Outsourcing locations: Romania, Cluj- Napoca 9 June 2009 Mihai Rada, KPMG Romania

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 1 Presentation Overview Introduction CEE comparative analysis Romania: emerging destination Cluj-Napoca: emerging destination Conclusions

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 2 Introduction Global financial crisis drives companies to pursue rationalization measures over the longer run Traditional outsourcing locations rapidly approach saturation point A new rush for outsourcing services across the IT sector, with a number of new locations worldwide emerging as viable Business Process Outsourcing (BPO) hubs is developing A study realized by KPMG identified 31 possible locations for the next outsourcing boom Location selection criteria: needs, priorities, compromise, site visit, location specific data Advantages offered by the emerging cities:  lower costs,  size of workforce,  quality of talent,  linguistic and cultural similarities,  government support and incentives  dedicated infrastructure for IT-BPO companies,  quality of life.

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 3 Introduction (outsourcing locations) America – Buenos Aires, – Campinas, – Curitiba, – Calgary, – Winnipeg, – Santiago, – Guadalajara, – Queretaro, – Boise, – Indianapolis; Asia-Pacific – Brisbane, – Changsha, – Hangzhou, – Ahmedabad, – Jaipur, – Nagpur, – Penang, – Davao City, – Iloilo City, – Ho Chi Minh City Europe, the Middle East and Africa – Sofia, – Zagreb, – Cairo, – Port Louis, – Belfast, – Gdansk, – Cluj-Napoca, – Rostov-on-Don, – Belgrade, – Tunis and – Lvov

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 4 CEE comparative analysis Internet users per 1,000 inhabitants Source: CIA World Factbook, World Bank, Eurostat Historical FDI inflow (million EUR) (2003 – 2007) Source: UNCTAD – World Investment Report 2008

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 5 Romania: emerging destination Foreign direct investment (FDI): Romania amounted large FDI inflows in the last years GDP growth: the Romanian economy has been expanding and real GDP grew by 7.1 percent in 2008 Inflation: with a value of 6.3 percent in 2008 and expected to decline to 4.5 percent in 2009 IT-BPO Scenario: the IT outsourcing industry comprises around 600 companies and is concentrated in and around Bucharest. Second tier cities such as Cluj-Napoca have emerged as new outsourcing locations Government incentives: the maximum amount of grants offered amounts to USD 28 million (EUR 22.5 million) in the Bucharest-Ilfov region and USD 35.5 million (EUR 28.1 million) in the rest of the country Membership of the European Union Distance to Western Europe countries is smaller as compared to traditional outsourcing locations (e.g. Asia).

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 6 Cluj-Napoca: emerging destination Development of the current IT-BPO industry: an alternative outsourcing location to Bucharest, due to increasing competition In 1999, ISDC opened its own development and testing centre in Cluj-Napoca in 2006, Wirtek acquired Code Wizards in 2007, Genpact opened its second BPO center in 2008, Evalueserve opened its first European research center at Cluj-Napoca Industry Profile- Size and Specifics: 245 IT companies operating in the Cluj County including over 100 software companies in the city of Cluj-Napoca the services offered out of Cluj-Napoca include research and data analysis, order management, finance and accounting, engineering services, software development and IT services

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 7 Cluj-Napoca: emerging destination (cont’d) IT-BPO key drivers: important financial and university center; benefits from a pool of qualified personnel; the talent pool is suited to provide multi-lingual services; the talent pool is suited to offer research and development services; the city has both, an established manufacturing and a services industry; the city is developing as a tier II alternative for companies with centers in Bucharest; the time-zone advantage; cost advantage over the West and East European cities;

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 8 Cluj-Napoca: emerging destination (cont’d) Human Resources: important academic center with about 62,600 students in 2007 employers benefit from the foreign languages skills of Romanian workforce Infrastructure: office space (IT parks): in 2007, the area of office space available in Cluj-Napoca was 20,150 sq. meters. The 2008 real estate projects are likely to add 84,000 sq. meters of available space; telecom infrastructure: a network of 64,000 km of optical fiber is currently being developed; national and international connectivity: the city has a well developed rail, road (the city is crossed by the European Road E60) and flight (Cluj-Napoca International Airport is the third largest airport in Romania) network; upcoming projects: the city is to be linked with Bucharest and the Hungarian border by Romanian Motorway A3; several real estate projects are being developed

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 9 Conclusions Alternatives to traditional outsourcing locations arose A wide range of outsourcing locations are available for companies Cluj-Napoca is an important emerging location offering talent pool, lower costs, developed infrastructure

Questions?

© 2009 KPMG Romania, the Romanian member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in Romania. 11 Contact details Mihai Rada Senior Manager, IT Advisory, KPMG Romania Mobil: Fax: