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Copyright © 2014 Everest Global, Inc. This document has been licensed for exclusive use and distribution by TCS

EGR-2014-1-E-1229

Topic: Everest Group PEAK Matrix for FAO Service Providers

Focus on TCS September 2014

2 Copyright © 2014, Everest Global, Inc. EGR-2014-1-E-1229

Introduction and scope

Everest Group recently released its report titled “Finance and Accounting Outsourcing (FAO) – Service Provider Landscape with PEAK Matrix™ Assessment 2014”. This report analyzes the changing dynamics of the FAO landscape and assesses service providers across several key dimensions. As a part of this report, Everest Group updated its classification of 20+ service providers on the Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO into Leaders, Major Contenders, and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and comparative assessment of FAO service providers based on their absolute market success and delivery capability. Everest Group also identified four service providers as the “2014 FAO Market Star Performers” based on the strongest forward movement demonstrated on the PEAK Matrix year-on-year. Based on the analysis, TCS emerged both as a Leader and a Star Performer. This document focuses on TCS’ FAO experience and capabilities and includes: TCS’ position on the FAO PEAK Matrix TCS’ year-on-year movement on the FAO PEAK Matrix Detailed FAO profile of TCS

Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand the service providers’ relative strengths and gaps. However, it is also important to note that while the PEAK Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each buyer. Buyers will have to consider their unique situation and requirements, and match them against service provider capability for an ideal fit.

https://research.everestgrp.com/Product/EGR-2014-1-R-1204/Finance-and-Accounting-Outsourcing-FAO-Service-Provider-Landsc






Everest Group’s research is guided by a framework that distinguishes multi-process FAO from single process Finance and Accounting (F&A) transactional services

FAO (multi-process)

Strategy Judgment-intensive Transaction-intensive

F&A transactional services

(single process)

F&A strategy

Internal audit Budgeting/forecasting

Treasury & risk management

Capital budgeting

Accounts receivable

Tax Fixed assets

Payroll Accounts payable and T&E

Regulatory reporting & compliance Management reporting & analysis

General accounting

Everest Group’s analyses include multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of three years

Everest Group’s analyses include 900+ FAO contracts signed as of December 2013

Source: Everest Group (2014)


Everest Group PEAK Matrix – 2014 FAO market standing Performance | Experience | Ability | Knowledge

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO

Note Steria also has a reasonable scale in the FAO market, but has not been featured on the PEAK Matrix due to unavailability of complete information Source: Everest Group (2014)

Leaders Major Contenders Emerging Players Star Performers

Mar

ket

succ

ess

25th p

erce

ntile

High

Low 25th percentile

75th percentile

Low High

75th p

erce

ntile

Accenture

Capgemini TCS

IBM

Wipro

Genpact

Infosys

HP Xerox WNS

EXL

Cognizant HCL Tech Mahindra

IGATE

Sutherland Global Services

Serco

Dell Aegis

Minacs Xchanging

Quatrro

NIIT Datamatics

IQ Back office

FAO delivery capability

(Scale, scope, technology, delivery footprint, and buyer satisfaction)

Leaders

Major Contenders

Emerging Players


TCS is an FAO Star Performer, based on strong forward and upward movement over time on the Everest Group PEAK Matrix

Market success in 2013 Capability enhancements in 2013

Posted the highest growth (31%) in multi-process FAO revenue (ACV) in 2013, representing an increase of around US$70 million

Signed nine new multi-process FAO contracts and

seven contract extensions/renewals, amounting to nearly US$400 million in TCV

Recorded positive revenue growth in all buyer geographies. Europe and Asia Pacific were the key growth markets with 90% and 40% YoY revenue growth (ACV) in 2013, respectively

Achieved significant growth in mature as well as emerging buyer industries of manufacturing and energy & utilities; revenue from these verticals grew 52% and 42% YoY, respectively

Achieved considerable success with large buyers (organizations with revenue over US$10 billion); revenue from this segment almost doubled in 2013

Recorded the highest expansion in scale in the market in 2013. Added about 6,000 FTEs to increase its total headcount to 17,000

Opened a delivery center in Riyadh, Saudi Arabia, in partnership with GE; a first all-female business process services center

Alliance with Kofax for R2R reconciliation tool

Launched a platform named TAP, to streamline and optimize the entire P2P cycle

Partnered with Pitney Bowes, SourceHOV, TollGroup, and Recall for scanning and mailroom partnership for BPO operations

Moving towards a balanced global delivery footprint, TCS scaled up its presence in Latin America and United States


TCS (page 1 of 5) FAO service capabilities

Key FAO leaders S. Rizvi, Global Head – Enterprise Services, TCS BPS Kumar Amitesh, Head Sales – North America, TCS BPS Vijay Damle, Head Sales – Europe, TCS BPS

Scale of operations Number of FAO FTEs over time

7,400 10,075 11,015

17,025

FAO service suite TCS’s finance practice cover AP, AR, GL, cash management,

fixed asset management, payroll, management reporting & analysis, treasury & risk management, budgeting/forecasting, tax, and internal audit

TCS offers FAO services in three platform-based models: Business Process-as-a-Service (BPaaS), SaaS-enabled technology transformation, and transactional F&A

TCS also offers process maturity assessment and transformation methodology called FORE to identify and implement the roadmap to the best-in-class processes

>1,500 FTEs 500-1,500 FTEs <500 FTEs

Procure-to-Pay (P2P)

Order-to-Cash (O2C)

Record-to-Report (R2R)

2010 2011 2012 2013

Areas Recent developments/investments

M&A/ partnership

2013: Alliance with Kofax for reconciliation tool in R2R process

2012: Partnered with Pitney Bowes, SourceHOV, Toll Group, and Recall for scanning and mail room partnership for BPO operations across TCS GNDMTM network

Delivery footprint

2013: TCS, in partnership with GE, launched a first all-female business process services center in Riyadh, Kingdom of Saudi Arabia

2012: Opened new delivery centers in Gandhinagar, Pune, Tianjian, and Sao Paulo

Technology and analytics

2013: Launched P2P platform, TAP 2012: Launched CFO dashboard and dynamic

discounting in AP process Source: Everest Group (2014)


TCS (page 2 of 5) FAO client portfolio

Major FAO clients

FAO revenue by buyer size1 2013

FAO revenue by signing region1 2013

FAO revenue by buyer industry1 2013

46%

37%

10% 4% Manufacturing <US$1 billion

>US$50 billion

North America

UK

Asia Pacific Energy & utilities

Other services

High-tech & telecom

Middle East & Africa

Rest of Europe (2%)

Financial services

US$1-5 billion

US$5-10 billion

US$10-50 billion

Latin America (2%)

1 Everest Group estimates based on contractual and operational information till December 2013 2 Includes retail, media, healthcare, hospitality, and government Source: Everest Group (2014)

32%

26% 12%

9% 7%

6% 9%

37%

36%

11%

10% 6%

Travel & logistics

Others2

Leading life assurance company in United Kingdom Global 500 electricity & gas distributor

Leading research company Global 500 telecommunication company Global 100 diversified manufacturer Citi Group Leading death care services provider in United States

Leading business space solutions provider in Asia Top 10 global shipping & container company

Recently announced FAO engagements

Q1 2014 Global Fortune 500 airline Multi-year contract to provide industry-specific F&A services

Q4 2013 Global Fortune 500 manufacturing company BPaaS model: Global invoice processing on a single platform

Q2 2012 Fortune 50 discount retailer Multi-year contract for complete F&A services for Americas


TCS (page 3 of 5) FAO delivery locations

Onshore locations Nearshore locations Offshore locations

Onshore locations Nearshore locations Offshore locations

Budapest Midland

Hangzhou Delhi Mumbai

Gandhinagar Kolkata

Pune Bangalore Chennai Manila

Quito

Sao Paulo

Montevideo Santiago

Tianjin

Peterborough



FAO technology approach: Pursues both augmentation and platform approach for FAO technology

TCS (page 4 of 5) FAO technology solutions

Technology augmentation solutions End-to-end F&A platform BPO Modular F&A platform BPO

Solution description

Add-on solutions that can integrate or supplement core customer environment

Robotic automation: Driving automation without changing underlying systems or processes

F&A processing on TCS-hosted, multi-client technology on cloud

Focused on serving mid-market buyers around the world

Enables reduced CAPEX and provides utility-based OPEX model

Specific business cycle processing on TCS-hosted, multi-client technology on cloud

Integrated, uniform, and global systems to supplement customers’ core systems

Serving large global customers with disparate and/or legacy ERP systems

Process scope Industry-agnostic payables

and receivables workflows Industry-specific utilities for

reconciliation, planning, and analytics

Process management, workflow, DMS, and OCR

End-to-end F&A outsourcing, P2P, O2C, and R2R

P2P Collections

Delivery model & pricing

Add-on cost per associate, typically included in the contract

Pay-per-transaction, bundled-in FTE pricing, and client access fees

Minimal upfront fees

Transaction pricing Mixed FTE and transaction

pricing

Home-grown modules Oracle EBS for core F&A; other Oracle technologies include AME, OBIEE, API/interfaces, and 10g

Technology leveraged

Proprietary



Global multi-process FAO market share1 Percentage

Overall remarks With over 17,000 FTEs and 55+ clients, TCS is a leading FAO service

provider. Current scale of FAO operations puts TCS in the same league as other large FAO providers (such as Genpact, Accenture, and IBM), thereby making it a significant contender in large RFPs

Beyond business transformation and process improvements, buyers cited transition management as one of the key strengths of TCS. TCS has also developed a specialized transition management solution to streamline switching and subsequent transition

However, staff training and development activities in industry-specific processes was pointed out by reference clients as a key improvement area

Delivery capability assessment1

Assessment dimension Rating Remarks

Scale Increased scale by a significant 55% to reach 17,000 FTEs

Scope Present across all major buyer geographies and industries. Considerable scale across F&A processes, including FP&A and F&A operational analytics

Technology capability

Continues to invest in augmentation and platform solutions across F&A processes. Launched a P2P platform in 2013

Delivery footprint

Building a balanced delivery model. Established a center in the Middle East, and increased presence in United States and Latin America in 2013

Buyer satisfaction

Delivers significant cost and process improvements, and manages the transition well. Low industry experience of FTEs is a worry

Global multi-process FAO market share over time1 Percentage share by ACV

Market success assessment

2011 2012 2013

Number of contracts ACV TCV

5-10% 5-10%

5-10%

5-10%

5-10% 5-10%

TCS is a Leader on the Everest Group PEAK Matrix for FAO

TCS (page 5 of 5) Everest Group assessment

1 Everest Group estimates based on contractual and operational information Source: Everest Group (2014)

High Medium-high Low Medium

Mar

ket

succ

ess

25th

per

cent

ile

High

Low 25th percentile

75th percentile

Low High

75th

per

cent

ile

TCS



Leaders Major Contenders

Emerging Players


Appendix


The scope of FAO services includes both transaction-intensive and judgment-intensive processes

Capital budgeting Strategy Administer approval process Project reporting

Strategy Judgment-intensive Transaction-intensive

Regulatory reporting and compliance Strategy Data extraction Analysis and MD&A

Regulatory reporting Compliance program

Management reporting and analysis Strategy Regular reporting Data extraction Analysis

– Ad hoc analysis and special projects

– Cost accounting

Payroll Strategy Earnings Deductions Checks and EFT

Reconciliation Third-party payments Tax reporting and filing Vendor management

Budgeting/forecasting Strategy Budget analysis and approval process Build-line item budget Forecast roll-ups and consolidation Forecast analysis and approval

process

Treasury and risk management Strategy Bank relations and administration Cash management and forecasting Investments Debt management Foreign exchange Treasury risk management

Accounts payable Strategy Maintain master data Process payment requests Process T&E claims Administer EDI/P-card Month-end close Vendor inquiries Reporting

Accounts receivable Strategy Customer set-up Billing Cash applications Credit and collections Customer inquiries Reporting

General accounting Strategy Process general entries Account reconciliations Inter-company accounting Prepare trial balances Perform closings Manage consolidations Cost accounting

Tax Strategy Tax accounting Tax planning and

analysis Tax compliance Tax audit

Fixed assets Maintain master data M/A/C of assets Post depreciation

Internal audit Strategy Establish annual

audit plan Conduct audits Reports and

recommendations

F&A strategy

Internal audit Budgeting/forecasting

Treasury & risk management Management reporting & analysis

Capital budgeting

General accounting Accounts receivable

Tax Payroll Accounts payable and T&E

Fixed assets Regulatory reporting & compliance

Strategy F&A strategy including

tax and risk position Accounting policy and

control Shareholder relations M&As/divestitures External reporting



Top quartile performance across market success and capability

2nd or 3rd quartile performance across market success and capability

4th quartile performance across market success and capability

High

Low

25th

per

cent

ile

75th

per

cent

ile

75th percentile

Mar

ket s

ucce

ss

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix

Emerging Players

Leaders

Major Contenders



Low High 25th percentile

Everest Group classifies the FAO service provider landscape based on its PEAK Matrix Performance | Experience | Ability | Knowledge (PEAK) Matrix



Service providers are positioned on the Everest Group PEAK Matrix based on evaluation across two key dimensions

1 Measured through responses from two/three referenced buyers for each service provider Source: Everest Group (2014)

Measures the scope of services provided across segments, processes, industries, and geographies

Measures the capability and investment in tools and technologies that help deliver better services

Measures the delivery footprint across regions and the global sourcing mix

Measures success achieved in the market. Captured through active ACV and

clients as of December 2013

Measures ability to deliver services successfully. Captured through five subdimensions

Measures the scale of operations (revenue, number of FTEs, etc.)

Scale Scope Technology Delivery footprint

Emerging Players

Leaders

Major Contenders

Mar

ket S

ucce

ss

Delivery capability

Measures the satisfaction levels1 of buyers across: Goal realization Process delivery Implementation Relationship

management Also measures the renewal activity of buyers

Buyer satisfaction


Additionally, Everest Group confers the “Star Performers” title on providers that demonstrate the strongest forward movement over time on the PEAK Matrix

2014 FAO Star Performers

Year 1

Year 0

Service provider

Mar

ket s

ucce

ss

Capability

Methodology Everest Group selects Market Star Performers based on the relative year-on-year movement of each service provider on the PEAK Matrix

In order to assess advancements on market success, we evaluate the performance of each of the service providers on the PEAK Matrix across a number of parameters including: Yearly ACV growth Number of new contract signings Expansion in overall contractual portfolio

In order to assess advancements on capability, we evaluate the performance of each service provider on the PEAK Matrix across a number of parameters including: Annual growth in scale Increase in scope of services Expansion of delivery footprint Technology- /domain-specific

investments

The top quartile performers on each of the specified parameters are identified and the “Star Performer” rating is awarded to the service providers with: The maximum number of top quartile

performances across all of the above parameters and

At least one area of top quartile performance in both market success and capability advancement

The “Star Performers” designation relates to YoY performance for a given service provider and does not reflect the overall market leadership position. Those identified as the “Star Performers” may include “Leaders”, “Major Contenders”, or “Emerging Players”


FAQs (page 1 of 2)

Does the PEAK Matrix assessment incorporate any subjective criteria? Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service

provider RFIs and Everest Group’s proprietary databases containing providers’ deals and operational capability information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction, and provider briefings

Is being a “Major Contender” or “Emerging Player” on the PEAK Matrix, an unfavorable outcome? No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical

services area. There are a number of providers from the broader universe that are assessed and do not make it to the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition

What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK Matrix position”? PEAK Matrix position is only one aspect of Everest Group’s overall assessment. In addition to assigning a “Leader”,

“Major Contender” or “Emerging Player” title, Everest Group highlights the distinctive capabilities and unique attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also helps providers showcase their strengths in specific areas

What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research? Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment Participation incentives for providers include adequate representation and recognition of their capabilities/success in

the market place, and a copy of their own “profile” that is published by Everest Group as part of the “compendium of PEAK Matrix providers” profiles


FAQs (page 2 of 2)

What is the process for a service provider to leverage their PEAK Matrix positioning status ? Providers can use their PEAK positioning rating in multiple ways including:

– Issue a press release declaring their positioning/rating – Customized PEAK profile for circulation (with clients, prospects, etc.) – Quotes from Everest Group analysts could be disseminated to the media – Leverage PEAK branding across communications (e-mail signatures, marketing brochures, credential packs,

client presentations, etc.) The provider must obtain the requisite licensing and distribution rights for the above activities through an

agreement with the designated POC at Everest Group

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