Webinar presentation "Outsourcing in CEE. Country Overview. Bulgaria" by BWA

1. Presenter: Sava Vladov, Sofica Group JSC Bulgarian Web Association (BWA) and Partners

2. WHY Outsourcing in BULGARIA Page 2/37

4. BULGARIA General Information Page 4/37

5. BULGARIA General information Official name Capital Territory Official language Political system Human Development Index*: 2007: 53 (1 = most, 177 = least developed) 2006: 54 (from 177) 2005: 55 (from 177) 2004: 57 (from 175) *- The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income). Between 2000 and 2007 Bulgaria's HDI rose by 0.65% annually from 0.803 to 0.840 today. Republic of Bulgaria Sofia 110.550 sq km Bulgarian Parliamentary Republic Page 5/37

8. BULGARIA Doing Business Page 8/37

9. BULGARIA Doing business In 2010 Bulgaria was ranked 44th out of 183 countries by the “ Ease of Doing Business Index” of the World Bank. Economies are ranked on their ease of doing business, from 1 – 183, with first place being the best. A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings are from the Doing Business 2010 report, covering the period June 2008 through May 2009. Page 9/37 Ease of … Doing Business 2010 rank Doing Business 44 Starting a Business 50 Dealing with Construction Permits 119 Employing Workers 53 Registering Property 56 Getting Credit 4 Protecting Investors 41 Paying Taxes 95 Trading Across Borders 106 Enforcing Contracts 87 Closing a Business 78

10. BULGARIA Doing business Page 10/37 Starting a business in Bulgaria. Eastern Europe & Central Asia comparison: The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita. Indicator Bulgaria Eastern Europe & Central Asia OECD Average Procedures 4 6.7 5.7 Time (days) 18 17.4 13.00 Cost (% of income per capita) 20.7 21.5 15.5 Source: 2010 World Bank, Ease of Doing Business Index

11. BULGARIA Doing business Starting a business in Bulgaria. Eastern Europe & Central Asia comparison Source: 2010 World Bank, Ease of Doing Business Index Page 11/37

12. BULGARIA Doing business Page 12/37 Paying taxes. Eastern Europe & Central Asia comparison: T he data below shows the tax that a medium-size company in Bulgaria must pay or withhold in a given year, as well as measures of the administrative burden in paying taxes. These measures include the number of payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the percentage of their profits they must pay in taxes. Indicator Bulgaria Eastern Europe & Central Asia OECD Average Payments (number per year) 17 46.3 12.8 Time (hours per year) 616 336.3 194.1 Profit tax (%) 4.5 10.9 16.8 Labor tax and contributions (%) 22.9 23.1 24.4 Other taxes (%) 3.9 9.4 3.3 Total tax rate (% profit) 31.4 43.4 44.5 Source: 2010 World Bank, Ease of Doing Business Index

13. BULGARIA Doing business Paying taxes. Eastern Europe & Central Asia comparison Source: 2010 World Bank, Ease of Doing Business Index Page 13/37

14. BULGARIA Doing business Page 14/37 Employing Workers. Eastern Europe & Central Asia comparison: The difficulties that employers face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices. Indicator Bulgaria Eastern Europe & Central Asia OECD Average Difficulty of hiring index (0-100) 17 31.9 26.5 Rigidity of hours index (0-100) 40 29.9 30.1 Difficulty of redundancy index (0-100) 0 25.9 22.6 Rigidity of employment index (0-100) 19 29.2 26.4 Redundancy costs (weeks of salary) 9 27.8 26.6 Source: 2010 World Bank, Ease of Doing Business Index

15. BULGARIA Doing business Page 15/37 Protecting investors The indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection. Indicator Bulgaria Eastern Europe & Central Asia OECD Average Extend of disclosure index (0-10) 10 6.1 5.9 Extend of director liability index (0-10) 1 4.3 5 Extend of shareholders suits index (0-10) 7 6.1 6.6 Strength of investor protection index (0-10) 6.0 5.5 5.8 Source: 2010 World Bank, Ease of Doing Business Index

16. BULGARIA Doing business Protecting Investors Source: 2010 World Bank, Ease of Doing Business Index Note: The higher the score, the greater the investor protection Page 16/37

17. BULGARIA Outsourcing Page 17/37

21. BULGARIA Why Outsourcing Page 21/37

22. BULGARIA Why Outsourcing Business process outsourcing (BPO) Involves the transfer of the day-to-day execution of an entire business function to an external service provider . Business segments typically outsourced in Bulgaria include data processing services, administration payroll, tele- marketing, accounting, billing and credit control, b ack o ffice o perations , product support, customer support, legal database maintenance; the list of services is endless. “ With an abundance of educated and multilingual prospective employees, Bulgaria is certain to continue to make inroads into global business process outsourcing” Statement by Peter Ryan, Data Monitor analyst Over 465,000 high school students are studying one foreign language, 200,000 students are studying 2 and 3 foreign languages. All university graduates study at least 1 foreign language. Knowledge Process Outsourcing (KPO) can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity . While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency. KPO services in Bulgaria have extended to various industries such as financial services, banking, insurance, marketing and research and legal services. IT Outsourcing (ITO). Bulgaria is a country with strong base of education. Excellent mathematics, science and engineering schools and highly skilled professionals are found here. This is the best place for the high-end, complex, but small-scale projects and contact centres. IT outsourcing market value (USD Mln) 250 Number of IT outsourcing companies: more than 410 Number of employees involved in IT outsourcing industry: more than 8 200 Page 22/37

26. BULGARIA Why Outsourcing City: Sofia Population : 1 267 098 Economic activity of the population : 75.8% Avg Rent prices: City Center : 5-25 €/m₂ Business parks : 8-13 €/m₂ Percentage of vacant office space : 18% Education : 98 771 university students, 16 825 graduates each year City: Plovdiv Population : 376 297 Economic activity of the population : 66.1% Rent prices: City Center : 2.5-12 €/m₂ Education : 27 201 university students, 3 176 graduates each year City: Ruse Population : 167 043 Economic activity of the population : 66% Rent prices : 4-18 €/m₂ Education : 8119 university students, ~1 900 graduates each year City: Varna Population : 351 931 Economic activity of the population : 69.8% Rent prices : City Center : 4-12 €/m₂ Business parks : 12 €/m₂ Percentage of vacant office space : 26% Education : 32 027 university students, ~5 777 graduates each year Source: indeximoti.bg & National Institute of Statistics Page 26/37 City: Veliko Turnovo Population : 66 958 Economic activity of the population : 35% Education : 5 245 university students City: Bourgas Population : 208 402 Economic activity of the population : 63.9% Rent prices : City Center : 3-10 €/m₂ Education : 11 919 university students, 1 098 graduates each year

27. BULGARIA Outsourcing Development Trends Page 27/37

29. BULGARIA Outsourcing Development Trends Page 29/37 NEW APPROACH? From clustering companies to Clustering…countries Cooperation of small and fragmented countries ( or small, but clustered industries ) make BIG capacity and recognized brand

30. www.bwa.bg Established in 2004 The main branch organization of the web companies Members : 5 5 big, middle and small companies in 3 categories: Web studios, Web media , Web services Member of : - The Advisory Council on electronic communication, post services, information society and electronic management under the Ministry of Transport, Information technology and Communications (MTITC) - Central and Eastern European Outsourcing Association (CEEOA), www.ceeoa.org - European Center for Women and Technology (ECWT), www.womenandtechnology.eu Our Mission: BWA keeps up with the web technologies development for achieving professional standards for quality web services and products in Bulgaria. BWA promotes the advantages of web and Internet among the business society, general audience, and government and non-government organizations in Bulgaria and EU. Our goals: - Strengthen position of the companies, which work in the field of information and communication technologies ( ICT ) and protect their interests on the Bulgarian and European market - Develop quality standards for work in the web; Unite the professional organizations in the field of ICT - Strengthen the web technologies as a momentum for the development of the business and the society as a whole Bulgarian Web Association (BWA) and Partners Page 30/37

31. Bulgarian Association of Software Companies ( BASSCOM ) www.basscom.org BASSCOM is the industry association of leading Bulgarian software development companies. Its mission is to promote competitive advantages and long-term traditions in software development as well as to encourage acquisition of best practices to raise company excellence. ADECCO www.adeccobulgaria.com Adecco is well-positioned and informed career partner to business and individuals. The company aims to set the standard for best practice in the HR consulting industry. AII Data Processing www.aiidatapro.com AII Data Processing is a major outsourcing provider focused on boutique BPO, information and editorial operations outsourcing, data processing and business services, including credit management, telesales and telemarketing. ICT Cluster Bulgaria www.ictalent.org Bulgarian ICT Cluster is a business organization specialized in information and communication technologies. The organization’s main priority is the use of information and communication technologies as a way to achieve economic growth and sustainable development. BWA Partners for the Webinar Page 31/37 SOFICA GROUP JSC www.sofica-group.com Sofica Group JSC is the leading independent BPO service provider on the Bulgarian market. The broad range of services offered by the company are structured in three distinctive service lines, namely HR outsourcing, Contact Centre services and Managed services.

32. Bulgarian Web Association (BWA) Dora Vassileva Chairman of the Board of Directors Tel .: +359 2 916 68 15 Е- mail: [email_address] Web: www.bwa.bg Zornitsa Simeonova Executive Secretary Tel .: +359 2 916 68 15, 952 22 27 Е- mail: z.simeonova@bwa.bg Contacts Page 32/37

33. Sources Page 33/37 Ministry of Finance of the Republic of Bulgaria / http://www.minfin.bg/en/ Bulgarian National Bank / http://www.bnb.bg/index.htm?toLang=_EN/ National Statistical Institute / http://www.nsi.bg/index_en.htm/ 2009 UN, Human Development Report / http://hdr.undp.org/en/statistics/ 2010 World Bank, Ease of Doing Business Index /http://www.doingbusiness.org/ 2009 A.T. Kearney, Global Services Location Index /http://www.atkearney.com/index.php/Publications/global-services-location-index-gsli-2009-report.html/

34. Page 34/37 BEST PRACTICES

35. Best practices - HP Page 35/37 A Success Story HP Global Delivery Center in Sofia On February 1, 2006 Hewlett-Packard Co. officially opened a new technical operation in Sofia - Global Delivery Center. Bulgaria was chosen amid severe competition from a list of 14 countries including Russia, Ukraine and Romania. The purpose of the center is to provide clients and partners of the company worldwide with high-value and cost effective IT and business remote services. The decision was a key strategic initiative by HP Services aimed at transforming the way in which HP delivers value to its customers, ultimately resulting in a world class global delivery model leveraging industry best practices. Three companies, Adecco, Sitel and Sofica Group, partnered with HP in the implementation of the project. Sofia Global Delivery Center today employs approximately 2100 employees (high level technical experts, service desk agents, specialists providing business and financial analysis , supply and administrative services). The Center in Sofia was recently appointed as Strategic one in IT Outsourcing business, among all other Global delivery Centers in Europe, Middle East and Africa. There are plans for significant growth (double size) in next 3 years. The factors for this decision are the excellent results and marvelous achievements which have been made for 4 years of GDC existence in Bulgaria.

37. Thank You! Page 37/37