LogicaCMG has a global service delivery model that blends onsite, offshore, and nearshore resources to provide services. Around half of its 6,000 employees are based in two facilities in India, serving clients across Europe, Asia Pacific, the US, and Australia. While India will remain a key outsourcing hub, Central and Eastern Europe is becoming a more attractive nearshore location for European companies due to proximity, cultural affinity, language skills, and other factors. LogicaCMG's blended delivery model matches projects with the right competencies from global centers to provide the best value.

1. India Outsourcing &
LogicaCMGs sourcing model
Arnošt Schmidt
CEE business development manager
Global Service Delivery
LogicaCMG
© LogicaCMG 2006. All rights reserved

2. A warm welcome from India/Bangalore
<Business Tuesday, January 8th 2008, Arnost Schmidt>

3. Service delivery from India
3000
Service delivery capability to R&D Services
2500 offer application, infrastructure
and BPO services
Managed Testing services
2250 Around half of our 6,000
employees are based in two
facilities in India (including a IM services
2000 Control
disaster recovery site) Bridge
Serving clients across Europe, made
1750
APAC, US and Australia ERP services operational
1500 Business services support for BPO services
internal processes in UK, NL, Level 5
AM/AD services
Germany, Portugal
1250 Service Desk
1000
750
500
250 Formation of LogicaCMGs
UK and NL Hubs established Global Service Delivery
0
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2003 2004 2005 2006 2007
<Business Tuesday, January 8th 2008, Arnost Schmidt>

4. What is India famous for ?
but also:
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5. Still a Human Resource Advantage
• 500 million+ people born after 1980
• 272 universities and nearly 14,000 colleges in
India
• India produces 3million graduates, 700,000 post-
graduates and 1,500 PhDs every year
• 75000 engineering graduates every year in the
three southern states, 30,000 every year from
Karnataka alone
• Largest Pool of educated and English speaking
people in the world
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6. Offshoring – Changing service portfolio
The Second Wave - Third Wave - growing with
The First Wave
building on the first wave innovation
• Body shopping / Staff • Legacy Maintenance • Domain expertise
Augmentation • Shift from onsite to offsite • TCO and TTM
• Y2k Compliance • Quality Assurance • Product Co-Development
• Maintenance and • Follow the Sun model • Product Ownership
coding projects adopted • KPO
• ITES such as BPO, call • Large deals
centres
• Moving towards products
and embedded software
5
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7. Indian IT 2.0
• Indian players becoming more global
– Size and scale on par with global IT MNCs
– Focus to move up the value chain
• Push towards globalisation and pull towards
offshore
• Indian companies resort to aggressive M&A
strategy to acquire competencies and global
footprint
– TCS / Pearl
– Wipro / Infocrossing
– Infosys / Philips
• But also:
US/UK remain dominant markets for
Indian IT
only 10% of IT services revenue from RoW
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8. Changing the offshore paradigm
• More and more european companies are shifting their IT services to
CEE. Why ?
– Face to face contact
– Common language
• 40% of all students in CEE are learning German
• 85% of the students in Romania are learning French
– Cultural affinity / understanding
– Quality & Productivity
– Costs
Central and Eastern Europe‘s (CEE) IT-services exports are growing
13% per year (Deutsche Bank Research)
Indian salaries annual increase of 14.5% (Financial Times)
Indian rate of staff attrition between 20%-25% (Financial Times)
<Business Tuesday, January 8th 2008, Arnost Schmidt>

9. Nearshore as an alternative for Offshore
• Nearshoring in CEE
– Geographicaly close to Western Europe
– Culturally close to Western Europe
– Language capabilities (German & English, French in Romania)
– High level of education
– Macro-economical factors (level of institutional quality, less bureaucracy, political
stability
• Nearshore is attractive for
demanding/complex BPO
– Education o a high and brought level
– Smooth communication between the
partners
Is essential in complex back-office
processes
<Business Tuesday, January 8th 2008, Arnost Schmidt>

10. In conclusion…
• Cost
• Proximity to client
• Time zone
• Specialist expertise
• Telecoms reliability
• Language skills
• Legislation compliance
India will remain THE offshoring hub with nearshore
locations as an alternative
• Nestlé S.A. has shifted their business critical Quality Assurance of code being
generated in India to LogicaCMGs Czech Republic operation
• The card payment transactions and -authorisations for SHELL‘s Europe and Asia
petrol filling stations are processed by LogicaCMGs Czech Republic operation
<Business Tuesday, January 8th 2008, Arnost Schmidt>

11. LogicaCMGs blended sourcing model
High
On-site
Complexity/
Onshore
Risk Blended Delivery Model
Offshore Near Shore
Low
Low Customer interaction/intimacy High
Global Service Delivery Strategy
It is based on the principle of blending a global team with the right skills from the
right competency centres such that it provides the best value for money at minimal
risk to our clients
<Business Tuesday, January 8th 2008, Arnost Schmidt>

12. India‘s benefits will remain but …
– India will remain the key outsourcing
(offshoring) market for English speaking
countries
– India will focus on leveraged service portfolio
like BPO, KPO
– CEE as a nearshore location is becoming
more attractive for European companies
(from continental Europe)
– Nearshore seems to be the right location for
European projects with demanding
processes where creative input is the key
– Language capabilities and cultural affinity
are essential in the decision process
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13. Thank You
© LogicaCMG 2006. All rights reserved

14. Questions ?
<Business Tuesday, January 8th 2008, Arnost Schmidt>