Business Process Outsourcing

V K Raman, Global Delivery, BPO Services

Analysts Day, 5th Feb 2007

5 February 2007
Experience Certainty.
BPO Services : Agenda

•Business Overview

•Market Opportunity

•Growth Strategy

•Case Study

5 February 2007
Business Overview : Revenue by Service Line

Consulting, 3.4% EIS, 5.4%

Asset Leverage BPO, 5.8% +528% Year over Year
Solutions, 2.8%

Infrastructure, 5.5%

Enterprise Solution,
11.8%

Business Intelligence,
ADM, 53.5% 9.5%

Assurance, 2.3%

Based on Q3 FY2007 Revenue

5 February 2007
 Value
Delivery Extraction Shared Industry Specific
Excellence Approach Services Offerings

Securities Processing

Credit Card Operations

Check Processing
Banking &

Transition
Fin.Services

Mortgage Processing

Task Level
Automation
Policy Servicing

Claims Administration

HR- Payroll
Closed Book Administration
Insurance

Operations
New Business Servicing

Sales and Order

Management

Sourcing and Logistics

Management

Infrastructure
Warranty/Spare Parts
Manufacturing

Management
IT & BPO
Bundling
Business Overview : Offerings

Revenue Assurance
Finance & Accounting

Supply Chain Management

Knowledge Process Management

Order Provisioning
Telecom

Customer Interaction Management

Quality
Clinical Data Mgmt.
Care
Health

Statistical Analysis
HR

Revenue Accounting

Loyalty Administration
Travel &

Utility
Hospitality

Services

Fare Filing

Customer Analytics
5 February 2007
Other HR Processes (e.g. Employee Data Mgmt.)
Retail

Merchandising
Administration
Growth Strategy : IT and BPO Synergies

Increased bundling of IT and BPO in large

Benefits enterprises
outsourcing contracts
• In-depth knowledge of systems
IT and BPO 17% 19% and offerings
21%
• Significantly lower transition time because of easier
knowledge transfer
• Process improvements through task
IT Services
61% 59%
and Software 58% level automation
• Single vendor control
• Significantly reduced fixed costs for vendor
management
Hardware 22% 22% 21% • Near zero technology maintenance cost

2002 2004 2005

• Utility based offshore delivery model

Bundling of IT and BPO more predominant in

mature offshorers

Source : McKinsey

5 February 2007
Growth Strategy : Sustainable Competitive Advantages
Domain Led Offerings
• Focus on key Horizontal Offerings and specialized
vertical slivers
• Work in focused domains
• Reutilize TCS’ intellectual property – tools,
methodologies & frameworks
• Benchmark to best-of-breed industry standards,
processes & practices
Global Network Delivery Model
• Deliver 24 X 7 using follow the sun approach.
• Deploy local associates to undertake task needed
for regulatory and language skill reasons.
• Mumbai, Chennai, Bangalore, Budapest, Santiago
(Chile), Montevideo (Uruguay), Hangzhou (China),
Peterborough (UK), Missoula (US) & TCS IT
Delivery Footprint
Platform Based Offerings
• Eliminate client fixed technology & service delivery
cost by offering completely variable utility /
transaction based pricing
• Powered by in-house developed platforms
Leveraging IT-BPO Synergies
• Bundling of IT & BPO, process automation and
productivity improvements
• Significantly lower transition time & risk given in-
depth knowledge of customer process & IT
systems
• Effective feedback capture from day-to-day
operations for system enhancements
5 February 2007
Case Study : Pearl Deal
Company Overview Business Needs:
• Over 2 million • Reduce cost of operations
policyholders • Transparency in pricing and joint value discovery to reduce costs ??
• £27 billion of assets.
• Closed book
insurance policy
portfolio Business Solution Offered By TCS:
16% 45%
• Comprehensive transformation plan
– Migrate 13 platforms to TCS platform (IIMs)
– Offshoring from year 2 18%
– Process improvements
• Investment mindset
11%
– Development of proprietary L&P platform – IIMs
Process Platform Off-shoring Total
– Upfront investments for takeover of operations consoli- savings
opti-
• Experienced deal team mization dation from out-
and auto- sourcing
– Practitioners with significant UK L&P business
mation
– expertise
– Dedicated deal team created from TCS! Insurance practice
• IT/BPO synergies
– Cost savings maximized by bundling ITO and BPO using platform rationalization, process-re-
Size of deal
engineering and off shoring
• $847 million over 12
years
Business Benefits
• 950 FTEs
• 45% total savings to Pearl form outsourcing by process optimization, platform consolidation and
automation, offshoring
• System rationalization, productivity improvement, selective offshoring and economies of scale via new
books
• Ability to address large “closed book market” as a third party provider

5 February 2007
Case Study : Large Retail Chain - Chargebacks
Company Overview Business Needs:
• Fortune 50 large US • Tracking of Process metrics
retail chain with • To improve Chargeback reversal rate
revenues greater than
• Movement to paperless operations
USD 80 B.

Size and Scope of Business Solution Offered By TCS:

Process • The process was decided to be moved offshore as “lift and drop” to quicken savings to the customer.
• FTE Strength - 20 • TCS well defined and time tested quality framework was used to understand the existing process and
• Analyse Credit Card gaps. Added a software system to help in
Disputes
– Better identification of valid chargeback and & potential reversals / invalid chargeback.
• Fax chargeback Eliminate the time spent on ivalid chargeback.
notices to the stores
– Algorithm based prioritization of potential chargeback reversals by $ value, due date and type
• Follow up with stores
by making calls of card. Focus on invalid chargeback greater than $1000
• Send complete • Added a digital Fax solution where the docs are sent and received in form of an image through a Fax
documents to the server.
bank
Business Benefits:
• The reversal rate was improved from 45% to 70%.
Systems Used: • The bottom line was increased by $ 1 Million USD per month. Projected savings in one year $ 15
million USD
• IBM
• The customer is able to strategically focus on the valid chargeback which in turn prevent the
• MS Access Database
recurrence of those transactions and improve their bottomline.
• Receipt Look Up

Key Learning & Findings:

• IT – BPO Synergy

5 February 2007
Case Study : Global Publishing & Media Co.
Company Overview Business Needs:
• A large Global • Inefficiencies in processes onshore, resulting in poor performance on metrics
publishing, financial, • High cost of providing service in a non-revenue center
information and media
• Inability to improve process efficiency due to Physical work flow tracking and reporting system
services Company

Size and Scope of Business Solution Offered By TCS:

Process • Offshore processed 100% of the volumes two weeks ahead of schedule, a reflection of the smooth
• Accounts Receivable / knowledge transfer
Cash Application • The project became SAS Type 1 compliant within 3 months of BAU and there were no non-
Process
conformances
• 19 TM, 1 TL & 1 PM
• The client is billed for 21 FTEs in the first year and in the subsequent 2 years TCS is expected to reduce
billing to 19 FTEs
• A Web Tool was developed to enable onshore to track the process and view reports at any point of time

Business Benefits:
• FTE Cost arbitrage of approx. $ 80,000 / month.
Systems Used: • Increased first day applications rates by 5 % , thereby reducing follow ups with customers resulting in
operational savings.
• Oracle and Lawson
based AR System

Key Learning & Findings:

• Implementation of Web based Tool to ensure real time communication with Onshore team , this leads to
faster transaction response times.

5 February 2007
Case Study : Large US Retailer
Company Overview Business Needs:
• Fortune 100 Retail chain • Consolidate processes to deliver from single location providing a standardize & unified experience.
with annual revenues Removal of redundant and manual activities
greater than $80 B. • Reduction of Backlogs
• Targets the home • Prevent $0.5m revenue leakage due to excess payment made to vendor every month
improvement market
Business Solution:
Size and Scope of • Lift & Drop Approach to transition. Phased transition by process
Process
• Developed the workflow applications for easy tracking and effective monitoring
• Finance & Accounting
(150) • Web Portal developed to provide the clients with online reports
• Technical Helpdesk (80) • Developed an utility to prioritize activities
• Email Support (100) – Chargeback reversals prioritized by date and value
• CC Chargeback (40) • Digitized some of the activities
• Merchandizing (15) – Added a digital Fax solution
• Price Change
• SKU Count Mgmt &
status update.
• Suspense Purchase Business Benefits:
Order (PO) deletion and
status change • BPR drives savings worth 18 million dollars annually
• Customer Interaction ( – Identified the top 20 accounts for the companies & resolved In the past 7 months $3.6m
30) overpayment by adjusting open credit notes to over due invoices
• Voice / Email Helpdesk – Created visibility on warranty invoices and saved more than $1m in past 7 months
• Services (45) – Introduced system changes in the billing software leading to reduction in incorrect billing
and resulting in $1MM (Approx) saved every month
Systems Used: • 24 hours assured cycle time on retail price change adds to the Competitive Advantage by allowing
• IBM Mainframes implementation of new promotions in a very short time
• Access Database • Credit Card Chargeback reversal rate increased from 40 % to 75% resulting in increased savings of
• Microsoft Outlook $1 MM a month.

5 February 2007
Case Study : A leading Global Investment Bank
Company Overview Business Needs:
• Large Global Investment Bank • To reduce Cost of Operations and Improve productivity
with over € 1,097 billion in assets • Client data validation and system integration to enable efficient reporting system
across 138 nations
• Centralised operations to support multiple regions
• Dedicated team for each process

Size and Scope of Process

Business Solution Offered By TCS:
• Revaluation- Timely and accurate
generation of Client revaluation • Transition Approach - Structured transition methodology adopted with focus of Process
statements for FX, OTC derivative, documentation, knowledge curve, efficiency & Quality output to run the bank activities.
Commodities products and • Team Mix- Team consisting of Team members, Team Leaders and Ops Manager with a right
securities for the bank’s clients mix up of graduates and post graduates with specialization in Finance.
(33)
• IT Leverage – Strong synergy on the IT application side between the TCS teams on IT and
• KYC - Revalidation of clients BPO. Frequent interactions with IT team, that handles Deutsche Bank’s credit risk
from Global Banking & Global
Markets -The Risk Capital repository
Management (RCM) division of DB
• Classifying the client in various
risk
buckets
Business Benefits:
• 100 FTE Avg/ month
• Generation of accurate valuation statements in a timely manner
• Credit Risk – Supporting 7 Credit
Risk Management processes (75) • 22/5 coverage to provide a wide range of services to customers
• Static Data - Static data set up (A/c • Cross training imparted to curb team member dependency
opening/maintenance& SSI) for • Savings of approximately US$ 1Mn due to productivity improvements
various products like equities,
fixed income, OTC and MM
products across different
geographies (132) Key Learning & Findings:
• Systems Used: DB’s Systems and • Expertise in application systems developed over a period of time
• applications • Process Improvements suggested

5 February 2007
 Thank You

5 February 2007
Experience Certainty.