A presentation in Supply Chain Young Talent Road Show 2012 in Ho Chi Minh City, Vietnam Presenter: Mr. Hieu Le, Senior Manager, CBRE

1. Software, IT and BPO
Industrial Real Estate Perspective
Presented by:
Hieu Le, Senior Manager, Industrial & Logistics Services
September 20th, 2012
CBRE | Market View | Sept 2012

2. AGENDA
OPPORTUNITIES
WHO / WHERE / WHY
TRENDS
DRIVING FACTORS
Q&A
CBRE | Market View | Sept 2012

3. CONCENTRATION MAP
Industrial Park – Export Processing Zone - Hi Tech Park – Economic Zone
CBRE | Market View | Sept 2012
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4. BPO – IT OUTSOURCING
Opportunity
Migration of business functions occur for numerous reasons;
increased confidence in pairing high value operations with
domestic labor is high among numerous industry sectors
Sample Business Functions Right-Shoring Rationale
• Accounting • Better utilization of labor
• Human Resources • Lower labor costs and
• Administration (e.g. labor availability
Payroll) • Favorable tax rates and
• Information tax incentives
Technology • Cultural affinity to base
• Customer Support company
(e.g. Call Centers) • Quality of training and
• Product Development education
• Research and • Strong government
Development support
• Production • Stable business /
• Marketing political environment
CBRE | Market View | Sept 2012
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5. BPO – IT OUTSOURCING
Opportunity
Onshore Nearshore Offshore
CBRE | Market View | Sept 2012
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6. BPO – IT OUTSOURCING
Market Share
CBRE | Market View | Sept 2012
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7. BPO – IT Outsourcing
Velocity and Volume
Growing
CBRE | Market View | Sept 2012
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Growing fast Origin of the biz

8. BPO – IT OUTSOURCING
Ranking
A.T.Kearney Top 20 countries in 2011 • Government support /
financial incentives / grants
play important factor in
creating a conducive
environment.
• Labor market and language
skill drive location decision
• Salary costs once the primary
driving factor behind offshore
location decisions;
increasingly this is balanced
with skill set and language
availability
• Asia dominates the top 10
positions on the GSLI. The
different strengths of these
countries vary from India,
with a deep and broad skill
base, to Vietnam, which
ranks as the most financially
competitive country in the
Index.
CBRE | Market View | Sept 2012
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9. BPO – IT OUTSOURCING
Ranking
Hochiminh City ranks 17 and Hanoi ranks 21 in
Tholons ‘s report on top 100 global outsourcing cities
Source: Vietnam ICT Outlook 2012
CBRE | Market View | Sept 2012
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10. BPO – IT OUTSOURCING
Ranking – Financial attractiveness
Source: A.T. Kearney Global Services Location Index, 2011
CBRE | Market View | Sept 2012
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11. BPO – IT OUTSOURCING
Ranking – People skill & availability
Source: A.T. Kearney Global Services Location Index, 2011
CBRE | Market View | Sept 2012
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12. BPO – IT OUTSOURCING
Sectors – Financial and Insurance
Key Drivers Key Functions being outsourced
Cost minimization to remain competitive Data Management
Cheaper cost of capital Financial Modeling & Analysis
Efficient management of data Human Resources
The need to increase productivity (e.g. Risk
work can be performed across time-zones) Legal
Closer integration with targeted markets
Results
Cost effectiveness
Centralization of function
Right labor pool and availability
Lower attrition rate
Diminished portfolio exposure
CBRE | Market View | Sept 2012
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13. BPO – IT OUTSOURCING
Sectors – IT and High Tech
Key Drivers Key Functions being outsourced
Cutting costs to remain competitive Human Resources
Risk management Research & Development
Management of talent Support Centers
Hyper-competition Training Facilities
Results
Improved focus on core operations
Support business growth
Economies of scale
Right labor pool and availability
Improved financial flexibility
CBRE | Market View | Sept 2012
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14. BPO – IT OUTSOURCING
Sectors – IT and High Tech – Vietnam
BPO Digital
Outsourcing Content
Data
Services
Software
Telecom
Spill over effects: BPO and IT Outsourcing projects, especially
from financial and insurance sectors, create demand for data
CBRE | Market View | Sept 2012
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center owners and builders and other related industries.

15. BPO – IT OUTSOURCING
Implications – FDI Inflow
Makati Quezon City Eastwood City
Taguig City
(Bonifacio Global City &
McKinley Hill)
CBRE | Market View | Sept 2012
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16. BPO – IT OUTSOURCING
Implications – Jobs Creation
Forecasts
CBRE | Market View | Sept 2012
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17. WHO / WHY / WHERE
Capgemini, from Europe to Vietnam
•Now moving to Vietnam to:
- Gain from low cost labor supply
- Gain from attractive offers from government
• (2009) India – 19,000 people as of June 2009
• (2011) Hochiminh – Phase 1: 150 staff, IT & BPO outsourcing
CBRE | Market View | Sept 2012
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18. WHO / WHY / WHERE
Hewlett Packard, from US to Vietnam
•Now moving to Quang Trung Software City in
Hochiminh City, Vietnam to
- Gain from low cost labor supply
- Gain from attractive offers from government
• Two R&D centers in China and India
• (2010) Hochiminh – investment cap: $US18 million, 1,000 people,
testing & global services
CBRE | Market View | Sept 2012
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19. WHO / WHY / WHERE
Rockwell Automation, from US to Vietnam
•Now moving to Saigon Hi-Tech Park in
Hochiminh City, Vietnam to
• - Capture opportunities for automation software
- Gain from attractive offers from government
• 15 centers in Asia. Strong in China & Singapore
• (2012) Hochiminh – 50 people, software & global services
CBRE | Market View | Sept 2012
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20. WHO / WHY / WHERE
Aricent, from US to Vietnam
•Now moving to Tan Thuan EPZ in Hochiminh
City, Vietnam to
- Tap on skilled labor with language competency
- High growth on telecoms & network software
• 7 centers in Asia (India, China, Japan, Korea, Sing, Taiwan)
• (2011) Hochiminh – 300 people, software development
CBRE | Market View | Sept 2012
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21. WHO / WHY / WHERE
Bosch, from Europe to Vietnam
•Now moving to E-Town in Hochiminh City,
Vietnam:
• - Synergy with manufacturing plant in Dong Nai
to service customers in Japan & Asia
• - Young labor force
• - Attractive government incentives
• 4 R&D centers in Asia. India, China, Japan, Singapore
• (2011) Hochiminh – investment cap: $US4.5 million, 1,000
people, software & embedded system services
CBRE | Market View | Sept 2012
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22. TRENDS
HCMC still captures the lion share
CBRE | Market View | Sept 2012
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23. TRENDS
Binh Duong & Dong Nai rises
• Perfect Office Solution in Binh Duong
• High specs
• Competitive rental
Breathtaking and Stunning Façade
CBRE | Market View | Sept 2012
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24. TRENDS
Decentralized & business parks
Mapletree
Office Building Incubation @ TT EPZ
TMA @ QTSC
CBRE | Market View | Sept 2012
Sacom @ SHTP E‐town @ Tan Binh Centerpoint @ Phu Nhuan
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25. DRIVING FACTORS
Specs
Well-Planned Building Design & Specifications
39 x office units 62.3 m
~ 190 to 250 sqm each
15.6 m
Column-Free Space
~ 2,000 sqm per floor
Highly Efficient Layout 39 m
Tall Ceiling Height: 4.5m
Ample Natural Light
Floor Loading: 500kg
Mapletree Floor Layout
CBRE | Market View | Sept 2012 Typical office floor Layout
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26. DRIVING FACTORS
Rents
• Possible short-term
bottom in office rents
• Average business parks
office rent below
$20/m2/month.
• In par with office rent in
Business parks office rent HCMC’s peripheral area
and Da Nang
(~$12/m2/month)
• 60% saving on rental vs.
downtown buildings
Source: CBRE Market View Q2/2012
CBRE | Market View | Sept 2012
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27. DRIVING FACTORS
Strong supports / Fast track services
Approval & issuance of investment
Certificates
Licenses & Permits
One Stop Service
Availability of tax incentives HR support
CBRE | Market View | Sept 2012
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28. DRIVING FACTORS
Strong supports / One stop services
SOFTWARE UP 10%
($US1.17 bil.)
79,000 people
DIGITAL UP 25%
CONTENT ($US1.16 bil.)
60,000 people
ELECTRIC & UP 101%
ELECTRONIC ($US11.3 bil.)
PRODUCTS 167,000 people
Source: Vietnam ICT Outlook 2012
Steps in the right direction
• Information technologies and telecom are consider the primary infrastructure to enable
Vietnam’s development. e.g. High Tech Law, Information Technologies Law.
• PM Decision 50/2009/QD-TTg on 4/29/2009, "Regulation on Management &
Development Program of the software industry and the development program of the
digital content industry in Vietnam" in order to remove obstacles and promote the
implementation of development programs and software industry.
• IT-related industries are entitled to high tech incentives.
• MOF Circular 96/2011 extending Tax Incentives for supporting industries in (1)
Electronics and (2) IT
• Personal income tax reduction for IT workers is in serious consideration
CBRE | Market View | Sept 2012
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29. www.cbrevietnam.com
109 Europe
Offices
55 Asia
Offices
187 U.S. and
Canada Offices
25 Middle East
and Africa
14 Latin Offices
America
Offices
30 Australia & New
Zealand Offices
CBRE | Market View | June 2012
Thank you for your attention.
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