Argea Proprietary 1 * Shooting the Azimuth

Argea Proprietary 1April 18, 2023

Shooting the Azimuth Finding the Mid-Market in the

Outsourcing Landscape

-Ram Iyer-CEO

Argea Proprietary 2June 5, 2006

Audience ??

1. Midmarket Companies looking to outsource

2. Service providers to Midmarket companies

3. Consultants to midmarket companies

“I’m just here to find out what this midmarket fuss is all about!”


Midmarket Company??

• $25MM - $2B in revenues (in the US)• 500-12500 employees

• $300M - $1.8B (too small – “the big boys are here’”• 2500 – 12000 employees• Varies by industry and transaction intensity• If you THINK you are a midmarket company, YOU ARE


70/30


The Global Competitiveness Curve

©Argea, 2005

International competitors are global savvy when entering US market


Characteristics of Mid-market Companies

Because the majority of these businesses have evolved from an entrepreneurial beginnings many tend to wind up doing ‘business with themselves’ and ‘falling in love with their product or service’.

Mid-market companies ‘kill issues with people’. As we know, building fixed costs escalates the break-even point and can prove to be very detrimental if your total market is moderate in size.Having strong financial skills

and the ability to help the CFO take days off is highly valued

Changes in the marketplace impact middle-market companies faster than the Fortune 500

In the mid-market, it’s not judged creative unless it rings the cash

register•Increase SALES, MARGINS, CASH

FLOW•Decrease COSTS


Outsourcing in the Mid-market..

As outsourcing in the mid market develops, deals that involve two or more companies providing an outsourcing solution to one buyer will become commonplace

Large vendors will seek partnerships with/acquire companies that have experience in the mid-market space

Creative deal structures that provide value will help suppliers stand out

Many mid market companies will have difficulty managing the outsourcing process on their own and will seek assistance…

The lines between BPO and ITO are blurring. Many deals involve both of these services from the same vendor

The number of suppliers and the complexity of the outsourcing projects are increasing – making it more difficult for companies to manage them to meet business objectives

Source: Ross Research - Outsourcing Trends Affecting the Mid Market 2003; Argea Interviews & Outsourcing Institute Interview with John Fischer

Mid market companies are starting to look at

outsourcing as an option since the larger

companies have started doing it successfullyToday (mid-market)

companies want implementation guaranteed and committed to by the consulting firms. Companies don't just want advice and consulting, but also they want these firms to implement what they're talking about. They are outsourcing an entire business process and need to make sure the outsourcer can take it from soup to nuts.

Outsourcing isn’t just for the big guys anymore. Thanks to internet technology – and the companies that it’s spawned – mid-market corporations are finding new ways to save money, win the war for talent, keep investors happy, and find their own strategic focus.

– ‘Midsized Companies Discover Outsourcing’ Report by the Outsourcing Institute


Mid Market Companies: Why Do They Matter?

• They are largely unserved/underserved in the outsourcing marketplace– Little vendor/client

equivalency– Seen as the source of “high-

cost” revenues by providers– They practice selective

outsourcing of discrete processes which can increase business fragmentation

• Viable midmarket companies are essential to the long-term health of the US and global economy– There are about 20,000

midmarket companies in the US (public and private)

• They will either move ahead and prosper from globalization – or they will be folded into global competitors (US and foreign companies)

• They have not yet reaped the competitive advantages of enterprise-wide outsourcing that multinationals have used to position themselves to profit from globalization

• The swollen US Balance of Trade deficit will not recede unless these companies can position themselves to compete better in a global marketplaceThese companies are vitally important to our collective future!


How Are M2 Companies Unique?

• They are less agile and responsive to changing business conditions (wider turning radius)

• Big companies can leverage greater resources to change course and to absorb business setbacks, weaker demand or higher costs

• Small companies can “turn on a dime” – they have fewer stakeholders to align with business decisions/objectives

• They want to see immediate results from business decisions

• Business control is a prime value (they shun distributed power)

• They identify more with a fixed geographic presence than a global presence (local)

• They seek partners – not providers

• Need flexibility in service agreements (scale up/down according to business conditions and need)

• Want providers who understand their whole business, not just the domain

• Want partners who will share risks and rewards and go on the journey with them

They are unlike big or small companies


Special Factors & Unique Challenges

• M2 Companies haven’t developed the appropriate mindset for enterprise-wide outsourcing (strategic recognition, commitment and leadership)

• M2 companies have limited financial resources

• M2 companies have limited skilled resources and can’t compete with M1 companies for them.

• M2 companies have narrow process ownership and control (opacity in business functions/processes)

• M2 have concentrated competencies and knowledge “lockboxes”

• Locally, M2 companies experience community and labor opposition to outsourcing

• M2 companies generally lack “outsourcing readiness”

• M2 companies have more limited vendor leverage

• M2 companies have limited experience managing multiple vendor networks

• M2 companies generally lack informed outsourcing advisors


How Can Mid-Market CompaniesGain From Outsourcing?

Standard models are a poor fit

• Practices of multinational companies with more experience don’t transfer to M2 companies

• M2 companies need a vastly different model for outsourcing success

• Companies and providers that understand this need and how to satisfy it can help M2 companies succeed in outsourcing


What You Could Outsource…..just In Services

ContractingEngineering

& construction

IT servicesOutbound

telemarketingTransportatio

nLegalStaffingTactical

SecurityAccounting &

tax servicesTraining

UniformsWeb hosting

Advertising, PR, sales

promotion, direct

marketing

DistributionManagement

consulting

CateringCustomer

relationship management

Transaction processing

Professional employer

organizations

Facilitiesmanagement

LogisticsDocument & information management

Business Process

Outsourcing

Outsourced facilities

management

IT outsourcing

Sales & customer care outsourcing

Supply resource

management

Finance & accountingoutsourcing

HR outsourcing

Strategic

FacilitiesITSales &

MarketingSupplyChain

Finance, Accounting,

AdminHumanCapital

Source: KPMG, Lake Capital


Our Approach …


Our Delivery Model (C-I-M)

• Provide a detailed questionnaire that we complete with the CFO or the business head of the target company

• Conduct 1-2 days of onsite interviews and provide estimated range of potential savings, based upon benchmarked data

• Choose and integrate multiple vendors to create solutions• Transition the work to the chosen vendor(s)• Manage the implementation for the Client (Managing Agent)

CONSULT INTEGRATE

VENDOR/SMANAGE

IMPLEMENTATION

We will tailor delivery to your desired results


Argea’s Delivery & Managing Agent Services

Client

Outsourced Service

Provider 1

Outsourced Service

Provider 2

Outsourced Service

Provider 3

We coordinate and manage the Outsourced Service Providers


CONSULT INTEGRATE

VENDOR/SMANAGE

IMPLEMENTATION

Our C-I-M approach ….

Ser

vice

sV

alue

•Experienced personnel to deliver the solution, e.g., project management, vendor selection or integration, transition skills.

•Ongoing expert services to ensure management satisfaction with in-house capability.

•Regulatory compliance assistance.

•Up-to-date access to specialist expertise and capability

•Flexible – can be scaled up or down on demand

•Guaranteed satisfaction with in-house capability.

•Integrate the outsourcing solution – select/ replace providers and integrate into a full solution

•Provide overall service management of the solution and contract management

•Manage delivery of solution benefits on client’s behalf

•Provides robust solution integration and service management capability quickly

•Easier to manage & deal with poorly performing suppliers

•Can in-source easily•Can exercise greater control•Cost overhead of agent fee

Managing AgentDelivery

Brings value to our Clientsand Managing Agent …


Why Should M2 Companies Use C-I-M?

The C-I-M model:• Delivers the competitive benefits of

outsourcing• Minimizes business risk• Assures the level of control and

flexibility mid-market companies want

Outsourcing is an offensive AND defensive weapon. M2 companies need both


Added Value of the C-I-M Model

• C-I-M promotes intelligent integration of multiple vendors

• Relieves management burden of monitoring providers

• M2 companies build global networks of specialists without cost of owning the network

• Compensation tied to performance• Service provider mix can be changed to adapt

to variable business conditions• It builds the first step to an ‘extended

enterprise’ to compete in a global economy


Key Conclusions

• Mid-Market companies need to use outsourcing to compete more effectively

• Mid-Market companies are poorly served in the outsourcing marketplace

• Mid-Market companies have unique needs, challenges and attributes

• The right outsourcing model reflects these special factors (C-I-M)

• Mid-Market companies can profit substantially from outsourcing if the right model is used


Who we are …


• Experienced outsourcing practitioners & process consultants: deep consulting, operational and business experience with outsourcing – from both client and supplier sides – GE, PriceWaterhouseCoopers, KPMG

• We have a team of practitioners – we will bring the right skills to the project at the right time

• We help you ‘make it happen’ - combine consulting and implementation services with education, where you need it

• We have several lateral partnerships that, together, offer a broad set of services across various functions of a company

• We have practitioners in India and strong relationships in other Asian outsourcing centers

About us…


The Depth of the Argea Leadership Team

Ram Iyer – Midmarket Outsourcing Expert; Key international strategist for Lucent; CEO, Fremont Technology Group; Operations Improvement at Boeing

Sid Milstein, One of the founder of Genpact (GE’s offshoring business); Former President GE Capital Global Processing Services ; Former Leader of GE Capital’s Corporate Sourcing Initiatives Group

Bill Batiste – Former Head of Outsourcing, PwC NA – Key leader in making the BP Amoco deal – largest at it’s time; ran W.Coast practice for 15 yrs

Partha Bardhan, Former Senior Partner, PwC & KPMG Consulting; President , Argea – India

Rip Sanders - PwC Partner; Led Covisint (portal for procurement - GM, Ford & Commerce One partnership) for Commerce One

Lu Ellen Schafer - Cross-cultural Expert – has trained over 11,000 employees worldwide for multinational companies


Our Advisors..

Ton Heijmen, Former COO of BPO for PwC globally; Senior Advisor on Offshoring & Outsourcing for The Conference Board

Jim Giordano – former CEO, Good Samaritan Hospital

Vishy Viswanathan, Former Managing Director, IT Resource & Location Strategy (ITO), JPMorgan Chase

Deepak Sukh – former General Manager, AT&T India; former Head of Software Outsourcing for Lucent Communications Software Group.

Gerry Benison, Former North American Head of Pharma Consulting Practice, PwC


Publications on Mid-Market by Argea practitioners…

• Adopt, Adapt and Ascend: Mid-Market Companies Confront Globalization – Chapter in ‘Six Billion Minds’ by

• Assessing Core Competencies in Mid-Market Companies (Q4 Online Edition of Outsourcing Venture Magazine)by Ram Iyer, CEO, Argea

• Assessing Outsourcing Readiness in Mid-Market Companies (Q3 Online Edition of Outsourcing Central Magazine)by Ram Iyer, CEO, Argea

• Driving the Next Wave of Pharmaceutical Competitiveness (as seen in LifeSciTech, Q3, 2005)by Ram Iyer, Argea CEO and Michael Thomas, EVP Pharmaceutical Consulting Services

• Outsourcing Success Through Six Sigma: The GE Story (as seen in Outsourcing Central Magazine, Q3, 2005)by Sid Milstein, EVP, Argea and Ram Iyer, CEO, Argea

• When Projects Head South (as seen in Financial Services Outsourcing Magazine, December 2004 by Ram Iyer, CEO, Argea and Julian Millstein, Principal, Brown Raysman Millstein Felder & Steiner LLP

• Outsourcing in the Mid-Market (as seen in Outsourcing Central Magazine, Q1, 2005)by Ram Iyer, CEO, Argea

• CxO Executive Forum: Summary of Proceedings, CXO Executive Forum, CXO Insight: Hidden Opportunities and Perils in Outsourcing, December, 2004, New York by Argea, Brown Raysman Millstein Felder & Steiner LLP, Grant Thornton and IACCM, December, 2004, New York

• Will Your Job Go Offshore - Published June 2004 IACCM - International Association of Contract & Commercial Managers by Ram Iyer


In case you were wondering..

Main entry: Argea

Pronunciation: r-jiaFunction: noun1. Greek Goddess of Outsourcing; also, 2. Greek mythology - daughter of Adrastus; wife of

Polynices3. the Fairy of Fate (Irish lore) who provided eisce

(wisdom, inspiration, and divination) - Argea reveals what has gone before and what will be. Fate is in her hands


Contact Info:Contact Info:Ram IyerRam Iyer

President & CEO12 Roszel Road Suite A204

Princeton, NJ 08540(609) 734-9100 – Landline

(609)610-6700 - MobileEmail: [email protected]

www.argea.com

Experienced Outsourcing Practitioners Driving Business Performance SM

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Argea Proprietary 1 * Shooting the Azimuth