Reinventing with Outsourcing

YES BANK Experience

Balaji V

Vice President, Business Services

July 4, 2005

Contents

Genesis of YES Bank

Technology Sourcing - Our Drivers

Strategic Importance / Risks & Benefits

Evaluation Framework

The Deal Mechanics

Our Partner

Genesis of the Bank

One of the 2 licences granted after a period of 9 years

Desire to build a world class knowledge driven Indian bank catering

to “Emerging India”

Space in the banking arena for a sector focused institution

Create a platform for professional entrepreneurship

Empowerment to people enabling personal and professional growth

Creating and sharing value

Establish highest standards of professional integrity, ethical

standards, regulatory compliance, transparency and corporate

governance

Desire to set higher benchmarks in banking services

Create shareholders wealth at large

Defining Sourcing Strategy

Identification of Drivers for Outsourcing

Core Competence Analysis Outsourcing Risk Analysis Scanning the Market Deal Type Assessment

YES BANK CASE STUDYEarly Successes Quick Adoption of Best

Practices

Rapid People &

Infrastructure Deployment

Better Pricing

Strategic Total

Outsourcing

IT Investment Portfolio

Strategic Alliances

Technology Framework and Relationships

Evaluation Framework Managed Services Capabilities Hardware & Equipments Strategic Fit Assessment Financial Decision Making Soft Factors

Outsourcing Drivers

Comparison of Project Success rates by Comparison of Project Success rates by Project ClassProject Class

Source: IBM Institute for Business Value Analysis

10%12%

12%

18%

20%

25%

36%38%

54%

55%

Function Diff icult to manage or out ofcontrolTake Advantage of OffshoreCapabilitiesShare Risks

Reduce time to Market

Accelerate reengineering benefits

Resources not available internally

Gain access to w orld-class capabilities

Free Resources for Other Projects

Reduce & Control Operating Costs

Improve Company FocusReasons for OutsourcingReasons for Outsourcing

Source: Outsourcing Institute

Strategic Importance

Leverage Global Technology Expertise

Build Technology Differentiators

Benchmarking Operational Efficiencies

Collaborate on joint initiatives for Business Process Services

Intellectual Banking Expertise Exchange

Center of Excellence for Risk Management, Basel II, STP

Implement World-Class Practices in IT Operations

Six Sigma, ITIL, CoBit

Risk Factors - InhibitorsOutsourcing has the Potential

to transfer risk, management

and compliance to third

parties who may not be

regulated and who may

operate offshore

Risk Spectrum

Strategic Reputation

Compliance Operational

Exit Counterparty

Country Contractual

Access Concentration & Systematic

BASEL Committee on Banking Supervision

Evaluation Framework

Managed Services

Capabilities

Delivery and SLA

Mechanisms

Hardware & Equipments

Pricing, Technology and

Delivery Lead times &

India Presence

Strategic Fit Assessment

Financial Decision Making

Buy Vs. Lease

Soft Factors (Relationship,

Contractual, Cultural)

Investment

Optimization

Investment

Optimization

Risk

Containment

Risk

Containment

Faster

“Go-to-market”

Faster

“Go-to-market”

Focus on

Core

Competencies

Focus on

Core

Competencies

DRIVERSDRIVERS

Evaluation MethodologyR

equ

est

Fo

r I

nfo

rmat

ion

Sen

t

Response from The Big 3

Comparative Study

Internal Competency &

IP Retention Assessment

Detailed Requirements

(RFP) for Outsourcing

Specified

In-depth Comparison

analysis (Quantitative)

Overall Capabilities Assessment (Qualitative)

Parity Checks and Interim Negotiation

Market Assessment

Initiation of Strategic

Discussions

Strategic Deal Framework Definition

Invitation to Participate

Responses

Evaluation & Strategic Fit Assessment

Sco

res

Sim

ilar

Fin

al P

rese

nta

tio

n

Evaluation by Core Team

Gartner Evaluation

Evaluation by Business

Heads

INT

EN

T F

OR

CL

OS

UR

E

6weeks 11 15 18 20

Sample Evaluation Parameters

Qualitative Parameters

Pre-sales responsiveness Seamless Delivery

Core Competencies Outsourcing Experience

Hardware Post Deal Expected Behavior

Networking Solution Design If complete mandate

Software Services If partial mandate

Data Centre Expertise Brand Value

Facilities Management Access to Global best Practices

Senior Management Ownership Bargaining Power of Yes Bank

Range and

Depth Of

Competencies

Scale of resources

in wide range

of technology platforms

Innovative

delivery methods &

technology tools

World Class

Business Process

Infrastructure

Changed Measures

“Reactive” to “Proactive”

Prevention

Utility to

Transformational

Our

Technology

Partner

Our Partner

The Deal Mechanics “Best of Breed Consortia” Prime Partner – Leading INDIAN

Technology Company

IBM, CISCO, HP, Bharti, Reliance

Well Defined Managed Services Framework

Continuous Improvement

Product Agnostic Proposal

Competitive Pricing – Ability to ensure “checks”

Obsolescence Safeguard

Well-defined Strategic Relationship Roadmap

To leverage each other respective expertise

Contracting – Ensure Success Contract Development

Localization, Regulatory, Business Groups Review Engagement of Specialists – Gartner, CB, E&Y

Contract Essentials Flexible, Strategic Objective Statement Addresses Risk & Innovation, Captures Continuous

Improvement Living Agreement

Contract Structure

Thank You !