ABSL Conference in Prague Location, location, location. Demystifying the location selection process

17 October 2013

www.pwc.com

PwC

Who we are

• The SSC CoE team consists of 16 SSC Practitioners experienced in all aspects of SSC & BPO from Strategy & Feasibility, implementation and Transition, to performance optimisation and contract re-negotiation.

• The team is made up of qualified ACCA, CPA & Six Sigma staff (black belt) staff, together with staff who have worked in the big 5 BPO providers.

• The team is based in Poland and has worked with over 100 Clients in Poland, CEE and all over the Globe.

• The team has set up and run its own PwC SSC in audit in Katowice, Poland.

• Every member of the team has a deep understanding of the PwC SSC methodology. PwC has a SSC methodology that works.

• The SSC CoE team received award for the Best Professional Advisory Firm in Shared Services and Outsourcing 2013

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PwC

Why undertake a location selection project?

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PwC

EE

LT

PL

CZ

SK

HU

RO

There is a lot of choice within CEE

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Warsaw – Citi Group, ABN Amro, Colgate Palmolive

Krakow – Shell, IBM, Capgemini, Philip Morris

Bucharest – Hewlett Packard, Procter & Gamble, Huawei

Cluj-Napoca – Office Depot, Bombardier

Debrecen – BT, Ygomi, GEM, National Instruments

Vilnius – Mirror Support Services, BDO, Barclays Bank

Tallinn – Playtech, Swedbank, Statoil

Wroclaw – Credit Suisse, UPS, IBM, HP

Prague – Accenture, DHL, Exxon Mobil, SAP

Bratislava – IBM, Henkel, KONE, Kraft Foods

Budapest – IBM, Diageo, Morgan Stanley, Citibank,

Ostrava – GE Money, Siemens, OKIN Group

Brno – IBM, Motorola, Infosys

Katowice – PwC, Capgemini, Steria

Gdansk – Arla Foods, Intel, Acxiom, Sony

Timisoara – Oracle, Alcatel Lucent, S&T Romania, Wipro

PwC

Asia

Jaipur

Mumbai – TCS, IBM, JP Morgan Chase

Pune

Bangalore – GE, Cisco, SAP

Chennai – HP, TCS, IBM

Hyderabad – GE, TCS, Genpact

Penang

Ahmedabad

Nagpur

New Delhi – TCS, Genpact, IBM

Kuala Lumpur – Shell, Accenture, Convergys, TCS

Ho Chi Minh Colombo

IND

CHN

VN

MAL

RP

CL

Dalian –Accenture, Convergys, IBM

Beijing – Accenture, Capgemini. IBM

Shanghai – Accenture, Wipro, SAP

Manilla – Accenture, Wipro, Genpact , Shell

Cebu - Accenture, Wipro, Convergys

Hangzhou

Chengdu

Davao

Changsha

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PwC

Americas

Monterrey – Wipro, Accenture, ACS

Mexico City – SAP, Accenture, EDS

Ciudad Juarez – Genpact, ACS, S-Data Solutions

Guadalajara

Queretaro

Boise

Seattle – Accenture, Wipro, Vcare,

Indianapolis

Vancouver – Accenture, Microsoft, eBay

Ottawa – Accenture, Fusion BPO Services

Calgary Winnipeg

Recife – Motorola, Dell, Sun Microsystems

Sao Paulo – Accenture, Convergys, Hewitt Associates

Rio de Janeiro – IBM, Oracle, Satyam

Campinas

Curitiba

Santiago

Buenos Aires

San Jose

Virginia Beach

San Antonio – Accenture, Citi, BD

Panama City – Caterpillar, Heineken, CCTG

Bogota

CDN

USA

MEX

BR

RCH RA

CR

PA CO

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PwC

PwC approach to get to a selection

Workshop discussion Feasibility & analysis

Site visits

Final selection & recommendation

•Understand the vision & key drivers

•Approx 25 locations

•Shortlist of up to 10 locations

•Down select to 2-3 preferred locations

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Initial screening

Elimination of certain locations based on 4-5 pivotal parameters

Long list of locations

Assessment criteria

Detailed research & analysis

Site visits (optional)

Final selection

PwC

When selecting a location, what is important to your organisation?

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PwC

Some common criteria Labour pool

•Population / students

•Labour force

•Unemployment

• Language skills availability

• SSC/BPO centres

Other costs

• Recruitment costs

Office space

•Lease rates

•Current office availability

•Future office availability (under construction)

Location accessibility

• International airports

•Various flight connections

•Geographical proximity

Standard of living

•Living standard indices for foreigners

•Rental property costs

•International schools

Country factors

• Political stability

• Inflation

• Corruption

Labour costs •Salary costs •Additional employer

charges • insurances, taxes and

benefits •Wage inflation data

Tax and subsidy factors

•Corporate taxation

•SSC investment subsidies / EU grants

•Opportunity for tax exemptions

IT infrastructure

• IT connectivity

• Security

• IT infrastructure cost

Labour market conditions

•General unions rules

•Amount of leave entitlements

•Termination notice

• Easiness to hire & retire

Other

• Size of current business

• Potential exit

• Easiness to transfer & exit

* Different weights assigned

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PwC

Trends and lessons

• It’s not just about labour cost

• What cities are well placed to deliver knowledge based services (KPO)?

• Secondary (or even tertiary) cities are making a play

• Considering what the city will look like in 4-5 years time

• What do we actually want to achieve from our SSC?

• Do we want to be in a hot spot location?

• Personal touch/visit can make a difference

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PwC

Different cities are at different stages of their SSC development

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PwC

Budapest/ Prague

SSC’s in the city

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May 2012 Finance Leaders' Summit

City Overview Budapest Prague

Population 1 722 000 1 246 200

Labour pool 955 000 750 000

Number of universities 45 33

Number of students 180 000 120 100

Language availability Good Very Good

Unemployment rate 11,10% 7,5%

Office space 629 700 sqm 369 550 sqm

Current cost per sq meter for class A office space

15 – 25 EUR per sq meter per month

19 – 21 EUR per sq meter per month

Location Accessibility / International airport(s)

Very Good / Yes

Very Good / Yes

Corporate taxation 19,0% 19,0%

PwC

City Overview Brno Katowice (Silesia)

Population 384 000 310 000 (1 980 000)

Labour pool 189 000 202 371 (1 200 000)

Number of universities 15 29

Number of students 81 500 200 000

Language availability Good Good

Unemployment rate 9,54% 3,60% (10,8%)

Office space 280 000 sqm 255 800 sqm

Current cost per sq meter for class A office space

12-15 EUR per sqm per month

14,0-16,0 EUR per sq meter per month

Location Accessibility / International airport(s)

Very Good / Yes

Very Good / Yes

Corporate taxation 19,0% 19,0%

Brno / Katowice

SSC’s in the city

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May 2012 Finance Leaders' Summit

PwC

City Overview Lviv Lublin

Population 750 000 350 000

Labour pool 500 000 231 000

Number of universities 38 14

Number of students 138 000 90 000

Language availability Moderate Good

Unemployment rate 15,00% 10,10%

Office space 150 000 sqm 120 000 sqm

Current cost per sq meter for class A office space

10 – 12 EUR per sq meter per month

9 – 12 EUR per sq meter per month

Location Accessibility / International airport(s)

Good / Yes

Good / No

Corporate taxation 25,0 % 19,0%

Lviv / Lublin

SSC’s in the city

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May 2012 Finance Leaders' Summit

PwC

Thank you

Anna Wójt

Manager

PwC Poland

+48 519 507 593

anna.wojt@pl.pwc.com

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