta
Associate Vice President
satishg@cybermedia.co.in
Ashwin Razdan
ashwinr@cybermedia.co.in
Pratibha Verma
pratibhav@cybermedia.co.in
Sruthi Ramakrishnan
sruthir@cybermedia.co.in
Niketa Chauhan
niketac@cybermedia.co.in
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4 GlobalServices www.globalservicesmedia.com October 2010
October 2010 Volume 2, Issue 1
TRACKING THE OPD RECOVERY
By Sruthi
Ramakrishnan
The formula for recovery is
old fashioned: hold on tight
to your existing customers,
over-deliver on your value
proposition, and be open to
looking at new engagement
models.
FEATURES
Hunger for growth is
driving M&A deals
Fueling the tide 12
Q&A with Aaron
Solganick 15
M&As by the
numbers 16
10
24
WHAT
COGNIZANT
THINKS
By Ed Nair
Q&A with Malcolm Frank,
Cognizant
25
8
INDUSTRY-SPECIFIC BPO
WILL EVOLVE STRONGER
THAN HORIZONTAL BPO
by Sruthi Ramakrishnan
The US Healthcare Reform bill is being seen as the biggest bonanza
yet for the industry. While strong IT services vendors have been
developing BPO niches in specific verticals, newer BPO vendor
entrants are entering through the industry-specific domains.
20
WHY EUROPEAN RPO STAYS WITHIN
EUROPE
By Pratibha Verma
Stringent data protection laws require employee information to be
kept within the Union
17
INDUSTRY- SPECIFIC PROCESSES
Digital Production— An Opportunity for Providers Pg 17
By Vivek Shenoy
Is Insurance Analytics Outsourcing set to Surge? Pg 18
By Reetika Joshi
M&As: The
Rising Tide

Releasing November 16th
To advertise or to participate
contact: Satish Gupta at satishg@cybermedia.co.in

ED NAIR
Editor
EDITOR’S NOTE
ed@cybermedia.co.in
Microtrends will
become waves of
change; systemic
shocks like the
recession can reset the
economy and the
market.
hange is slow to be noticed. It is understood better, when things add
up over time or when a large shift happens.
This issue of the digital magazine is all about change; how micro-
trends will become waves of change or how systemic shocks like the reces-
sion can reset the economy and the market.
For instance, the story on how the OPD market is recovering from the
recession focuses on the impact of cloud computing on software product mod-
els and the attractive mid-market opportunity. Mid-market software com-
panies are treating their OPD vendors as extended R&D organizations, while
enterprise software vendors will use OPD vendors to handle entire families
of products. Globalization of R&D is a far-reaching trend.
Similarly, the cover story on M&As spells out the need for companies to
buy their way into market share and the increasing willingness of small com-
panies with service niches to sell out. These trends will endure for a few years
to come. Reason: buying market share is the fastest way to accelerate growth
and to get into new geographic market for services (India, China, Brazil, oth-
ers).
Another interesting example of change is brought out by the story on RPO
in Europe. Very strict data laws mandate that RPO work not be offshored
outside the European Union. The laws are not aimed at curbing offshoring;
they are aimed at strengthening data privacy. This is in stark contrast to the
US trying to enact laws that penalize offshoring with increased taxes, dis-
criminating against Indian companies by hiking visa fees, or any other pro-
tectionist measures.
Finally, the story about Cognizant drives home the point on how a com-
pany can synthesize various signals that combine to form large forces of change
and make it a way of life both inside and outside the organization. The Cog-
nizant way is a fantastic example of thought leadership. GS
C
Understanding the
Nature of Change

Releasing November 30th
Case Studies are invited from service providers. For more details
contact: Satish Gupta at satishg@cybermedia.co.in or visit:
www.globalservicesmedia.com/live

Product Development
By Sruthi Ramakrishnan
The formula for recovery is old fashioned: hold on tight to your existing
customers, over-deliver on your value proposition, and be open to looking at
new engagement models.
Tracking the
OPD Recovery
P
ost recession the outsourced product develop-
ment (OPD) segment is coping with an empty
deal pipeline. "We were all faced with a bifur-
cated market during the worst of the downturn.
Most companies were on a spending 'lock
down'”, says Pallab Chatterjee, ex-CEO and presently
chairman on the board of Symphony Services." However,
there was a sliver of the market that was willing to make
the bold R&D investments necessary to emerge stronger
during the recovery. The challenge for OPDs was to find
and exploit those opportunities."
Jim Walsh, Chief Technology Officer, GlobalLogic agrees
with Chatterjee. "Companies less than $100 million in
annual revenues tended to shrink, and some of the small
ones went out of business. So we lost some business in that
sector. But in the $100 million category, people saw OPD as
a cost saver. So we had more growth there. This growth off-
set the shrinkage."
Market Sweet-spots
It is precisely to this category, that is, to companies in the
$25 -500 million range, that OPD vendors are looking to
to lift them out of the downturn. "Large ISVs still represent
excellent growth opportunities as they are driving innova-
tion across a number of areas, such as Cloud enablement,
SaaS, PLM, etc. That said, the midsized market is extreme-
ly compelling to us because this is where some of the most
exciting and current technology development (e.g., unified
communications) is occurring. So we intend to continue
taking advantage of opportunities with larger ISVs while
expanding our footprint to include the mid market," says
Chatterjee.
The mid-market attraction, though, is not a new factor.
"Going to the mid-market is only logical--startups are not
enough for sustenance, and big companies are already suffi-
ciently penetrated. So it’s basically a very safe strategy to fol-
low,” says Karthik Ananth, Director-Market Expansion,
Zinnov Management Consulting.” And it’s not something
that companies started doing last year, they have been doing
this for the past three years. They took a halt last year as they
did not know what would happen to the mid-size market,
but now they are following the same strategy again.”
Besides the mid-size market, OPDs are looking to exploit
the opportunities provided by companies wanting to refresh
their product lines. “Companies wanting to grow in newer
markets want to revitalize their product lines so that they
can be rapidly deployed and configured at a lower price
Pallab Chatterjee, Chairman on the
board of Symphony Services

Product Development
point in the newer areas,” says Walsh. “There has been no
talk of cost arbitrage in the last nine months. Instead, com-
panies are looking at revenue generation activities, revitaliz-
ing their product lines and broadening their markets by
leveraging new technologies.”
Besides Asia, Europe is one of the geographies OPDs are
looking to expand in. “We’re continuing to invest sales and
marketing resources in China – for clients who want to tap
China’s huge and highly skilled workforce (while maintain-
ing a toe hold in a region that represents a huge market for
them). And we are investing heavily in Europe for optimiz-
ing the R&D functions of a number of ISVs, telcos/carriers,
etc.,” says Chatterjee.
Challenges
Perhaps the biggest challenge for OPDs in the post-recession
period is to match up to the increased expectations from
them. As Jim puts it, “The playing field is becoming more dif-
ficult for companies, they need to be much better than they
were. The bar for software quality and presentation has gone
way up.”
As Ananth points out, the recovery story happened three
months back. “Now it’s about finding out which are the
growth areas and where are the new avenues of growth.” He
opines that with the advent of cloud computing and SaaS,
software moving to them will have significantly larger
opportunities. GS
Third-party Partnerships:
Future of Software R&D
l According to Zinnov's study on Software R&D
Globalization, only 5% of R&D budgets are cur-
rently being spent on outsourced partnerships,
which means about 95% of the R&D is conduct-
ed by companies in-house (HQ, Captive models)
l For many of the large sized companies that par-
ticipated in the Zinnov survey, mature/ existing
products account for more than 75-80% of
their total revenues. Hence they have to invest
heavily on maintaining and enhancing these
products to suit requirements.
l In keeping with their low spend strategy, compa-
nies are now focusing on new products for both
the US market and the emerging markets to tap
into newer opportunities and newer customer
requirements.
l Amitava Roy, COO, Symphony Services,"Two
major challenges to software product companies
today - freeing up resources to work on new
products and maintaining margins for legacy
products,”
l Majority of companies are increasing R&D spend
in captive centers in emerging geographies such
as India and China
l Biggest captive center challenge- the tag and
the brand recognition to attract and retain
people
l 'Go-to-market' strategy: companies are asking-
should we develop it on our own or should we
get a partner who can not only develop it for me
but also help me in penetrating newer markets
and support me in expanding my existing mar-
ket?
l Challenges faced by small and medium sized
ones: higher total cost of ownership, high set up
cost and lower productivity
l The new pricing models offered by vendors to
clients: outcome based pricing, revenue share
pricing and risk reward pricing. Companies are
now looking to leverage the risk-reward partner-
ship model, where the vendors are willing to
absorb a certain amount of business model risk,
across the lifecycle of products
OPD VENDORS ARE LOOKING
AT COMPANIES IN THE
$25-500 MILLION RANGE TO
LIFT THEM OUT OF
THE DOWNTURN

M&As: The Rising Tide Special Report
The Rising Tide
for M&As

■ Fueling the tide 12
■ Q&A with Aaron Solganick, Generation
Equity Advisors 15
■ M&As by the Numbers 16

T
HE ACQUISITION of Unisys Insurance
Services Limited (UISL) by TCS' UK sub-
sidiary Diligenta has brought into focus an
interesting trend in M&As in the services
industry.
Recent deals show that instant growth in market share is
increasingly becoming a driver for M&As. The Unisys
acquisition, for instance, was done primarily to increase
TCS's market share in the UK insurance space. Suresh
Menon, CEO, Diligenta had said at the time of closing the
deal, “Diligenta will use its vast experience of life and pen-
sions BPO and the existing expertise available at UISL to
continue to build its UK operations and service UISL’s
customers.”
Buying Market Share
TCS has seen instant gains following the transfer of UISL’s
business, with the former having become the second-largest
insurance BPO provider in the UK, after winning two deals
The hunger for revenue growth is driving M&A deals
in ITO and BPO
worth £250 million ($392.5 million) and business for the
next six years.
A similar trend can be seen in several M&As of recent
times. Genpact's acquisition of Symphony Marketing
Solutions, Capgemini's purchase of majority stake in
Brazilian major CPM Braxis, IBM's purchase of Unica have
all had established vendors in niche sectors being acquired
by bigger players who offer a wider range of services. "The
last two years saw businesses focusing more on managing
costs to take a conservative view during the global down-
turn. Now we see them back like in pre-crisis growth mode
and resuming investment – both organic and inorganic,"
says Sashi Reddi, Founder & Chairman, AppLabs. The soft-
ware testing and quality management company acquired
Value Minds, a developer of web-based testing tools last
month.
Symphony Services is another company that has been
active on the acquisition front, with two recent acquisitions-
CoreObjects and Proteans - adding to their expertise and
Fueling
the Tide

beyond their domestic market base and gain access to a larg-
er clientele, besides granting association with a known name.
In such cases, target compa-
nies aim to, as David
Shpilberg, Vice Chairman of
the Board of CPM Braxis said
in an interview with
EuroBusiness Media, "create a
solid, global-standard compa-
ny that continues to grow at
above market rates".
Besides markets, compa-
nies are also looking to acquire
expertise in services that seem
potentially profitable. IBM
seems to be leading the race in
this regard, with the company
spending more than $11 bil-
lion in the past five years to
shore up on higher-margin
software businesses like
OpenPages, Unica and
Coremetrics. “We will contin-
ue to see action from active
acquirers such as IBM who
indulge in large to small size
transactions throughout the
year,” says Ratna Srivastava,
Senior Analyst, Tholons.
Going Organic
M&As are like growth on
steroids. While they work as
an instant growth booster, do
they have an adverse effect on
in-house initiatives for
growth? "Most of the buyers
have been chasing targets offering complementary services
and hence not a threat to the in-house initiatives," says Ratna
Srivastava. "However, a few large deals initiated in the past
couple of months were primarily in line with acquirer’s
major line of businesses, but has not been a threat because
the objective was to gain access to a geography or a new
client segment."
Ultimately, internal growth will drive a company's suc-
cess. “Inorganic growth is fast and allows immediate utiliza-
tion of acquired assets. But, if the firm grows only inorgani-
cally then it would be difficult for it to maintain sustainable
growth from within and is a strategy for failure. Hence, there
has to be a good balance between organic and inorganic
growth," sums up Reddi. GS
client base. While the company has found the two acquisi-
tions complementary "to the work we have historically done
with ISVs", it has also benefited
by adding "Proteans’ established,
international client base to our
global ISV client roster".
The company is not ruling out
more takeovers in the near future.
"We are always on the lookout for
highly specialized and differenti-
atetd providers that will add to
our core competencies; bring
greater value to our client base;
and add strong engineering talent
to our team. We have very aggres-
sive growth goals for the next sev-
eral years, and we plan to reach
those goals through a combina-
tion of organic and inorganic
growth," says Sanjay Dhawan,
CEO of Symphony Services.
The strong M&A wave is set
to hold across company sizes and
price bands, as the industry strives
to return to its pre-recessionary
galloping growth rate and compa-
nies keep all growth options open.
"We are actively seeking ERP test-
ing companies in the $40-50 mil-
lion range to help us address the
large enterprise market. Many of
our customers are demanding
highly specialized ERP testing
skills and we would be open to an
acquisition in that space," says
Reddi.
Small Firms Willing to be
Acquired
This works well for mid-tier companies, several of which
were facing closure during the recession. Unica had a loss of
$22.5 million on revenue of $100.6 million in the fiscal year
ended Sept. 30, 2009. Kale Consultants, a mid-size out-
sourcing services firm, sold out to European back office
provider, Accelya. Several others like Hexaware
Technologies, Mastek, and Patni witnessed a tough year and
shrank in revenue. For such companies, choosing to sell out
to a bigger (and financially more stable) company may seem
a viable option.
But for profit-making enterprises like Brazil-based CPM
Braxis, such M&As enable the target companies to reach out
“The last two years saw busi-
nesses focusing more on man-
aging costs. Now we see them
back like in pre-crisis growth
mode and resuming investment
– both organic and inorganic,”
Shashi Reddy,
Founder & Chairman, AppLabs

Aaron Solganick, Founder President and Managing Director,
Generation Equity Advisors, spoke with Ed Nair about the
prevalent trends in M&A in the services industry. Aaron believes
that the tide is rising compared to the stillness that prevailed in
the past two years. Excerpts from the conversation:
We are seeing the continuation of
a two-year consolidation phase
GS: What are you seeing in terms of
the climate for M&As in the services
industry for 2010?
AS: The overall climate for M&A for
the Software & IT Services industry
for 2010 is one of the most active in
terms of number of transactions
announced in the U.S. and globally.
We are seeing a continuation of a 2-
year consolidation phase of major
software and IT services firms. M&A
is steadily improving quarter-to-quar-
ter 2010 and has clearly gained signif-
icant improvement since a dismal
2009. M&A for 2010 is still at below-
normal levels as compared to 2005-
2007, but is steadily improving.
GS: What kind of deals are these?
What are the drivers?
AS: So far this year, the largest M&A
deals mostly involved BPO firms,
while transactions with the highest
multiples spanned offshore outsourc-
ing, government, specialty consulting
and digital marketing services, show-
ing that healthy valuations are not just
tied to one area. Overall, companies
are acquiring to gain traction in a
product or service offering or geo-
graphic reach (India to US, Europe to
US, Latin America to US).
We see a consistent trend in larger
IT services and BPO firms acquiring
small-to-mid market companies that
add strategic value to their current
offerings. The mega-mergers over the
past 2 years have mainly been to take
advantage of a lower valuation and
sometimes a near fire-sale.
GS: But large deals seem to be miss-
ing; the likes of HP-EDS, Dell-
Perot, ACS-Xerox. How are the large
companies doing?
AS: Even though deals of the type you
mentioned have not happened, all of
the major technology conglomerates
such as IBM, HP, Accenture and
Capgemini have been steadily active
in acquiring companies in 2010.
Nippon Telegraph and Telephone
Corporation (NTT), one of the
largest global telecommunications ser-
vice providers announced the acquisi-
tion of Dimension Data Holdings Plc
(Dimension Data), a global specialist
IT services and solutions provider, for
$3.2 Billion. PwC also recently
announced the acquisition of
Diamond Management &
Technology Consultants, Inc. (DTPI)
for $378 million, a move to improve
its global management consulting and
systems integration offerings. Aon
Corporation’s acquisition of human
resources consulting and outsourcing
solution provider Hewitt Associates
for $4.8 billion and 1.6x revenue was
a large deal in Q3. Add to this,
Accenture-Ariba and CapGemini-
CPM Braxis kind of deals.
GS: What about the Indian vendors?
AS:As for the Indian companies such
as Wipro, Infosys and HCL, there
have been few M&A announcements
in 2010. We see Indian firms acquir-
ing small-to-medium sized BPO firms
in the U.S. and Europe, but not India-
to-India firms. We also do not see
U.S. or European firms acquiring any
of the large Indian firms this year and
possibly the next due to large valua-
tion gaps (1x’s revenue for U.S. IT ser-
vices firms versus 4x’s revenues for
Indian IT services firms). GS
Aaron Solganick, Founder President and
Managing Director, Generation Equity Advi-
sors, is an experienced technology investment
banker. He has completed over $8.4 billion
in transactions to date including M&A,
private capital raises and IPOs. He has
worked at top-tier and middle-market M&A
firms and gained experience in complex
transactions of most shapes and sizes.

GLOBAL M&A DEALS
0
300
600
900
1200
1500
Q3 '10Q3 '09
TOTALVALUEINUSD(INBILLIONS)
QUARTER
1137.98
1420.20
0
2000
4000
6000
8000
10000
Q3 '10Q3 '09
GLOBAL M&A DEALS COUNT
TOTALNO.OFDEALS
QUARTER
6,864
8,010
0
100
200
300
400
500
600
Q1-Q3 2010Q1-Q3 2009
DEALS WITH OVER $500M VALUE
NO.OFDEALS
QUARTER
323
515
0
10
20
30
40
50
60
Q3 '10
(for IT services only)
Q3 '10Q3 '09
AVERAGE M&A DEAL SIZE
USD(INMILLIONS)
QUARTER
21.95
27
58
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Q3 '10Q2 '10Q3 '09
DISCLOSED DEAL VALUE
USD(INBILLIONS)
QUARTER
1.4
2.9
3.8
0
20
40
60
80
100
120
Q3 '10Q2 '10Q3 '09
VC-BACKED M&A DEALS
NO.OFDEALS
QUARTER
69
97
104
M&As by the Numbers
Sources: Thompson Reuters, Capital IQ, National Venture Capital Association, Dow Jones Venture Source,
MergerMarket

Industry-specific Processes
Vivek Shenoy, Analyst — Publishing, ValueNotes Sourcing Practice
O
n the 19th of November 2007, Amazon
released its first generation Kindle – an event
that shaped the digital market. Since then,
large corporations such as Sony, Barnes and
Noble, Google, and more recently Apple,
have been giving the digital content market significant atten-
tion – adding credibility and more so, validating the digital
market as a strong revenue source. Consumers have respond-
ed well to digital content as evident by e-book sales in the US:
The International Digital Publishing Forum (IDPF) reports
sale of digital content/books in the US, for the first two quar-
ters of 2010, in excess of $150 million – a 200% growth since
the same period last year.
Publishers, over the last few years, have faced significant
cost and revenue challenges – challenges that have shaped
how the industry is currently operating. For publishing com-
panies undergoing cost and revenue pressures, the digital mar-
ket presents a holistic solution – one that opens a channel of
revenue with non-linear growth, while ensuring minimal
costs of production & sales. Whether it is opening a new
channel of revenue through digital sales or migrating to digi-
tal only operations, the publishing industry worldwide is get-
ting a digital facelift. However, creating digital offerings pre-
sents its own sets of problems.
Optimal Production of Digital Content is a Challenge
To better understand how publishers address the digital mar-
ket the ValueNotes Sourcing Practice is conducting a survey on
“The Current State of Digital Content”. Initial responses from
our survey suggest that integrating a digital workflow in addi-
tion to the existing print workflow is a challenge – more than
two-thirds of the respondents having indicated so. Most pub-
lishers view the creation of digital content as two activities:
n Digitisation of backlist/archives
n Digitisation of existing/future content
Digitisation presents its own set of challenges and is highly
dependent on the value of the content (particularly for
STM/Academic, reference and trade book publishers).
Publishers with a large backlist have faced issues while organis-
ing content, identifying source files (due to multiple versions),
developing workflows in-house and most importantly organis-
ing the resources required while undertaking the digitisation.
On the other hand, digitisation of existing/future content
is highly dependent on developing strong workflows that
incorporate multiple formats. The biggest challenge remains
in maintaining a uniform user reading experience – across var-
ious e-readers and formats. To truly monetise the digital mar-
ket, publishers need to not only develop the necessary tech-
nology skills and infrastructure, but also develop the resources
in-house – a significant cost outlay.
Leveraging the Outsourcing Model
Traditionally, publishers have leveraged outsourced publishing
services providers to cut costs. However, with the onset of dig-
ital content, publishers are going beyond cost as the primary
criteria for choosing a vendor. For example, a large education
publisher we interviewed rated product expertise as the prima-
ry driver for choosing a vendor. Varying formats, ensuring uni-
formity of reading experience and integrating deliverables in
the buyer’s workflow all require capability and skill on part of
the vendor.
Buyers have also indicated lack of in-house capability
(technological expertise) and resources (scalability of opera-
tions) as other important drivers of outsourcing. While buy-
ers might consider outsourcing more, satisfaction levels are a
concern. Quality, timeliness and delivery processes remain
areas where most buyers seek improvement.
Providers (pure-play publishing services and otherwise)
now stand at the threshold of a significant opportunity – that
of digital production. This opportunity includes volume dri-
ven services such as conversions, XML, etc. to value added
services such as workflow and process consultancy. However,
to successfully address this opportunity; providers will need to
match up to the buyers expectations of quality and delivery.
Publishers will soon need to find a lasting solution to quality
issues – consumer expectations from digital content is increas-
ing rapidly. As the market grows, the publishing industry will
adopt digital content on a wide scale and as the market matures,
there will be more opportunities to cross-sell content. Whether
publishers outsource or not, the need of the hour is to digitise
in a holistic manner – one that will facilitate the digital pro-
duction of existing/future content optimally. GS
For publishing companies undergoing cost and revenue pressures, the digital
market presents a holistic solution- one that opens a channel of revenue with
non-linear growth, while ensuring minimal costs of production & sales. However,
creating digital offerings presents its own sets of problems.
The Digital Production Opportunity

T
he last few years saw the deconstruction of
the mighty ‘Banking, Financial Services and
Insurance’ (BFSI) segment, for the out-
sourcing industry. With significantly dis-
similar business environments, processes
and outsourcing needs, the distinct differences in the
banking and insurance sectors have become apparent.
They are now treated as exclusive customer segments, and
the addressable market for each of them have proved
extremely lucrative for outsourcing providers. Due to this
reason, providers are striving to gain critical industry expe-
rience and evolve their ‘banking’, ‘financial services’ and
‘insurance’ practices independently, with a keen eye on
high-end services for the near future.
The insurance segment, worth US$4066 billion in
global premiums (Swiss Re Sigma Study, 2009), is no
stranger to outsourcing. Insurance, reinsurance and inter-
mediary companies have relied on outsourcing application
development and infrastructure management outsourcing
for many years, like the aggressively outsourced banking
segment. With confidence established in the ‘outsourcing’
concept, in the last decade UK based insurers moved ahead
to set up offshore captive centres and Third Party
Administrator agreements for various low-end business
processes as well. Simultaneously, insurance companies in
the US engaged with BPO providers instead, and it is due
to their efforts that the intensity of insurance BPO out-
sourcing has grown to today’s volumes. Collectively, the
By Reetika Joshi, Analyst, ValueNotes Sourcing Practice
Providers are striving to gain critical industry experience and evolve
their banking, financial services and insurance practices indepen-
dently, with a keen eye on high-end services for the near future
Is Insurance Analytics
Outsourcing Set to Surge?

North American insurance BPO market was valued at
US$2 billion in 2009 by Celent, a consulting firm. By
2013, this figure is estimated to double, despite the sizing
relating to only core low-end BPO processes.
Moving up the Enterprise Value Chain Through
Insurance Analytics
Processes outsourced today by insurers in the
US/Europe include a wide variety of volume-led transac-
tions, in the fields of policy administration and servicing,
claims administration, various marketing/ sales/new busi-
ness outbound voice processes, and customer support.
These back-office/voice processes have been easier for
insurers to outsource, as they are relatively less critical,
offer greater savings potential, and are easier to migrate
due to their high process maturity.
As the industry matures, several major BPO providers are
now transitioning to position themselves as high-value busi-
ness partners, and are offering a range of knowledge inten-
sive services, to move up the value chain. Of these KPO ser-
vices, insurance analytics looks to be the strongest contender
in the coming years, due to the influence of several compet-
itive forces in the insurance segment, elaborated below.
1. Legislative and regulatory compliance requirements:
The US healthcare reform will bring in over 30 million
new insured over the course of the next four years, intro-
ducing complete new segments for US insurers to service.
While this is a great opportunity for insurers, they will
need strong risk and price remodelling to aid their product
development. European insurers, meanwhile, are subject
to compliance requirements from the Solvency II regime,
which will bring about a more effective risk management
framework for the EU. As a result, insurers have to set up
extensive risk modelling to comply with the Solvency II
requirements, including quantitative requirements (Pillar
I), governance, supervision and risk assessment (Pillar II),
and disclosure of insurance operations (Pillar III).
2. Strong competitive pressures encouraging ‘core’ out-
sourcing: Insurers face a market with falling premiums and
profitability, compared to the pre-recession years. There is
severe competition, coupled with newer customer and dis-
tribution channel dynamics. To be able to compete, insur-
ers must achieve the highest degree of efficiency and lean-
ness. Once ‘unoutsourceable’ core processes are no longer
viewed as such. Risk modelling, actuarial services and new
product development were traditionally the most core
insurance activities, directly linked with company perfor-
mance and competitive differentiation. The entire gamut
of these services was then retained in-house. However,
with the paradigm shift, even high level research and ana-
lytics work is being considered for outsourcing. This
includes services such as: Predictive analyticsClaims and
profitability analysisPersistency modelling and
analysisMortality/morbidity modelling and
analysisProduct profitability analysisNew product develop-
ment – pricing, valuationCommissions analysisActuarial /
statutory reporting Actuarial dataInformation manage-
ment
While initially more reporting and information man-
agement services were outsourced within analytics,
providers are now seeing a surge in actuarial and prof-
itability/pricing analytics as well. Based on the industry
redefinitions taking place, in the coming years only work
that is heavily governed by regulations and/or is incapable
of being delivered through technology will remain as ‘core’,
to be retained in-house.
3.Provider base gaining KPO domain expertise: The
majority of high-value insurance processes are complex,
being knowledge and judgment intensive. Hence, these
‘KPO’ services will only be entrusted to established ‘niche’
providers who have demonstrated domain expertise in
insurance. Towards this, BPO providers are rapidly vertical-
izing in order to enhance insurance expertise. Existing out-
sourcing relationships with IT/BPO insurance clients are
being leveraged to cross-sell analytics services. The top
insurance BPO providers have a significant presence in
India, and are benefiting from the country’s strong talent
pool, with strong analytical/mathematical skills and English
language capabilities. With robust business delivery mod-
els, domain expertise and a large talent pool, providers are
positioned well to move up the insurance value chain.
When is the Shift?
While the stage has been set for insurance analytics to
gain traction, it must be noted that the bulk of outsourced
work still remains heavy back-office processing and cus-
tomer support. What has changed for insurers is the
increased focus on risk modelling, due to changes in the
competitive and regulatory environment. This might not
translate into more business for BPO providers in the short
term, save for existing accounts that have grown, given
higher confidence in vendor capabilities. As providers
become more verticalized, and further develop their dedi-
cated insurance practices, the shift towards higher value
analytics services will accelerate in the next three years.
Risk, marketing and operational analytics, coupled with a
consultative approach, will greatly help insurers gain com-
petitive advantage in a challenging and complex competi-
tive environment. Due to heightened demand and the
strong value proposition offered by the global vendor base,
‘claims processing’ as the most outsourced activity may see
some competition in the years to come! GS

BPO Trends
V
ertical-specific BPO services present a larger
and more diverse market opportunity as
compared to horizontal BPO services. The
US Healthcare Reform bill has been the
biggest newsmaker in this regard, with many
already terming it the “biggest bonanza yet” for the indus-
try. Service providers with expertise in the healthcare area,
both from industry leaders like India, Philippines and
nearshore locations like Canada, Mexico are queuing up to
grab a share of the approximately $2.5 trillion US health-
care pie.
Experts say that opportunities will be widespread
in those industry domains where BPO and IT services
can be bundled together under a single vendor's provision.
This will help to generate more efficient business outcomes
and to secure future IT work with existing clients. So
the providers who can bring in industry domain
expertise are set to emerge as significant players in the
coming year.
A trend which is indicative of this growth potential is
that newer vendor entrants are entering the BPO industry
through the industry-specific (vertical) process domains.
Most of the strong IT services vendors have also been
developing BPO niches in specific verticals where they
have developed some strong process acumen and client
credibility.
According to a survey by Horses for Sources, one-in-ten
financial services firms, and one-in-five from life sciences,
are looking to move into some form of domain-specific
BPO this year for the first time. These are typically areas
where there is some immediate labor arbitrage opportuni-
ty, like trade settlement transactions and mortgage pro-
cessing in financial services, and data storage and manage-
ment processes in life sciences.
Reasons for Evolution of This Sector
At the outset, process outsourcing had been primarily a
cost-control strategy driven mainly by labor arbitrage.
Cost-control is still relevant. But in today’s environment,
especially keeping the slow economic recovery in view,
organizations are searching for value--for ways to do things
better, faster, and cheaper--and for the ability to truly
transform their businesses. To do that, they need BPO that
is based on industry-specific knowledge and that is driven
to achieve measurable business outcomes.
On the buyer side, several industries- financial services,
life sciences, healthcare, retail, manufacturing, media, etc.
- are undergoing fundamental changes, right from their
infrastructure to business model to customer expectations.
In such a situation, outsourcing processes is no longer seen
as abhorrent or unusual. Another reason is the success of
existing domain-specific BPO engagements. Over half of
all the financial services and life sciences firms recently sur-
veyed by Horses for Sources are looking to expand existing
BPO engagements this year, and very few intend to pull
work back onshore. However, this doesn't necessarily
entail massive increased spending overnight, but more a
gradual incremental increase in engagement scope.
Suppliers also find the marketplace increasingly crowd-
ed, and industry-centric capabilities enable competitive
differentiation. Moreover, the move to greater domain-
specificity is intrinsically tied to the business utility model
of the future, where there are signs of the convergence of
SaaS, Cloud and BPO/ITO models within an engagement
The US Healthcare Reform bill is being seen as the biggest bonanza yet for the indus-
try. While strong IT services vendors have been developing BPO niches in specific verti-
cals, newer BPO vendor entrants are entering through the industry-specific domains.
Opportunities will be widespread where BPO and IT services can be bundled together.
Industry-specific BPO Will Evolve
Stronger Than Horizontal BPO

BPO Trends
structure. The need for clients and vendors to define,
develop and implement holistic end-to-end process solu-
tions is slowly coming to the forefront.
All these reasons have led an increasing number of indus-
try verticals to explore new and radical means to improve
productivity, source new revenue opportunities and drive-
out cost. Other benefits sought from providers include
enhanced customer service, greater competitive agility, and
measurable long-term business value, to name a few.
Vertical-specific Potential
Healthcare outsourcing : The Healthcare Reform bill has
the outsourcing industry abuzz with anticipation. Many
BPO firms, including several Indian ones, recently
increased or are in the process of increasing their onshore
presence in the US or seeking possible mergers and acqui-
sitions with other companies so as to broaden their exper-
tise and so gain more business from the on-the-brink-of-
booming healthcare industry there.
But capturing the US healthcare market is easier said
than done. So far only a few IT and BPO firms have made
a headway into the US healthcare provider and payer mar-
ket despite the huge potential for automation and out-
sourced services in areas such as revenue cycle management
and claims processing. Industry players and experts cite
issues like lesser willingness to outsource as compared to
the financial services players, regulatory and privacy con-
cerns related to patient records, compliance to specific Acts
such as HIPAA (Health Insurance Portability and
Accountability Act), knowledge of medical procedures and
codes, and variations between states which make this mar-
ket more challenging.
But with 32 million Americans slated to join the ranks
of the newly-insured, many providers will soon be seeking
assistance in the processing of not just the new enrollees,
but their existing clients as well. Insurance providers who
were previously hesitant about outsourcing services will
also now be forced to rethink, especially as competition
will be tougher than ever in their industry. Of course with
that, competition to gain profit from healthcare services
will be tougher in the outsourcing industry as well.
Financial sector outsourcing: The financial services sec-
tor has seldom faced a tougher set of business, market, and
regulatory challenges. Many firms face threats from ongo-
ing consolidations, more mature non-traditional competi-
tors, and proliferating compliance demands. To meet these

BPO Trends
challenges, BPO is increasingly being seen as a logical and
proven tool for banks, card issuers, mortgage, insurance
and other financial services firms. Banks and other organi-
zations are using BPO to manage risk, to reduce costs, and
to comply with increasingly rigorous regulatory demands.
Mortgage Process outsourcing: The major challenge
which service providers face while offering mortgage ser-
vices is the integration of services like loan origination,
vendor management, post-closing processing services,
third party services until underwriting, modification ser-
vices, technology services etc.
TCS (Tata Consultancy Services) shared with Global
Services ('New Demands in Mortgage Processing BPO',
September 28, 2009) that as mortgage rates dropped to
under 5% early last year, re-finance activity increased cre-
ating a spike in demand for origination and loan closing
related services. This demand cooled as rates edged up.
For default related services including MODs and real
estate owned (REO) there were
early demand spikes as servicers
began to deal with the mort-
gage crisis. An uncertain regu-
latory environment and politi-
cal pressures for moratoria on
foreclosures late in 2008 con-
tributed to a slowing in default
outsourcing. As moratoria
expire and MOD programs
become better defined, service
providers are facing a need to
rapidly add scale. Cycle time
has shortened dramatically. For
service providers this translates into a need for excellence
in manpower management, recruiting, and training. An
additional critical element is deep domain expertise – the
ability to work with the client to optimize processes, find
ways to automate more fully and expand the scope of
potentially outsourced business processes.
Life sciences outsourcing: The industry-wide drive for
pharmaceutical and biotechnology companies to lower
costs, access specialized services and increase flexibility
through outsourcing work to Contract Service Providers
(CSPs) was highlighted by BioCrossroads’ latest report on
Industry Developments in U.S. Biopharmaceutical
Contract Services. The new report acknowledges that
while 2009 was slow for many CSPs, the underlying rea-
sons for pharmaceutical and biotechnology companies to
outsource selected activities will continue for the foresee-
able future. CSPs should continue to grow as the pharma-
ceutical industry moves towards a more flexible business
model. Biomarker services and the need for larger clinical
trials will provide opportunities for additional growth in
future years.
Besides, with the consolidation of the pharmaceutical
industry and the continued trend of strategic partnerships
between CSPs and their clients, many companies in the
sector will be drawn to find new revenue sources.
Besides India and Japan, China is emerging as a poten-
tial industry leader in this vertical. According to a 2008
report ‘The Changing Dynamics of Pharma Outsourcing
in Asia: Are You Readjusting Your Sights?’ by
PriceWaterhouseCoopers, big pharmaceutical companies
rated China as the best location for outsourcing in Asia.
The country’s large population represents enormous mar-
ket potential for Western firms whose domestic profits are
coming to a standstill. Pharma companies are also drawn
by China’s low production costs. The Wall Street Journal
estimates that the total cost of a scientist in China is
$30,000, compared to $250,000 in the U.S. Worldwide
pharmaceutical firms looking
to expand sales into emerging
markets are contributing
resources to China.
Supply Management out-
sourcing: The market sur-
passed a billion dollars in
expenditure for the first time
last year, with a 30% hike in
expenditure on new multi-
scope BPO contracts, as
reported by the AMR
Research Supplier
Management BPO services
report of 2009. The main reason for this uptake is the
increased availability of low-cost offshore services for pro-
cure-to-pay and strategic sourcing support, with 72 per-
cent of services being delivered from India for largely
North American and European organizations. But
experts say that this market will not sustain its growth
trajectory unless customers think beyond short-term
labor arbitrage, and service providers introduce signifi-
cant process and technology enhancements to the early
adopters to help them optimize their delivery.
Publishing outsourcing: The pressures that publishers
faced in the wake of economic recession stimulated the e-
book market. In the US alone, trade wholesale electronic
book sales amounted to $167 million according to the
International Digital Publishing Forum (IDPF). The e-
book segment is growing and has witnessed serious
attempts by publishers to make it a strong revenue
source.
Outsourcing is being looked upon, besides to tackle
The move to greater domain-
specificity is intrinsically tied to
the business utility model of the
future, where there are signs of
the convergence of SaaS, Cloud
and BPO/ITO models within an
engagement structure

BPO Trends
cost pressures, to deal with the challenges of adapting to
new technology, lack of in-house capability and addressing
new geographies.
According to a 2010 ValueNotes survey of publishing
service buyers, India was followed by the US in popular
publishing outsourcing destinations, while the Philippines
was the second most preferred offshore destination after
India. ValueNotes estimates the Indian publishing out-
sourcing industry to grow to a $1.2 billion annual market
by 2012 from $660 million in 2008. This growth is
expected to come from the rise in the number of publish-
ing firms that will outsource their work.
Indian players are shifting focus from the matured aca-
demic segment to the more lucrative segments in the pub-
lishing market- educational, magazines, corporate, B2B,
trade and e-books will be attractive segments over the next
three-four years, and Indian service providers can extend
their current capabilities to service these upcoming oppor-
tunities.
The industry still suffers from a serious piracy problem,
caused largely by the high price of books, especially foreign
books published under license, where currency exchange
rates push up the prices. Besides, diversifying into new
areas of business and providing value-addition within cur-
rent offerings are areas where outsourcing is yet to be
viewed as a complete solution, the ValueNotes survey
revealed.
Media outsourcing: The global media and entertain-
ment industry revenue is likely to increase by leaps and
bounds due to the proliferation of content in multiple for-
mats across media platforms. The media process outsourc-
ing opportunity is huge since most of the existing contents
worldwide are in the analogue form and need to be digi-
tized for new platforms.
As advertising declines, the pace of onshore and off-
shore outsourcing in the media industry appears to be
picking up. The Everest Group reported an increase in
media-related outsourcing deals in the last year. Mergers
among media companies are driving some of those deals,
but most of the push to outsourcing is due to pressures in
the ad market. Publishers see labor arbitrage and off-
shoring as one of the easiest things they can do to cut costs.
Many companies today understand the importance of
maintaining a good profile on the internet. Hence, they
seek social media services like SMO (SM optimization) for
their websites from third party vendors to boost their
online business marketing while they focus full time on
their core business development.
Other Verticals
Industry specific variations of horizontals continue to
remain unaddressed though a few areas such as Revenue
Accounting (Travel) or Revenue Assurance (Telecom) are
drawing interest. Travel (airlines) is a sector where industry
specific services such as Pricing/Fare filing or Yield
Management or Load Management have seen demand
though "revenue accounting" has been leading in the sec-
tor.
Insurance is a sector which has been waiting for a good
platform solution for a few years now.
Firms looking at supply chain functions, such as man-
agement of environmental compliance, distribution man-
agement, sourcing etc. are also choosing to outsource
them.
Other emerging verticals include technology, telecom
and transportation.
Opportunities and Risks
The 2009 Everest report ‘Industry-Centric BPO
Solutions- Opportunity to Attain Distinctive Market
Positioning’ says that while “verticalization” of services
implies numerous opportunities for value creation, there
are also potential risks, and suppliers need to identify and
adopt mitigation strategies for these risks.
Among opportunities, the report mentions that while
the overall BPO market is highly competitive, the market
by industry is concentrated. Also, the industry specificity
of services sets the stage for the introduction of higher-
value pricing models. On the other hand, strategic invest-
ments for capability building in vertical services will carry
larger risks.
Experts also warn that while industry-specificity will
clearly be a major driver in outsourcing, the financial pres-
sures on vendors to maintain their profit margins may
override its development. The capability to deliver genuine
domain-specific process acumen to clients is quickly
becoming a major differentiator in the market. However,
investing in the talent to truly scale these capabilities is
expensive, and the margins aren't as appealing as those cur-
rently being displayed by several vendors delivering the
easy, operational work. As a result, sector-specific skill
shortages (specialized skill categories for vertical-specific
processes such as actuaries for Insurance BPO) are likely to
emerge, according to the Nasscom- Everest India BPO
Study (2008).
While some vendors are clearly content with a thin
veneer of vertical capability, others are picking verticals
where they feel they can gain an edge over the competi-
tion. But it's a gradual development, and experts say that
it will take patience and attitude on the vendors’ side to
invest in the depth of talent they need, and less concern
about short-term profits and demands. GS

Human Resource Outsourcing
By Pratibha Verma
T
he European recruitment process outsourc-
ing (RPO) market is not amenable to off-
shoring. Despite being a segment growing at
annual rate of 10 percent, the RPO market
in Europe relies solely on a mix of onshoring
and nearshoring. Cultural affinity and the nature of the
recruitment process is only part of the reason. Alsbridge
Senior Manager Shaun Dunphy says, " Onshoring of RPO
with some nearshoring is emphatically practiced in Europe
because of data protection laws.”
The Data Protection
Directive (Directive 95/46/EC
on the protection of individu-
als with regard to the process-
ing of personal data and on the
free movement of such data) is
a European Union directive
that regulates the processing of
personal data within the
European Union. It is an
important component of EU
privacy and human rights law.
According to Information Commissioner's office, the
Data Protection Act says that personal data shall not be
transferred to a country or territory outside the European
Economic Area (EEA) unless that country or territory
ensures an adequate level of protection for the rights and
freedoms of data subjects in relation to the processing of
personal data.
This is the eighth data protection principle, but other
principles of the Act are also relevant to sending personal
data overseas. For example, the first principle (relating to
fair and lawful processing) will in most cases require to
inform individuals about disclosures of their personal data
to third parties overseas.
Dunphy says that employee-data cannot be transfered to
other countries without the employee's consent. So, if the
data is going to be stored in the other country, it becomes
mandatory for the employee to sign an agreement before
joining the company.
The seventh principle (concerning information security)
is relevant to how the information is sent and the necessity
to have contracts when using subcontractors abroad.
Dunphy says, "If data is going outside the EU you
would have to inform every candidate about it. These are
constraints. A lot of organizations worry that they don't
want to be the first one to have a legal case about holding
data in India or any other offshore destination. For many
RPO companies it is easy to retain the data within the EU.
The reason why RPO is not offshored is also because it can
run easily in the same conti-
nent.”
What do RPO buyers need?
RPO buyers want streamlined
recruitment processes from ser-
vice providers, which means
they want providers to reduce
the time it takes to hire good
candidates, reduce the cost per
recruitment. They want to move
to fixed price per recruitment
campaign and to lower the
recruitment cost from what they have in-house. It would
have been easier to reduce costs through offshoring but the
laws prevent it. GS
Stringent data protection laws require employee information to be kept within the Union
Why European RPO Stays
Within Europe
Recent RPO Deals in Europe
l SourceRight Solutions for Siemens (announced
August 9, 2010)
l Alexander Mann Solutions for Cobham Plc
(announced July 14, 2010)
l Xchanging for BAE Systems (announced May 18,
2010)
l Harvey Nash for Buying Solutions (announced
March 2, 2010)
l Alexander Mann Solutions for Atos Origin
(announced October 21, 2009)
Source: Ovum IT Services Contracts Analytics
“A lot of organizations worry
that they don't want to be the
first one to have a legal case
about holding data in India or
any other offshore destination.”
Shaun Dunphy, Alsbridge

Q&A
M
en and organizations do fundamental
rethinking when something is serious-
ly broken. So, what happened at
Cognizant?
MF: The recession. Companies in our sector, including us,
had grown at superlative rates for the past five to six years.
And then suddenly growth stalled. Institutions of the likes of
Bear Stearns and Lehman Brothers fell. It was scary.
GS: Did you panic?
MF: Our CEO Franc D’Souza did a very wise thing. Instead
of panicking, he gathered the senior managers at Cognizant
and charged them with coming up with a synthesized view of
what was happening. The top 20 managers locked themselves
up in a meeting all Friday, Saturday, and Sunday for many
weeks that followed. Instead of just providing our opinions on
what we thought went wrong, we looked at what was hap-
pening through the lens of our clients.
We went client-by-client, half an hour each, in a rigorous
way. These meetings were not fun, but after the third one, the
pattern started to emerge.
GS: What was that?
MF: Customers were recognizing that this was not a cyclical
downturn; they recognized that this was a shift point. The
trigger for that might have been the mortgage crisis, but there
were some very large forces at work. It was not about tighten-
ing the belts or laying off a few people.
Change is accelerating as the global recession gives birth to
a “reset economy” in which organizations in every industry are
reassessing their business models to overcome unpredictable
markets, greater margin pressures and a drought in invest-
ment capital.
There was this feeling amongst many clients that some-
thing was seriously wrong at the basic level, that they need to
build a new curve, that they need to find new ways of orga-
nizing, new ways of delivering, and new ways of creating
value. That was the initial view into what we now call as
‘Future of Work’.
GS: Future of Work. Sounds eclectic. So those large forces of
change that you mentioned ...
MF: Yes. There are a few easy ones. One was certainly global-
ization. For us, in terms of what we do during the day, we are
too close to the trees to be able to see the forest clearly. Our
clients had globalized this one piece around IT but there were
many other portions of their business model that were not
Thoughts are things, as they say. Powerful thoughts have shaped institutions, orga-
nizations, nations, and civilizations. Malcolm Frank, SVP-Corporate Marketing and
Strategy, Cognizant, was asked by his CEO (Francisco D’Souza) to synthesize the
signals from the market and come up with a strategy that would define what and
how the company did. In an exclusive phone-side chat with Ed Nair, Malcolm
explains the evolution of Cognizant’s thought, called as ‘Future of Work’ and how
Cognizant applies it to the marketplace.
WHAT COGNIZANT THINKS
Malcolm Frank, SVP-Corporate
Marketing and Strategy, Cognizant

Q&A
globalized. Clients were closely looking at that. Work, of all
forms, is migrating to its right location worldwide, allowing
companies to leverage expertise anywhere and everywhere it
resides.
Second is virtualization and I don’t mean it only in the
techie sense. New virtualized platforms are enabling real-time
collaboration both within organizations and with outside
partners, leading to new ways of working, managing and
innovating. Virtualized company, virtualized work experi-
ence….because of financial pressures companies were highly
motivated to try out these new things.
GS: What about technology? Isn’t that a force of change by
itself? There is so much talk about cloud computing, social
media…
MF: Yes. Cloud computing, social networking, broadband
and mobility are enabling new business and technology mod-
els that improve operational flexibility and knowledge shar-
ing. There was first-hand experience at this. The experience
they were having on Sunday nights— very exciting and
engaging social computing experience using their iPad or to
Tweet or chat with friends on FaceBook. And then, on
Monday morning and face the old world kind of
work……the difference is vast and things are not going to go
on this way for long.
This dissonance between the Sunday night and Monday
morning experience was driving some real change not just
with the IT footprint but also overall with the organization. It
is being turbocharged by the ‘millennial’ generation. This
brings us to the next major force of change- the ‘millennial’
generation and their mindset.
GS: What about the generation of millennials?
MF: A major shift in the nature of work coincides with the
growing presence of the Millennial generation in the work-
force and the consumer marketplace. There are an estimated
50 million Millennials, defined as persons ranging in age from
18 to 29, who were born after 1980 and have come of age in
the new millennium. Approximately 65% of this group is
now in the workforce on either a full-time or part-time basis.
(Pew Research Center, “Millennials: A Portrait of Generation
Next,” February 2010.)
GS: What do these ideas point toward? What did you do
about them?
MF: There were two perspectives: outside-in and inside-out.
Outside-in, the answer was unambiguous. But this was the

general theme. How does this show up in the retail banking,
how in the life sciences industry, how in certain portions
of the manufacturing industry. We really understand that. It
was beneficial for us, but it was more important for the cus-
tomers.
The second important thing was inside-out. Lot of cus-
tomers came back to Cognizant and said that, “You seem to
embody these principles”. That makes sense because if we
look at what we do- we are by definition highly globalized and
they were particularly intrigued by the management team that
is virtual but works in a very cohesive way. We embrace the
virtual experience in a meaningful way. Third, we run the
company on social technology. It looks like FaceBook. Called
as Cognizant 2.0 or C2, it is the marriage between social com-
puting, cloud computing, and knowledge management.
Today, C2 provides a virtual “town square” for more than
89,000 Cognizant asso-
ciates and some 54,000
users have collaborated
on hundreds of projects
worldwide. About 90
percent of our employ-
ees are millennials.
When customers look at
Cognizant, they say that
we already embody a lot
of the attributes of
Future of Work.
GS: Is this a vision or a
value proposition or a
set of corporate guide-
lines…..how does the
‘Future of Work’ play
out at Cognizant?
MF: We live by it. It is not a vision or value proposition to
attract clients or new recruits. It is a very pragmatic way of
doing things, the way things are done at Cognizant. We
believe these are going to become operating norms for the
next generation. We talk about it internally a lot. The
opportunities that are created for our associates- how do you
manage teams that are globally distributed teams, virtual
teams located in many different places, located across differ-
ent organizations in a very cohesive way. These are capabili-
ties that are going to serve them well for the next decade
or so.
GS: All of these are concepts validated by what’s happening
in the world. But in the end, Cognizant is an IT services and
BPO company. How do you apply this ‘Future of Work’
construct to your business?
MF: The ‘Future of Work’ helps us understand and analyze
the future of every industry. Our great strength is the 2-in-a-
box model, we have got senior client partners onsite with cus-
tomers. It helped us get in front of the customer quickly, to
take these concepts, and really hone them across various
industries. Our broad findings were:
1. Organizations need more scalable and flexible IT systems
and processes that allow knowledge to be captured and
applied by virtual teams inside and outside the conven-
tional organizational structure.
2. Powered by new (and often cloud-enabled) platforms of
collaboration, new systems which rely heavily on social
computing and mobility solutions, are emerging to
replace or extend traditional systems of record to deliver
just-in-time insights, across disciplines.
3. The impact of this is unique. Knowledge is getting cre-
ated, captured, and used differently. This is fueling high-
value, knowledge-based processes at forward-thinking
companies. These activi-
ties range from clinical
trials data management
in life sciences, to risk
management and under-
writing in insurance, to
mortgage loan-decision-
ing in retail banking,
among others.
Cognizant delivers IT
and business capabilities
to its clients. We do it by
combining applications,
platforms, infrastructure,
knowledge processes,
and domain expertise in
unique ways.
GS: Give me live examples.
MF: We helped a global life sciences company have access to
real-time reports from a fully outsourced sales and marketing
analytics solution. This solution was delivered as a business
process as a service (BPaaS) solution. While delivering more
accurate and timely cost data, the BPaaS solution is enabling
the company to flex its sales and marketing operations as busi-
ness conditions dictate.
Another top-five global life science company engaged us to
help optimize and extend how it analyzes sales and marketing
data (e.g., segmentation, promotion response analysis, align-
ments, call planning, and incentive compensation). Using a
mix of next-generation solutions (hybrid and pure BPaaS), we
helped the company reduce its analytics spend by 33% in
2009 (compared with 2008), while reducing its OpEx across
sales and marketing operations to fund other ongoing busi-
ness transformation initiatives.
Ed Nair
GS
Q&A
T
i
S
(
u
I
e
C
“Change is accelerating as the global
recession gives birth to a “reset econ-
omy” in which organizations in every
industry are reassessing their business
models to overcome unpredictable
markets, greater margin pressures and
a drought in investment capital.”

Global Services Digital Magazine October Issue 2

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Global Services Digital Magazine October Issue 2