Using the Downturn to Prepare for the Upturn

LONDON NOW

Using the Downturn to Access Technology Opportunities in the UKWebinar

29th September 2009

Speakers

Sunil Dwivedi, Head of India, Think London

Ian Gomes, Partner,

Chairman New and Emerging Markets, KPMG

Udayan Guha, Vice President Europe,

HCL Technologies

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Presentation title goes here

Who we are

London’s foreign direct investment agency

Supported by Government & the business community

Confidential & comprehensive consultancy service

Experts on London business

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Think London ICT Clients

Quick Poll

So why London Now ?

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Presentation title goes herePresentation title goes here

Talent▲Talent Pool – Deeper & Wider

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1.9millionHighly qualified workers

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Property▼West End Rent down 30% from 2008

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£▼18% against the dollar

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£ Living▼From 3rd to 16th rank worldwide

Think 2012 Games

Europe’s capital of ICT

• More than 20,000 companies in software and IT• London’s ICT sector is worth $27 billion• 500,000 IT and technology workforce• Europe’s most e-enabled city• 7,000+ wireless access points• 50% of UK mobile subscribers will use mobile internet services by 2010

3.5%

4.3%

5.5%5.8%6%6.2%

9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Public sector Banking FinancialServices

Telecoms &Media

Insurance Energy &Utilities

Retail,Wholesale,Hospitality

6% pa

UK demand for Software & IT Services Source: Holway/Ovum

Average growth across all vertical markets up to 2010

Vertical market growth (CAGR 2005-2010)

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Touchdown London

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London Now!

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Ian Gomes, KPMG

London's window of opportunity - how much longer?

© 2009 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 18

London within Europe – IT/BPO opportunity

SEPTEMBER 2009

HIGH GROWTH MARKETS

KPMG


Strategic imperatives facing global IT players in Europe

Strategic Imperatives Key Challenges

Service offering (IT, Services, Consulting)

Market Focus (sector, geography)

Outsourcing capabilities (onshore, offshore)

Scale (growth, consolidation)

Pricing pressures

Skills shortages

Language and cultural differences

Acceptance of outsourcing

Increasing protectionism

Customer Behavioral pattern UK Germany France Italy Spain

Price H M M H H

Quality of solution L H M L M

Personal relationships M M H H H

Local culture L M H H M

Importance of local staff L L H M L

Impact of local regulation L M M H L

Responsiveness/Service levels M H L L L

Vendor Reputation H M M M M

Openness to outsourcing H M M M H

Openness to offshoring H M M M H

Globalization is a natural consequence of the development of the worldwide IT industry


European IT/ITES Market Landscape

Russia

Poland

Moldova

Ukraine

Serbia

Bulgaria

Romania

Hungary

SlovakiaCzech Republic

Belarus

Bosnia

CroatiaSlovenia

Estonia

Latvia

Lithuania

Montenegro

MacedoniaSpain

France

UK

Italy

Ireland

Sweden

Finland

Poland

TurkeyPortugal

Germany

Norway

Austria

Belgium

Netherlands

Switzer-land

Greece

Albania

Denmark

Russia

Poland

Moldova

Ukraine

Serbia

Bulgaria

Romania

Hungary

SlovakiaCzech Republic

Belarus

Bosnia

CroatiaSlovenia

Estonia

Latvia

Lithuania

Montenegro

MacedoniaSpain

France

UK

Italy

Ireland

Sweden

Finland

Poland

TurkeyPortugal

Germany

Norway

Austria

Belgium

Netherlands

Switzer-land

Greece

Albania

Denmark

UKComputer hardware, Software products, IT services

Revenues 2006 € million

2007€ million

2008 € million

2009 € million

2008-09 CAGR

UK 40,627 43,380 45,528 48,033 5,5 %

Germany 28,517 30,767 32,806 34,950 6,5%

France 22,091 23,478 24,837 26,308 5,9 %

Italy 10,005 10,040 10,126 10,248 1,2 %

Spain 6,831 7,333 7,808 8,313 6,5 %

GermanySoftware products, IT services

France Datacom and network equipment, Software products, IT services

ItalyDatacom and network equipment, Software products , IT services

SpainComputer hardware, Software products, IT services

Source: EITO

What do the important European markets buy?


Emergence of the Offshoring Market in Europe

Traditional Coverage

Outsourcer Offering

Sample Products

Appetite in important European sectors

Manuf.Financial Services

Telecom/ Retail

Public Sector

Front Office

Sale, Marketing, Distribution

CRMOriginating sale,

after sales serviceL H H M

Internal Office

Production, Services, Delivery

Develop New/ Administer Application

New Proposal Processing

L M M M

Back Office

Maintaining Efficiency in Cost

FunctionsEAD/BPR F&A/HRO M H H H

Upkeep of Efficient IT Systems

Systems Integration,

MaintenanceITO H H H H

Weight of FS, Services and Public Sector in UK economy and their current pressures to rationalize costs/improve efficiencies makes it an interesting Offshore market

9%

6.2%

6%

5.8%

5.5%

4.3%

3.5%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

Public sector

Banking

Financial Services

Telecoms & Media

Insurance

Energy & Utilities

Retail, Wholesale, HospitalitySource: Holway/Ovum

Growth in Customer Segments (2005-10)


UK Offshoring Market continues to surge

0

500

1000

1500

2000

2500

3000

3500

4000

2004 2005 2006 2007 2008 2009

Ma

rke

t S

ize

(E

UR

Mn

)

UK/Ireland Germany/Austria/Switzerland France Nordics Benelux Italy

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Infrastructure Application Management BPO

Share of BPO has grown from less than a third of UK outsourcing to just under half

Market EUR Mn 2004 2005 2006 2007 2008 2009 CAGR

UK/Ireland 768 1076 1453 1882 2332 2766 29%

Germany 115 126 53 185 223 266 18%

France 97 111 134 157 183 212 17%

Nordics 40 52 67 86 110 138 28%

Benelux 38 50 65 83 105 133 28%

Italy 39 43 49 63 74 86 17%

Spain/Portugal 16 18 21 27 31 36 17%

Total 1,113 1,476 1,943 2,483 3,057 3,636 27%

UK has emerged as the dominant Offshore Market in Europe

Source: Forrester

Source: Ovum


How does the UK IT market compare with Rest of Europe ?

UK Rest of Europe

Size Second largest Offshore market after US

Relatively lower sized Offshore market

Appetite Large and growing. Entirely driven by considerations of saving cost and improve efficiencies

Not yet as widely accepted. Customers less familiar and more wary

Language Hub for tapping English speaking geographies viz. UK, Ireland, Benelux, Nordics

Language continues to be a barrier

Immigration and labour laws

Easier mobility and Home Office regulations on UK WP & Business Visas

Often tougher labour laws and unions can impede staff transfers and BPO supplier options

Talent pool Easier availability of Indian nationals and even UK nationals that are well-versed with the ‘Indian Offshore Delivery Model’

vs


What makes London so special within UK?

• Hub for Global Banking

• Centre of Intellectual Excellence

• High standards of living

• Amongst largest services driven economies

• Abundant pool of talent

Apple ComputersAlcatel-LucentAT&T CorporationAtos OriginAxill EuropeCanonChina NetcomCisco SystemsChina TelecomDoCoMo EuropeEedo Knowledge CorporationElectronic Data SystemsEMC2EYP Mission CriticalFrance telecomFujitsu Services HoldingsGoogleHCLHutchison WhampoaIBMInfosysInnopathLarsen & Toubro Infotech

KG InternationalMcKeesson CorporationMicrolandMicrosoft UKNCRNokiaNTTOrgangePerot SystemsQualcommRadiant SystemsRaytheonSamsungSharpSiemens CommunicationSony EricssonT-MobileTata Consultancy ServicesTelenorTelesoneraTelstra EuropeUnisys CorporationWIPRO


Contacts

Ian GomesChairmanHigh Growth Markets PracticeKPMG LLP+44 (0) 20 [email protected]

mailto:[email protected]

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Udayan Guha,HCL Technologies

Think London

Udayan Guha

Vice President, Europe

28th September 2009

28 28

The HCL Enterprise

A culture of trusted partnerships with large

customers including JVs with organizations

like Hewlett-Packard (1991), Deutsche Bank

(2001), British Telecom (2002), NEC (2005),

to name a few

Founded 33 years ago, by Shiv Nadar,

a globally respected visionary,

a Forbes billionaire and the recipient of the

Padma Bhushan, one of the highest civilian

recognitions bestowed by the Govt. of India

HCL Technologies

Highlights

HCL Infosystems

The software services

arm

Total Revenues $5B

Employees 60,000

Countries 26

Systems integration arm

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HCL in Europe

Headquartered in UK - Offices in London and Greater London ( Croydon and Romford) Continental Europe: Offices in Germany, Netherlands, Belgium, France, Italy,

Switzerland, Sweden Total number of employees in Europe today ~ 4500 Total number of employees in UK as on 31 Mar 09 ~ 3725 employees Three of the largest customers of HCL are from UK Executed one of largest IT acquisitions in UK. £441 million acquisition of AXON Group

plc (2000 employees, £205 million revenue) Growing faster than any other geography, HCL’s Europe business contribution has

increased from 7% of the company’s revenues (FY01) to 35% (FY09). European revenues have grown by 54% year-on-year to 30.5% of total revenue.

Industry Accreditations

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Recognitions for HCL in Europe

One of Britain’s Top Employers in 2007 and 2008 by CRF UK.Recognized for its long standing commitment to supporting employee productivity in a culture and working environment in which they feel appreciated and innovation is allowed to thrive. Third successive year that HCL has been shortlisted and nominated as one of Britain’s Top Employers

The FT ArcelorMittal Boldness in Business Award. Presented the ‘Readers’ Award’ in recognition for the strategic acquisition of Axon, Employee First philosophy and exceptional contribution to client success

The International Investor Of The Year Award - presented by the Greater Paris Investment Agency in recognition of the investment made by HCL in the greater Paris area in 2008

Commended Vendor of the Year by the National Outsourcing Association (NOA) in the UK for the Best Practice Winner Awards

Investor of the Year - HCL UK was recognized as Top Investor of the Year 2006 by the UK Trade and Investment Board. HCL Technologies Chairman, Shiv Nadar was conferred the UK Trade and Investment Business Person of the year award for 2009

London Business School published a report in their annual “Business Strategy Review” recognizing “Organizational Innovation” in 10 notable global organizations, including HCL Technologies, the lone Indian company featured. Report talks about “Employee First” as a new model of management and talks about “HCL heading in the right direction”

http://www.uktradeinvest.gov.uk/

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Why London as your base in Europe?

London and greater London offers the best pool of global talent. Some of the world’s best universities and B Schools are based in London providing a talent base in excess of 65,000 per year.

TalentTalent

London is the European / global base for 75 per cent of the Fortune 500 companies making it ideal for client relationship management.

London is the place to be if you want to develop business in emerging verticals like UK Public Sector, pharmaceuticals, bio-technology

The traditional sectors in London are predominantly Financial Services, having more international banks than any other city and naturally the biggest customer segment for most ITES companies.

Centre for global financial service clients

Centre for global financial service clients

Access to large global corporates / emerging verticals

Access to large global corporates / emerging verticals

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Why London as your base in Europe? ... contd

Hub of international travel routes, making it the world's best-connected city. Major Airports include Heathrow, Gatwick, Luton, City ,Stanford all operating multiple carriers to all major cities in the world.

Eurostar makes it easy to travel to Paris and Brussels

Travel accessTravel access

Convenient international time zones making it the most ideal place for setting base to conduct business with organisations in Europe, Middle East, South Africa and Asia.

Time-zoneTime-zone

Business friendly city – hardly any red tape to start a company Flexible labour laws

Ease of starting businessEase of starting business

Think Now - Think Londonwww.thinklondon.com

Any Questions?Any Questions?

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