A Review of International Shared Service Centre/BPO Locations (Based on information from the Financial Times fDi Benchm

1. A Review of International Shared Service Centre/BPO Locations(Based on information from the Financial Times fDi Benchmark tool, April 2012)

2. Project Profile Overview Scottish Development International have produced this scenario based project with independent input from the Financial Services fDi Benchmark tool. The aim of this paper is to demonstrate the Scottish Central Belt’s capability benchmarked against other worldwide shared service centres/BPO. The project parameters are as follows: • Project Profile: Shared service centre/BPO • Benchmark Level: City Level • Total Head Count: 200 • Benchmark Locations: Barcelona, Boston, Brussels, Chicago, Dublin, Houston, London, Los Angeles, New York City, Prague, San Francisco, the Scottish Central Belt, Seattle, Stockholm, and New Delhi • Currency: GBP - United Kingdom Pound

3. The fDi Benchmark Matrix shows the trade off between cost and quality across the 15 selected locations for the shared service centre/BPO profile. The average cost and quality score is 100 for the selected locations. fDi Benchmark Matrix Source: fDi Intelligence, from the Financial Times Ltd

4. fDi Benchmark Matrix The matrix is based on the weighting and cost model for the shared service centre/BPO profile. The weighting model identifies the key location criteria for the project and the cost model shows the primary cost inputs for the operation. The cost and quality scores are calculated using real data on all the location requirements and cost inputs. The results indicate the different location solutions for the investor as follows: • Dublin, Prague, Los Angeles, the Scottish Central Belt and New Delhi offer the highest quality at the lowest cost than the average of all the selected locations • Brussels, London, and New York City offer higher quality but at the highest cost • Barcelona, Houston, Chicago and Stockholm offer the lowest cost, but at the lowest quality (The Operating Cost value is in GBP - United Kingdom Pound) Source: fDi Intelligence, from the Financial Times Ltd

5. The location attractiveness index shows the overall attractiveness of the 15 selected locations for the shared service centre/BPO profile. The ratio of quality to cost is 50:50 Location Attractiveness Index Source: fDi Intelligence, from the Financial Times Ltd

6. The cost quality competitiveness uses the results of the independent fDi Benchmark Matrix to show the ‘Value for Money’ of each location option. The graph shows that: • The top locations offering the highest quality for a given level of cost are the Scottish Central Belt, New Delhi, and Prague • New Delhi, the Scottish Central Belt and Prague offer an above average level of quality and good value for money as there relative quality is higher than their relative cost. Cost Quality Competitiveness Source: fDi Intelligence, from the Financial Times Ltd

7. Cost Competitiveness • The annual operating cost calculation for shared service centre/BPO project is based on the following primary input costs: • Labour Cost, Property and Telecoms • The average cost across the selected locations for shared services centre/BPO is GBP 8,755,827 • The greatest cost saving between the selected locations is GBP 8,805,715 per annum Source: fDi Intelligence, from the Financial Times Ltd

8. Cost Competitiveness • The locations with the lowest operating costs are New Delhi, Krakow and Prague. • In terms of the individual cost factors, the locations with the lowest costs are: • Labour Cost: the Scottish Central Belt, New Delhi, and Prague • Property: Prague, Seattle and Los Angeles • Telecoms: Stockholm, Seattle and Los Angeles • (The values in the table below are in GBP - United Kingdom Pound) Source: fDi Intelligence, from the Financial Times Ltd

9. Quality Competitiveness • The quality competitiveness assessment is based on the weight model for the shared service centre/BPO profile which assesses each location across the following location factors: • General Business Environment, Labour Availability and Quality, Presence of an Industrial Cluster, Infrastructure and Accessibility and Living Environment. • The average score for the selected locations is 100. • The locations with the highest quality scores are New York City, London and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

10. In terms of the individual quality factors, the locations with the highest scores are: • General Business Environment: the Scottish Central Belt, London and Dublin • Labour Availability and Quality: New York City, London and Los Angeles • Presence of an Industrial Cluster: the Scottish Central Belt, Dublin and Prague • Infrastructure and Accessibility: London, Stockholm and Brussels • Living Environment: Chicago, Houston and New Dehli Quality Competitiveness Source: fDi Intelligence, from the Financial Times Ltd

11. General Business Environment The quality competitiveness breakdown for general business environment for the shared service centre/BPO profile is shown below: The locations with the highest overall scores for General Business Environment are the Scottish Central Belt, Dublin and London Source: fDi Intelligence, from the Financial Times Ltd

12. In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are: • Economic growth and stability: Los Angeles, London and New York City • Operating risk: the Scottish Central Belt, London and New Delhi • Taxation and incentives: Dublin, Houston and Seattle • Access to finance: Stockholm, Houston and Seattle • Regulatory environment: Stockholm, Dublin and the Scottish Central Belt General Business Environment Source: fDi Intelligence, from the Financial Times Ltd

13. The quality competitiveness breakdown for Labour Availability and Quality for the shared service centre/BPO profile is shown below: The locations with the highest overall scores for Labour Availability and Quality are New York City, London and Los Angeles Labour Availability and Quality Source: fDi Intelligence, from the Financial Times Ltd

14. In terms of the individual quality criteria within Labour Availability and Quality, the locations with the highest scores are: • Overall size of labour market: New York City, New Delhi and Los Angeles • Tightness and competition for labour: Brussels, Barcelona and Dublin • Experienced industry-specific staff: New York City, London and New Delhi • Non-experienced staff: Stockholm, New York City, Los Angeles and Chicago • Flexibility of labour regulations: New York City, Los Angeles and Chicago Labour Availability and Quality Source: fDi Intelligence, from the Financial Times Ltd

15. The quality competitiveness breakdown for Presence of an Industrial Cluster for the shared service centre/BPO profile is shown below: The locations with the highest overall scores for Presence of an Industrial Cluster are Prague, Dublin and the Scottish Central Belt Presence of an Industrial Cluster Source: fDi Intelligence, from the Financial Times Ltd

16. In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are: • Industry specialisation: Brussels, Barcelona and Houston • Size of industry: Brussels, New Delhi and Barcelona • Track record: Prague, Dublin and the Scottish Central Belt • Export competitiveness: the Scottish Central Belt, London and Dublin Presence of an Industrial Cluster Source: fDi Intelligence, from the Financial Times Ltd

17. Infrastructure and Accessibility The quality competitiveness breakdown for Infrastructure and Accessibility for the shared service centre/BPO profile is shown below: The locations with the highest overall scores for Infrastructure and Accessibility are London, Stockholm and Brussels Source: fDi Intelligence, from the Financial Times Ltd

18. In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are: • Access to major overseas markets: London, Brussels and Barcelona • Quality of local infrastructure: New Delhi, New York City and Boston • Quality of utilities: Brussels, Prague and Barcelona • Quality of ICT infrastructure: Stockholm, Prague and Seattle Infrastructure and Accessibility Source: fDi Intelligence, from the Financial Times Ltd

19. The quality competitiveness breakdown for Living Environment for the shared service centre/BPO profile is shown below: The locations with the highest overall scores for Living Environment are Chicago, Houston and New Delhi Living Environment Source: fDi Intelligence, from the Financial Times Ltd

20. In terms of the individual quality criteria within Living Environment, the locations with the highest scores are: • Cost of living: New Delhi, Houston and Prague • Attractiveness for international staff: Chicago, London and Houston Living Environment Source: fDi Intelligence, from the Financial Times Ltd

21. To realise the potential,please contact: Scottish Development International 150 Broomielaw, Atlantic Quay Glasgow G2 8LU Scotland, UK T +44 141 228 2828 F +44 141 228 2089 www.sdi.co.uk Worldwide offices in: Americas, Europe, Middle East, Africa and Asia Pacific