© LogicaCMG 2006. All rights reserved

Arnošt Schmidt

CEE business development manager

Global Service Delivery

LogicaCMG

India Outsourcing &

LogicaCMG s sourcing model

<Business Tuesday, January 8th 2008, Arnost Schmidt>

A warm welcome from India/Bangalore

<Business Tuesday, January 8th 2008, Arnost Schmidt>

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Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2003 2004 2005 2006 2007

Q3 Q4

� Service delivery capability to offer application, infrastructure and BPO services

� Around half of our 6,000 employees are based in two facilities in India (including a disaster recovery site)

� Serving clients across Europe, APAC, US and Australia

� Business services support for internal processes in UK, NL, Germany, Portugal

Service delivery from India

UK and NL Hubs established

Service Desk

AM/AD services

BPO services

IM services

R&D Services

Managed Testing services

Formation of LogicaCMGs Global Service Delivery

Level 5Level 5

ERP services

Control Bridge made operational

<Business Tuesday, January 8th 2008, Arnost Schmidt>

What is India famous for ?

but also:

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Still a Human Resource Advantage

• 500 million+ people born after 1980

• 272 universities and nearly 14,000 colleges in India

• India produces 3million graduates, 700,000 post-graduates and 1,500 PhDs every year

• 75000 engineering graduates every year in the three southern states, 30,000 every year from Karnataka alone

• Largest Pool of educated and English speaking people in the world

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• Body shopping / Staff Augmentation

• Y2k Compliance• Maintenance and

coding projects

The First Wave

• Legacy Maintenance• Shift from onsite to offsite• Quality Assurance• Follow the Sun model

adopted• ITES such as BPO, call

centres• Moving towards products

and embedded software

The Second Wave -building on the first wave

• Domain expertise• TCO and TTM• Product Co-Development• Product Ownership• KPO• Large deals

Third Wave - growing with innovation

Offshoring – Changing service portfolio

5

<Business Tuesday, January 8th 2008, Arnost Schmidt>

Indian IT 2.0

• Indian players becoming more global

– Size and scale on par with global IT MNCs

– Focus to move up the value chain

• Push towards globalisation and pull towards offshore

• Indian companies resort to aggressive M&A strategy to acquire competencies and global footprint

– TCS / Pearl

– Wipro / Infocrossing

– Infosys / Philips

• But also:

�US/UK remain dominant markets for Indian IT

�only 10% of IT services revenue from RoW

<Business Tuesday, January 8th 2008, Arnost Schmidt>

Changing the offshore paradigm

• More and more european companies are shifting their IT services to CEE. Why ?

– Face to face contact

– Common language

• 40% of all students in CEE are learning German

• 85% of the students in Romania are learning French

– Cultural affinity / understanding

– Quality & Productivity

– Costs

�Central and Eastern Europe‘s (CEE) IT-services exports are growing 13% per year (Deutsche Bank Research)

�Indian salaries annual increase of 14.5% (Financial Times)

�Indian rate of staff attrition between 20%-25% (Financial Times)

<Business Tuesday, January 8th 2008, Arnost Schmidt>

Nearshore as an alternative for Offshore

• Nearshoring in CEE– Geographicaly close to Western Europe

– Culturally close to Western Europe

– Language capabilities (German & English, French in Romania)

– High level of education

– Macro-economical factors (level of institutional quality, less bureaucracy, political stability

• Nearshore is attractive for demanding/complex BPO

– Education o a high and brought level

– Smooth communication between the partners

Is essential in complex back-office processes

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In conclusion…

• Cost

• Proximity to client

• Time zone

• Specialist expertise

• Telecoms reliability

• Language skills

• Legislation compliance

• Nestlé S.A . has shifted their business critical Quality Assurance of code being generated in India to LogicaCMGs Czech Republic operation

• The card payment transactions and -authorisations for SHELL ‘s Europe and Asia petrol filling stations are processed by LogicaCMGs Czech Republic operation

India will remain THE offshoring hub with nearshore locations as an alternative

<Business Tuesday, January 8th 2008, Arnost Schmidt>

LogicaCMGs blended sourcing model

Complexity/Risk

High

High

Low

Low

Offshore

On-site

Customer interaction/intimacy

Onshore

Near ShoreBlended Delivery Model

Global Service Delivery Strategy

It is based on the principle of blending a global t eam with the right skills from the

right competency centres such that it provides the best value for money at minimal

risk to our clients

<Business Tuesday, January 8th 2008, Arnost Schmidt>

India‘s benefits will remain but …

– India will remain the key outsourcing (offshoring) market for English speaking countries

– India will focus on leveraged service portfolio like BPO, KPO

– CEE as a nearshore location is becoming more attractive for European companies (from continental Europe)

– Nearshore seems to be the right location for European projects with demanding processes where creative input is the key

– Language capabilities and cultural affinity are essential in the decision process

© LogicaCMG 2006. All rights reserved

Thank You

<Business Tuesday, January 8th 2008, Arnost Schmidt>

Questions ?