by Janko ARAH BUDAPEST, NOVEMBER 9th, 2006 SPECIALITIES OF MANAGEMENT CONSULTING IN NEWLY JOINED AND CANDIDATE COUNTRIES by Janko ARAH BUDAPEST, NOVEMBER 9th, 2006

Newly Joined and Candidate Countries Newly Joined Countries: Estonia, Lithuania, Latvia, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta and Cyprus (8 new members are bordering Western Europe) Candidate Countries: Bulgaria, Romania, Croatia and Turkey There are 8 members (out of 24) in FEACO from Newly Joined and Candidate Countries: Bulgaria (BAMCO) Croatia (UPS – AMC) Cyprus (CYBCA) Czech Republic (APP) Hungary (VTMSZ) Poland (SDG) Romania (AMCOR) Slovenia (AMCOS)

GDP per capita in PPS (EU-25: 100 – 17.900 euros) Source: Eurostat

Real GDP growth in 2005 Source: International Risk & Payment Review, October 2006

Inflation, annual ave. in 2005 Source: International Risk & Payment Review, October 2006

Unemployment in % in 2005 Source: International Risk & Payment Review, October 2006

The European MC-Market Composition by Country/Region, 2005 in % Source: Feaco 2006

Estonia – some general information on MC leading country in the Baltic region, small c. & market culture for consulting is very young, no clear market leader 3 sectors in MC: - big companies (KPMG, PWC, E&Y and D&T) - local companies: technical oriented, young staff, MC mainly for export - many individuals (hard to find clients, strong competition) - ECA was established in 1992; has 35 members - accepted as a partner by governmental institutions

Latvia - some general information on MC - Association of Business Consultants - founded in 1995 and has 67 members - association's members services are HR management, economy, marketing, organisation's management, IT, legal services, production and technology - main goals of LBKA - Latvian MC market trends - current activities of LBKA - implementation of CMC standards - elaboration of training programs - involvement in common EU projects

Slovakia - some general information on MC MC manage their Slovak operations from Prague small private companies, specialized agencies, banks, broker firms, investment companies, foreign trade organizations, different information centers, trade and industrial chamber, and some of the universities small and start-up businesses represent a specific area of MC National Agency for Development of Small and Medium Enterprises (NADSME), the network of Business Innovation Centers (BIC) and Regional Advisory and Information Centers (RAIC)

Comparison of Management Consulting in Selected Markets Turnover MC Market GDP Pop. in MC* Growth Growth in mio. Poland 240 (300) 10,0% (30) 3,5% (5,6) 38 Czeck R 390 (400) 2,9% (4) 6,1% (3,7) 10 Hungary 251 (226) 11,0% (5) 4,3% (3,9) 10 Slovenia 120 ( 90) 8,9% (10) 3,9% (4,6) 2 Romania 200 (107) 20,0% (35) 5,0% (8,1) 22 Bulgaria 56 ( 56) - (7) 5,5% (5,3) 7 * In mio EURO in 2005 and (2004) Source: Feaco, Survey 2005-2006

Key Figures of Selected European MC-Markets, 2005 (2004) Country Turnover per Consultant (EUR) Czech R 46,791 (50.000) Hungary 55,134 (65.000) Slovenia 57,554 (65.000) Poland 24.000 ( - ) Romania - (50,000) Bulgaria 20,000 (20.000)

Specialities in MC - 97,4% of the 61,6 billion Euro MC turnover in Europe was generated within the Western-European countries and 2,6% in CEE in 2005 - MC has developed significantly - typical daily fees: 100 – 1.300 EUR potential growth rate varies between 2,9 – 20 % (4 - 35 % in 2004) MC can be optimistic about the future

the importance of reliable local partners will increase, due to language barriers, to the knowledge of the local business culture and to local client contacts privatisation and public market projects - private sector and services such as business strategy, organisation development, human resources and IT consulting clients seek not only advice, but implementation and operation services as well speed, quality and value added, comprehensive solutions are going to be of key importance outsourcing - a key driver of the industry development

Outsourcing: - from invoicing to advanced research and development - Accenture, Capgemini, IBM some multinationals, like Lufthansa, General Electric... - economic benefit - capital involved - CEE cannot compete with China or India on wage rates, but it has other advantages: - broad knowledge of European languages - for call centres, it is better to have them in the same time zone, to enable them to respond quickly - geographic proximity

Specialities of MC in Slovenia pro-active promotion activities (awards) Networking; Consulting cluster Relation to national government Changes in top managements SME’s looking for strategies and HR - Local communities (consortium for development funds, EU projects etc.)

Czech Republik Management Consulting Market by Service Line (390 mio euros) Source: FEACO

Hungary Management Consulting Market by Service Line (251 mio euros) Source: FEACO

Slovenia Management Consulting Market by Service Line (120 mio euros) Source: FEACO

Romania Management Consulting Market by Service Line (200 mio euros) Source: FEACO

Bulgaria Management Consulting Market by Service Line (56 mio euros) Source: FEACO

Daily Effective CEE Partner/Manager Fee Rates – Contrasting Countries & Firm Size

Daily Effective CEE Senior Consultant Fee Rates – Contrasting Countries & Firm Size

Daily Effective CEE Consultant Fee Rates – Contrasting Countries & Firm Size

feaco forward programme 2006-2008 Establishment of a clear operational framework Development of prospectus Once a year ExCo meeting in one of the countries Promote the temporary placement of staff member of CEC association in large WE association Have ExCo representative at each medium/large scale event organised by National Associations

Thanks for your attention.