1. Program for the Development of the Software Industry, PROSOFT Sergio Carrera Riva Palacio Director General of Domestic Commerce and Digital Economy Ministry of the Economy Government of Mexico

2. Mexico’s Economy Overview 104 million  Total population: 104 million  GDP: 625 BUSD (world’s 10th economy)  U.S. second trade partner (Canada 1st)  Largest FTA’s network worldwide (including NAFTA, EU, and Japan)  4th country in number of airports and 1st in daily flights to and from the U.S.  7th exporting economy  Ranked 5th in per-capita foreign direct investment received  Largest spanish speaking population (U.S. – 5th)  Best country in Latin America in terms of technological accomplishment, according to the UN

3. PROSOFT Mexico’s IT industry policy Goals (2013)  To accomplish an IT services annual production level of 15 billion USD  To reach the OECD’s average IT expenditure as an economy  To position Mexico as the leading IT powerhouse in Latin America

4. PROSOFT – Mexico’s IT industry policy Strategies 1.Promotion of exports and investments in the sector 2.Enhancement of human capital capabilities 3.Adequation of the digital economy legal framework 4.Development of the IT domestic market 5.Stregthening of the local industry 6.Achievement of world class process capabilities 7.Promote cluster development countrywide

5. State governments participating in PROSOFT Aguascalientes Baja California Jalisco Morelos Puebla Sinaloa Yucatán Nuevo León Guanajuato Sonora

6. Mexico’s ITES industry value offer  Human capital  Highest IT undergraduate level workforce in Latin America (+100,000)  30% of current undergraduate total enrollment in IT related fields  Abundant non-IT undergraduate level workforce for BPO and call centers available nationwide (lawyers, BA’s, CPA’s, HR)  Infrastructure  Broadband services available nationwide  World class telecommunications services in main cities  Sectoral experience for multinationals  Manufacture  Financial services  Government  Telecommunications

7. Total project cost advantage (nearshore approach) Reduced flight cost and time compared to the Asian regionReduced flight cost and time compared to the Asian region Enhanced productivity in the solution of real time problemsEnhanced productivity in the solution of real time problems Smaller amount of professionals at customer’s facilitiesSmaller amount of professionals at customer’s facilities Quality and process capabilites 3 CMM-5, and +15 CMM-4 and 3 companies3 CMM-5, and +15 CMM-4 and 3 companies (+53 currently engaged in model implementation and assesment) ISO-9000 adoption widely spreadISO-9000 adoption widely spread Legal framework Electronic signature and invoiceElectronic signature and invoice Data protection and privacyData protection and privacy Intellectual property rightsIntellectual property rights In all cases, the legal framework is compatible with U.S. legislationIn all cases, the legal framework is compatible with U.S. legislation Mexico’s ITES industry value offer

8. Country Environment Political stabilityPolitical stability Low geopolitical riskLow geopolitical risk NAFTANAFTA (investment protection, IPR, visas, market access) Preferential market access with the U.S., Canada, EU, Japan, and Latin AmericaPreferential market access with the U.S., Canada, EU, Japan, and Latin America Cultural Affinity Compatible business environment and legal frameworkCompatible business environment and legal framework Deep knowledge of the American consumerDeep knowledge of the American consumer Direct access to the U.S. Hispanic marketDirect access to the U.S. Hispanic market Mexico’s ITES industry value offer

9. PROSOFT support for export oriented companies  Manpower training and certification  Software & equipment  Infrastructure  Process implementation and certification  Standards certification  Technology transfer and royalties  Supplier development programs  Education/training tailor-made programs with universities Cash grants on a 50% basis of total costs for: Additional grants from State governments apply

10. PROSOFT incentives for foreign companies establishing ITES operations in Mexico  The same type of cash grants given to export oriented companies apply  Tax breaks for R&D activities  Local governments incentives (availability differs from state to state): 1.Payroll & Estate tax exemption 2.Preferential rates for land acquisition or leasing. 3.Simplified red tape

11. PROSOFT grants – Sep/Dic 04 Projects supported 69 Companies qualified for grants:  95 companies engaged in improving their process capabilities  +1,200 IT professionals engaged in training and certifications  + 200 professionals engaged in PMI training and certification  5 facilities for operations in embedded software, semiconductor & hardware design, and multimedia content development supported 221  Cash grants worth 20 milion USD

12. Concluding remarks 1. Mexico’s ITES value offer has advantages over other options:  Nearshore approach  Compatible legal framework and business environment  Political stability  Competitive total project cost  Tailor-made programs to develop supplier capabilities 2. Mexico’s workforce pool for BPO activities is abundant and readily available nationwide 3. Mexico’s IT industry has extensive experience working with U.S. based companies

13. Program for the Development of the Software Industry, PROSOFT Sergio Carrera Riva Palacio Director General of Domestic Commerce and Digital Economy Ministry of the Economy Government of Mexico