1. New Rules of Client Engagement: What Will Drive Business? Stephanie Moore Chief marketing Officer UST Global

2. What motivates BPO buyers? Yes, desire for cost savings  Through labor arbitrage, process improvement and disposition of expensive IT assets Support movement to internal shared services configuration Capital: disposition of assets such as existing “captive” global sourcing centers  A major trend with recent BPO “mega” deals Disposition of non-core activities to allow focus on core activities Better service for customers and/or employees Access to specialized knowledge and research capability  KPO But, also

3. How have client expectations changed post the global meltdown? Cost savings expected through labor arbitrage, of course, but today the focus is also on:  Process improvement and/or transformation  Platforms to replace internal systems  For clients: significantly reduced costs  For vendor improved margins as one to many becomes a reality  The cloud and related hype breathes new life into the BPO sector 3

4. What are the business models that are in demand related to pricing, delivery and risk? Pricing elements include:  Price per FTE (staff augmentation)  Price per transaction (e.g., invoice, HR transaction)  Price per volume of transactions (e.g., Ks of invoices) Unsophisticated customers still seek FTE pricing, while sophisticated customers search for transaction or value based pricing  Remember that for most one-to-one BPO engagements pricing ultimately has to be based on labor and any material (software, infrastructure) costs. The cost per transaction is “backed” into 4

5. What are the business models that are in demand related to pricing, delivery and risk? Platform-based BPO  Benefits to the supplier:  Achieve one to many leverage in BPO relationships  Escape constraints of FTE-based pricing and allow for transaction-based pricing  Increased operating leverage and margins for BPO services  Benefits to the customer:  Escape cycle of ongoing investments in application platform (e.g., ERP)  Gain access to best practices as embedded in the platform 5

6. What are the business models that are in demand related to pricing, delivery and risk? For sure, everyone wants to transfer or “share” risk, but this is easier said than done in today’s market  Desperate sellers may make the risk associated with shared risk unpalatable  How do customers and suppliers really share risk?  In depth investment in deal structure in order to make this work for both parties 6

7. How do service providers adapt to these models and expectations – what do they need to change within their own organization? Focus on delivering value beyond labor arbitrage… Develop domain expertise to facilitate client business process optimization Consider R&D investment in platforms Partnerships will be critical.  Software providers, PAAS, SAAS, infrastructure on demand 7

8. Who are the new clients and are their expectations different? New clients are usually more sophisticated than they were back in the day (think 2001 and the call center boom) They expect their BPO providers to save them money through labor arbitrage, but also to provide vertical expertise and business process advice and sometimes the required technology  Unfortunately, some providers are not equipped to meet these needs just yet  Vendors that have “opportunistically” entered BPO arena often are better positioned to provide this domain expertise. Newer sourcing and vendor management professionals understand the concept of a fair deal, but may have limited exposure to BPO deals 8

9. Client expectations in emerging economies (particularly India) Lack of legacy and funds fuels desire to combine service and software and infrastructure Platform based services are key SAAS configurations, offerings, expertise will be critical here  This work typically more suited to combination IT/BPO players  Assembling, configuring and managing solutions for clients will be critical in India 9

10. Key takeaways for BPO service providers to enhance the client experience EDUCATION Expectations management Metrics  Baselines critical for SLAs and perceptions of value “True-up” opportunities Escalation and remediation processes well understood and utilized 10

11. Thank you!