Changing Focus: Shifting Sights from America to Europe Sanjiv Puri, Managing Director, ITC Infotech India Ltd. 13 th February, 2008

Europe vs. USA: Growth Trends Growth rates in Europe>>US across most Verticals 2007 saw the Americas fall behind EMEA in the number and value of outsourcing contracts >$25 mln for the first time In Europe, the average deal size has increased by 35% Data Source: Datamonitor; TPI

Growth rates in Europe>>US across most Verticals

2007 saw the Americas fall behind EMEA in the number and value of outsourcing contracts >$25 mln for the first time

In Europe, the average deal size has increased by 35%

Global Competitiveness a must. Globalization Deregulation Digitization YOU New Entrants Buyers Suppliers Substitutes Competitors Traditional Sources of Competitive Leverage The New Forces

Europe Outsourcing – Changing Trends Moderate economic pressure Slower uptake in Europe for most technology trends Less competitive pressures Minimal exposure to India/ Indian players US focus of Indian companies – group mentality Perception of low cost but poor quality Language barriers Challenge of working through an on-site model Socio-cultural barriers Limited exposure to Indians Demand of experience over youth and quality over price Access to lower cost East European Markets Poland, Hungary, Ireland and Russia were viable options Visa restrictions Stricter than in the US Source: McKinsey Companies engaging in in-house language training Still real but Indian companies are becoming more culture-sensitive Changing as European companies aspire to be globally competitive Indian IT companies setting-up key local offices and near-shore development centers Increasing student population in Europe (in particular the U.K) Inability of East European markets to meet the demand The off shoring model puts less pressure on Visa efforts Historic Trend Changing Scenario

Slower uptake in Europe for most technology trends

Less competitive pressures

US focus of Indian companies – group mentality

Perception of low cost but poor quality

Challenge of working through an on-site model

Limited exposure to Indians

Demand of experience over youth and quality over price

Poland, Hungary, Ireland and Russia were viable options

Stricter than in the US

Companies engaging in in-house language training

Still real but Indian companies are becoming more culture-sensitive

Changing as European companies aspire to be globally competitive

Indian IT companies setting-up key local offices and near-shore development centers

Increasing student population in Europe (in particular the U.K)

Inability of East European markets to meet the demand

The off shoring model puts less pressure on Visa efforts

Europe vs. USA: Networked Readiness Index The Index indicates maturity of a country in terms of: Environment for ICT offered by a country or community Readiness of the community's key stakeholders (individuals, business and governments) Usage of ICT among these stakeholders European countries rank high and are going up among all these measures The USA’s rank has gone down by 6 places in the last year Source: World Economic Forum -1  31 32 4.35 Spain +4  42 38 4.19 Italy +1  26 25 4.9 Luxembourg +1  25 24 4.93 Belgium -1  22 23 4.99 France +1  18 17 5.17 Austria +1  17 16 5.22 Germany +3  13 10 5.42 Norway +1  10 9 5.45 United Kingdom -6  1 7 5.54 United States +6  12 6 5.54 Netherlands +4  9 5 5.58 Switzerland +1  5 4 5.59 Finland +6  8 2 5.66 Sweden +2  3 1 5.71 Denmark Evolution Rank 2005-2006 Rank 2006-2007 Score 2006 Countries Networked Readiness Index: Variation 2006-2007

The Index indicates maturity of a country in terms of:

Environment for ICT offered by a country or community

Readiness of the community's key stakeholders (individuals, business and governments)

Usage of ICT among these stakeholders

European countries rank high and are going up among all these measures

The USA’s rank has gone down by 6 places in the last year

ITC Infotech: European Experience

The themes ……..that matter. Partner-based strategic relationship approach as opposed to conventional client-vendor relationship Value Arbitrage vs Cost Arbitrage Engagement structured around Extended Enterprise Principles Cultural alignment through mutual adaptation Focus on domains and business solutions Sustainability ;CSR and Green IT Deep focus on processes-mature outsourcing processing Empowerment and Collaborative decision making

Partner-based strategic relationship approach as opposed to conventional client-vendor relationship

Value Arbitrage vs Cost Arbitrage

Engagement structured around Extended Enterprise Principles

Cultural alignment through mutual adaptation

Focus on domains and business solutions

Sustainability ;CSR and Green IT

Deep focus on processes-mature outsourcing processing

Empowerment and Collaborative decision making

But US is still the biggest market…. Competitive and Regulatory pressures will require “Business Solutions” What is globally sourced is still a small percentage of the IT Services Industry Off shoring Flexible Resource Pool Reducing spends and economic downturn in the USA – threat or opportunity? Will it accelerate off shoring? USD Depreciation vs Business Value.

Competitive and Regulatory pressures will require “Business Solutions”

What is globally sourced is still a small percentage of the IT Services Industry

Off shoring

Flexible Resource Pool

Reducing spends and economic downturn in the USA – threat or opportunity? Will it accelerate off shoring?

USD Depreciation vs Business Value.

Thank You