European Outsourcing Opportunity for Growth and Investment

1. European OutsourcingOpportunity for Growth and Investment Yvonne Emmerson-Peirce ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

2. Yvonne Emmerson-Peirce Individual Professional Training Director UK National Outsourcing Association www.noa.co.uk Regional Director and Head of Global Strategic Sourcing Practice. Adderley Featherstone PLC a premier Recruitment Search and Selection company located in the UK with representation across Europe and Asia which operates globally www.adderleyfeatherstone.com Accredited Associate International Institute for Independent Business www.iib.ws ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

3. The Global Outsourcing Market • BPO market:2004: $300 billion 2006: $1.2 trillion(IDC) • Global IT outsourcing market: $18 billion by 2008; 20% growthyear on year (IDC) ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy Source: TheEconomic Times, 2005

4. The Offshoring Market • Offshore will more than double from 3% to 6 or 7% of overall IT services spend by 2008 (Gartner and IDC) • By 2008, nearly 25% of U.S. spending on applications development, integration and management services will go tooffshoreproviders (IDC) • The European market represents 25% of the Global total(Gartner) Source: TheEconomic Times, 2005 ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

5. The 1st wave : Global Market 1980 – early 90s • Led by US, closely followed by UK • Corporations originally looked for cost reductions • Management and development limited by tools and bandwidth • New finance vehicles PFI/PPP • Freeing up of capital on world markets • Typical 10 year deals ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy Source: TheEconomic Times, 2005

6. The 2nd wave : Global Market • Move into Western Europe • Individual country agreements • Rise and rise of call centres • World Trade Organisation rules changed, allowing increases in - ITO/BPO, manufacturing, commodities etc ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy Source: TheEconomic Times, 2005

7. The 3rd wave : Global Market • Extension of EU (to include former soviet controlled countries e.g Poland, Czech Republic,Hungary etc.) • Integration of EU tax breaks in Ireland, Slovenia etc. soon to add Bulgaria and Romania • Created additional direct competition with India, China and other offshore destinations • Improved centralised control and improved bandwidth • Maturation of contracts = renegotiate, in-house (part or a whole), termination, competitive re-bid, move to smaller discrete packages or consortia. • Improved CRM (customer relationship management) in local end user countries ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

8. Based on Gartner Dataquest, November 2005

9. The European Outsourcing Market The UK is the most “mature” IT service market in Europe and remains the largest and fastest growing with the greatest level of expertise in legal, financial, programme management and consultancy. The UK is also the largest market for offshore services which in part can be attributed to the significant number of large scale Public Sector deals: NHS,e- government, CJIT etc Germany follows with an emphasis on BPO offshore especially call centres utilising the former Eastern European countries for their language skills. ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

10. What is the European view on the impact of offshoring? • NOA research has demonstrated attitudes of U.K. organisations towards the impact of offshore services on both their organisations and the overall economy are positive: • >90% of respondents perceived that use of offshore services helps maintain the competitive position of UK/EU companies • >85% of respondents perceived that use of offshore services makes a positive contribution to the Euro economy. • >80% perceived that use of offshore services has a net job-creating impact on organisations • EOA colleagues report a buoyant and expanding market ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy NOA Offshore Research 2005

11. Supply Chain Management Offshore Supplier Customer Direct route creates problems Using Global Sourcing Supplier can often result in lack of control Supplier with Local presence Conclusion: establish a local presence! ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

12. Customer Procurement Preferences Conclusion: Offshoring supplier needs a local presence! ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy NOA BPO Offshore Research 2005

13. UK Business Opportunities • Corporations and Public Sector • Well established, with commitment to outsourcing and offshoring: opportunities to form alliances and partnerships and for dual/multi-shoring to spread and/or share risk • Small and medium sized enterprises account for 95% of all business and 60% of GDP • Many are aware of the advantages of offshore supply • Most do not have the capability to source an offshore supplier • The SME market is a great growth opportunity • SME’s are more vulnerable to incorrect strategic decisions • Demands confidence in a LOCAL partner ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

14. What do users see as most important when choosing an Outsourcing supplier? • Expertise in the particular function to be outsourced • Compatible culture (especially at Governance and Compliance level) • Meeting service targets (operational benefits) • Technological innovation • Value for money – (price and added value) • Achieving smooth transition and change From NOA research ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

15. Boardroom Concernswhen considering China • English Language Capabilities • Intellectual Property Rights • Data Protection Issues • Information Security • Quality of technology and standards of education • Staff Loyalty/ Turnover • Innovation • Business Continuity • Supply Chain Management and Control ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

16. Shared development Cost savings inadequate needs added value such as innovation More risk reward /gain sharing Increased global mergers and acquisitions Make more manageable e.g transition and transformation and measurable limited KPI’s not SLA’s ad nauseam Data protection Taxation Acquired rights law Sarbannes Oxley and tightened European standards Foreign exchange More complex contracts Compliance and Governance of Private and Public institutions Move from procurement to partnership mentality Improved professionalism and standard NOA/EOA Better training Main board experience and knowledge improvement in decision process Unions and politicians (protectionism) Benchmarking Top influencers for the future ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

17. For Future Success… • Recognise you will be operating in a mature market: • Cost advantage may not be enough • Give added value in technology, systems and delivery • Map Western employment practices and standards • Expect tougher shorter term contracts slewed against offshored agents as service provider • Discrete work packages assigned to principle service provider to provide turnkey solutions • Investment in good management and personnel, intellect and culture • Invest in local presence • Use specialist professional services in the target country ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

18. ADDERLEYFEATHERSTONE plcExecutive Search  Management Selection Human Resource Consultancy Adderley Featherstone is one of the leading Search and Selection companies base in the UK with representation throughout Europe and Asia. Strong multi-disciplined industry knowledge of IT and BPO markets covering executive and mid-managements positions globally Experience in successfully managing manufacturing recruitment campaigns across Asia, including China Consultative approach to clients to help business grow and enter new markets and countries ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

19. The NOA/EOA is Europe’s leading independent body that represents the interests of outsourcing end-users and global service companies. The NOA/EOA is the leading provider for: Market Intelligence Impartial advice and information Outsourcing professionals to meet and discuss industry news, opportunities and trends Promoting best global practices and standards www.noa.co.uk The NOA is a World Leader ADDERLEYFEATHERSTONE plc Executive Search  Management Selection Human Resource Consultancy

20. Corporate End Users Abbey Alliance & Leicester American Express Barclays Bank Boots British Gas BUPA Lloyds TSB National Grid NatWest Bank OGC Prudential Royal & Sun Alliance Royal Bank of Scotland Southern Water Services Thomas Cook Transco Viacom Whitbread NOA Sample Membership • Suppliers & Services • Adderley Featherstone plc • Blue Arrow • BT • Cable & Wireless • Compass • Digital Fuel • Gartner • HCL Technologies • IT Net • Line Management Group • Logicom • Paymaster • Project Office • Telelogic Technologies • Unisys • Vanco • Vertex • Visteon • Wirebird

21. NOA Sample Membership • Consultants • Analysis Limited • Cap Gemini • Capita Business Services • Charles Douglas Organisation • CT Consulting • Deloitte & Touche • EDS • Flex Contact Centres • IBM • JGL Applied Systems • KPMG • Mason Communications • Xansa • Legal Firms • Bird & Bird • Burges Salmon • Baker Mackenzie • Dundas & Wilson • Freshfields • Morgan Cole • Osborne Clarke • Sidley Austin • Simmons & Simmons • *Extract

22. Key events 2006 • France • Germany • Holland • Austria • Interest from Benolux, Spain, Switzerland, Canada, Australia & New Zealand • More than 2 seminars organised per month • New and ongoing Market Research • Two major €OA/NOA summits in November 2006 • Code of Practice, Toolkit, Benchmarking, etc. • New initiatives such as Individual Professional Training

23. How the NOA works • Volunteer Board • All have real jobs with users, suppliers, legal etc. • Example: the Chairman Martyn Hart, Consulting Director with Gartner • Outsourced support • PR • Membership • Accounts • Conferences • Publications • Research

24. NOA Chairman : Martyn Hart www.noa.co.uk Tel: +44 (0) 7976 750 925 Adderley Featherstone PLC Regional Director: Yvonne Emmerson-Peirce www.adderleyfeatherstone.com Tel: +44(0)20 7317 3116 Useful Contacts Or e-mail: yep@adderleyfeatherstone.com yvonne@mallarddrake.co.uk