DELL CONFIDENTIAL 1

Off-Shoring in Central and Eastern Europe

4th Vienna Economic Forum – VEIT V. DENGLERVienna, November 5th, 2007

DELL CONFIDENTIAL 2

Executive summary

OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER

DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS

DELL CONFIDENTIAL 3

Off-shoring to Central and Eastern Europe countries

Recent

Announce-

ments

NEW CAPTIVE SETUPS

EXPANSION OF OUT-SOURCING PROVIDERS

LARGE OUT-SOURCING DEALS

Center of excellence for banking back office in Wroclaw

CREDIT SUISSE UPS INBEV

F&A center in Wroclaw

F&a/converged services centers in Prague and Budapest

New service center in Bucharest

WIPRO LOGICACMG CONVERGYS

New call center in Brno

Billing, customer support service from Budapest

F&A out-sourcing to Genpact Bucharest and Kolkata

NOVARTIS

Almost 80 new centers announced in 2006/07, ~40,000 additional FTE off-shored to Eastern Europe, of which 10,000 in new centers, 30,000 in existing centers

DELL CONFIDENTIAL 4

"Came for cost, stayed for quality"

TRANSACTION FACTORY

KNOWLEDGE HUB

CORPORATE/REGIONAL HEADQUARTERS

TRANSACTION CENTER FOR WESTERN EUROPE

EUROPEAN/GLOBAL CENTER FOR CORE COMPETENCIES

EUROPEAN/GLOBAL CENTER FOR CORE COMPETENCIES

Examples Lufthansa (Cracow) Zurich/Capgemini

(Cracow) P&G/HP (Bucharest)

Delphi (Cracow) Siemens (Wroclaw) SAP Labs (Sofia)

Dell (Bratislava) JCI (Bratislava)

FASTER MOVE TO KNOWLEDGE-INTENSIVESERVICES DRIVEN BY COMBINATION OF FACTORS

Talented workforce with good functional knowledge Cultural proximity/accessibility/timezone

overlap Language capabilities

DELL CONFIDENTIAL 5

DELL Evolution in Bratislava

Technical Support with up to 300 FTE for German language area

Dell launched operations in Slovakia in November 2002

Center with up to 900 FTE to support full range of customer-facing functions

Expanded by 2004 to include German-language Sales and Customer Care

Over 1600 FTE by end 2007 covering a wide range of front and back office functions

Grew to a European Business Center by 2006, w/ num. headquarter functions

1

2

3

DELL CONFIDENTIAL 6

DELL Finance in BratislavaValue

Time

Front Office

BACK OFFICE MID OFFICE FRONT OFFICE

Financial Planning &Analysis

Pricing

CreditCollections

Channel Controlling

FunctionalAccounting

Reporting

OPEX Mgmt

Commission Targets

VAT

GL Accounting

AP

Business Controls

Business Analytics

FY’05 FY’07 FY’08FY’06

Back-office Mid-office

DELL CONFIDENTIAL 7

Executive summary

OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER

DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS

CHALLENGES OF OFFSHORING ARE LARGELY EXAGGERATED

DELL CONFIDENTIAL 8

( )

Challenges of off-shoring are largely exaggerated

Activity spectrum and value

ONLY TRANSACTIONAL ACTIVITIES CAN BE OFFSHORED

SAVINGS EXPECTATIONS IN BUSINESS CASES ARE INFLATED

EASTERN EUROPE HAS PLATEAUED, THERE IS NO MORE VALUE TO BE EXTRACTED

SOURCE: MCKINSEY

Location

TALENT AVAILABILITY IS A MAJOR CONCERN

EVOLUTION OF COST LEVELS IS A MAJOR CONCERN

EASTERN EUROPEAN CENTERS END UP HAVING TOO MANY EXPATRIATES

Organization and operations

RAMP-UP SPEED IS USUALLY OVERESTIMATED

TRANSITION IS COMPLEX AND ERROR-PRONE

OFFSHORE CENTERS HAVE POOR PERFORMANCE

DELL CONFIDENTIAL 9

Wage differences will persist

SOURCE: MCKINSEY

DELL CONFIDENTIAL 10

Executive summary

OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER

DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS

CHALLENGES OF OFFSHORING ARE LARGELY EXAGGERATED

WESTERN EUROPE LIVES OFF THE PAST – NEEDS TO DEVELOP NEW VALUE PROPOSITION FOR ATTRACTING BUSINESS