BUSINESS SERVICES IN CEE 2014 KEY FACTS ON THE SECTOR

AND FUTURE TRENDS

POLAND & CZECH REPUBLIC – OVERVIEW:

CZECH REP.

APPROX. 470 CENTRES*

APPROX. 130 000 FTEs*

POLAND

APPROX. 260 CENTRES*

8 STRONG LOCATIONS 3 STRONG LOCATIONS

APPROX. 57 000 FTEs*

*Only foreign capital centres

POLAND AS A LEADER OF BUSINESS SERVICES IN CEE

High number of cities being academic centres

More advanced services are provided

Growing complexity of business processes

Nearshore advantage with Western Europe as client

CEE’S STRONG COMBINED “VALUE PROPOSITION”

From costs to outcomes / high-end services (value added)

From enabling functions to core processes

Industry know-how required in traditionally horizontal processes

Desire for process expertise and technology (platforms)

Global solutions - multi-sourcing, near-shore / far-shore

KEY MARKET TRENDS IN CEE REGION

Modern services sector job growth in Eastern Europe is back to on track

▪First results from 2014 – growth continues!

15% expected for 2013

2004 05 06 09 08 07 10 11 0

100

200

300

400

500

+11% +22%

+34% +31%

12

+15%

YE 2012: 320,000 FTEs

2013

+20%

YE 2013: 409,000 FTEs 28% achieved

SOURCE: McKinsey&Co.

SOURCE: NASSCOM; McKinsey

1 Estimates

Eastern Europe

India

∆ 2012/2013 (percent)

EE as % of India

BPO (F&A, HR, CC)

R&D, ESO

ITO

Total

13

22

21

18

2013

+7.0 +28.0

+9.0 +40.0

+4.0 +31.0

+9.0 +19.0

2013 FTEs ('000)

140

1,0551

197 9171

72 3521

409 2,3241

Overall, Eastern Europe still growing faster than India, mainly driven by record growth in BPO

6

9

26

10

2006

Poland - the growth engine for modern services in CEE

SOURCE: McKinsey

Ø 2013: +28%

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54

40 30 20 10 0

70

50 60

130 120 110 100 90 80

Change in FTEs Percent, 2012/2013

Total FTEs FTE, thousands, 2012, 2013

Czech

Ukraine

Russia

Hungary

Estonia

Romania

Latvia Lithuania

Poland

Bulgaria

Poland

Romania

Slovakia Ukraine

Russia

Hungary

2013

2012

Global BPM market is likely to sustain 8-10% growth

2012 2014(E) 2020(E)

Global BPM market size1

2012-20(E), US$ billion

111-113 128-130

204-206

1 For leading segments and industries Source: Everest Group (2014)

ESTIMATES

Five next generation BPM trends to watch out for

1 Growth segments different from the past

2 Though a big opportunity, analytics requirements likely to change

3 Technology/Automation a strategic imperative

4 Increase in outcome based pricing constructs , though selectively

5 Increasing maturity of hybrid sourcing

Source: Everest Group (2014)

Newer BPM segments driving growth as traditional segments mature

BPO segment growth (3 year CAGR) Percentage

FAOPO

Contact centerMulti-process HRO

Capital Markets BPOHealthcare BPOInsurance BPOAnalytics BPO

Marketing BPORPO

20-22%

14-16%

16-18%

30-32%

16-18%

20-25%

New

er

horiz

onta

ls

Mat

ure

se

gmen

ts 8-10%

10-12%

2-4%

6-8%

Indu

stry

sp

ecifi

c

Source: Everest Group (2014)

Majority of the current work

Likely to be productized /

automated

Relatively easier to

commoditize

Increasing area of interest

More talent / expertise based

Difficult to commoditize

Though a big opportunity, analytics requirements likely to significantly change

Bus

ines

s im

pact

Sophistication of solution

30

40

20

10

1. Reporting

2. Descriptive Analytics

3. Predictive Analytics

4. Prescriptive Analytics

Relative maturity of analytics solutions Percentage third-party offshore analytics FTEs

Source: Everest Group (2014)

FUTURE IS BRIGHT BUT CANSURPRISE YOU!

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