Presentation by:- Ajoyendra Mukherjee Vice President, TCS

1. Cross-Border Supply of IT Services A Private Sector Perspective www.tcs.com WTO Cross-Border Supply Symposium Presentation by:- Ajoyendra Mukherjee Vice President, TCS 28 April 2005 • Geneva

2. Agenda • Indian IT Industry • Cross-Border Service Delivery • Opportunities – As Supplier & Consumer • Challenges • Conclusion

3. Indian IT Industry Services Spectrum • Application Development & Maintenance • IT Enabled Services • IT Infrastructure Management • Engineering, R&D

4. Indian IT Industry Includes IT Services & Software, ITES-BPO and Hardware Source: NASSCOM, Strategic Review 2005

5. Indian IT Industry - Exports Includes IT Services & Software, ITES-BPO and Hardware Source: NASSCOM, Strategic Review 2005

6. Indian IT Export Destinations Excludes hardware exports Source: NASSCOM, Strategic Review 2004

7. Cross Border Service Providers India - the largest “Cross-border” IT Services Provider Estimated Value of Offshore Sourcing (US $ M) – CY 2004 Source: neoIT, NASSCOM

8. TCS – Largest Indian IT Service Provider • Created Indian IT Industry and have led it since 1968 • Operate in 47 countries • 33 Delivery Centers - 15 in India, 18 Overseas • Growing at a rate of > 40% annually • Global Employee Strength of 43000+ • 60% Revenue from North America, 23% from Europe • Enterprise wide CMMi, PCMM L5

9. Agenda • Indian IT Industry • Cross-Border Service Delivery • Opportunities – As Supplier & Consumer • Challenges • Conclusion

10. Cross-Border Service Delivery – Genesis Client Office, Onsite TCS Office, India 1970s • Small, dedicated team stationed at client site • Development • Maintenance • Testing Support “Movement of Natural Persons”

11. Cross-Border Service Delivery – Genesis Office Setup in the same country as client • Sales & Marketing • Account management Client Office, Onsite TCS Office “Commercial Presence” TCS Office, India 1980s “Movement of Natural Persons”

12. Cross-Border Service Delivery – Genesis Client Office, Onsite “Cross Border Supply” Remote Service Delivery (Offshore) • Design & Coding • Testing • Documentation • Maintenance TCS Office “Commercial Presence” TCS Office, India 1990s “Movement of Natural Persons”

13. Cross-Border Service Delivery – Genesis Delivery Centers across the globe to establish a near-shore presence Client Office, Onsite Multi “Cross Border Supply” TCS GDC TCS Office Local Recruits “Commercial Presence” TCS Office, India 2000+ “Movement of Natural Persons”

14. Cross-Border Service Delivery – Summary “Cross Border Supply” Offshore Delivery Centers established in India to service overseas customers remotely with a cost-effective, scalable model “Consumption Abroad” People sent overseas for specialized Training “Movement of natural persons” Dedicated team stationed at client site & People moving between Vendor offices in different Countries “Commercial Presence” Global Delivery Centers setup to address regulatory & language requirements, 24x7 service delivery windows, BCP & DR

15. Agenda • Indian IT Industry • Cross-Border Service Delivery • Opportunities – As Supplier & Consumer • Challenges • Conclusion

16. Opportunities – As Consumer • Cost Saving • High Quality • Faster Time to Market • 24 Hour Service Window • Better Utilization of Internal Workforce • Address Aging Demographics of Western economies

17. Opportunities – As Supplier Potential for Indian IT Industry by 2008 • By 2008, IT and ITES Services will generate an employment for 1.1 M and 1 M respectively • In addition the Parallel Support Services will create employment for another 2 M people Source: NASSCOM, McKinsey Report, 2002

18. Agenda • Indian IT Industry • Cross-Border Service Delivery • Opportunities – As Supplier & Consumer • Challenges • Conclusion

19. Challenges – “Movement of Natural Persons” • Immigration & Visa Issues • Universal Recognition of Qualifications, Experience and Training • Employment laws enforcing local hiring directly or indirectly e.g. USA (recruitment attestation / displacement attestation), UK (TUPE) • Wage Parity Insisted upon • Social Security Tax • Tax Withholding

20. Challenges – “Commercial Presence” • Structure of Entity (Branch, JV, Fully owned Subsidiary etc.) • Restrictions on Foreign Investments & Local equity participations • Remittance of foreign exchange • Staffing & Management conditions • Restricted Access to certain market segments based on the structure

21. Challenges – “Cross-Border Supply” • Data Security / Data Protection • IP Protection & Software Piracy • Language & Cultural Differences • Deduction of Withholding Tax • Double Taxation • Geo-political Stability & Government support • Offshore Management

22. Agenda • Indian IT Industry • Cross-Border Service Delivery • Opportunities – As Supplier & Consumer • Challenges • Conclusion

23. Conclusion • Cross-Border IT Services is a growing necessity and opportunity • Visa & Immigration, Taxation, Protectionist Law and Uniformity in Qualification are some of the key challenges still faced by a service provider like us… • A uniform GATS framework and commitment will provide the right impetus to the growth of Cross-Border IT Services

24. Q & A