1. Software Product Companies and Globalization Opportunities
Sunnyvale Beijing Bangalore Hyderabad Pune Gurgaon
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2. R&D Globalization Council
R&D Optimization
Many companies still have significant room for growth to achieve their optimal globalization
levels
Optimal Level = 35 percent
Small
Characteristics: Multiple product lines, (Less than USD 200 Million Revenue)
significant revenues from developed markets,
and renewed focus on emerging market Optimal Level = 55 percent Medium
opportunities (Less than USD 1 Billion Revenue)
Risks: Reduced innovation capabilities across Characteristics: Monolithic product, fresh
multiple products, business continuity, time- focus on emerging markets, and significant Big
to-market, and lack of proximity to customers pressure on bottom line due to steady (More than USD 1 Billion Revenue)
growth of revenues
Risks: Productivity, quality and innovation,
lack of good understanding of product Optimal Level= 80 percent
architecture and technologies
Characteristics: VC funded, pressure to keep
burn-rate low, single product offering, sales
and marketing office in HQ, sr. executives in
remote location
ILLUSTRATIVE
Optimal Propensity to Offshore R&D (at one location)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note:
Source: Zinnov Analysis based on historic trends for the last 7 years and primary interviews with key stakeholder of MNC R&D subsidiaries 1

3. R&D Globalization Council
R&D Optimization
Our recent research shows that companies are not yet leveraging the full potential of
globalization
Global Software Product Market
USD 300-320 Billion
Total R&D Spend (15%) Others (85%)
USD 45-48 Billion USD 272-285 Billion
A B C D
Concept (8%) United States (73%) Mature Products (75%) Total In-House (95%)
USD 3.6 – 3.8 Billion USD 32.9 – 35.0 Billion USD 33.8 – 36.0 Billion USD 42.8 – 45.6 Billion
Development (37%) *Other Developed (12%) New Products (25%) Total Outsourced (5%)
USD 16.7 – 17.8 Billion USD 5.4 – 5.8 Billion USD 11.3 – 12.0 Billion USD 2.3 – 2.4 Billion
Note:
1. In-house includes offshoring to
ca ptive centers
QA/ Testing (31%) **Emerging Geo (15%) 2. Outs ourced is only to thi rd party
USD 14.0 – 14.9 Billion USD 6.8 – 7.2 Billion s ervi ce providers
Support/ Sustenance (23%) India = USD 3.8 - 4.2 Billion
USD 10.4 – 11.0 Billion China = USD 2.0 - 2.4 Billion
Note:*Western European countries and Canada; **India, China, South East Asia, Central and Eastern European Countries (Ukraine, Poland, Bul garia etc.), Russia and others
Source: Interviews with key executives (of software product companies) in the US, India, China, Ukraine and Russia; Qualitative insights from company annual reports; Zinnov Analysis 2

4. R&D Globalization Council
R&D Optimization
Increasing talent pool and stabilizing costs are making emerging countries such as India, China
and Eastern Europe attractive for growth
Organization Pyramid for MNC R&D
Growth of MNC R&D Talent Pool in India
Subsidiaries in India, 2009*
(Current and Projected) Team Structure/ Size
Engineering QA
India R&D MNC Talent
Pool (in Thousands)
1% 1%
India MNC R&D Talent
Pool Growth Rate
Senior
Level
1% 3% (8+ Yr)
6% 7%
Middle
Level
India R&D* Center Operating Cost – 13% 13% (3-8 Yr)
Relative Comparison
YOY Growth 19%
-6% -5%
14% 36% 34%
19%
Junior
Level
(0-3 Yr)
44% 42%
Note: *For all verticals including software
Source: Zinnov annual survey on R&D operations cost, 2008 3

5. R&D Globalization Council
R&D Optimization
Increase in focus and investments into global centers of industry leaders has added significant
value to their bottom and top lines
Operational Operational Strategic Global Strategic
Support Independence Independence Partnership
Company I
Centers’ Value Preposition
Company H
Company G
Company F
Company E
Company C
Company D
Company A Company B
Centers’ Capability and Initiatives
Note:
Source: Zinnov Analysis 4

6. R&D Globalization Council
SG &A Optimization
As R&D activities mature, product companies are looking at shared services globalization for
optimizing their internal operations
Globalization Adoption Curve for Technology Product Companies
HIGH
Internal IT Product
Services Development
Customer
Offshoring Rate
Support
Professional
F&A Services
Human
Sales & Inside Resources
Marketing Sales
LOW
Emerging Rapidly Growing Mature
Maturity
Note: Adoption curve is the representation of majority of the companies. Exceptions of companies which grow by acquisitions as excluded
Source: Zinnov Analysis 5

7. R&D Globalization Council
SG &A Optimization
IMS and F&A related activities are fast gaining momentum in emerging geographies (1/2)
Percentage of FTEs that can be Cost of Outsourcing IMS to a Indian
Outsourced for IMS Vendor Vs. US Vendor
IT Help Desk
End User Support 60,000
Indian Vendor
Cumulative Cost (USD ‘000)
Internal Help desk 50,000
US Vendor
40,000
AMS Minimum
Potential Savings Potential USD
30,000
27 MM
Hardware support
Mainframe Additional
Potential 20,000
Services
Servers 10,000
Network Services 0
25 40 55 70 85 100
0% 20% 40% 60% 80% Number of employees
Level-I Level-II Level-III Level-IV
• IT Help Desk • System Administration • Higher-end technical Support such as High
• Defect Break/Fix, Application Patch Mgmt
• Scheduled Tasks • OS Upgrade and Patch Roll outs Availability Clustering and Fail-over Setups
IT Desk Services • Password/ID creation/Reset • Security Administration • System performance & Capacity Planning • IT Security Compliance
• Onsite Selective Staffing
• Data backup and Recovery
• Packaged Application Implementations
Application • End User Support
• Application Migrations
Management Services • Scheduled Batch Support • OS Upgrade and Patch Roll outs • Application Monitoring
• Defect Break/Fix, Application Patch Mgmt
• Asset Management • Work/Job Scheduling • Application Management
(AMS) • Scheduled Tasks • Application Administration
• IT Audits
• IT Security Compliance
• Application Support
• Onsite Selective Staffing
• Higher-end technical Support such as High
• End-User Support • Server Management Availability Clustering and Fail-over Setups
Hardware Support • Asset Management • Work/Job Scheduling • Storage Optimization • IT Security Compliance
Services • Scheduled Tasks • Data back up and Recovery • System performance & Capacity Planning • Onsite Selective Staffing
• Incident Management • Architecture/Design
High Capability Moderate Capability Low Capability 6

8. R&D Globalization Council
SG &A Optimization
IMS and F&A related activities are fast gaining momentum in emerging geographies (2/2)
Propensity to Offshore
F&A Outsourcing to India Low High
Financial
Procure to General Closing & Treasury &
Order to Cash Planning/ Compliance
Pay Accounting Reporting Tax
Analysis
Requisition Credi t & Order Revenue, Expense Cl os e Ba nking Pl a nning and
Internal Audit
Ma teri al Ma na gement Accruals Ma na gement Opera tions Support
Purcha sing / Bi l ling/Invoice Fi xed Assets Sta tutory/GAAP Ca pi tal Planning Ba s e Cost SOX Project
Procurement Ma na gement Accounti ng Adjus tments & Al l ocation Reporting Ma na gement
Deduction/ Inventory Accounti ng and Ca s h Flow Regulatory
T&E Accounting Cons olidation
Di s pute Mgmt Accounti ng Reporting Ana l ysis Compl iance
Invoi ce Data Ca s h Appls. & Account Tri a l Balance Ri s k Bus iness/Sales Control Self
Ca pture Col l ections Reconciliation Ana l ysis Ma na gement Ana l ysis As s essment
Di s pute Reporting & Inter Company Internal
Ta x Accounting
Res olution Reconciliation Accounti ng Reporting
Pa yment Accrua l s and Financial
Portfol io Analysis Ta x Returns
Proces sing Res erves Statements Analysis
Externa l
AP Hel pdesk Journal Entries Tra ns fer Pri cing
Reporting
Account
Tra nsaction Tax
Reconciliation
Vendor
Ma na gement
Es cheatment /
1099
Increasing Order of Complexity
Note: The list is not exhaustive
Source: Primary interviews with key stakeholders among the leading F&A outsourcing service providers ; Zinnov Ananalysis 7

9. R&D Globalization Council
Cost of Service Optimization
Increase in customer awareness on GDM and competition from Indian service providers will
force companies to grow services teams in emerging locations
Revenue Structure of Leading Software Product Companies
Q1’09 Q1’08 % Change Competition
New license revenues
New License $1,513 $1,612 -6.1% continue to decrease for • Local players are growing their
most of the companies capabilities across product lines thus
License Updates and Support $2,968 $2,647 12.1% eating into products firms’ services
Oracle business
Consulting $754 $837 -9.9%
Training $78 $101 -22.8% Demands For Lower Price
On Demand $191 $174 9.8% Companies are forced to • Product customers demand lower
adopt a global delivery prices knowing the Indian vendors’
Q2’09 Q2’08 % Change price points thus forcing product firms
model for services
Symantec to adopt a global services model
Content, Subscription & Maintenance $1,209 $1,291 -6.4%
License $223 $359 -37.9%
Deal Structure Focus on Services
Q2’09 Q2’08 % Change (Illustrative) • Product firms are consciously focusing
Adobe Product $660 $841 -21.5% on services business in order increase
customer wallet share and to
Services and Support $45 $46 -2.2% smoothen revenue flows
Q2’09 Q2’08 % Change
Technology Advancement
Software License € 543 € 898 -39.5%
• Remote client application environment
Support € 1,337 € 1,099 21.7% data gathering and analysis is now
SAP
possible
Consulting € 517 € 628 -17.7% • Bulk of the application configuration
Training € 70 € 114 -38.6% and customization can now be done
remotely
Professional Services € 610 € 768 -20.6%
Mature Partner Ecosystem
H1’09 H1’08 % Change
• Indian vendors have product specific
License, Training, Professional Services, Business COEs and groups
Sage € 271 € 309 -12.3%
Forms, Hardware • Local SI capability in training resources
quickly on different hardware and
Combined Software/ Support Contracts, Maintenance software products
€ 477 € 462 3.2%  Increased Margins • Partners for providing low cost support
and Support, Transaction Revenues, Hosted Products
on routine implementation tasks
 Additional Deals
Note:
Source: Company annual reports ; Zinnov Analysis 8

10. R&D Globalization Council
Cost of Service Optimization
We are already starting to see this happen at a global level with many MNCs acquiring services
businesses
Major Acquisitions by Global Companies
MNC Acquired Company Acquisition Objective
Deal Size – 3.9 USD Billion
Dell Perot Systems Dell, which has slowly been building its services business
over the past few years, saw Perot Systems as a way to
rapidly increase its services capabilities
Deal Size – 6.4 USD Billion
Xerox ACS For Xerox, ACS offers important BPO capabilities that will
enable Xerox's growing services business to compete with
the likes of HP and Dell
Deal Size – 13.9 USD Billion
HP, with the EDS acquisition, is looking to create a services
Hewlett-Packard EDS unit that can rival that of IBM. Earlier in 2006 EDS acquired
MphasiS for USD 380 million to further expand its services
portfolio
Note:
Source: Company websites and press releases 9

11. R&D Globalization Council
Cost of Service Optimization
Technical support including premium support will be delivered out of the India center due to
proximity with both services and R&D organizations
Company A
Headcount for Technical Support
(Including Premium Support) in India • Probl em resolution support
• Support assistance
• Information s ervices Clients: Lehman
100% • Preventi on and resolution servi ces Bros, Citigroup
• Works hops
• Support account management
Talent pool for product
support on multiple Asian
& European languages is
75% available in the industry
Company B
• Gl obal s upport i nfrastructure
50%
• Proa cti ve, automated s upport
• Li fetime support Clients: GSI, KPMG
• Ecos ys tem support
• Product enhancements a nd updates
Low cost per head (CPH)
25% in India average:
Premium Support
Engineer: USD 37,000 –
USD 40,000
Company C
0%
Average Company Company Company
A B C • Mi s sion cri tical partnership Clients: British
• Cri tica l services Telecom, HSBC
Technical Support Premium Support • Proa ctive 24 s ervices
10

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