Maximizing Value by Innovating Managed Services Time Warner Ashish Malhotra VP, Global IT Workforce Management Neo Group Atul Vashistha Chairman sig.org/eval
Maximizing Value by
Innovating Managed Services
Time Warner
Ashish MalhotraVP, Global IT Workforce Management
Neo Group
Atul VashisthaChairman
sig.org/eval
A presentation by Time Warner and Neo Group
MAXIMIZING VALUE BY INNOVATING
MANAGED SERVICES
ASHISH MALHOTRA, TIME WARNER
ATUL VASHISTHA, NEO GROUP
SIG GLOBAL SUMMIT 2016
Carlsbad, CA
3
4
© 2016 Neo Group Inc. Proprietary
• Globalization Strategy
• Sourcing
• Location strategy
• Health Checks
• Renegotiations
• Governance
Since 1999, we have been helping clients
accelerate benefits and minimize risks associated
with global in-house services and sourcing
We have a Singular focus on the global services
and sourcing supply chain
We achieve outcomes through deep IP, real-time
analytics, globally recognized experts, proven
methodologies and co-creation with our clients
NEO GROUP OVERVIEW
We deliver results through three distinct and linked solutions and services:
ADVISORY SERVICESGOVERNANCE
SOLUTIONS
• Design
• Run and support
• Ongoing Governance
Services, such as, Resource,
Contract and Performance
Management Services
SUPPLY WISDOM
• Country
• City
• Supplier
• Outsourced Service Desk
• Monitoring Subscription
Services
© 2016 Neo Group Inc. Proprietary
How do we balance between staff-augmentation, managed capacity and
managed services?
How do we ensure what is right for managed services?
How do we manage risks of sourcing in a managed services model?
How do we minimize the liabilities - contractual staff and with suppliers?
How do we ensure performance and relationship alignment with suppliers?
AGENDA5
BASIC
Functional & Technical Expertise
Project Team Task Management
Process & Methodology Compliance
Project Issues Management
Manage Project Inputs
STRATEGIC
Soft Skills + Global View
Stakeholder Influence
Strategic Alignment (Quality + Value Delivery)
Managing Risks in Delivering Value
Own Program / Project Outcomes
6
Types of Engagement
Delivery Models
WHYshould a BuyerManager usethis model
WHAT is the
Buyer really purchasing
WHO is responsible for managing
the team
WHEN does the
engagement end
WHERE are the team
members located
HOWis the
engagement being paid for
StaffAugmentation
Unstructuredbody of work
Able to manageindividual resources
Willing to endureall risks
People
Brains bythe hour
Buyer Manager When the Buyer Manager no longer requires the skill
The Buyer Manager decides the location of the team members
Time & Materials
Billable hours based on Individual ratesand skills
Capacity Ongoing, highlyrepeatable work
Able to manage a process/factory
Willing to share riskwith a provider
A set ofrelated skills
Production capacity
Combined Buyer, Manager, and 3rd-Party Provider Manager
When the workactivity has been shifted to another set of resources (internal or external)
The Buyer Manager and Provider Manager agree on the location of the team members
Pre-established block of work hours
Blended rates
FixedDeliverable
Defined beginningand defined end
Able to manage toa workplan
Willing to share riskwith a provider
Deliverables 3rd-Party Provider When the deliverable is completed
The Provider Manager decides on the locationof the team members
Firm Fixed Fee
Based on reaching milestones
ManagedService
Ongoing engagementwith specific outcomes
Able to managecompliance to SLAs
Willing to sharerisk with a provider
Outcomes
Performance
3rd-Party Provider When the work activity has been shifted to another set of resources (internal or external)
The Provider Manager decides on the location of the team members
Monthly FixedFee
Based on performance
TYPES OF OPERATING MODELS
© 2016 Neo Group Inc. Proprietary
• What portion of your outsourcing Managed Services?
• What portion do you expect it to be by 2020?
POLL7
8
While it is important to understand and manage all of the components of a sourced engagement, there are a select set of management activities that require a considerable level of focus, on an on-going basis, in order to ensure the success of the engagement.
CRITICAL SUCCESS FACTORS
Management Activities
StaffAugmentation
CapacityFixed
DeliverableManaged
Service
Activities In Scope
Activities Not In Scope
List of Deliverables
Acceptance Criteria
List of Responsibilities
Assumptions and Dependencies
Risks and Mitigation Plans
Communication and Escalation
Change Control
Pricing and Invoicing Schedule
Knowledge Transfer/Transition
Governance and Reporting
Service Level Agreements & Credits
Productivity Improvements
Quality Improvements
Warranties
Critical Success Factors (CSFs) must be closely managed to ensure the opportunity successful engagement
The selection of one operating model over another will be primarily driven by the Manager’s desire to manageand control the outcome of the engagement, coupled with the need to assume responsibility for managing inherent risks.
CHOOSING THE APPROPRIATE OPERATING MODELS
9
The Buyer Manager can significantly reduce their risk by engaging Third-Party Providers
to provide Fixed Deliverables or Managed Services whenever possible.
LowL MediumM HighH
Outsourcing
Operating
Models
Example
Engagements
Level of
Perceived Control
Level of
Endured Risk
Buyer 3rd Party Buyer 3rd Party
Staff
Augmentation
• Oracle Database Analyst
• Java Application Architect
• Business Analyst
H L H L
Capacity
• Testing Centers of Excellence
• Virtual bench of common
or repeatable skillM M M M
Fixed
Deliverable
• Requirements Analysis Phase
• Application Construction Phase
• Full life-cycle App. Development
M M L H
Managed
Service
• Legacy Application Maintenance
• Infrastructure Maintenance
• Remote Server Monitoring
M M L H
R Responsible for completing that step in the process
A Accountable for ensuring that the step is completed
C Consulted prior to the completion of the step
I Informed of the results once the step is completed
10
The responsibilities for each engagement activity can be best portrayed in a responsibility assignment matrix, often referred to as a RACI chart. Based on the selected type of sourcing engagement, certain responsibilities will shift from Buyer to the Provider.
ROLES AND RESPONSIBILITIES
STAFF
AUGMENTATION
Buyer Roles Provider Roles
Pro
j. M
gr.
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Plan Project R,A C,I
Analyze Req. C,I R,A
Design Software I C,I R,A I
Build software I C C,A I R
Test Software I C,I R,A
FIXED
DELIVERABLES
Buyer Roles Provider Roles
Pro
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ter
Plan Project R,A C R,I
Analyze Req. I A,C I R
Design Software I A,C I C R I
Build software I A,C I C R I
Test Software I A,C I C R
CAPACITY
Buyer Roles Provider Roles
Pro
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ter
Pro
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Plan Project R,A C,I C,I
Analyze Req. C,I R,A
Design Software I C,I R,A I
Build software I C.I A,C I R I
Test Software I A,C I C R
MANAGED
SERVICES
Buyer Roles Provider Roles
Pro
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ter
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Plan Project A,C R,A C,I
Analyze Req. A,I C,I R
Design Software A,I I C,I R I
Build software A,I I C C I
Test Software A,I I C,I R
STAFF
AUGMENTATION
Buyer Roles Provider Roles
Pro
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Tes
ter
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ter
Plan Project R,A
Analyze Req. R,A
Design Software R,A
Build software A R
Test Software R,A
FIXED
DELIVERABLES
Buyer Roles Provider Roles
Pro
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Ana
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Plan Project A R
Analyze Req. A R
Design Software A R
Build software A R
Test Software A R
CAPACITY
Buyer Roles Provider Roles
Pro
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Plan Project R,A
Analyze Req. R,A
Design Software R,A
Build software A R
Test Software A R
MANAGED
SERVICES
Buyer Roles Provider Roles
Pro
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gr.
Ana
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Arc
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Plan Project A R
Analyze Req. A R
Design Software A R
Build software A R
Test Software A R
11
The (SOW) defines the specific components of a sourced engagement, with each requiring differing levels of detail, based on the type of engagement model that is selected. (e.g., Staff Augmentation, Capacity, Fixed Deliverable, Managed Service, or Hybrid)
THE STATEMENT OF WORK (SOW)
SOW Components
Staff
AugmentationCapacity
Fixed
Deliverable
Managed
Service
Activities In Scope L M VH H
Activities Not In Scope – M VH H
List of Deliverables – L H H
Acceptance Criteria – L VH H
List of Responsibilities L L H H
Assumptions and Dependencies – M H H
Risks and Mitigation Plans – M H H
Communication and Escalation L M H H
Change Control – L VH VH
Pricing and Invoicing Schedule L L VH H
Knowledge Transfer/Transition – L M H
Governance and Reporting L M H H
SLAs & Credits L M H VH
Productivity Improvements – H L H
Quality Improvements – H L H
Warranties – M H VH
Completion of all SOW sections
is important but there is a key
set of components that must be
well thought out to ensure the
greatest opportunity for
success. If these components
are not fully understood prior
to engagement initiation, the
result is likely to be
mismanaged expectations
between Buyer management and
the Provider.
L Low M Medium
H High VH Very High
12
OUTCOMES VS. TASKS
Clients Manage
The focus and activities of internal staff differ when managing outcomes vs. tasks.
Outcomes
Requirements
Communication
Performance
Results
Relationships
Expectations
Manage the Result
Service Level Agreements
Knowledge Management
Provider Governance
Program Reporting
Steering Committee
Escalation Process
Critical Success Factors
Tasks
Scope
Time
Resources
Activities
Process
Deliverables
Manage the Work
People
Talent Management
Domain Expertise
Project Management
Facilities
Quality Assurance
© 2016 Neo Group Inc. Proprietary
FOCUS WILL BE ON MANAGING PERFORMANCE13
“Not everything that counts can be counted, and
not everything that can be counted, counts.”
- Albert Einstein
Any managed services model is based on expected results / outcomes –
achieved through adoption of leading practices and embraced by stakeholders
and followed with the right spirit and rigor
Effective measures to monitor and deliver on the service levels (expected
outcomes) is critical to the adoption of managed services - adoption is typically
slower than expected across organizations
Continuous improvements is an on-going process – maturity is reached over a
period of sustained efforts
Monitor and measure performance indicators that “actually” impact the
business when service levels aren’t met
© 2016 Neo Group Inc. Proprietary
DEFINE CONSISTENT & EXTENSIVE SERVICE LEVELS14
It is important to follow a consistent service level framework
Used In-house
New Created
In-house
Supplier Provided
Business Provided
Co-Developed
SOURCES
Impact
- What affects the business
Peer Shared
EVALUATE & DEFINE
CRITICAL
SERVICE LEVELS (CSL)
Leading & Lagging Indicators
CRITICAL DELIVERABLES
REPORTING
SERVICE LEVELS (RSL)
MONITOR –
“What Really Matters”
Influence
– Will it have an influencing
effect on the outcomes
– Will it manage stakeholders
expectations
Measurable
– Can it be measured
objectively
Relationship
- Will the measures contribute to
knowledge sharing and on-going
improvements
© 2016 Neo Group Inc. Proprietary
METRICS IMPACT SIGNIFICANTLY – UNDERSTAND RATIONALE15
Notes
RationaleProcess Frequency
SLA Monitoring
SLA Analysis and reporting
Calculate & monitor utilization
Calculate Performance Credit, Earn-back
Validate RCA and track progress
Validate Performance Credit, Earn-back
Manage Continuous Improvement (SLAs)
Review service level applicability
Publish Business/IT Availability Index
Review
Financial Impact
Control
Capacity Estimation/Productivity
Operational Excellence
Financial Impact
Continuous Improvement
Business Continuity
Redefining SLAs
Hiring Fulfillment / Metrics Business Continuity
Daily / Weekly
Monthly
Daily
Yearly
Yearly
Ongoing
Ongoing
Quarterly
Monthly
Monthly
Client Provider
Monitor critical deliverables CSATYearly
Engagement Operational Health - check Ops and Relationship ImprovementsQuarterly
Cultural Integration – One-Team-Team Operational ExcellenceOn-Going
Project Reporting ControlMonthly
Contractual Compliance Audits CSAT Legal ComplianceYearly
16
GOVERNANCE REPORTS AND TREND ANALYSIS
Governance reports should include a select set of lagging indicators, in the form of SLAs, and an even smaller set of leading indicators, in the form of KPIs.
Selection of SLAs and KPIs
The value of choosing the right KPIs
The Provider is meeting the SLAs, but the engagement is failing
The governance reports should contain 4 to 6 SLAs, and 1or 2 KPIs, that are felt to be the most important factors tothe business. These 5 to 8 items will form the basis of meaningful ‘heads-up’ metrics on the Manager’s dashboard.
Even though a Provider is meeting their contractual obligations, the KPIs may indicate a downward trend in the performance of the business which should warrant action.
If the correct measures have been used in the governance report, and the KPIs are truly leading indicators, then critical issues can be dealt with proactively versus managing failed actions or results.
The selected SLAs and KPIs may change over the life of the engagement, based on the changingneeds of the business and the area of engagement that require management focus.
17
Consider implementing a robust governance model with simple interfaces that increase delivery options and efficiency.
Function
Impact:
Cost ––– Risk Key Success Factors
1Service
Management
• Proactive vendor management (VMO)• Detailed metrics and KPIs• Process automation with multi-vendor
control capability• Effective problem management
2 PMO
• Understand demand impact on invoice• Clear projection by categories• Actively manage risks and issues• Run projects to audit ready methodology
3 Build
• Demand process clarity• Change mgt. controls• Predictable releases• Clear resource levels (e.g. shared roles)
4 Operate
• Efficient “one & done” metrics• Proactive management• Problem management remediation• Automation aligned with delivery
5 Strategy
• Clear priorities for Cost, Risk, and Quality• Enterprise reference architecture• Defined application objectives• Close alignment with business operation
6 Governance
• Maintain compliance with standard technology and processes
• Oversight to achieve standardization• Manage issues based on strategic priorities
H
M
M
H
H
M
H
H
L
H
M
M
PMO Build Operate
Strategy
Service Management
Governance
To
wer
s
Tactical Strategic
Less
More
Balanced and
efficient sourcing
based upon:
• Service clarity
• Standardprocedures
• Stable processes
• Simple interfaces
• Measures andcontrols
Flexible
Workforce
Line of Business
1
2 3 4
5
6
Contractors Employees
Vendors Partners
ROBUST APPROACH TO GOVERNANCE
18
AVOID COMMON PITFALLS
Lack of buy-in from demand managers negatively impacts
the provider’s ability to deliver and may negate SLAs put in place for the outcome
Ensure that internal staff is informed about the managed service model and strategy.
Train managers for their new roles and responsibilities in a managed service operating mode.
Make sure provider is qualified to deliver a
managed service
Providers that are unprepared for managed outcome models rarely deliver the product on time or within the budget allocated. New negotiation ensues related to change order and overtime.
Understand providers capabilities and examples ofhow previous engagements were delivered during selection process.
Beware the T&Mengagement masquerading
as Managed Service
Set the right expectation up front and in contracts. Often, the client thinks they are contracted for managed service and the provider thinks the client is ultimately responsible for the outcome.
Similarly, a client may sign up for managed service but consume on a staff augmentation model, which may also lead to unexpected outcomes.
Understand the level of knowledge transfer effort
required
If you do not devote enough time to this, there is no way a provider can deliver the desired outcome.
© 2016 Neo Group Inc. Proprietary
ENSURE GOVERNANCE IS ALIGNED TO GOALS19
Strategic Governance
Functional Governance
Project Governance
Coordination, communication & control between
process owners
Provide for knowledge management
Opportunity Identification & enable demand
aggregation
Cross-functional, cross-geography, cross-vendor
alignment
Manage global sourcing activities and
contracts
Manage vendor relationships, performance
and resources
Manage scope and integration
Reporting
Align business strategy & global services
initiatives
Guide execution of enterprise wide global
sourcing initiatives
Ensure adequate risk mitigation and controls
Program sponsorship
© 2016 Neo Group Inc. Proprietary
MANAGE THE RELATIONSHIP20
Client of Choice initiatives
RACI
Tracking issues to closure
Communications strategy & management
Meetings and visits (meeting cadence)
CSAT
Employee recognition programs
One Team
New opportunities
Relationship feedback
CORE TEAM /
GMO
Financial
Management
Performance
Management
Contract
Management
Relationship
Management
Resource
Management
HR
Fin
an
ce
Pro
cure
ment
Corporate Services
Leg
al
Security
Glo
bal A
ud
it
GOVERNANCE – RELATIONSHIP MANAGEMENT
FOCUS
Level 4
Level 3
Level 2
Level 1
Continuous Low Performance / SLA ratings
Unresolved Client / Provider difficulties
Issues impacting MSA / SOW
Issues Unresolved at Level 3
Falling Performance / SLA ratings
Non- Action on Action Item (ATRs) / Recurring Issues
Issues Unresolved at Level 2
Fall in Performance / SLA ratings
Unresolved Task Request Prioritization
Work Load Adjustments
Quality / Productivity / Other issues not
resolved at Level 1
Project Issues
Process Deviations / Non-
Compliance
Task Request Prioritization
First Level for Quality/
Production Issues
ParticipantsEscalation Categories
CIO, GMO,
Procurement,
HR, Finance,
Legal
Pillar Head,
Project Manager,
Resource
Manager
Project Manager,
Resource
Manager
Project Teams
CEO, SBU Head,
Delivery Head
SBU Head,
Delivery Head,
Program
Manager
Program
Manager /
Offshore Delivery
Manager
Project Teams
Client Provider
The key steps in the dispute resolution mechanism is to conduct periodic reviews of all project issues. The periodic reviews largely help in
resolving the disputes at an early stage.
ESCALATION PYRAMID
Urgency Impact Prioritization Example Timeline
High High High
Continuous Low Performance / SLA ratings
Unresolved Client / Provider difficulties
Issues impacting MSA / SOW
Issues majorly impacting business
90% in 6hrs &
100% in 12hrs
Low High Medium
Falling Performance / SLA ratings
Non- Action on Action Item (ATRs)
Recurring Issues on Quality / Productivity
Unresolved Task Request Prioritization
Work load adjustment issues
Issues impacting business
New resourcing issue
Reporting validation issue
80% in 12hrs &
100% in 24hrs
High Low Medium
Low Low Low
Project Issues
Process deviations / non-compliance
Task request prioritization issues
75% in 24hrs &
100% in 48hrs
ENGAGEMENT ISSUES PRIORITIZATION
CSAT Framework
New Sourcing Opportunities
Requirement Fulfillment
Solution Design & Delivery
PersonnelCommercial
Interface
Performance & Reporting
Relationship Management
CUSTOMER SATISFACTION
© 2016 Neo Group Inc. Proprietary
FOCUS ON PERFORMANCE & VALUE21
Service Levels / Performance Metrics monitoring & reporting
Analyze trends in service areas (Service Levels)
Schedule Management - Reorganize work processes to include offshore teams
Offshore workflow / workload management – monitoring & validating time-sheets & utilization
Review workload distribution across resources
Recommend productivity enhancements
Monitor continuous performance improvement efforts
Perform monthly operations reviews
CORE TEAM /
GMO
Financial
Management
Performance
Management
Contract
Management
Relationship
Management
Resource
Management
HR
Fin
an
ce
Pro
cure
ment
Corporate Services
Leg
al
Security
Glo
bal A
ud
it
FOCUS ON PERFORMANCE / OUTCOMES
GOVERNANCE - REPORTING
Pillar Heads
Resource
Manager
Project
Manager
CIO /
Provider
Stakeholders
GMO
Reporting Flow
Reports copied to GMO and Feedback Loop
Validated Reports Consolidated Reports
Variances Reports. Continuous Improvements
Feedback / Action Items
Notes
RationaleProcess Frequency
SLA Monitoring
SLA Analysis and reporting
Calculate & monitor utilization
Calculate Performance Credit, Earn-back
Validate RCA and track progress
Validate Performance Credit, Earn-back
Manage Continuous Improvement (SLAs)
Review service level applicability
Publish Business/IT Availability Index
Review
Financial Impact
Control
Capacity Estimation/Productivity
Operational Excellence
Financial Impact
Continuous Improvement
Business Continuity
Redefining SLAs
Hiring Fulfillment / Metrics Business Continuity
Daily / Weekly
Monthly
Daily
Yearly
Yearly
Ongoing
Ongoing
Quarterly
Monthly
Monthly
Client Provider
Monitor critical deliverables CSATYearly
Engagement Operational Health - check Ops and Relationship ImprovementsQuarterly
Cultural Integration – One-Team-Team Operational ExcellenceOn-Going
Project Reporting ControlMonthly
Contractual Compliance Audits CSAT Legal ComplianceYearly
GOVERNANCE – QUALITY IMPACT BEYOND PROJECTS
Share Point Folder Management Structure
Syntel Engagement
Governance
Owner: GMO Relationship
Manager
Financial Management
Owner: IT Admin / Finance
Performance Management
Owner: Project Managers &
Resource Managers
Contract Management
Owner: GMO Relationship
Manager
Relationship Management
Owner: GMO Relationship
Manager
Resource Management
Owner: Resource Managers
Invoicing Process
Documentation
Monthly Invoices
with Time Sheets
– as a listing
SL Validation &
Reporting Process
Weekly / Monthly
Reports
Quarterly / Annual
Reports
Service Credit
Computation
Model
Operational Issue
Log – as a listing
Change Request
Process
Change Request
Approval Forms
Change Request
Log – as a listing
MSA / SoW
Key Contractual
Terms – Ready
Reckoner
Resource
Selection Process
On-boarding / Off-
boarding Process
Resource Tracker
– as a listing
Requirements
Form / JD
Issue Resolution /
Escalation
Process
Engagement Issue
Log – as a listing
Governance
Documentation
- Structure
- RACI
CSATMonthly Payout –
as a listing
Service Credits
Adjustments – as
a listing
Overall
Performance
Dashboard
Knowledge / Research
Owner: GMO
Industry Best
Practices
Knowledge
Artifacts
Reference
Documents
All documents to be uploaded / archived in
Share Point within 48 hours of finalization /
publication
GOVERNANCE – KNOWLEDGE MANAGEMENT
22
Sourcing has evolved from a tactical labor arbitrage model that started in the manufacturing sector, to a much broader strategic model. As Providers mature by commercializing their services, they have begun to provide more value-based offerings that are being leveraged by companies for business transformation.
TRANSFORMATIONAL OPPORTUNITIES
Service capabilities grow as cost per transaction declines
• Control reactive operations by systematically addressing complexity drivers, while improving service delivery processes
• Service demand and capacity improvements result from changes designedto control volume while increasing response speed
• Transformed enterprise environment produces a service delivery continuumwhile simultaneously improving cost basis and service quality
Asserting a new service continuum
• Operational Efficiencies: establishes service control based on transformed services
• Optimization: iterative transformation addresses complexity and value potential increases as services improve
• Service Excellence: predictable quality results from process improvement,team knowledge, and tool enhancement
• Measurable Results: business benefits that optimize bottom line andimprove responsiveness
TransformingSustaining Value
CBI IT
Infrastructure
Service Portfolio
ServiceCapabilities
Operational Processes
Virtualize Standardize Rationalize
Process
ResourceIndependence
Continuous Improvement
• SourcingOptionality
• ResilientProcesses
• IncreasedThroughput
• EconomicTransparency
• Reduced“Run” Risk
Scalable Demand Response
Predictable Service Quality
Capability Asymptote: marksservice constraint without transformation investment
Chaotic Reactive Stable Proactive1 2 3 4 5
Predictive
C1
C2
Traditional IT
Outsourcing
Limited benefits:cost reduction fueledby labor arbitrage
TransformationOutsourcingPotential
New service continuumwhere costs decline asservice increases Transform
Cost based ontechnical complexityand process
© 2016 Neo Group Inc. Proprietary
THANK YOU23
NEO GROUP
GLOBAL HEADQUARTERS6200 Stoneridge Mall Road, 3rd Floor
Pleasanton, CA 94588, USA
ASIA-PACIFIC HEADQUARTERSNo 13, 1st Floor, C Block,
Embassy Heights, Magrath Road,
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AMSTERDAM, NETHERLANDS
AUSTIN, TEXAS
BOGOTA, COLOMBIA
LONDON, UK
NEW YORK, USA
ATLANTA, USA
SAO PAOLO, BRAZIL
SILICON VALLEY, USA
SYDNEY, AUSTRALIA
ATUL VASHISTHAChairman, Neo Group
978.707.9769
ASHISH MALHOTRAVP, Workforce Management, Time Warner
www.neogroup.com
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ATUL VASHISTHAChairman, Neo Group
978.707.9769
ASHISH MALHOTRAVP, Workforce Management, Time Warner