STRATEGIC ROADMAP Brian Economaki Gabriel Gaspar Harald Tolleshaug Tran Thi Thu Huong

1. ITO and BPO Industry size across the globe Presentation Agenda A. Perspectives 1. ITO and BPO Industry size across the globe 2. The Evolution of BPO solutions B. Growth 1. vCustomer 2. Shaping the new Strategy 3. Going International C. Plan 1. Implementation Roadmap 2. Financial Status

[ perspectives ] The competitive Landscape

Cost competitive destinations attracted most of ITO and BPO companies Situation Analysis: ITeS and BPO Outsourcing Destination Cost competitive destinations attracted most of ITO and BPO companies ITO and BPO Industry size in Outsourcing Destination Countries 2004 [USD m] 550 2,200 110 8,200 25 70 Russia Ireland Poland 700 5,500 Canada 12.2 200 300 China 100 Mexico 5.2 800 India 200 330 ITeS Exports Philippines 120 30 Brazil BPO Exports 220 50 40 25 Malaysa Romania S. Africa 25 Hungary Source: 1) neoIT

Situation Analysis: Value Creation through BPO As competitiveness increases, companies must offer value based solutions which improve their clients way of doing business Services offered by major companies: AMOUNT OF VALUE CREATED 1980 1985 1990 1995 2000 2005 2010 Transformational BPO Remote Infrastructure Management Product Development & Testing Design & Integration BPO Customer Contact/ Hardware & Installation Support Full Process Outsourcing Value Added Rules-based Processing Problem Solving Out-tasking Maintenance Application Support Technical Support Data Entry Strategic Impact

Situation Analysis: Quality Differentiation Although it is the cost-benefit perspective which attracts new clients – Differentiation and Value must be created vCustomer Solutions Objectives of Value Creation Client Retention MOVING FROM COSTS TO SPEED AND INNOVATION It is safe for services firms to gravitate towards large and "safe" market niches like SAP implementations, compliance  or SOA work - but the barrier to entry in most of these markets is pretty low. Custom Solutions ADDING VALUE THROUGH TRANSFORMATIONAL BPO SERVICES MIX CUSTOM PRODUCTS QUALITY AND EXPERTISE Client Acquisition ENTERING NEW MARKETS AND BUSINESS AREAS

Geographical Expansion [ growth ] Geographical Expansion

Growth Strategy: Potential of Middle-Sized Companies While major players (>1 bn USD) fight for large accounts, vCustomers specializes in middle-sized companies UNTAPPED DEMAND LIES ON MIDDLE-SIZED COMPANIES WHO WERE LEFT BEHIND ON THE OUTSOURCING PROCESS “Vendors who do not narrowly dominate niches in the broad market will continue to try and find the shrinking number of buyers who still buy on a relationpship basis.” Vinnie Mirchandani Founder of Deal Architect And Jetstream Group 21 % GROWTH POTENTIAL Accenture, CSC, EDS, Fijutsu,  HP and IBM combined have only 21% of market-share 1) Source: 1) Gartner

Growth Strategy: Benefits of CRM, BPO Competition is forcing players to expand internationally in order to further explore cost savings synergies Phase 1: National consolidation Phase 2: Internationalization Phase 3: Multinational consolidation Country A Country B Country A Country B Country A Country B Country C Country D Country C Country D Country C Country D Time Benefits Economies of scale Risk is less dependent on a single geographical area Additional funds for further growth – size drives further size National markets Consolidation activities Regional markets Products

Growth Strategy: Health Care Upcoming in Europe Current State of Demand: Health Care (Europe) Departmentalization of government Health Care Providers Demand for ITES in HR, Training, Revenue Cycle Management Looking to cut costs wherever customer care isn’t sacrificed Trends Changing Demand: 2007-2010 National Health Systems Gaining Interest in BPO Global Service Delivery in all Health Care Business Processes Positive impact of nearshoring Solution: End-to-End Business Process Solutions in long term contracts, maintaining quality and evaluating performance

Growth Strategy: Competitive Entrance In Eastern Europe Entering Europe through the back door – Cost-competitive countries on Eastern Europe will provide language and IT skills Country Analysis Framework 1 Labor cost 9 Labor skill Level Moscow 2 CAPEX + OPEX expenditures Riga Language proficiency 8 Warsaw Industry size 3 Kiev Prague Low Budapest Process maturity Bucharest 4 Medium Education System 7 Sofia High Location + Culture (nearshore) Infra-structure 5 6

Growth Strategy: Entering Bulgaria, Monitoring Hungary Expansion Location: Plovdiv & Varna (Bulgaria) As the market grows, further expansion can happen in Hungary Bulgaria India USA Cities with Students [# of graduates] Procedures [#] 11 11 5 Evaluation before expading into Hungary Cost [% of income per capita] 9.6 61.7 0.5 Min. Capital [% of income per capita] 104.2 Need for growth expansion Dealing with Licences [% of income per capita] 325 678 16.9 Difficulty of Hiring (0-100) 61 56 Difficulty of Firing (0-100) 10 90 10 Cost of Firing (0-100) 30 79 Varna Plovdiv Budapest Szeged Strength of Investor Protection (0-100) Bulgaria (1-2 years) Hungary (3rd year) TOTAL 5.3 6.0 8.3 Source: “Doing Business in 2006 – World Bank and the International Finance Group, McKinsey Quarterly”

Expansion Location: Monterrey, Mexico Growth Strategy: Entering Mexico Expansion Location: Monterrey, Mexico Primary Service: U.S. Market  81% ITES, 2006 Serve Spanish speaking population in U.S.: est. 100m Proximity to U.S. border  Nearshoring Infrastructure Strength: Two International Airports 5 renowned Mexican Universities: Monterrey Institute of Technology and Higher Studies Source: World Bank and IFC, 2006

[ plan ] Implementation Roadmap

3-Year Implementation: Overview Implementation Roadmap – Projects take place in a three year period according to milestones and checkpoints Bulgarian call center goes live Mexican call center goes live Year 1 Year 2 Year 3 RPO Recruitment & training – Mexico Evaluate Bulgaria Consider expansion Romania/Hungary Evaluate Mexico Further development on, or exit from, European healthcare market Internal RPO Recruitment & training - Bulgaria Evaluate and develop Bulgaria Mexico Pursue healthcare clients in European Markets External

Financial Status 3-Year Growth: Financial Outlook Positive CF since Q4.2001 25 mio. $ accumulated money reserve Stable CF from established CRM business Your financial flexibility is able to support the recommended expansion without raising further capital

3-Year Growth: Necessary Info. For Further Consulting Full disclosure of financials/accounts Budget preparation, evaluative criteria Potential and existing partnerships Offices/call centers operations Historical process of expansion Cash flows Risk evaluation Client List Contacts R & D programs and projects Strategic road map Consulting for further opportunities through monitoring and evaluation of all emerging markets. Risk analysis and trend identification, as well as strategic positioning for partnerships and/or acquisitions.

Thank You. Questions? EU Map SWOT vCustomer – the Company Competitive Landscape Motivations to Offshore Porter’s Five Forces Offshore Market Potential 1 Offshore Market Potential 2 Multiple Engagement Models Indian Business Models Vendor Selection Criteria Country Attractiveness Index ITO Landscape BPO Landscape Country SWOT 1 Country SWOT 2 Why Europe? – Offshore penetration by geography BPO in Europe – Q1 2007 A Viable Investment A Financial Example Ease of Doing Business – a Comparison World Ranking – Ease of Doing Business Ranking Criterias Bulgaria Bulgaria – Ease of Doing Business Why Bulgaria? Cities to operate in – Eastern Europe Mexico Mexico – Ease of Doing Business China – Ease of Doing Business Why not China 1? Why not China 2? Why not China 3? India – Ease of Doing Business

Porter’s Five Forces Index Porter’s Five Forces

Doing Business – a Comparison Ease of Doing Business Index Doing Business – a Comparison

Bulgaria Overview: Bulgaria member of the EU since 1.1.2007 Index Bulgaria member of the EU since 1.1.2007 inflation rate of 6,5% in 2006 flat corporate income tax 15% (no other European country beats this) established time limits on issuing licenses ranks 62 on the World Bank’s ‘Ease of Doing Business Ranking’, China ranks 91, India ranks 116 and US ranks 3 Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp., and “The World Factbook” - CIA

Bulgaria – Ease of Doing Business Overview: Bulgaria Cont. Index Bulgaria – Ease of Doing Business Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp.

Mexico Overview: Mexico corporate income tax 30% Index Mexico corporate income tax 30% Inflation rate of 3.4% in 2006 ranks 73 on the World Bank’s ‘Ease of Doing Business Ranking’, China ranks 91, India ranks 116 and US ranks 3. nearshore to the US Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp., and “The World Factbook” - CIA

Mexico – Ease of Doing Business Overview: Mexico Cont. Index Mexico – Ease of Doing Business Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp.

China – Ease of Doing Business Overview: China Index China – Ease of Doing Business Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp.

India – Ease of Doing Business Overview: India Index India – Ease of Doing Business Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp.

Ease of Doing Business Ranking Ease of Doing Business By Country Index Ease of Doing Business Ranking Source: “Doing business in 2006” – A copublication from the World Bank and the International Finance Corp.

Ease of Doing Business Criteria Index

Map of EU Index

Where to go – Eastern Europe Eastern Europe Suitabl Graduates Index Where to go – Eastern Europe Plovdiv & Varna

SWOT vCustomer SWOT: April 2007 Strengths Quality services Index SWOT Strengths Quality services Customized solutions Call centers in India ISO & Six Sigma certified Weaknesses High costs - no economies of scale Small product umbrella Limited financial ability Only located in India Opportunities Nearshoring Increasing demand from Europe Threats Increasing competition Market saturation Increasing nr. of BPO companies Industry M & A Losing quality during expansion

vCustomer – the Company vCustomer: Company Profile Index vCustomer – the Company Close to 100% customer retention Ranked as fastest growing private company in the ITES industry in 2004 Ranked among the top 5 pure play call-centers in 2006 Ranked 12th among the top 20 BPO companies in India 20 marquee clients 4500 employees

BPO Competitive Landscape Index

Motivations to Offshore Potential Client Offshore Motivation Index Motivations to Offshore

Why not banking, financial services & insurance? Index Inability to compete immediately with larger companies Lack of specialization/training of staff Economies of scale Trend toward megacontracts

Country Attractiveness Index 1

Country Attractiveness Index 2 - ITO ITO Landscape: 2006 (McKinsey) Index Country Attractiveness Index 2 - ITO

BPO Landscape: 2006 (McKinsey) Index

Country Analysis (neoIT) Index Country SWOT 1

Country Analysis (neoIT) Cont. Index Country SWOT 2

Why Europe? Index Why Europe?

Why India? Current competitive strength Index Current competitive strength Foundation of company, developed infrastructure of operations Despite rising labor costs, relatively low with other viable options Potential for growth still high Competitive advantage expertise of all business practices in country vCustomer needs to continually monitor India during all future evaluation periods. Competitive advantage with familiarity can lead to positioning in numerous circumstances, including partnerships, mergers, or any offerings of strategic buyouts.

Primary Criteria Secondary Criteria Why Bulgaria? Index Primary Criteria Secondary Criteria Strategic Partnership Nearshoring: EU Improving infrastructure Future potential EU Membership: Prioritized region Qualified workforce Gaining experience for potential EU operations Ease of transition to essential market to optimize first mover advantage

Why not China? Why not China? Red Ocean Index Economies of scale of larger (over $1b revenue) companies Pre-Olympic ‘boom’ vs. post-Olympic economy Strength in India

Unfamiliarity with culture Economic advantages of EU and NAFTA Why not China? Cont. Index Why not China? Lack of English speaking employees, high cost of internet connectivity, workforce immaturity. Unfamiliarity with culture Economic advantages of EU and NAFTA Not looking solely for cost advantages China needs to be continually monitored as an expansion option to 2010 and beyond

Why not China?: Nearshoring Why not China? Cont. Index Why not China?: Nearshoring

Offshore Market Potential Index

Offshore Market Potential 2 ITO/BPO Industry Outlooks: 2005 Index Offshore Market Potential 2

Multiple Engagement Models Index From primarily captive… …to a hybrid model Indian best-of-breed vendor Indian best-of-breed vendor Outsource to Global brand Outsource to Global brand Feasibility of outsourcing the process JV/ Alliance JV/ Alliance Delay Captive Delay Captive Cross-border operation sophistication Source: McKinsey Analysis

Indian Business Models Strategic Alliance/Joint Index India Business Models Captive Models Strategic Alliance/Joint Venture Models Outsource Model Pure Captive Model An internal cost center or a 100% subsidiary company set-up to execute offshore business processes and/or IT services Amex, Dell, Standard Chartered, HSBC, Ford, Sun Joint Venture (JV) Joint Venture with equity participation from customer and vendor. Customer retains control due to investments in entity. British Telecom - Mahindra Pure Outsource Use of a India-based provider to offshore business processes or IT services Managed Outsource Full-/part-time resources on the ground in India to facilitate transition, relationship mgmt and transfer of organization and domain knowledge to third party providers BOT and Inverted BOT Where the Indian Provider sets up facility and provides implementation support to start with Customer can buy out at a predetermined stage Reverse scenario has also been seen in the market Aviva-WNS/EXL,24/7, AIG- Polaris

Criteria for Vendor Selection Index

Startup Costs Index Source: UCN, Inc. Start Up Cost per Teleworker One-Time   Furniture, Equipment and Telecommunications $5900 One time charges, Set-up & Installation $1200 Total per Teleworker $7100† Ongoing Monthly Costs Recurring Telecommunications $110/month Network & home office/teleworker support Total Average Cost per Year $2640 Year One Average Cost $9740 Year Two Average Cost Savings from unneeded office build out $1,500,000 One-Time start-up Costs (710,000) Annual Real Estate Cost Avoidance $ 500,000 Productivity ($50K salary x .15 x 100) 750,000 Retention ($50K salary x .20 x 100) 1,000,000 On-Going annual costs (264,000) Net Annual Savings (1st Year) 276,000 790,000 Net Annual Savings (2nd - 5th years) 1,986,000 Total Five Year Savings 10,010,0008 Source: UCN, Inc.

Source: Nelson Hall April 17, 2007 BPO in Europe: April 17th, 2007 Index BPO in Europe - 2007 BPO activity in last 12 months higher in EU than in US Benelux and Central Europe up 13% -Trend for growth throughout all of Europe, not just UK Industry specific outsourcing responsible for increase in Europe Source: Nelson Hall April 17, 2007

A Viable Investment Index “Czech Republic, Hungary, Poland, and Slovakia—can offer average labor cost savings of 40 to 60 percent over costs in Western Europe, while cities in EU-candidate and non-EU countries can offer cost advantages of 60 to 80 percent.” - The McKinsey Quarterly - “The Overlooked Potential for Outsourcing in Eastern Europe”, Dec. 06