Everyone s Back Office Is Someone Else s Front Office

Everyone s Back Office Is Someone Else s Front Office A Carretek Perspective on Offshoring of Back Office Business Processes May 2003 www.carretek.com www.carreker.com www.mastek.com

Table of Contents Executive Summary 3 Background 4 Outsourcing, from ITO to BPO 4 Payments-Related BPO 5 India, the Offshore Model 6 Staging BPO for Banks 8 Carretek, The Business 9 The Carretek Offering 9 The Carretek Value Proposition 10 Why Carretek 13 Mastek Credentials 13 Carreker Credentials 14 May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 2

Executive Summary The objective of BPO is to increase efficiency as part of a programme of corporate transformation. It is therefore vital for the service provider to have a deep understanding of the business that is to be supported. Financial Times July 3, 2002 Carreker Corporation (Dallas) and Majesco Software Inc., a wholly-owned US subsidiary of Mastek Limited (Mumbai) have formed a new company named Carretek LLC to help banks define and implement a path to accessing the benefits of offshore outsourcing (offshoring). The company s early emphasis will be on business process outsourcing (BPO), and in particular BPO for payments processing, where Carreker has domain expertise and technology dominance. The collaboration combines the strengths of the two founding companies to create a competitive advantage in an emerging line of business at a time when banks are intensely focused on accomplishing what offshore BPO delivers: lower costs and higher productivity and quality. Carreker is a global provider of payments technology, consulting, and revenue enhancing solutions to banks and their processors. Mastek is a global outsourcing company with a powerful IT track record, stellar customer references, local presence around the world, and a highly skilled workforce in state-of-the-art facilities in India today, with other locations planned for the future. In the coming years, banks are almost certain to offshore commodity-like business processes, just as over time they came to outsource non-core IT functions. Early on, the benefits will be primarily cost-related, but over time, banks will also achieve greater productivity and quality for a much-needed competitive edge in payments processing. The complementary expertise of Carreker and Mastek will be deployed to transform the outsourced functions, reducing the work involved and increasing the value delivered through process and technology improvements for which both companies are already renowned in their respective fields. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 3

Background $356 billion in financial-services firms cost base will shift offshore... The survey indicates that the financial services firms plan to shift, on average, 15 percent of their global cost base offshore over the next five years. Deloitte Research Survey April 2003 Outsourcing: from ITO to BPO BPO to offshore locations is experiencing explosive growth. In 2002 McKinsey predicted BPO from developed countries to India alone would grow from $1.4 billion in 2001-2002 to $21-24 billion in 2008. That prediction is already reflected in the banking industry, where many large and mediumsized banks are actively seeking ways to take advantage of new outsourcing opportunities, and several have transitioned a wide variety of business processes overseas. The CEO of one top 30 US bank is well-known for frequently asking his managers, Is that something we can outsource, and if not, why not? Like an increasing number of his peers, he recognizes the need to husband the bank s resources and capital for core businesses and offload the costs and risk of non-core businesses via outsourcing. According to a Deloitte Research survey published in April, 2003: $356 billion in financial-services firms cost base will shift offshore (based on a $2.34 trillion cost base for the top 100 institutions globally). The survey indicates that the financial services firms plan to shift, on average, 15 percent of their global cost base offshore over the next five years. In recent years, outsourcing has been incrementally applied to an ever-wider scope of business activities. It has generally begun with slow, measured, learning-intensive progress, eventually reached a point of critical mass, and was then followed by a rapid roll toward easy justification and near-status quo. IT outsourcing (ITO), consisting of a third party assuming control and management responsibility for a company s existing hardware, software and associated staff support, has been a mainstream trend for many years. In banking, IT outsourcing quickly gained favor among small banks, and now, even a $5 billion announcement like Morgan Chase s IT outsourcing contract barely raises eyebrows. BPO appears to offer a learning path similar to that of ITO; in the early stages a few selected processes will deliver proof of concept while familiarizing all parties with the new relationship and best practices involved. With success in the early processes, additional processes will be added to the concept, increasing the business case for banks. As for offshore outsourcing or offshoring early concerns about its impact on the US economy and on the reputation of US companies that chose that route have largely subsided in the private sector. For one thing, offshoring of manufacturing is recognized by US consumers as responsible for the availability of an endless array of high quality goods that would be unaffordable if produced domestically. Offshoring of IT followed a similar path, starting with worries that the US would lose its IT edge, especially considering that it imported hundreds of thousands of immigrants in the 1990s to ease IT engineering shortages. But more recently, the opportunity to redeploy US labor and capital to higher-value industries and cutting edge R&D is being recognized, and comments like this from the Wall Street Journal (February 3, 2003) are typical: Silicon Valley doesn t need to have all the tech development in the world, says the president of Collaborative Resources... We need very-good-paying jobs. Any R&D that is routine can probably go. Silicon Valley types already talk about the next wave of innovation coming from the fusion of software, nanotech, and life sciences. Accordingly, offshore BPO today is more readily recognized as creating the opportunity for clients to better redeploy capital now tied up in outsourceable functions. Says Atul Vohra, May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 4

Background (continued) Over the next 5 years, US banks will miss out on US$900m in revenues as a result of electronic payments and check conversion. Celent Communications Banks Payments-Driven Revenues March 20, 2003 Mastek s President of Majesco Software (Mastek s wholly owned US subsidiary), The business of America is design and innovation. But, BPO is qualitatively different from ITO. With BPO, the third party still assumes management responsibility for parts of the company and the associated staff, but it also delivers an entire business process that was previously carried out by internal staff. Often, these business processes are so intrinsic to the company s core that the changeover must be transparent. That is, the company rather than the service provider must still appear to be the owner of the processes, and the company must remain able to exercise extensive control over them. As a result, BPO providers must be expert not only in outsourcing but especially expert in the specific functions being outsourced. According to the Financial Times (July 3, 2002): Unlike software development and IT outsourcing, where the main objective is to save costs, the objective of BPO is to increase efficiency as part of a programme of corporate transformation. It is therefore vital for the service provider to have a deep understanding of the business that is to be supported. The more content-intensive the process, the more expertise required to outsource it successfully. That explains why the processes that have tended to be early candidates for BPO are those that are transaction-intensive (but fairly content unintensive), such as accounting, payroll, call centers, mail response, and other clerically intensive back office activities. As one of the world s leading experts in bank payments processing, Carreker is uniquely positioned to play a leadership role in bank offshore outsourcing of these content-intensive payments processes and others, as new expertise is added. Payments-related BPO A number of trends within the payments industry in the US are compelling banks to look towards outsourcing certain business processes associated with their payments franchise in an effort to reduce the unit costs of processing paper payments by leveraging the scale of BPO providers. As the shifting payments environment has forced banks to better understand their payments revenue sources, they are also realizing how significantly paper payments have historically contributed to their overall revenue upwards of 30 and 40 percent for many large banks. At the same time, paper payments are declining and with them the associated revenue. According to Celent Communications: Over the next 5 years, US banks will miss out on US$900m in revenues as a result of electronic payments and check conversion. (Banks Payments-Driven Revenues, March 20, 2003) Regardless of how quickly or slowly the shift from paper to electronics occurs, banks have no choice but to continue supporting and investing in high-quality infrastructures for both paper and electronic payments. The challenge, especially on the paper side, is to do so at much, much lower cost. According to Carreker research (Banking s Payment System Drivers, March, 2003): In order to maintain current unit cost levels, US banks must reduce their payment processing costs by $1.85 billion over the next four years. Ordinary cost management practices are insufficient for the challenge. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 5

Background (continued) Today, half a dozen global financial institutions with their own facilities in India have fully justified this payments processing model in the captive version. Fortunately, new technology is emerging for that purpose, including image technology that helps bridge the paper and electronic environments. Among the many benefits conferred by image processing, the most relevant to outsourcing is that it permits multiple parties in multiple locations with multiple systems to perform the required payment functions. This in turn reduces the costs involved (e.g., less transportation), diminishes risk (e.g., more fraud filters applied more quickly), and makes information available to a variety of paying parties. Carreker is a leading provider of this image technology to banks and their processors and a leading consultant to banks formulating their imaging strategies. Since these technologies enable remote, paperless, processing, the ROI on banks investment in these technologies can be greatly enhanced by the outsourcing of certain business processes, particularly to offshore or nearshore locations. Telecommunications advances have drastically reduced obstacles to offshore BPO. Transmission costs have fallen, bandwidth has exploded, and universal networking standards have emerged to the point of eliminating obstacles to the massive amounts of information that must be transmitted between onshore and offshore facilities. Until very recently, offshore outsourcing of payment processing would have been difficult to justify. Today, half a dozen global financial institutions with their own facilities in India have fully justified this payments processing model in the captive version (i.e., using their own Indian subsidiaries to perform BPO for their US and other international holdings). They include ABN AMRO, American Express, Cigna, Citibank, HSBC, and Standard Chartered. Carretek is confident of proving the viability of the non-captive version for selected payment processes enabled by Carreker technologies and delivered in a seamless offshore/onsite model already proven by Mastek to meet the growing needs of banks in this field. McKinsey s prediction of a $21-24 billion dollar Indian BPO market in 2008 identified six main process areas: administration, content development, customer care, finance, HR, and of course, payments services, estimated at $3-3.5 billion over that same period. Over time, it seems evident that US banks will outsource some components of all of these areas. Bearing in mind that BPO requires intensive domain expertise, their best success will occur with providers who have deep content knowledge. Carreker s expertise thus makes Payment Services the thin edge of the wedge for Carretek in gradually accustoming banks to offshore outsourcing, building trust in the provider, and expanding to other areas to maximize the value of the BPO relationship. India, the Offshore Model India has emerged as the global model for offshore outsourcing in large part because of the confluence of two circumstances: One of the world s largest pools of highly educated English-speaking workers (250 million), many of them scientific and technical talent. By 2010, India is expected to be the largest English-speaking country in the world. Very low wages. Starting salaries for IT engineers in India range from $5,000- $10,000, very low by US standards but magnificent in a country with a per capita annual income of $500. The types of jobs typically outsourced to India are jobs usually considered last-resort or deadend in the US: back office jobs that by definition do not carry out the purpose of the company May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 6

Background (continued) By 2008, global remote-service operations may undertake activities accounting for half a trillion dollars around the world and representing every element of the value chain. The McKinsey Quarterly 2000 (or bank). The jobs pay poorly by local standards, they are filled by underqualified, often undereducated, workers with few alternatives, and employers generally have little expectation that the workers will improve the process through their own initiative. They are low-status positions, and low motivation and high turnover are endemic in the US. Precisely the opposite circumstances prevail in India, where such jobs are high-status career positions. For these English-speaking, highly-trained college graduates, whose success depends on finding a niche in the global economy, offshore outsourcing is their path. Because their jobs embody the full mission of their companies, they are proud of their positions. Because their job descriptions are not to perform a mind-numbing function but to continually find ways of improving both productivity and quality, they are engaged, proactive workers. Besides the pay, high by local standards, these employees receive employee benefits extraordinary by local standards: company-provided breakfast, lunch, transportation to and from work, and full-service corporate campuses. India BPO operations are also advantaged by the unique partnership between the government of India and NASSCOM, the National Association of Software and Services Companies, which maintains a concerted and extended development effort bent on attracting first IT business, an effort heavily fueled by Y2k concerns and now, increasingly, BPO business. As a result, early concerns about the cross-border and sovereign risk of BPO to India have been largely laid to rest. In the case of Carretek, its owners have taken extra steps designed to reassure clients about the potential risks of offshoring. By maintaining a strong local presence in its clients countries, Carretek manages clients concerns about working with overseas management. In the US, banks deal directly with high-level, US-based management. Clients comfort level is enhanced by Carretek s powerful and proven epmo a proprietary Web-based project management office tool, developed by Mastek and proven with numerous clients. The epmo essentially provides the client with real-time visibility of client-determined metrics of the offshore facilities performance, based on pre-determined service level agreements. For most clients, epmo gives them more control than they have previously enjoyed, rather than the reduced control they initially fear. Confidentiality of data and security of intellectual property have shifted from a concern in the early days of ITO to a point of confidence for the many Fortune 500 companies offshoring to India. Due to the combined efforts of NASSCOM and the government, the criticality of IT services to the country s GDP and hard currency earnings, and India s stable democratic government and strong legal framework, India has earned a stellar reputation in protecting IP rights. Mastek s data security practices, recently audited by a Big 5 audit firm, received the highest rating, and the company is currently seeking additional certification for its record in data security. As for the emerging constraints of the Patriot Act, there is no impact, as the data itself remains with the client; offshore workers access it across encrypted lines. In dealing with Carretek as their BPO partner, banks can derive additional comfort from the fact that they are dealing with a US company, headquartered in Dallas, Texas, and under the jurisdiction of and subject to US law. Carretek s owners have both been in business for over 20 years (Carreker as a public company listed on Nasdaq and Mastek as a public company listed on the National Stock Exchange of India), and between them have over 700 employees in the US. As for concerns about geopolitical events or natural catastrophes that could jeopardize Indian operations, Mastek already maintains double redundant back-up facilities in London and May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 7

Background (continued) We have seen savings of 50 percent in terms of salary costs. There is no shortage of the right people to do the jobs, and the productivity of the people is higher than expected. Simon Bush Head of India s Standard Chartered Bank s Global Shared Services vnunet.com February 13, 2003 Southeast Asia, and is actively seeking to build both back-up and front-end processing facilities in another area of the world, with Ireland and Canada under consideration. There is no shortage of Fortune 500 companies claiming success in BPO outsourcing to India; American Express, Dell Computer, Eastman Kodak, GE, Ford, Microsoft, Sun Microsystems all have announced plans to scale up their operations in India. GE employs 20,000 people in India 10% of total GE employees, even though India represents only 1% of GE s revenues. According to Simon Bush, head of Standard Chartered Bank s global shared services center in India (vnunet.com, February 13, 2003): We have seen savings of 50 percent in terms of salary costs. There is no shortage of the right people to do the jobs, and the productivity of the people is higher than expected. Staging BPO for Banks According to Carretek research, many bank-processing functions are ultimately candidates for offshore outsourcing. Some, like those in the left column below are comparatively easy to outsource. They involve relatively less content than those to their right, contain more repeatable activities, offer less opportunity for error, and/or involve less risk in the event of errors. Easy/Immediate Medium/Near Term Difficult/Long Term Transit Adjustments Missing Items All Other Transit Adjustments On-Us Adjustments Exceptions In-bound Returns Fraud Remittance Processing Wholesale Lockbox International Collections High Speed Image Keying Low Speed Keying Balancing Call Center Functions Mortgage Loans Consumer Loans Carretek is initially focused on providing banks with an offshore alternative for six payments related processes. In order of priority these are, Transit Adjustments Missing Items, Exceptions, In-bound Returns, Fraud, Remittance Processing and High-Speed Image Keying. These initial processes are being offered because their offshoring is enabled by Carreker technology solutions already installed in many large US banks, and Carretek can leverage the domain expertise it brings to the table. Once the offshoring of these processes have proven the concept for Carretek s customers and allowed the relationship to develop and stabilize, other service offerings will be developed with additional Adjustments types and Mortgage Lending as early candidates thus expanding the offshoring business case for Carretek clients. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 8

Carretek, The Business Back rooms by definition will never be able to attract your best. We converted ours into someone else s front room and insisted on their best. This is what outsourcing is all about. Jack Welch JACK: Straight from the Gut Warner Business Books September 2001 The Carretek Offering While offshore BPO itself is the centerpiece of the Carretek offering, the full offering includes a range of services designed to provide banks with the most value, permit them to choose the level of service they need or wish, to make changes as circumstances alter, and to tie Carretek s compensation to performance. If the Carretek offering were described as end-toend, this is the sequence of services banks could access: Global Sourcing Strategy Development Services A combination of consulting, collected best practices, and tools, this service is designed to help banks explore their outsourcing options, choose among them, and deploy tools that efficiently drive toward the best decisions. Some banks will desire full-fledged assistance throughout the process; others will prefer a minimal version of this service, consisting mainly of Carretek s methodology and tools. Still others will wish to reach their own conclusions on these questions, without Carretek s intermediation. Carretek is prepared to tailor the service entirely according to each bank s preferences. BPO Services As indicated above, Carretek will focus initially on a selective range of payments related processes. The outsourcing service will include transforming each process before outsourcing it reducing its work content for maximum efficiency and lifting its content for maximum value. Over time, Carretek will add expertise and/or partners as necessary to offer offshoring of additional business processes, included some unrelated to payments. A key success factor in this part of the Carretek offering will be transparency the ability to transfer the process from the bank to the offshore facility without disrupting service and to perform the function at levels above the bank s in-house performance, while still giving the bank significant control of the process. To minimize risk and disruption for clients, and to maximize client control, Carretek s offshore model will be seamlessly blended with the bank s on-site facilities. Another key success factor is flexibility that is, Carretek s readiness to adapt the level and type of its BPO services to meet clients unique needs. Carretek offers three models designed to serve clients with different needs and sensitivities, for which Carretek will be compensated on a risk/reward basis: 1. Carretek s Dedicated Offshore Processing Center model is a straightforward arrangement under which the bank contracts to progressively outsource an increasing number of processes over a period of time, with the contract designed to provide a planned level of cost savings for the client and to minimize the bank s incentive to bring the processes back in-house. Carretek builds the offshore processing facility, and operates it under the assumption that the bank will not re-insource the function. 2. Carretek s Build-Operate-Transfer (BOT) model is designed for the client with misgivings about long-term or permanent outsourcing. It looks the same in the early stages as the first model a contract to progressively outsource a number of processes to a Carretek offshore facility and deliver a planned level of savings to the bank. However, the client has the option of buying back the offshore facility from Carretek at some predetermined point in the future. Of course, the pricing arrangements between Carretek and the client reflect the cost of this option. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 9

Carretek, The Business (continued) Mastek s IT and offshoring excellence combined with Carreker payments excellence and dominance in the enabling technology of image processing deliver a combination unmatched in the marketplace. 3. Carretek s Collaborative Outsourcing model is designed for clients with concerns about up-front transition costs and in-house employee disruption. Without making any physical transfers, a substantial number of employees performing the processes being outsourced (plus the hardware, software, and intellectual property they use) are transitioned to a Virtual Company (VC) owned jointly by Carretek and the client, which performs all the original functions and is compensated at full cost (that is, at no cost savings for the client at this stage). Gradually (typically over a period of months) the client s personnel are replaced by the VC s employees in a dedicated offshore facility, with the cost differential being shared between Carretek and the client in proportion to ownership of the VC. Application Development and Application Support Carretek will provide client banks with application development and application support initially in payment-related technologies, and ultimately in the broader range of technologies deployed in banks. The Carretek Value Proposition: Cheaper, Faster, Better The primary factor in the business case for Carretek s initial functional focus is the low cost of labor. Wages among India s vast talent pool typically lag US wages by 65-70 percent. While the differential varies as wages vary by function and across the US, most banks can expect their processing costs to be reduced by a net 35-40 percent, even before the process and technology improvements Carretek will provide. This offshore differential represents a significant improvement over onshore outsourcing, where cost savings, if any, are generally limited to those provided by scale. The business case is enhanced by the improved productivity available through offshore BPO. Time zone differences between India and the US (basically night versus day) permit faster turnaround when work delivered at end of day US can be performed overnight. Since it is performed during India s day hours, no late-shift premium expense is incurred. Carretek can operate its outsourcing facilities 24 hours a day, seven days a week, for more effective utilization of their processing infrastructure. By outsourcing like functions from multiple clients, Carretek can also leverage the effects of both experience and scale. The third business case component is improved quality. Carretek s clients will have access to a growing talent pool of educated, skilled, and motivated English-speaking personnel, whose business performance can be closely monitored by the client through Carretek s service-level agreements and epmo, an online, real-time dashboard of quantifiable, customized metrics. It is the Japanese auto manufacturing phenomenon. At first it was the cheap prices that attracted American buyers. Japanese manufacturers used the cost differential to go to school on quality, until eventually quality and low-cost combined to create an extraordinary competitive advantage. In delivering these benefits with greater reliability and consistency than its competitors, Carretek relies on specific competitive advantages: 1. Domain Knowledge Leading to Better Process Management. Carreker has been focused exclusively on the banking industry, particularly on payment May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 10

Carretek, The Business (continued) By virtue of its ownership by both Carreker and Mastek, Carretek is a global company with extensive roots in both the US and in India. systems and associated processes throughout its nearly quarter century of existence. Banking is the foundation of its business and the focus of its technology offerings and consulting practices. 2. Improved ROI on Investments in Payments Technology. While Carreker technologies in the payments space find ready acceptance in the marketplace based on the process and productivity improvements they generate, their business case can be substantially enhanced by offshoring some processes that the technologies now permit to be performed remotely. 3. Technology-Led Process Improvements. Carreker has a long history of technology and process innovation in banking. Mastek has an equally long history of continuous process improvements, as evidenced by its CMM level 5 certification and Six Sigma black belts on staff. Accordingly, Carretek can quickly harness new technological advances that improve client banks processes. 4. US Accountability with Seamless Onsite/Offshore Delivery Model. By virtue of its ownership by both Carreker and Mastek, Carretek is a global company with extensive roots in both the US and in India, and considerable management depth in both countries. For clients, this is a superior model to a US company with an offshore arm, or an offshore company with some onsite resources. The Carretek model provides the onsite interaction and accountability of a local provider and the price and quality of a global, best-of-breed sourcing solution. 5. Track Record of Delivering Sustained Value, Consistently. Both companies have an enviable record of delivering on their promises, painstakingly built over more than two decades in each case. Carretek s credibility rests, therefore, on what its owners have already accomplished, not on what they expect to. For Carreker in particular, its entire business is dependent on maintaining value-added relationships with its banking clients a relationship it will never put at risk by failing to deliver what Carretek promises its customers. 6. Performance-Based Pricing. A risk/reward approach to pricing remains a relative novelty in the offshore outsourcing business, but Carretek intends to be at the forefront of this emerging trend essentially providing for penalties for falling short on service levels and incentives to overachieve. 7. Flexible Business Models. Based on client needs and perception of risk, Carretek is prepared to be entirely flexible with respect to the structure under which it is prepared to do business plain vanilla outsourcing, build-operate-transfer, collaborative outsourcing initiatives and others not yet invented. Carretek s flexible delivery models involve a level of customization that traditional outsourcers eschew in favor of more packaged, formulaic arrangements. As a result, clients with different needs can embrace BPO at their own pace and under their own control. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 11

Carretek, The Business (continued) 8. Complete Visibility through Process Metrics Dashboard. Building on Mastek s valuable epmo, Carretek will build, customize and make available the technological tools clients need in order to have full visibility as needed into Carretek s performance of their processes, often more control and visibility than clients have with their current arrangements. 9. End-to-End Service Offering. As more fully described under The Carretek Offering, Carretek offers a full range of offshore outsourcing services, including global sourcing strategy development, BPO services, and ITO services. 10. Unique Combination. Mastek s IT and offshoring excellence combined with Carreker payments excellence and dominance in the enabling technology of image processing deliver a combination unmatched in the marketplace. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 12

Why Carretek The real benefit of India turned out to be its vast intellectual capability and the enthusiasm of its people. We found terrific scientific, engineering, and administrative talent that today serves almost every business at GE. Jack Welch JACK: Straight from the Gut Warner Business Books September 2001 Mastek Credentials Mastek s credentials for this business can be grouped into three main categories: Core business leadership. Since 1982, Mastek has been delivering high-quality offshore outsourcing services. Its distinguished client base, including American Airlines, Fidelity, Cigna, John Hancock, and Citibank, is entirely referenceable. Its equally distinguished Advisory Board includes outsourcing experts from a number of industries, with banking particularly well represented. The company employs 1,600 people, with another 1,000 people through nine alliances worldwide. It has 210,000 square feet of world-class outsourcing facilities in Mumbai (and is actively pursuing locations in other prime outsourcing countries) and T1 connectivity worldwide. In addition, the company maintains critical local presence its clients countries: US, UK, Germany, Belgium, Japan, Singapore, and Malaysia. IT leadership. A litany of firsts : The world s first IT company to be assessed at the highest level of software delivery (CMM 5) and people capabilities (P-CMM 3) by Carnegie Mellon s Software Engineering Institute, the gold standard of IT performance (capabilities maturity model). First India-based organization to build software products, to develop an ERP system, to start a software R&D center, to introduce a supply chain management system. One of the first India-based organizations to introduce RDBMS and to enter the CRM space globally. One of India s top 20 software export organizations, one of 50 organizations worldwide in Microsoft s Early Adapter Program for.net, and currently delivering one of the world s largest.net-based systems. Extraordinary turnaround performance: 92 percent in an industry where the standard is 30%. One of the few Indian IT companies to deliberately avoid bulking up on Y2k business in favor of building long-term business and relationships. A high priority for IT excellence: Mastek writes off its PCs in two years, versus an average of four years for US companies. Financial strength. In 2002, Mastek earned $7.3 million on total revenue of US$60 million. The same year, its stock saw the second highest appreciation (more than 125%) among IT stocks in India. The company has a strong balance sheet and is capable of very rapid growth, with experience in ramping up quickly and smoothly as new clients are added. Mastek made the Forbes Global List of the 200 Best Small Companies in the World in and the Deloitte Touche Tohmatsu Asia 250. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 13

Why Carretek (continued) Carreker s image processing technology is one of the chief enablers for offshore payment processing outsourcing. Carreker Credentials Carreker s credentials complement Mastek s: Client relationships. Carreker has longstanding technology and consulting client relationships with large banks and their processors around the world. Clients include 20 of the Top 20 banks in the US and about 70 of the next 100, the top four in the UK, the top seven in Australia/New Zealand, the top two in Ireland, five of the top six in Canada, and the top four in South Africa, with expansion targeted in Europe and Latin America. Other clients include Metavante, Fiserv, Viewpointe, Symcor, IBM, Cash Services Australia, and many other processors and multi-bank entities. The American Bankers Association endorses Carreker s fraud and cash technology solutions. Expertise. To the degree that the critical success factor for BPO, unlike ITO, is the provider s content expertise in the outsourced processes, Carreker s expertise in payments processing, and client recognition of that expertise, is a virtually unmatchable advantage. Among its recent consulting innovations is a proprietary Payments Cost/Benefit Model that large banks are using to model and managing their shifting paper-to-electronic payments revenue and expense. Technology footprint. Carreker has the world s largest footprint in essential bank back-office technologies: In rough estimates for our US bank market, upon full implementation, 70 percent of banks demand accounts are protected by our fraud systems, 50 percent of US check volume is archived by our image systems, 60 percent of electronic check presentment takes place through our ECP system, 40 percent of US checks are priced through our pricing system, and of the banks that have invested in automating the cash inventory management of their ATMs and branches, half use our systems. Moreover, Carreker s image processing technology is one of the chief enablers for offshore payment processing outsourcing. To Learn More If you would like to invite the Carretek team to deliver an executive presentation to you and your colleagues, contact: Wayne Franz Carretek Sales Executive wfranz@carreker.com or your Carreker relationship manager. Jay Mehaffey Carretek Business Development Manager jmehaffey@carreker.com Corporate Office 4055 Valley View Lane, Suite 1000 Dallas, Texas 75244 800.486.1981 fax 972.701.0758 www.carretek.com 2003 Carreker Corporation, All rights reserved. Carretek is a trademark of Carreker Corporation. epmo, Mastek and Majesco are trademarks of Mastek Limited. May 2003 2003 Carretek LLC Everyone s Back Office Is Someone Else s Front Office 14