1. Driving Innovation in Outsourcing Relationships Srini Krishna, Director Commercial & Global Supplier Management, Microsoft srikrish@microsoft.com srikrish@microsoft.com June 19, 2012

2. Confrontation – basis for most contracts Service provider drives innovation and transformation The expert and recipient of payment drives innovation Client collects the spoils through price reductions Little in the contracts to create long-term value Contracts based on a single-frame view of operations extrapolated over contract life Construct of the contract provides little for both to create value over contract life Allocation of Value necessarily adversarial Provider expected to deliver a share of value created For the outsourcer valid return for “outsourcing their business”

3. Think differently to drive innovation Embed innovation in the relationship from inception Innovation should be a conscious effort to change the way services are delivered, not a chance occurrence Intent and commitment to driving innovation has to be core to the outsourcing programme Relationship a collaborative partnership Partnership between two equals with each bringing value to the table to drive innovation and transformation The two are vested in each other’s success Shared vision underpins the relationship Recognition that success requires the alliance to create synergistic value that exceeds what each would create individually from the relationship Shared vision that encompasses both organisations beyond the immediate confines of the contract

4. Think differently to drive innovation Both organisations need to earn fair return Acceptance that each has to earn fair return on the relationship Commercial structure gives fair return and appropriately balances risk and reward Relationship not a mere contract, an enabler The contract, an enabling framework that provides the ground rules, the inviolable and the operating rules The inviolable principles define the relationship, while the operating protocols oil the working of the partnership

5. Microsoft’s experience driving outsourcing innovation – OneFinance BPO contract A vested relationship Both sides vested in each other’s success Shared Vision to drive innovation & transformation Shared vision commits both sides to collaborate to achieve specific outcomes over contract term Determines the agenda to create long-term value over and above original contract Partnership drives innovation Transformation a joint responsibility, no one side solely responsible for identifying sources of and driving innovation Commercial model that ensures both sides earn more than their original economics