Trinity

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Keys To Developing a Global Operating Model
February 2007
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Agenda

• Introduction Transaction Details
• Case Studies
• BPO Solution Stack
• Offshoring Critical Success Factors
• BPO Vendor Critical Success Factors
• The Way Forward
• Appendix
• Globalization and Outsourcing Facts

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African Proverb
Every morning in Africa, a gazelle wakes up. It
knows it must run faster than the fastest lion or
it will be killed. Every morning a lion wakes
up. It knows it must run faster than the slowest
gazelle or it will starve to death. It doesnt
matter whether you are the lion or the
gazelle. When the sun comes up, you had better
start running.
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Introduction
WNS Global Services is the leading provider of
vertically-focused offshore business process
outsourcing solutions, managing and operating
business processes for leading global
organizations

• How we deliver the global operating model
• Vertical domain expertise
• Over 10 years in the industry
• Deploy technology solutions in support of BPO
• Proven, scalable processes and infrastructure
• 10,500 associates over 4,000 of which run end to
  end processes
• 8 delivery centers over 100 customers 350
  processes
• Transact over 10 billion of payables for our
  clients every month
• Manage more than 12 million customer interactions
  per year
• Transform data collection and analytics processes
  by reducing costs up to 40 and continuously
  improving quality

WNS acquired Tucson based Trinity Partners in
November 2005 Trinity Partners was the BPO and
IT solutions delivery expert to the US Mortgage
Banking clients, delivering solutions to lenders,
investors, servicers and lender service providers.
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Case Study 1 End-to-End Mortgage Processing
Client Profile
Scope of Work

• Top-15 US Wholesale Mortgage Lender (over 45,000
  loans originated per quarter)

• Loan Document Indexing
• Shipping Data Entry and Validation (Investor
  Delivery)
• Final HUD 1 (Document Follow-up)
• Post Closing, Closing
• Customer Service Help Desk
• Broker Approval
• International Accounting - Accounts
  Reconciliation
• Policy Audits
• Risk Management (Loss Mitigation) - SSN
  Verification
• Asset Grading (Underwriting)
• International Accounting - Accounts Payable
• Assignment of Loans
• Rate Quotes, Locks, Extensions
• Pay History Reconciliation
• Purchase Clearing, Purchase Advisory

Client Challenge

• Rapid growth, wants to manage expansion
• Unable to focus on strategic imperatives
• Time to market challenges
• Cost management

Program Characteristics

• Executing domain specific processes (gt 25)
  across value chain transaction and contact
  center
• Executed strategy phase to develop prioritized of
  offshore roadmap
• Embraced outsourcing as part of business strategy

Consumer/Economic Benefits
Client Benefits

• Multiple products support for consumers and
  better rates
• Faster loan closing/funding turn-around time
• Available capital for expansion and investment in
  the US

• Improved relationships with constituents
• Reduced processing costs by up to 50
• Decrease in processing time higher loan
  velocity
• Enabled focus on core competencies and tripled
  volumes and growth in 3 years

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Case Study 2 Loan boarding and due diligence
Client Profile
WNS Scope of Work

• Loan document indexing
• Data extraction and loan boarding Due diligence
  and Servicing data
• Loan Audits Quality control
• Credit Underwriting

• Alt-A, non-prime mortgage investor and servicer

Challenges

• Rapidly increasing volumes
• Inefficient partners
• High cost base for required skills
• Wants more control of its operations

Program Characteristics and Benefits

• Licensed indexing platform onshore
• SLAs structured with incentives and penalties
• Reduced processing costs by up to 50
• Improved quality of loan files
• Decrease in processing time higher loan
  velocity
• Enhanced capacity management

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BPO Solution Stack

• BPO solution stack can (should) be categorized
  into four broad areas
• Strategy consulting services that enable an
  organization to create an offshoring strategy and
  roadmap.
• Business Process Outsourcing (BPO) services that
  are vertical domain specific and include
• Transaction Processing
• Contact Center Services scripted and unscripted
  processes
• Information Technology delivery as stand-alone
  services and in support of BPO solutions
• IT delivery team across multiple disciplines
• Solution Platforms that can be sold as
  stand-alone products

Services and Solution Categories
ENVISION TO EXCEL
BUSINESS PROCESS OUTSOURCING
SOLUTION PLATFORMS

• Vertical and Domain Specific Processes

• Offshoring Assessment
• Redesign Optimization
• Transition Optimize

• Stand-alone solutions
• Coupling of IT and BPO

INFORMATION TECHNOLOGY DELIVERY

• Enterprise Application Design Implementation
• Application Maintenance Support

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BPO Solution Stack Mortgage BPO Example
Services and Solution Categories
ENVISION TO EXCEL
BUSINESS PROCESS OUTSOURCING
SOLUTION PLATFORMS

• Lender Services
• Loan Administration

• Loan Origination
• Contact Center

• Offshoring Assessment
• Redesign Optimization
• Transition Optimize

• Digital Loan Management
• Lead Generation
• Document Follow-up

INFORMATION TECHNOLOGY DELIVERY

• Enterprise Application Design Implementation
• Application Maintenance Support

• Advantages of solution stack
• End-to-End solution for the client
• Multiple and Alternative sources of revenue for
  the company
• Multiple partnership alternatives e.g. technology
  vendors
• Ability to move to Transaction based pricing
• Convergence of Information Technology and BPO
  into meaningful industry platforms
• Intellectual Property (IP) creation for company
• Diversification of business

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Offshoring Critical Success Factors
Critical success factors for managing and
maintaining a competitive and efficient offshore
outsourcing operation

• Ensure the Partnership Model with the offshore
  center(s), whether outsourced or captive, is in
  line with the strategic objectives of the firm
• Select the partner that understands your
  priorities
• Strategic Risk Management Financial
  Operational
• Do not treat India (or other geographic
  locations) as a black box, but as an extension
  of your business
• Program Governance is clearly defined, supported
  by senior Executive Sponsorship
• Buy-in for the program is at all levels of the
  organization
• Program Management Office leverages a
  cross-functional, disciplined approach
• The Migration strategy is clear and measurable
• Rapid transition times are achieved if your
  partner understands your business
• Leads to faster ROI
• Measurement analysis is in the DNA of the
  delivery partner
• Dont just measure outputs, you need to
  understand the outcomes to make the right
  business decisions
• Provide visibility, via integrated dashboards, to
  multiple constituents
• Ensure that what is being measured and analyzed
  is directly linked to the business strategy

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Offshoring Critical Success Factors (cont)

• Recruit, hire, train and retain the right people
• The senior management team at the remote centers
  must be trusted partners
• The team must know how to execute Business
  Solutions, not just IT Solutions
• IT Enablement must be an integral component of
  the offshore partners offering
• Its not just about infrastructure, but
  enterprise application development to enable
  business process
• Leverage IT to transition and manage processes
  offshore
• Accelerate the optimization of the processes to
  gain continual improvement in efficiencies
• Continually strive for operational excellence and
  efficiency
• 6-sigma discipline is engrained in the day to day
  operations of the company
• Navy Seals mentality tightly run operation
• Link to measurements quality and productivity
• Leverage the time differential and the 24 hour
  day
• Security is embedded into everything the
  offshoring partner does
• Physical and virtual
• Certification e.g. ISO 17799 (BS 7799) ISO
  90012000
• Business is not static, neither should the
  relationship
• Flexibility in contracts
• Ability to modify processes
• Continuing Education and Process Training

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Key Elements for Value Creation in BPO

• Size Matters
• Nobody gets fired for choosing IBM mentality
• Domain Expertise and Experience
• Demonstrate consistent performance and ability to
  execute on clients business
• Hire the Right Management Team
• Three Key People Delivery Operations
  Expertise, Financial Legal, Sales Marketing
• Passion for the business
• Differentiate Yourself
• Unique partnership models, new geographies, new
  industries
• Focus on the Right Industry
• Technology and Process laggards
• Industry is shaped like a hockey stick
• Consistent and Constant Marketing
• Always be relevant
• Stay on message
• Dont go to market before you are ready

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The Way Forward

• Vertical and Domain Expertise
• Convergence of IT BPO
• Knowledge Process Outsourcing (KPO)
• Innovative Partnership Models

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The Way Forward Domain Vertical Expertise

• Verticalization of Resources Businesses
• Successful BPO players have developed vertical
  Business Units to address the market need for
  domain expertise.
• Demand for greater granularity in verticalization
  is coming
• Example Financial Services versus Investment
  Banking, Retail Banking, Insurance Mortgage
  Banking
• Business Solutions versus Point Solutions
• Solution is composed of Process, People,
  Technology and Domain Expertise.
• Offering only one component of the solution is no
  longer an option for outsourcing vendors.

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The Way Forward Convergence of IT and BPO

• Cost is no longer the driving factor for
  outsourcing, instead businesses are looking for
  help with managing growth and value creation
• Translates to contractual terms that call for
  measurable process improvements over time
• Not possible to achieve process improvement and
  optimzation with re-engineering and six-sigma
  alone Technology integration and enablement of
  processes is a must have.
• IT players have a distinct advantage over the
  traditional BPO players
• Proven relationships and Master Services
  Agreements in place
• IT outsourcing is a mature industry when compared
  with BPO
• Confidence in process execution if youve built
  and maintain the system for a client.

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The Way Forward KPO
The BPO market is changing rapidly as customers
demand higher value offshore services and
providers look maintain their profit margins
the result is the growth of KPO

• KPO defined
• KPO Knowledge Process Outsourcing
• Subset of services offered by the BPO industry
  it is the next natural extension of traditional
  BPO
• Involves the delivery of high-level, knowledge
  intense transaction, contact center, research, or
  analysis functions by workers with
  domain-specific, vertical skills
• KPO drivers
• Customers demand more specialized and higher
  value services and solutions they want a
  provider who knows their business
• Margins in traditional BPO are squeezed as
  providers undercut each other on price to win
  deals
• Competitive pressures on early market leaders
  like India from countries like the Philippines,
  China, Sri Lanka have forced players to offer
  higher value services in order to maintain market
  share
• Industry consolidation has driven the creation of
  niche KPO players who must differentiate in order
  to gain market share

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The Way Forward KPO Advantages
KPO has tremendous advantages for customers, KPO
providers, and employees of KPO firms alike

• Customers
• Strategic extension of their business offshore
• Access to a highly skilled workforce
• Greater focus on quality and value-add than
  traditional BPO the provider understands their
  business
• Moves the offshore play beyond pure wage
  arbitrage
• Providers
• Deeper client relationships and longer term
  contracts
• Fewer retention woes (KPO attrition rates are
  much lower)
• Increased profit margins
• Better ability to compete with captive operations
• Employees
• Clearer career trajectory jobs are now in a
  specific industry, rather than in BPO
• More extensive training opportunities and more
  transferable skills
• Higher pay
• Uniquely positioned to capitalize on local
  markets once they evolve

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The Way Forward Innovative Partnership Models

• There are several distinct partnership models
  when creating an outsourced presence.
• Traditional Outsourcing
• End to end or sub-component of a business process
  is transitioned and executed in the offshore
  delivery center
• Optimal model for commodity, non-core business
  processes
• Partner has full execution responsibilities
• Client monitors the processes through metrics
  review and dashboards
• Build, Operate and Transfer (BOT)
• Vendor sets up the remote offshore center from
  initiation through to process delivery
• Leverage the Vendors relationships and
  intellectual capital to recruit staff, acquire
  and setup facilities, build the infrastructure,
  manage vendors, and deal with regulatory issues
• Ownership and management responsibilities are
  transferred to the customer after a pre-defined
  period
• BOT ensure process integrity and diffuses
  inherent build-out and migration risks to enable
  the client to achieve the creation of a captive
  center
• Assisted Build Out
• Works well for clients that require assistance
  with specific processes associated with captive
  operations
• Services include acquiring and setting up
  facilities, entering a foreign market, build out
  of the global delivery infrastructure, recruiting
  and training
• Joint Venture
• Vendor and the client create a joint venture that
  will service the clients business
• Client provides knowledge of the existing
  business function while Vendor provides the local
  expertise and service skills
• The JV may also deliver services to other
  entities, enabling the client to acquire an
  additional revenue stream

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• APPENDIX

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Globalization and Outsourcing Factoids

• In 2003, 25,000 US Tax returns done in India. In
  2005, expected to be 400,000
• China has over 160 cities with populations of 1
  million or more
• In China, when you are one in a million, there
  are 1,300 other people just like you
• In 2003, China replaced the U.S. as the largest
  importer of Japanese products
• Since the mid-1990s, cheap imports from China
  have saved American consumers roughly 600M and
  have saved U.S. manufacturers untold billions in
  cheaper parts for their products. Which as, in
  turn, enabled the Federal Reserve to hold down
  interest rates longer.
• Yale Fall 1985 71 Chinese, 1 Russian.Yale Fall
  2003 297 Chinese, 23 Russian
• In 2004, Infosys received one million
  applications from young Indians for 9,000
  technology jobs (gt1001)
• Forrester predicts that 3.3 million US jobs will
  be offshored by 2015, which translates to
  approximately 210,000 jobs per year over the next
  decade
• The US economy is expected to see a significant
  decline in the working population over the next
  decade, by as much as 15.6 million workers
• So if we assume that no jobs are added to the
  economy over the next 10 years (assuming the
  number of job positions remains at 138MM), the US
  will need to supplement the declining work force
  through immigration, increased innovation and
  productivity, and outsourcing of jobs (by 15.6
  3.3 12.3 million people)

Tom Friedman, The World is Flat 2005,
Forrester, National Public Radio, McKinsey Global
Institute, Gartner Dataquest
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Globalization and Outsourcing Factoids

• For every 1 spent in India to offshore US
  services, approximately 67 cents in direct
  benefits are brought back to the US, in the form
  of savings and investment in US goods and
  services
• The US is attracting jobs here currently there
  is approximately 1.3 trillion direct foreign
  investment in the US, maintaining 6.5 million
  insourcing jobs in the US. Put up trade barriers,
  and its a two way street 200,000 US jobs
  outsourced per year vs. 1.3 trillion in
  investment, creating jobs in the US. Pick the one
  that benefits the US economy the most
• Estimates from Forrester Research and the Labor
  Department postulate that about 300,000 jobs have
  been lost to outsourcing over the past 3 years.
• 1 of annual productivity growth eliminates about
  1.3 million jobs. Source Forrester Research, the
  Labor Department, Business Week
• Since early 2002, US companies have been able to
  squeeze out productivity gains on the order of 5
  annually

Tom Friedman, The World is Flat 2005,
Forrester, National Public Radio, McKinsey Global
Institute, Gartner Dataquest
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Can America survive? -- Yes!

• America will do fine in a flat world with free
  trade, provided it continues to churn out
  knowledge workers who are able to produce
  idea-based goods and services that can be sold
  globally. There may be a limit to the number of
  good factory jobs in the world, but there is no
  limit to the number of idea-generated jobs in the
  world.
• Todays wants become tomorrows needs Internet,
  Starbucks, Google
• Post WWII, America integrated a broken Europe and
  Japan and yet our standard of living has
  increased every decade since. Our unemployment
  remains under 5
• 150 years ago, 90 of Americans worked in
  Agriculture. Today its lt4
• We can innovate, and retain high function, high
  paying jobs here HP, Dell, Google, Microsoft,
  Cisco
• We remain the worlds largest domestic consumer
  market, full of early adopters

Tom Friedman, The World is Flat 2005
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Arizona Advantages and Disadvantages
Arizona as a headquarters location has had
several unique advantages and disadvantages for a
BPO business

• Lower labor costs than other US states
• Access to bilingual skills in English and Spanish
• Less competition for talent than on the East or
  West Coasts big fish in a small pond

• Skillset shortage many of Trinitys employees
  were imports to Arizona
• Lack of cultural openness around outsourcing
  the anti-outsourcing factor
• Longer travel times to US and international
  destinations

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