Near Shore Destination Costa Rica The P&G Story

1. Near Shore DestinationCosta RicaThe P&G Story March 2011 Atul Vashistha Chairman Neo Group BestOutsourcingJobs www.neogroup.com

2. Presenters • Alfonso Cos • Former Global VP, Shared Services, P&G • Atul Vashistha • Chairman & CEO, Neo Group • Pilar Madrigal • Director of International Affairs, CINDE

3. Content • The P&G Experience • Destination Costa Rica • CINDE • Q&A • Presentation available later on • Cinde.org • neogroup.com

4. Outsourcing Location Trends • Leveraging Unique Capabilities • Competitive Advantage of Nations • Geographic Risk Diversification • Global Delivery Model • Captive Centers (BPO) • Multi-functional centers

5. Nearshore Trends • Skill-sets • Affinity • Proximity • Time Zone The Americas Opportunity

6. Infrastructure Attractiveness Government support/Incentive FDI attractiveness Power supply Transportation Financial Attractiveness Salary Level (ITO, BPO, KPO) for entry level Salary growth (ITO, BPO, KPO) for entry level Rent (Grade 1 CBD) Business Environment Attractiveness Ease of doing business Quality of life Geopolitical Attractiveness Cultural compatibility/Support facilities for expats Political risk Crime rate Terrorism/Ethnic tension/Social unrest Human Resources Attractiveness Scalability risk Number of industry employees Attrition – Overall and client Country Assessment Framework Macro Economic Attractiveness Macro Economic indicators Currency attractiveness Software parks/SEZ’s Rent growth Cost of living increase Country Assessment Access to healthcare Pollution levels Quality of education Business and support amenities/5 star rooms Natural disaster risk Industry Attractiveness Industry size ITO Industry size BPO Industry size KPO Projected industry growth ITO Projected industry growth BPO Mature Service Providers

7. Why Costa Rica? Workforce quality Multilingual Water Supply Power Supply Housing Schools Costa Rica • Ranked 3rd in the world on “Environmental Performance Index”

8. Very Low Low Medium High Very High Macro Economic Attractiveness Source: Neo Group • Stable democratic country since 1948 • Typically a low fluctuating currency. • No army since 1948, instead a big investment in education and environment • The GDP contribution from the services remains very high for Costa Rica pegged at 68% for 2009. • Costa Rica has a low trade deficit of 2% i

9. Geopolitical Attractiveness Source: EIU • The last World Bank Survey for Global Governance Indicators ranks Costa Rica in the first place within Latin America for political stability. • The country has had no terror attacks, social unrests/strikes and is the greenest country in the world. • Costa Rica has low trade deficit and low payment risk which is the best among the Latin American countries. i Even more stable than the U.S.A.

10. Very Low Low Medium High Very High Infrastructure Attractiveness • Very good government support, good power supply, good transportation and with a good support from the Foreign Direct Investments (FDI’s). • Internet services are the most readily available and sophisticated in Central America. • Extensive highway system, two major international airports and two seaports. All major U.S., European, and Latin American passenger and cargo carriers • The government fosters growth with incentives, which finds favor with the FDI’s and increases the private participation. • The power supply situation is one of the best in the world with renewable sources of energy being used wherever possible and Costa Rica has a surplus of Power which it exports to the other Latin American power deprived countries. • Abundant water supply, reliable hydroelectric power and an advanced telecommunications system. i

11. Very Low Low Medium High Very High Human Resources Attractiveness • Attrition in the offshore/outsourcing Services Sector is lower than Asian locations • Costa Rica offers a good human resource pool in the Latin American region, especially with the bilingual skills (English, Portuguese, Spanish, etc.) and good educational background (6% of GDP is allocated for education). • According to the fdimagazine, Costa Rica has the best in the category of availability and quality of human resources, with scores higher than major competitors like the Dominican Republic, Panama and Puerto Rico. • Costa Rica has one of the highest literacy rates (95.9%) of the American Continent. Education is mandatory until the 9th grade. • Around 35.6% of the total population are between 15 – 35 years (annual growth rate of 2.1%). i 11

12. An Attractive Location: San José • Ranked 3rd in the world on “Environmental Performance Index”. • The city has well-educated, creative, innovative, English-speaking and highly productive human resource. San Jose has technical and superior education institutions that generate qualified human resource, such as: Technical high-schools, Private and public universities, National Learning Institute, CEFOF, CENFOTEC. • 50% of the elementary schools and all high-schools have computer labs and receive English lessons. This allows children and teenagers to learn the language and computer skills at a very early age. • Great location for expatriates. Ranks first in the Happy Planet Index. • 62% of the employable workforce lives in the greater metropolitan area where San Jose is located. i 12

13. Costa Rica: SWOT Analysis Strengths Weaknesses • Salary levels for the ITO and BPO employees are higher than other developing locations. • Costa Rica has a local software supportive business park formed mainly by highly productive PYMES (SMEs - small and medium sized enterprises). But not enough software firms or human resources. • Smaller local ITO companies • Excellent human resources • Quality education • Good business and support amenities • Conducive environment for doing business • No limitations on capital funds transfers associated with an investment, regardless of the currency. • CINDE – Great support resources • Cultural compatibility for expats • Stable/pleasant climatic conditions • Access to good health care Opportunities Threats • Multi-functional capabilities for BPO, such as the case of Align, P&G and Experian. • Deep call center experience, ie: Sykes, Aegis and KPO such as Amba Research and WNS • Leverage same time zone coverage for USA and Costa Rica, which has a long daytime working shift (5 am to 7 pm) • Leverage bi-lingual, with one of the highest gross participation of population in labor pool (50%) • Leverage neutral accent • Close proximity to other larger centers such as Sao Paolo • Smaller labor pool • Rising cost of labor (average less 3%/yr in US$) • Not enough resources in a specific area of expertise or too high recruiting parameters • Payroll fringes (social security, pension plan, etc.) account for a fixed percentage of the employees salary – 34.5% 13

14. Recommendations • The population of the country is about 4.5 million people and the Services Sector employment is around 32,000, which is 1.4% of the labor pool. This makes it an ideal location for smaller centers (<1000), though it can support larger call centers. • English and Spanish language based processing of work can happen real time in Costa Rica, whose time lines exactly match with U.S MDT timings. • Government support can be leveraged to acquire tax benefits/concessions as the Costa Rican government is promoting the offshore/outsourcing industry with CINDE and Procomer serving as strong support organizations. • Strong focus on education and good universities makes it an ideal center for higher end multi-functional operations. • Ideal place for companies with a large carbon foot print to start operations as Costa Rica is the greenest country in the world and carbon foot prints can be acquired with ease. 14

15. Q&A pmadrigal@cinde.org Atul@neogroup.com

16. Contact Information Neo Group Global Headquarters 4000 Pimlico Drive, 114-108 Pleasanton, CA 94588. Asia-Pacific Headquarters No. 16 & 16/1 5th Floor Phoenix Towers, Museum Road Bangalore 560025, India. Amsterdam, Netherlands Sao Paolo, Brazil Monterrey, Mexico Bogota, Colombia Atul Vashistha Chairman atul@neogroup.com www.neogroup.com