Trends 2012, Demand Outlook, Operating Models, Neo Group Risk Management, Rising Geographies, Wages/ Hiring, M&A, Pricing

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

2. Neo Group
Trends 2012
Demand Outlook
Operating Models
M&A
Pricing
Wages/ Hiring
Risk Management
Rising Geographies
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3. NEO GROUP
SERVICES
ADVISORY
GOVERNANCE
/ PROGRAM RISK
MANAGEMEN
T SERVICES
- MONITORING
Exclusively focused on
superior outcomes
through global services, RESEARCH
outsourcing and related
issues
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4. TRENDS 2012
MY 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
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5. BUYERS
MATURING
 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
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6. BUYER TRENDS TO WATCH
IN 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.
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7. SUPPLIER TRENDS TO WATCH
IN 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
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8. TRAP
UNCLEAR 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
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9. TRAP
NOT 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
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10. NEED FOR PROACTIVE
RISK 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)
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11. RISE OF NEW AND EMERGING
LOCATIONS
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 supplier's 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
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12. CURRENT HOT SPOT:
WORKFORCE PROFILE Poland Belarus
Russia
• Excellent programming Skills
• Highest Universities in EE • Excellent Software Skills
• Large universities graduate pool
Canada • 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 force
United 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 pool
Mexico • 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 Skills
Guatemala , Panama, Honduras, operation • Multi-lingual skills • Promising IT labor market
Costa 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
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13. 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 Testing
Costa 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
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14. 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, Australia
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