Virtual Trade Mission: Exploring Opportunities in India May 7, 2009

1. Virtual Trade Mission to India: Opportunities May 2009 ADVISORY

4. At the same time… sourcing is becoming increasingly global Increasing knowledge and maturity is leading to a search for newer locations. Calgary Winnipeg Boise Indianapolis Queretaro Guadalajara Curitiba Campinas Buenos Aires Santiago Port Louis Cairo Tunis Belfast Gdansk Rostov-on-Don Cluj-Napoca Lviv Sofia Zagreb Belgrade Nagpur Jaipur Ahmedabad Penang Ho Chi Minh City Davao City Iloilo City Brisbane Hangzhou Changsha Source: KPMG, Exploring Global Frontiers, February 2009

6. Other global trends in outsourcing Service providers are investing and gaining deeper BPO and ITeS capabilities in specific domain areas… looking to provide higher value Companies increasing their exploration of Tier 2 and 3 locations, particularly within mature markets such as India and Eastern Europe Both customers and providers are considering a variety of sourcing models… ranging from captive, outsourcing, hybrids, joint ventures, etc. Cost savings are essential, but “partnering” is improving business agility and increasing access to capabilities

10. Back to basics – Build a strong sourcing framework Build Deliver Service Management Governance Relationship Management Planning Transition Operations Design

11. Clearly, India leads as a sourcing hub for IT and ITeS services, across virtually all verticals Two-thirds of Fortune 500 companies already source IT/ITeS services from India Source : KPMG Analysis, various media articles Illustrative HP, Unilever Sign USD 675 Million Outsourcing Deal Friday, February 15, 2008: India’s consulting, outsourcing and technology major, HP has signed a seven-year outsourcing contract worth $675 million with Unilever. HP will now manage Unilever’s technology infrastructure in the US, Asia, Africa, Turkey and the Middle East. Through this agreement, HP will provide management of Unilever’s IT processes and services, including corporate data centres, messaging and directory services, Internet and intranet systems hosting, disaster recovery services, and the outsourcing of 4,500 multi-vendor UNIX and Windows servers and storage environments HSBC ramps up Indian outsourcing presence 24 November 2006 17:10 GMT: HSBC is expanding its offshore outsourcing operations in India with a new BPO facility in Kolkata (formerly known as Calcutta) and a software development centre in Hyderabad. HSBC already has one wholly owned BPO subsidiary - HSBC Electronic Data Centre - in Kolkata, which has 2,000 employees working on back-office operations, and is now planning to set up another centre in the same city. HSBC's general manager and country head for India, Naina Lal Kidwai, said the second BPO facility in Kolkata will employ another 2,000 staff, according to reports in India Ford plans to raise its outsourcing bill from India February 09, 2006: More good news is coming in for the Indian outsourcing industry. Ford Motor Company (FMC), world’s third largest car maker, has decided to outsource services in the field of IT, engineering and components. The move has been made to cut costs. Sources in the industry are indicating that Ford is likely to increase its purchasing power of components from the domestic market by six times. Currently, the company purchases worth $80 million. Novartis to shift 100 jobs to India November 17, 2008: New Delhi: At a time when global pharmaceutical companies such as Merck and Pfizer are trimming their workforce to beat the economic blues, Novartis, the Swiss pharmaceutical major, has decided to shift 100 jobs to India. The company plans to make Hyderabad as its back office hub for data management in clinical research and financial service segments. Though Novartis’ global recruitments shows no increase in numbers, its Hyderabad office will see an addition of at least 100 people in the coming months, said Jurgen Brokatzky-Geiger, head (human resources), Novartis Johnson & Johnson eyes partnership models in India Johnson & Johnson Pharmaceutical Research & Development LLC (J&JPRD), the fifth largest pharmaceuticals company in the world, is set to sign a number of research collaborations and in-licensing deals with major pharmaceuticals companies soon. Says Paul Stoffels, chairman, worldwide R&D pharmaceuticals group, J&J, “We want to exploit the cost effective factor of the Indian pharmaceuticals R&D sector. The availability of skilled as well as cheap services makes India the preferable R&D outsourcing hub for J&J.”

15. Moving to higher value added services Data Entry Call Centers Collections Customer Service F&A Processing Reporting Technology Help Desk Research Analytics and other services Investment Banking, Equity Research, High-end Analytics Cost Arbitrage & Labour Productivity Process Improvement Value Creation Phase 1 Phase 2 Phase 3

16. Key concerns when offshoring to India The recent terror attacks have unfortunately come in the wake of an economic decline and thus the IT-ITES industry has been affected in the short-term. Vendors, buyers and the India government are now making proactive efforts towards improved security, governance and business continuity plans. Security Threats Higher levels of attrition is a problem being faced by the IT-BPO industry in India today. However, India still has a large talent pool available even in the Tier II and Tier III cities. Attrition Labor costs are rising at approximately 10% year on year basis, however India seems to be maintaining lead to other major destinations. Indian service providers looking to Tier 2 and 3 cities to improve cost profile. Rising Costs Physical infrastructure in the country is improving… but still needs considerable investment. Connectivity of roads, airports, power availability definitely needs to be improved to sustain the growth currently seen in the country. Infrastructure

18. Contact Information Ronald Clanton Partner, KPMG Sourcing Advisory Services [email_address] (919) 664-7247 All information provided is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.