1. Establishing a Software Development Centre in Scotland A cost-quality comparison (Based on information from the Financial Times fDi Benchmark tool – June 2011)

2. Competitiveness of Scotland Value for Money Overall Attractiveness Quality of the Location Annual Operating Costs Quality Competitiveness General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Contents

3. The following analysis is based on fDi Benchmark, an online location benchmarking tool provided by the Financial Times (FT) fDi Benchmark compared the Scottish Central Belt with the leading locations globally for establishing a Software Development Centre based on an analysis of over 55 quality factors and 10 cost factors A key emphasis was placed on: - Presence of industrial cluster – the size of the industry, track record and R&D capabilities; and - Labour availability and quality – tightness and competition for labour, and experienced industry- specific staff Other factors including general business environment, and quality, infrastructure and accessibility and the living environment were also assessed Benchmarking Study

4. Project Profile Overview Cost FactorUsage Amount Property Total Occupancy cost (in town office rent)2,000 m² Weighting Model OverviewWeight Presence of an Industrial Cluster40 Labour Availability and Quality35 General Business Environment10 Infrastructure and Accessibility10 Living Environment5 Employee TypeProfile Head count General Management Business Unit Manager1 Information Technology Computer Operator28 Programmer25 Senior Programmer6 Senior Software Development Engineer8 Senior Web Developer3 Software Development Engineer14 Technology Engineering Specialist6 Web Developer5 R&D / Engineering R&D Team Leader2 Administration Secretary2

5. fDi Benchmark Matrix The fDi Benchmark Matrix shows the trade off between cost and quality across the 6 selected locations for the Software development centre profile. The average cost and quality score is 100 for the selected locations. Source: fDi Intelligence, from the Financial Times Ltd The ‘ideal’ quadrant is the top left (high quality/lower operating costs)

6. fDi Benchmark Matrix The matrix is based on the weighting and cost model for the Software development centre, June 2011 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:  the Scottish Central Belt offer higher quality at lower cost than the average of all the selected locations  New York City offer higher quality but at higher cost  Birmingham, Leeds, Manchester offer lower cost, but at lower quality The Operating Cost value is in GBP - United Kingdom Pound LocationQualitative Score Operating Cost Index Operating Cost Value Birmingham62.484.74,006,251 Dublin96.7103.74,907,897 Leeds52.986.34,083,375 Manchester62.882.03,877,210 New York City (NY)216.3155.57,354,875 Scottish Central Belt109.087.94,156,248 Source: fDi Intelligence, from the Financial Times Ltd

7. Location Attractiveness Index The location attractiveness index shows the overall attractiveness of the 6 selected locations for the Software development centre profile. The ratio of quality to cost is 50:50 Source: fDi Intelligence, from the Financial Times Ltd

8. Cost Quality Competitiveness The cost quality competitiveness uses the results of the 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 and New York City  the Scottish Central Belt and New York City offer an above average level of quality and good value for money as their relative quality is higher than their relative cost. Source: fDi Intelligence, from the Financial Times Ltd

9. Cost Competitiveness The annual operating cost calculation for Software development centre is based on the following primary input costs: Labour Cost  The average cost across the selected locations for Software development centre is GBP 4,730,975  The greatest cost saving between the selected locations is GBP 3,477,664 per annum  The values in the chart below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

10. Cost Competitiveness LocationLabour CostProperty Birmingham3,130,077876,174 Dublin4,190,535717,361 Leeds3,255,991827,383 Manchester2,990,729886,480 New York City (NY)6,373,381981,492 Scottish Central Belt3,330,902825,345 The locations with the lowest operating costs are the Scottish Central Belt and Birmingham In terms of the individual cost factors, the locations with the lowest costs are:  Labour Cost: Manchester and Birmingham  Property: Dublin and the Scottish Central Belt The values in the table below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

11. Quality Competitiveness The quality competitiveness assessment is based on the weight model for the Software development centre 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 and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

12. Quality Competitiveness Location General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Birmingham92216105 Dublin112151105 Leeds91811105 Manchester919 105 New York City (NY)139988115 Scottish Central Belt9315595 In terms of the individual quality factors, the locations with the highest scores are:  General Business Environment: New York City and Dublin  Labour Availability and Quality: New York City and the Scottish Central Belt  Presence of an Industrial Cluster: the Scottish Central Belt and New York City  Infrastructure and Accessibility: New York City and Manchester  Living Environment: New York City and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

13. General Business Environment The quality competitiveness breakdown for General Business Environment for the Software development centre profile is shown below The locations with the highest overall scores for General Business Environment are New York City and Dublin Source: fDi Intelligence, from the Financial Times Ltd

14. General Business Environment Location Economic growth and stability Operating risk Taxation and incentives Regulatory environment Birmingham 0.531.811.914.99 Dublin 0.572.752.574.91 Leeds 0.321.811.914.99 Manchester 0.491.811.914.99 New York City (NY) 3.662.021.815.12 Scottish Central Belt 0.431.811.914.99 In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are:  Economic growth and stability: New York City and Dublin  Operating risk: Dublin and New York City  Taxation and incentives: the Scottish Central Belt and Dublin  Regulatory environment: the Scottish Central Belt and New York City Source: fDi Intelligence, from the Financial Times Ltd

15. Labour Availability and Quality The quality competitiveness breakdown for Labour Availability and Quality for the Software development centre profile is shown below The locations with the highest overall scores for Labour Availability and Quality are New York City and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

16. Labour Availability and Quality Location Overall size of labour market Tightness and competition for labour Experienced industry-specific staff Flexibility of labour regulations Birmingham 3.474.342.7611.59 Dublin 1.094.084.6910.74 Leeds 1.843.031.7311.59 Manchester 2.283.611.6811.59 New York City (NY) 20.552.9659.0616.40 Scottish Central Belt 2.272.9814.0811.59 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 and Birmingham  Tightness and competition for labour: Dublin and Birmingham  Experienced industry-specific staff: New York City and the Scottish Central Belt  Flexibility of labour regulations: New York City and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

17. Presence of an Industrial Cluster The quality competitiveness breakdown for Presence of an Industrial Cluster for the Software development centre profile is shown below The locations with the highest overall scores for Presence of an Industrial Cluster are the Scottish Central Belt and New York City Source: fDi Intelligence, from the Financial Times Ltd

18. Presence of an Industrial Cluster Location Size of industryTrack record Research and Development Capabilities Birmingham 7.044.364.94 Dublin 13.8328.778.18 Leeds 5.420.524.93 Manchester 7.892.888.20 New York City (NY) 26.4612.7448.88 Scottish Central Belt 23.3522.738.87 In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are:  Size of industry: the Scottish Central Belt and New York City  Track record: Dublin and the Scottish Central Belt  Research and Development Capabilities: the Scottish Central Belt and New York City Source: fDi Intelligence, from the Financial Times Ltd

19. Infrastructure and Accessibility The quality competitiveness breakdown for Infrastructure and Accessibility for the Software development centre profile is shown below The locations with the highest overall scores for Infrastructure and Accessibility are New York City and Manchester Source: fDi Intelligence, from the Financial Times Ltd

20. Infrastructure and Accessibility Location Access to major overseas markets Quality of utilities Quality of ICT infrastructure Birmingham 2.095.022.59 Dublin 2.644.792.14 Leeds 2.575.022.52 Manchester 2.745.022.67 New York City (NY) 3.175.123.15 Scottish Central Belt 1.785.021.93 In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are:  Access to major overseas markets: New York City and Manchester  Quality of utilities: New York City and the Scottish Central Belt  Quality of ICT infrastructure: New York City and Manchester Source: fDi Intelligence, from the Financial Times Ltd

21. Living Environment The quality competitiveness breakdown for Living Environment for the Software development centre profile is shown below The locations with the highest overall scores for Living Environment are New York City and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

22. Living Environment Location Cost of living Attractiveness for international staff Birmingham 3.671.24 Dublin 3.331.57 Leeds 3.561.17 Manchester 3.741.32 New York City (NY) 2.852.35 Scottish Central Belt 3.861.35 In terms of the individual quality criteria within Living Environment, the locations with the highest scores are:  Cost of living: the Scottish Central Belt and Manchester  Attractiveness for international staff: New York City and Dublin Source: fDi Intelligence, from the Financial Times Ltd

23. 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