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

2. 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

3. [ perspectives ]
The competitive Landscape

4. 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

5. 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

6. 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

7. Geographical Expansion
[ growth ]
Geographical Expansion

8. 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

9. 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

10. 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:
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

11. 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

12. 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”

13. 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

14. [ plan ]
Implementation Roadmap

15. 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

16. 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

17. 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.

18. 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

19. Porter’s Five Forces
Index
Porter’s Five Forces

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

21. Bulgaria Overview: Bulgaria member of the EU since 1.1.2007
Index
Bulgaria
member of the EU since
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

22. 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.

23. 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

24. 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.

25. 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.

26. 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.

27. 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.

28. Ease of Doing Business Criteria
Index

29. Map of EU
Index

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

31. 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

32. 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

33. BPO Competitive Landscape
Index

34. Motivations to Offshore
Potential Client Offshore Motivation
Index
Motivations to Offshore

35. 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

36. Country Attractiveness Index 1

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

38. BPO Landscape: 2006 (McKinsey)
Index

39. Country Analysis (neoIT)
Index
Country SWOT 1

40. Country Analysis (neoIT) Cont.
Index
Country SWOT 2

41. Why Europe?
Index
Why Europe?

42. 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.

43. 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

44. 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

45. 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

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

47. Offshore Market Potential
Index

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

49. 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

50. 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

51. Criteria for Vendor Selection
Index

52. 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.

53. Source: Nelson Hall April 17, 2007
BPO in Europe: April 17th, 2007
Index
BPO in Europe
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

54. 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