WTO Symposium on Cross-Border Supply of Services The Private Sector Experience 28 April 2005

1. WTO Symposium on Cross-Border Supply of Services The Private Sector Experience 28 April 2005 Ernest L. Cu President & CEO

2. The Private Sector Experience Table of Contents Section 1 – About SPI Technologies • Who we are • What we do • How we do it Section 2 – Our Experience In Cross-Border Supply Of Services • Key opportunities • Key challenges • Case study • Wishlist

3. Section 1 - The Private Sector Experience Who we are • Founded in 1980 in the Philippines as a data entry company. Evolved into one of the leaders in the content outsourcing space. IPO in 1991; went private in 2004. Owned by TH Lee Putnam Ventures, GIC of Singapore and management. • Provide IT-enabledcontent transformation, structuring and processing solutions which enhance the value of enterprise content and enable clients to meet their large-scale, complex content and data management needs. • Key markets served - Publishing, Legal, Healthcare, Financial Services and Retail. Focused on the US markets. • Over 150 clients worldwide - Fortune 1000 companies, leading non-profit organizations, institutions and government agencies. • Five years of double-digit revenue and profit growth; 2004 revenues and profits were $53 million and $13 million respectively.

4. Section 1 - The Private Sector Experience What we do • Content Editorial and Production Deep domain expertise in providing content transformation services such as content enrichment (e.g. copyediting and layout), content conversion, content structuring (e.g. abstracting and indexing), and content delivery across multiple data and delivery formats. • Transaction Processing Focus on providing large-scale, high-quality rules-based data entry transaction processing services. • Content Coding and Electronic Data Discovery Acknowledged as the leader in conventional coding and online coding services. Provide also large-scale electronic data discovery services. • Medical Transcription Offer a unique onshore/offshore medical transcription solution that delivers high quality and high volume to a number of hospitals and clinics.

5. Section 1 - The Private Sector Experience How we do it • Multi-country operating model offering significant cost advantages, risk mitigation, enhanced scalability and flexibility. • Scaleable resource pool of 6,500 + content specialists and support staff in 24 locations across the world. • World-class quality processes – ISO 9001:2000; BS-7799; CMMi Level 5 and Six Sigma. • Robust technological and shared services infrastructure to support service lines.

6. Section 2 - The Private Sector Experience Key opportunities • Growth prospects in offshoring across industries are very promising. BPO/ITES services are among the fastest growing sectors in international trade. BPO/ITES offshoring expenditures are expected to grow from US$ 1.3 billion in 2004 to US$ 24 billion in 2007*. • Short-term pain; long-term gain. Win-win situation for all in the long run through: • Significant cost savings. • Improvements in quality and productivity. • Transition to higher-value, core competence work in developed countries. • Employment generation in developing countries. Substantial indirect benefits. * Gartner Research

7. Section 2 - The Private Sector Experience Key challenges • Regulatory environment in importing country. • Anti-offshoring legislations in various US states; Ominous precedent being set by government bodies and institutions. • Negative public sentiment towards offshore outsourcing. • Visa issues – impact on delivery, service, manpower development. • Offshoring is still in its infancy. • Industry dynamics are still evolving; Fly-by-night operators still outnumber legitimate players. • Service and quality standards vary widely. • Country image – perception vs. reality. Brand “India” vs. the “rest of the world”. • Managing client expectations. • Managing intellectual property is a concern. • Multi-country model is key for scalability and growth. • Negative press about the Philippines. • Potential shortage of qualified labor.

8. Section 2 - The Private Sector Experience Case study - Publishing History (1997-1998) • Entered the pre-press production market in 1997 thru the acquisition of a customer’s pre-press operation in Europe. Migrated work to the Philippines. • Single client, single service offering, one unit operations in Manila. • Focus on Scholarly, Scientific, Technical, Medical and Educational (SSTM) publishing markets. Current situation (1999-2005) • Multiple operations across countries – Philippines, India, China, Vietnam, Mexico and the US; 9 delivery centers in Asia; 3 project management/customer support offices in the US. • Ability to match skill sets required for the job with location uniqueness, e.g. Vietnam and Dumaguete; Produce over 1 million pages for 550 journals and 650 books and encyclopedias. • Over 40 clients – commercial publishers and not-for-profit publishers. • Ability to attract work that was never offshored – high-end copyediting, rights and permissions, Science journal (AAAS).

9. Section 2 - The Private Sector Experience Case study - Publishing Challenges faced: • Perception that offshore work is inferior. • Building a robust, scaleable and interconnected I.T. platform across countries. • Managing outsourcing and offshoring biases at all levels within client organizations. • Visa hurdles. • Free flow of employees between India and Philippines is cumbersome. • Inability to send many employees to the US for extended periods of time – young workforce with majority of employees being single has its disadvantages. Looking into the future: • Offshoring will become a key competitive advantage for those who manage it well. • Role of government in outsourcing of services needs clarity and redefinition.

10. Section 2 - The Private Sector Experience Wish List Our wish list: • Make government intervention more fact driven rather than sentiment and perception driven. • Allow market forces to take their course leading to win-win scenario for all parties in the long run. • More transparency in the financial and legal systems in developing countries. • Flexibility in visa regulations – US, Europe, India and ASEAN countries. • More balanced view of exporting countries like the Philippines.

11. Q & A