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Offshoring trends in Europe and specifically in germany

Minsk, Belarus. Offshoring trends in Europe and specifically in germany. Selected clients & success stories. Heyer Medical Deposix Siemens Mey-Group AXES Technologies Motherson Sumi Arcor Marconi Tenovis France Telecom Italtel Swisscom Winterthur Fiducia. Network Telesystems

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Offshoring trends in Europe and specifically in germany

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  1. Minsk, Belarus Offshoring trends in Europe and specifically in germany

  2. Selected clients & success stories • Heyer Medical • Deposix • Siemens • Mey-Group • AXES Technologies • Motherson Sumi • Arcor • Marconi • Tenovis • France Telecom • Italtel • Swisscom • Winterthur • Fiducia • Network Telesystems • PS‘Soft • Watchguard • Informatica • PassGo • PerSoft • Trustworks • Intellitactics • Wallstreet AG • Solsoft • Efficient (bought by Siemens)

  3. Our business focus • Facilitating business opportunities for ICTcompanies in Europe in selected sectors • Developing business in Europe (including finance, if required) • Industries: High-Tech, IT, Finance, Telecommunications • Establishing market-contacts with Top 500 German firms and “larger” enterprises • Regions: Central and Western Europe.

  4. Some Facts & Figures

  5. Some Facts & Figures

  6. Some Facts & Figures

  7. Some Facts & Figures

  8. Some Facts & Figures

  9. IT-outsourcing Europe (bn. Euro)

  10. German outsourcing market

  11. European Banks – IT Spending

  12. European Banks – IT Spending

  13. German Banks – Automatisation

  14. Business case:Belgian Pension Fund Fund – Portfolio Management • Status • Huge project projected for 4 years with 350 project members • After 2 years all targets and milestones missed • Internal processes and work estimate not properly set up and defined • Looking for advice • Project organization and management • Feasability of using external, additional resources • Project estimate, based on existing requirements • How to identify and screen potential suppliers • Suppliers • Looking for ready done modules • Replacement 50% of internal resources - projected

  15. Business case: germany Reporting to comply with requirements by BaFin • Industry Standard or Monopoly by CMG-Logica • Too expensive • Slow adoption to current environment • Not very customer centric • Many German Banks (ca. 250) would love to have a choice … • More flexible • Better integration with existing systems

  16. Some Facts & Figures

  17. Business Case:european Provider covering 220 countries Field Service Support – PDA/Smartphone • Sector Specific Focus for SCM • Telco, High-Tech, Utilities … • Integration of on site Engineering with the Back office • Dispatch of work orders • Scheduling and assignment of resources • Acknowledge the work order • Order for material and alert for availability • Onsite support and access to the inventory and other back office systems • Request for additional material • Termination • Consulting in design of workflow and integration with existing systems • Restructuring existing processes

  18. Business Case:telecommunications Equipment Manufacturer Wireless Fixed Line - Broadband • Development of a new WiMAX and BRAN Stack • Existing project is running out of time and budget • New system design, if necessary • Rewrite of the requirements and adoption to the newest 802.16g standard • Consultation about existing stack products and costs involved • Project estimate for own development • New development environment • Test bed • Failover, Backup and remote update and management

  19. Business Case:telecommunications Equipment Manufacturer Compliance with international ISDN/Signaling standards • Analysis of existing differences of standards and their implementation for all countries in question (Asia, Africa, Europe, South- and NA) • Implementation of these variants in existing product - homologenisation • Set up of Test bed • Extensive tests locally and offshore

  20. India: Lessons learnt?

  21. India: Lessons learnt?

  22. Lessons Learnt - India • Indians failed to penetrate Continental Europe • Reasons: • Language Barrier • Business Mentality - Lack of focus, very few exceptions, like HSS, iflex, AXES • USA as a market place will become tough: • Growing competition, new entrants (Phillippines ...) • Pricing – telco provider pay only 15 US$ • US customers get „picky“ – body shopping • Consolidation – Big players

  23. Lessons Learnt - India • Indian supplier try to get around these constraints by creating high value services and dependancy for their customers • European Off shoring is not yet as mature ...: • mid sized is in most cases ok • Focus is VERY important • Acceptance for higher pricing, when „Nearshore“ • Fixed price • Security, Certification not as important as for US clients

  24. 4Ways2Business • Export / Reseller • no market-penetration • the importer takes the profit • Representative Office / Co-operation • high market penetration • sales on customers' demands • Joint Venture • close contact to customers and markets • local partner usually in the lead • Outsourcing / Buy-in in a spin-off: • strong customer-bind • decisions and profits fall on you

  25. Successful strategy for outsourcing • Learn to understand the local markets: • Market research • Customer‘s needs and target group • Local competitors and pricing • Provide a one-stop-shop solution for your customers that covers all their needs e.g.: • Set-up a joint venture • Offer a Buy-in • Be prepared to invest in a spin-off • Be patient: Create a trust relationship, try to understand your customer‘s needs

  26. Dos and Don‘ts for outsourcers • Act globally, be present locally – especially in the very decentralized marketplace of Europe ->”GLOCAL” • Let yourself be introduced to the market by a native for building a trust relationship • Build your own German infrastructure for contract management, sales and marketing, project management, support (1st level) • Never sell your services only by low pricing • Create added value through flexibility, highly skilled engineers and specialising in industries and applications

  27. 3Ways2GetToMarket • Query: • Penetrating the German market? • Solutions: • Find a reseller • Co-operate with a local partner • Set-up a joint-venture

  28. Pros and Cons for Resellers • Advantages • No capital required, low cost • Access to established customer-base • Fast turn-over initially • Disadvantages • German resellers are small entities with limited and regional customer-base, i.e. one reseller will never suffice • German resellers expect high commitment from supplier in terms of marketing, support, time, documentation • High transaction-costs • No funding possible

  29. Pros and Cons of Co-operation • Advantages • Co-operation partners offer established brand, reputation and customer-bases e.g. as intl. consultants • Present yourself as a local player through partner • Get know-how and facilities for marketing, market-entry strategy • Medium capital expenditure, medium cost • Funding available • Disadvantages • Long-term business perspective • Slower development of turn-over

  30. Pros and Cons of Joint-Ventures • Advantages • Strong success-oriented commitment from both sides • Access to broad customer base, established marketing and sales channels • Funding easily available in German private and public finance markets • Know-how-transfer driven by results (R&D, Production) • Disadvantages • Risk finance required (e.g. through cost coverage) • Loss of independence • Complexity of relationship requires intense preparation and permanent screening

  31. Buy-ins and investments • Why should you be ready to invest? • Outsourcing-plans can lead to a spin-off-strategy with your potential German customers • Set-up own business to become outsourcer of more than one customer • Establish your own brand and business in Germany • Allow others to join in! • Find strategic industrial-investors and/or financial investors • Profit from German public and private capital market • Profit from local and specific industry know-how • Let your main customer be your capital partner as well

  32. Doing business in Germany • Business mentality • Strategic and thorough planning • Decisions are based on performance not on marketing • Efficient and direct communication • Scheduling in advance and punctuality expected • Legal / tax • Different legal system (German law vs. English law) • Based on civil code • Contracts only regulate what is not covered by the law • Legal advice therefore cheaper than Anglo-Saxon countries • Complex but competitive tax-system, over-all tax-burden in 2002 lower than UK, France, USA

  33. 1Step2Europe.com Inc. http://www.1Step2Europe.com info@1Step2Europe.com Glockengießerwall 26 Pilotystraße 4 20095 Hamburg 80538 Munich Germany Tel:+49-40-85378237 Tel: +49-89- 230 352 61 Your contact to us: Suneil Bhende & Alexander Pohl sBhende@1Step2Europe.com aPohl@1Step2Europe.com

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