Mc Kinsey Morocco Bpo Case For Colombia Compites

Establishing Morocco as a credible French-speaking offshoring destination p g g 1. Positioning : Morocco’s approach to building globally competitive exporting industries 2. Concrete impacts on the ground : Acceleration of growth in French-Speaking Offshoring Cali, November 10th 2008

AGENDA 1. Morocco’s approach to building globally competitive exporting industries • Strong focus on Priority Sectors – as “fuel” for transversal reforms • “Flagship Projects”/Special Zones as forcing devices for fast impact on the ground • Government as a Strategic Architect (shaping, impulsion) • FDI as an accelerator and credibility tool • Discontinuity in means for a discontinuity in impacts 2. Concrete impact on the ground • Achievements t date in 3 core sectors : T i A hi t to d t i t Tourism, A t Automotive, ti BPO/Offshoring • Zoom on BPO/Offshoring : acceleration of growth and leadership in the French-speaking world 1 1

MOROCCO: THOROUGH VISION BUILD ON 4 MAIN PILLARS “Plan Azur”: The Tourism “Emergence Program” : pillar – 10 million tourists A focused industrial by 2010 policy to boost exports growth (7 sectors) • Holistic Vision (economic and social) • Prioritization taking into account country means ( (financial, managerial) • Exports as the primary economic growth engine (GDP, hard currency) Improvement of existing Human Development infrastructure and initiatives and social liberalization lib li ti investment (INDH) i t t 2 2

OVERVIEW OF THE MAJOR INITIATIVES FOR THE COUNTRY • Traditional economic pillar of the country ; leveraging the natural attributes of Morocco (proximity to Europe, climate, history, culture. etc.) “Plan Azur”: The • “Plan Azur” articulated around 5 dimensions (image, hotel capacities, Tourism pillar – 10 airline capacities, real estate development, training) million tourists by • Development of 6 new sea-side integrated resorts (~200,000 beds) 2010 1. Automotive 5. Fish processing “Emergence Program” : A 2. BPO/ Offshoring 6. Textile focused industrial 3. 3 Aeronautics 7. 7 Handicraft policy to boost exports growth 4. Agribusiness (7 sectors) • Roads & Highways : (1’000 km of highway roads, 15’000 km of Improvement of conventional roads) i l d ) existing infrastructure • Ports / « Tangiers Med »: Launch of a new international large-scale port and liberalization • Energy: new generating capacities / liberalization (PPA) • Utilities: major investments in water/sewage; new concessions of public services in largest cities • New Cities and social housing p g g programs ( (200’000 units) ) Human Development Initiatives and • INDH : National program to improve quality of life and opportunity for the poorest of the poor social investment (INDH) • But also numerous structural political and social reforms (e.g. Women rights - new civil code) 3 3

4 KEY DIMENSIONS CONSIDERED TO SHAPE MOROCCO’S Moroccan approach POSITIONING IN THE GLOBAL MARKETS Cross-cutting reforms Sector focused approach Economic policy approach • Create positive business environment • Prioritize sectors where country has (e.g., taxes, doing business, justice) competitive advantages (e.g., labor natural • Natural development of economy/ resources, geographic position) sectors (let the market do the rest ) ( • Set sector specific reforms ( g taxation) p (e.g., ) Pragmatic and actionable and incentives approach • Factoring country Widespread across nation Focus on flagship projects/Special specificities Implementation Economic Zones scope/ pace – Execution capabilities Full territorial All strategic Prioritized Pilots on Special limitations of the implementation + sectors g strategic + Economic zones country (scarcity of simultaneously sectors (impact& skills, funding feasibility) constraints) – Local industry structure/scale (mainly Owner of productive SMEs) Strategic Architect Pure Market regulator Role of assets government • Strategic shaping role • No intervention as • Strong involvement in ((frame conditions) operator or shaper • Incorporating core productive sectors • Impulsion role on key • Role focused on market leanings from other • Significant presence/ sectors / reforms Risk regulation only emerging countries ownership of companies taker of last resort economic approaches Target industry Dominant state-owned National Competitive private sector structure Champions • Government control of major companies Local private Foreign Direct in productive sectors companies + investors • Build-up of National Champions Columbia Discontinuity in results Discontinuity in means/ methods • Special delivery units (e.g., Economic Agency, Country FDI Promotion Arm) • Significant public investment (core infrastructure, training, incentives) 4 4

A COHERENT, INTEGRATED AND PRAGMATIC INDUSTRIAL PROGRAM AROUND 8 KEY SECTORS AND ~15 “FLAGSHIP PROJECTS” 1 Overa vision / rategy • Overall forward looking Portfolio definition of country all Strategy & positioning str Strategy development t Sector • Prioritization of key sectors prioritization based on natural competitive advantages 2 y Tourism Automotive ector Deep- • Development of sector-based dives" BPO / Aeronautics Agro- Offshor- business comprehensive strategies ing over a 5-10 year period “Se Fish process- Textile Handicraft 8 key ing sectors 3 Implementation 6 Touristic 2 Auto. Cities 2 BPO zones - Tangiers - Casablanca "Flagship projects” Resorts • Development and launch of projects - Kenitra - Rabat concrete "flagship projects” • Visible results within 12-18 1 Aeronautic 2 Fishing Hubs 2 Agropolis city - Agadir - Meknes months ~15 (Nouaceur) - Dakhla - Berkane flagship projects 5 5

“FLAGSHIP PROJECTS” : WINNING THE BATTLE FOR CREDIBILITY ‘’Plan Azur’’ : World-class integrated resorts • Saïdia • Mogador Tangiers • Khémis Saleh • Taghazout Saïdia • El Haouzia • Plage blanche Khémis Saleh Kenitra Gharb Dedicated BPO/Offshoring Zones Rabat Casablanca Nouacer • CasanearShore (Casablanca) El Haouzia Meknes • Technolpolis (Rabat) Fez Mogador Essaouira Taghazout Industrial outsourcing Zones Agadir • Tangier Automotive City • Kenitra Automotive City Guelmim Plage blanche g • Nouacer Aerospace City Dedicated “Agro-Centers” • Agropolis – Meknès • Agropolis - Gharb g p • Agropolis - Souss Massa Draa • Agropolis Berkane Dakhla Regional processing center – Fishing Transformation Hub • Agadir Fish hub • Dakhla Fish hub 6 6

AGENDA 1. Morocco’s approach to building globally competitive exporting industries • Strong focus on Priority Sectors – as “fuel” for transversal reforms • “Flagship Projects”/Special Zones as forcing devices for fast impact on the ground • Government as a Strategic Architect (shaping, impulsion) • FDI as an accelerator and credibility tool • Discontinuity in means for a discontinuity in impacts 2. Concrete impact on the ground • Achievements to date in 3 core sectors : Tourism, Automotive, BPO/Offshoring BPO/Off h i • Zoom on BPO/Offshoring : acceleration of growth and leadership in the French-speaking world 7 7

SYSTEMATIC APPROACH ARTICULATED AROUND 5 KEY THRUSTS detailed in following pages Key strategic exporting sectors identified In-depth sector fact-based diagnostic from the 1 Tourism standpoint of Business Operators (international and national) 2 Automotive Development of deep sector strategies (target sector-strategies 3 BPO/Offshoring niches, key strategic thrusts in all dimensions) 4 Aeronautics Development of pragmatic Sector Master plans articulating clear priorities on all key fronts 5 Agro-business 6 Fish processing Parameterization of flagship projects (location, key infrastructure, training plans, incentive schemes ) 7 Textile Development of government-led sector 8 Handicraft promotion targeting key markets & FDI partners 8 8

1 KEY THRUST FOR TOURISM STRATEGY Aspiration to become the 2nd Cote d’Azur – 10 millions tourists by 2010 – Targeting of top 3 European markets - 200 million people less than 3 hours from Morocco p p 6 resorts coming – Reposition Morocco as a preferred on-line from 2010 beach/cultural destination for European tourists and onwards (until 2015) Number of international tourists in Morocco, Very aggressive sector-wide reform agenda millions – Liberalization of air access with Europe (open 10 sky) – Favorable incentive scheme (easy/cheap 9 7,5 access to land, exemption of taxes for resort Tourism developers, improvement of financing access) 8 – Financing of training to scale-up in HR 7 Development of 6 world-class sea-side 6 resorts – Strategically located (Atlantic/Mediterranean 5 4,5 coasts) – Innovative approach to resort design 4 (integration, style) 2001 2008 2010E – Massive capacity increase ( (200,000 beds) ) Massive government-led promotion effort Strategic impulse toward world-class potential FDI partners (e.g. Kerzner International, Dubai International Properties) 9 9

2 KEY THRUST FOR AUTOMOTIVE STRATEGY Aspiration to become the industrial automotive backyard of Europe • Renault-Nissan assembly plant – Focus on 2 types of players: car-makers and coming on line equipment manufacturers • Capacity to build – Focus on countries regions with strategic 200,000 cars p.a. delocalization agendas (e.g. Southern from 2010 France, 6 Spanish regions) Automotive jobs in Morocco, Thousands Development of a Government-led Value 70 Proposition around Dedicated automotive 75 cities 60 50 50 Automotive World-class port and integrated logistics 14 km away from Europe 40 30 27 Targeted training plan and training 18 subsidies (academic, on-the-job) 20 10 Special incentive scheme including 0 industrial free zones 2001 2005 2008 2010E Government-driven promotion of Morocco’s automotive value proposition Strategic (Prime Minister) impulse – 6 Spanish regions for Tiers 1 and Tiers 2 equipment manufacturers – Direct discussion with Renault-Nissan Group CEO 10 10

3 KEY THRUST OF BPO/ OFFSHORING STRATEGY FIGURES EXCLUDE DOMESTIC MARKET Focus on natural markets for Morocco : French-speaking nearshoring – Target French speaking countries (France, Belgium) – Seek BPO activities fitting Morocco’s natural intrinsic (e.g., language, geographical/ cultural Offshoring jobs in Morocco proximity, business practices) Thousands 50% of objective Development of a Government-led Value 60 [100,000 jobs Proposition around Special BPO Zones by 2013] 52 50 BPO/ World-class infrastructure and services 40 Offshoring 32 (esp. real-estate, telecom) 30 Aggressive training plan and training 20 subsidies (academic, on-the-job) 10 10 1,5 0 Competitive incentive package and doing 2001 2005 2008 2010E business Strong promotion effort in target countries Strategic impulse led at the highest level of the Moroccan State (Prime Minister, Minister of Industry) St t (P i Mi i t Mi i t fI d t ) 11 11

POSITIONING STRATEGY – TARGETING OF KEY OFFSHORING BUSINESS/PROCESSES Geographic targeting Offshoring processes targeting • Importance of French language Main targeting criteria • Similar business practices • Geographical proximity/management high-touch • Adapted Process (simplicity, IT operability) 12 “natural” natural 3h from processes for Paris Morocco 3 industry-specific •Banking: payments processing 1 h from processes (checks) Madrid ( (banking g •Insurance: Contract Administration, claims management & insurance) •Accounting and Finance: handling of 6 functional mass accounting processes (A/R, A/P) processes •Customer care: basic voice, sales ( (Inbound & outbound)) PriorityFrench speaking countries : 1: French speaking •HR: Payroll processing, Personnel admin. • countries (France France • mainly) Belgium 3 IT-related • Help desk processes • Application development (tiers 2) • Switzerland • Application maintenance/management (legacy systems) PrioritySpain 2: Spain 12 12

MOROCCO’S OFFSHORING VALUE PROPOSITION Structural advantages St t l d t of Morocco Morocco value proposition : A clear business case for captives 9 commitments on 3 critical • Geographical, cultural dimensions • Massive reduction in costs and economic - 60-70% proximity to France Dimension 1 • Human resources pool “World Class“ at competitive costs • Strategic case and “option infrastructure and value” (defense) • Good infrastructure services Dimension 2 A decisive offshoring Competitive human p Strategy resources pool and A clear business case training subsidies for providers • Special BPO zones (real estate, telecoms) • Strong cost reduction • World-class W ld l Dimension 3 ~40% infrastructures Competitive Incentive • Targeted education plan package • Strategic case (growth) • Aggressive incentive and “option value” packages (defense) • Strong promotion effort 13 13

OVERVIEW OF THE "MOROCCO VALUE PROPOSITION" Dimension 1 O1 “World Class“ • 2 zones (CasaShore, RabatShore) specially dedicated to infrastructures Dedicated offshoring with infrastructure and services of the highest and services zones quality at competitive costs (e g rental costs at USD (e.g., 8/m 2/month) O2 Dimension 2 • A first-class telecom offer – guaranteed technical and Competitive human Outstanding commercial SLAs and costs in line with most competitive resources pool and telecom offer locations (USD 7,800/month for a 2 Mbits leased line to training subsidies France) a ce) O3 Dimension 3 • A "R d for Output" approach iincluding an offer of "Ready f O t t" h l di ff f Competitive "Ready for Output" furnished offices (e.g. ~300,000 m2 on CasaShore) and Incentive package approach 10-12 on-site "business support services” provided by international suppliers selected on a competitive basis 14 14

CASASHORE : THE LANDMARK PROJECT OF MOROCCO’S OFFSHORING STRATEGY • ~ 53 ha site • ~300,000 m2 of world-class infrastructure office space and facilities (including Telecom) Key developments: • Launch of site development in Q2 2006 • Delivery of nearly 60,000m2 by Q2 2008 (fully operational) • Upcoming 2009 45,000m2 completely sold out • Acceleration of construction due to strong demand from 40,000m2 to 50,000m2 per year 15 15

A “READY FOR OUTPUT” OFFER – HIGH QUALITY BUSINESS SERVICES PROVIDED BY INTERNATIONAL SUPPLIERS NON EXHAUSTIVE A Business services Dedicated client services s Administrative IT Recruiting Office space Business Others ( events. facilitation : operations support organization Center Travel) SPOC* support d B General services for the zone Telecoms Catering Transportat Hospitality Sports & Postal and Others (stores, ion i (Hotels) (H t l ) leisure l i financial fi i l daycare, etc.) d t ) services services C Facility Management On-site Facility Security Reception Cleaning Parkings Utilities Management desk & Help services (Power line supply) * Single Point Of Contact 16 16

RENTAL COSTS IN LINE WITH THE MOST COMPETITIVE DESTINATIONS BACK UP USD / m2 / month Chennai class C 4 Hyderabad Class C 5 Kolkata Class C 5 Bandwidth Barn 7 Delhi Class C 8 Casa Shore – class A 8 Bucarest - Gelati Region (BPO specific) Class B 9 Prague Cl P Class B - N C t l min Non Central i 9 Mumbai Class C 10 Prague Class B - City Centre min 12 Mauritius Cyber City 12 ITP min Bangalore min, 12 Budapest - Normal office min 13 Bucarest Class B min 14 Chennai Tidel Park 15 Casablanca Zénith Millénium 16 Prague Class A - Non Central min 16 Dubai - DOZ 18 Bucarest Class A min 19 Prague Class A - City Centre min g y 19 Budapest - Prime office 21 Dubai - Quality office (lower end range) 32 17 17

VERY COMPETITIVE TELECOMMUNICATION COSTS BACK UP USD, USD monthly cost of a 2 Mbits International leased line to Paris France Paris-France 15 900 13 600 11 100 8 500 7 800 Morocco’s ~ -50% objective 3 500 South of Morocco India Romania Tunisia Czech France Republic p Source: Maroc Telecom, Tarifica 18 18

OVERVIEW OF THE "MOROCCO VALUE PROPOSITION" Dimension 1 “World Class“ O4 infrastructures Large, • Large and very competitive potential HR pool, notably and services competitive Bac+2 - Bac+4 : annual production of 60–70,000 HR pool French speaking target profiles Dimension 2 Di i O5 Competitive human Voluntary • Proactive National Training Program focused on building resources pool and national key competencies around 16 profiles (Software training subsidies training Engineers, Database manager, Banking back-office program employees, Client services operators …) – with the objective to train ~20,000 to 30,000 associates between 2006 and 2009 Dimension 3 O6 Competitive Competitive • Subsidy of 100% of initial training costs and 75% of y g Incentive subsidies for continuous training costs package on-the-job • 5,000 USD subsidy per employee (average; variable by training profile) 19 19

DECISIVE NATIONAL TRAINING PROGRAM Planned training volumes by end 2009 Cumulative Specific profiles (not exhaustive) by end 2009 a Management • a1 Offshoring platforms manager (operations) 100–200 (2 profiles) a2 Project management for offshoring platforms (feasibility study, assembly ...) • managers Bac +5 5 b Engineers • b1 Software Quality Engineers sector (applications, software ...) 2,000–3,000 (2 profiles) • b2 Network and Systems Engineers sector (WAN, LAN ...) engineers c • c1 Developers (Java, C++ ...) • c2 Database manager (Oracle, Sybase ...) 3,000–4,000 Technicians • technicians Bac +2 – Bac + 4 (5 profiles) c3 Enterprise application manager (SAP ...) • c4 Network technician (router, LAN/WAN, servers ...) • c5 PC pool (hardware) and office automation manager d • d1 Accountants (French norms, IFRS ...) Qualified 10’000 –15,000 • d2 Banking back-office employees (payment managers ...) admin. staff Administrative • d3 Insurance technician (contract management claims manager ...) management, ) (5 profiles) • d4 Personnel manager (wages, social security declaration ...) • d5 Client services operators (active sales/outbound) e Bac + 2 Basic • e1 Client services operators (passive sales/inbound) ~5’000–8,000 Administrative • e2 IT help desk (level 1: office automation) operators t (2 profiles) 20,000– 30,000 20 20

OVERVIEW OF THE "MOROCCO VALUE PROPOSITION" Dimension 1 O7 “World Class“ • Individual Income Taxes (IGR) capped at 20% “flat rate” infrastructure and Aggressive for both nationals and expatriates services fiscal incentives • Total exemption of corporate tax for the first 5 years ; 50% exemption for the following 5 years • Limited import duties on hardware/software (@2.5%) • Free repatriation of profits, dividends and capital • Free operation of foreign currency accounts Dimension 2 Di i Competitive human O8 resources pool and • Single window clearances on the zone (CasaShore) training subsidies "Lighter" • Total flexibility of the new labor code (e.g., clear and administration simple rules for hiring/firing) Dimension 3 Competitive Incentive O9 • Additional and specific incentives on top of Morocco’s package “First Movers Offshoring Value Proposition for first movers with premium" clear commitments in the BPO arena (activity levels, e p oy e t) employment) 21 21

INCENTIVES : AMBITION TO POSITION MOROCCO IN THE FIRST TIERS OF MOST ATTRACTIVE COUNTRIES Former position of Morocco Current Morocco Offer First tier countries in terms of aggressiveness of offer Description Increasing aggressiveness Most aggressive countries 1 Income taxes (national employees) 2 Income taxes (expatriates) 3 Corporate tax 4 Custom duties 5 Training subsidies 6 Set-up subsidies 7 Lay-off costs 22 Source: Analyses McKinsey 22

STRONG PUBLIC INVESTMENT FOR CASANEARSHORE ZONE WITH ALMOST USD 250 MILLION HIGH LEVEL ESTIMATES USD million Subsidies for trainings and fiscal calculated for a 5 7 years period million, 5-7 250 50 0 Indirect subsidies – 140 National training program* 40 Direct subsidies – On-the-job training 100 60 Infrastructure I f t t Training T i i Fiscal Fi l Total T t l costt Subsidies Subsidies Subsidies of incentives (Land Access) * Pre-recruiting 23 23

STRONG INITIAL IMPULSE FORWARD BY ACTIVE ON-GOING PROMOTION On-going Initial impulse promotion Objective: • Create political goodwill in France around • Prove the strategic relevance of Morocco Morocco’s offshoring value p p g proposition as the destination of choice for French- speaking offshoring Audience: • Targeting of CEOs of Top 30 French global • Targeting of CIO/COO of Top 100 companies (across all sectors) companies as to discuss concrete • French government officials through offshoring opportunities in Morocco institutional cooperation bodies (building on success-stories) Mechanism: • High-profile road shows as the primary • Yearly event in Paris (“Maroc Offshore”) marketing tool at 3 levels with presence of key officials of both – Direct promotion in France at the highest countries level of the state (Prime Ministers) – Potential clients – Offshoring suppliers operating in Morocco – Activation of GIEFM (Moroccan-French (success stories) Economic Impulsion Group) • Continuous support of the Moroccan State – Official presentation of Moroccan value (Moroccan secretary of state for trade and proposition by officials industry) 24 24

IN LESS THAN 2 YEARS MOROCCO’S OFFER ATTRACTED MAJOR PLAYERS, MAINLY IN IT OUTSOURCING Almost 20 out of 50 first IT providers operating in Major French captives installed in Morocco – France installed in Morocco mainly banks and insurances 25 25

CASABLANCA ALREADY THE FRENCH-SPEAKING NEARSHORE DESTINATION OF CHOICE GLOBAL FRENCH FINANCIAL INSTITUTION Distance from head office Onshore Nearshore Offshore Casablanca in the Strong Hyderabad top 5 (out of 37) of ion New Delhi potential offshore Attractivenes of destinati S Casablanca Mumbai destinations Darlan analyzed (at par DublinLondon Shanghai Amsterdam Prague Sofia with Indian cities) Rotterdam Guangzhou Kuala Lumpur Swindon ss Brussels Budapest Manila Milan Florence Bucharest B h t Peterborough Luxembourg Barcelona Weak Madrid Lille Warsaw Nantes Leipzig Kiev Zurich Geneva Frankfurt Nuremburg Moscow Best • London • Hyderabad, India location • Casablanca • Dublin • New Delhi, India 26 Source:McKinsey 26

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Mc Kinsey Morocco Bpo Case For Colombia Compites

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