Optimizing an Application Outsourcing Advisory Engagement

Optimizing an Applications Outsourcing Advisory Engagement A recent ITO Contract Health Check conducted for a global high-tech manufacturing company revealed an opportunity for up to 33% savings in total costs. The areas in which these opportunities were identified included adherence to contracted terms, solution optimization, asset financing, and offshore leverage enhancement. Driven by the comprehensiveness and accuracy of the contract health check, the client engaged Wavestone to execute the downstream phases as well:

SOLUTION / The incumbent’s automation solution failed to realize tangible reduction in TCO and FTE glide path / With automation at its core, the newly selected provider’s solution has a 44% fee reduction commitment from Year 1 to Year 5 / Incorporated best-in-class productivity and right-sizing tenets (FTEs reduced from 126 to 60) / Re-calibrated the existing provider-friendly SLAs to best-in-class SLAs with stringent Fee-at-Risk and Consecutive SLA Default penalties PERFORMANCE / Developed the roadmap for 33% cost opportunity as part of the Contract Health Check / Unlocked additional competitive synergies as part of the RFP to Contract phase to realize 41% TCO savings PRICING / Conducted final negotiations and reduced termination fees from $5 million to $1.75 million in Year 1, and 0 after Year 3 / Reduced Transition cost from $2 million to $1.1 million and ARC-RRC rates 35% / Collaborated with client Legal and external counsel or MSA and Schedules development / Turned 5 key "red" clauses on Governance, COLA, Benchmarking to "Green" in the new contract NEGOTIATIONS AND CONTRACTING / Facilitated development of a comprehensive Governance structure ensuring optimized cost, quality, risk mitigation and business alignment OVERALL GOVERNANCE

Engagement Elements

Here are the key highlights from the complete lifecycle of the engagement.

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Execution of RFP to Contract

Transition Support

No research analysts, senior deal advisors lead engagements | No research rankings or pay-for-play with service providers | Partner-level staffing to support upstream planning/downstream realization

Health Check Service Lead Sarthak Brahma , Managing Director | sarthak.brahma@wavestone.com | O: +1 (610) 854-2700 | C: +1 (917) 715-0239

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