1. InvestBulgaria Agency www.investbg.government.bg ICTalent in Bulgaria Software partnership opportunities for German companies SYSTEMS, Munchen October 2004

2. InvestBulgaria Agency www.investbg.government.bg The ideal near-shore investment destination … Hundreds of small software companies do contract programming for some of the largest customers in the world, including Boeing, BMW and Nortel. Other giants such as SAP and Computer Sciences have local labs in Sofia… …It was access to nearby talent that convinced SAP to set up its Bulgarian outpost… …There is an exceptionally high level of talent in Eastern Europe (Kasper Rorsted, Managing Director HP EMEA)… MARCH 1, 2004

3. InvestBulgaria Agency www.investbg.government.bg Bulgaria: a 2007 EU accession country with strongest track record in stability Deutsche Bank Eurasia Group Stability Index: Bulgaria ranks 5th ahead of India, China, Turkey, Russia A NATO member, Bulgaria closed ALL EU chapters, ensuring legal system compliance Bulgaria has gained sustainable economic position as EU business gateway: GDP growth of above 4% in 7 consecutive years and a privatized economy Currency board with € peg, 0% budget deficit, 3% av inflation and 60% of exports to EU Record FDI of $1.4 bn in 2003, driven by pre-EU attractive investment opportunities 1 st half 2004 FDI amounted to $1.2 bn, telecom FDI shares 14% of the total FDI 98-04 Low taxes ranging from 0% to 19.5% (15% in 2005) Robust, foreign banks dominated financial sector and modern telecom infrastructure No VAT for software export ICT legislation is well in place S&P and Fitch investment grade ratings as of June-Aug 2004 Bulgaria is positioned to enter the EU in 2007 as the Southeastern Europe’s hub for developing sophisticated products and solutions in ICT

4. InvestBulgaria Agency www.investbg.government.bg FDI inflow in Bulgaria 1995-2004F, EUR mFDI stock by country 1998 - H1 2004 FDI stock by sector 1998 - H1 2004 Sources: BNB, WIIW – “Foreign Direct Investment in South East Europe in 2003-2004”, InvestBulgaria Agency FDI reached € 1,343 in July 2004 FDI as % of GDP, 2003 Total EUR 6.9 bn Record FDI inflow in Bulgaria

5. InvestBulgaria Agency www.investbg.government.bg Source: EITO, 2004   € 1.8 billion investment in ICT sector in 2003   ICT is expected to continue growing although at a declining rate of some 11.6% in 2005   Telecom will keep developing faster than IT Steadily growing ICT sector

6. InvestBulgaria Agency www.investbg.government.bg Source: IDG Bulgaria   More than 50% of the exporting companies are software developers   Electronic assembly and specialized hardware manufacturers account for the lion’s share of the revenues from exports Fast growing IT exports over 55% average yoy growth IT exports by year, € million

7. InvestBulgaria Agency www.investbg.government.bg Bulgaria is the leader in the field of outsourcing among the countries in East Europe ← Latest research of CIO and Meta Group Bulgarian software companies develop the expert specification together with the client, provide smart solutions and meet the deadlines within the initial budget Bulgarian software developers have a wide expertise in: Key markets of the Bulgarian software industry – the US, Canada, Germany, France, UK, the Netherlands, Austria, Italy, Japan, China ESI Centre in Bulgaria since 2003 Bulgarian software industry review  Sophisticated information systems  Industry knowledge and solutions  Network security services & solutions  E-business and wireless applications  Geographic Information Systems  Rapid Prototyping Systems  Gaming solutions  Web design  Complex B2B solutions  Embedded software  CAD/CAM  Multimedia

8. InvestBulgaria Agency www.investbg.government.bg Software development: skills availability   More than 40 years of experience in the development of hardware, software and electronic products   Well educated, talented and committed workforce   Very good language skills   Large talent pool More than 15% Bulgarians have higher degrees (3rd in the EU) More than 20% speak a foreign language More than 5,000 university and college students enrolled in IT degree programs annually Bulgaria employs more than ICT 20,000 professionals Bulgaria ranks 3rd in world for certified IT professionals per capita and 8th in the world in terms of absolute numbers 5th in the world in sciences 11th in mathematics 2nd in world based on Scholastic Aptitude Test scores 2nd in international IQ tests (MENSA International) 1st in Tokyo math Olympics 2003   110 CISCO academies in the country – in 2003 Bulgaria won 2 of 6 world CISCO annual awards: “Best project” and “Best student”

9. InvestBulgaria Agency www.investbg.government.bg Salary levels for software industry Monthly gross salary comparison 1 (June, 2004) for software development companies (€) CountryJunior software developer Senior software developer Project leaderSocial security, % Social security contribution Company cost, 50- jobs office 2 Bulgaria300 to 600600 to 1,0001,000 to 1,50032.2%9,87852,378 Romania300 to 600600 to 1,000800 to 2,50038% to 45%18,050 to 21,375 65,500 to 68,875 Hungary900 to 1,0001,350 to 1,5001,750 to 2,15029%19,06884,818 1 Company information, June 2004:   Data for Sofia; salary levels in the countryside of Bulgaria are around 20% lower   Data for Bucharest   Data for Budapest; salary levels in other Hungarian regions are 15 to 20% lower 2 Assuming the office has 25 junior developers, 20 senior ones and 5 project leaders and develops 10 projects at a time; highest salary bracket used for calculations

10. InvestBulgaria Agency www.investbg.government.bg Key IT players expand SAP: 180 people in Sofia R&D office Innovative software for J2EE SAP Web Application Server for SAP sites worldwide Infrastructure for portal, warehouse, exchange, and all application components Web services in J2EE and ABAP through open standards Fastest growing subsidiary of SAP worldwide June 2004 SAP Labs Bulgaria have announced expansion Tumbleweed Communications (NASDAQ:TMWD): Since 2002: leading provider of enterprise solutions in the areas of anti-spam, anti-virus, e-mail filtering, and e-mail encryption more than 600 enterprise customers Announced selling Indian (Bangalore) operation to expand the existing business operations in Sofia, Bulgaria by 50% by the end of 2004 Employs approximately 60 people, to recruit 30 more by Dec 2004

11. InvestBulgaria Agency www.investbg.government.bg Foreign companies using services of Bulgarian software developers …

12. InvestBulgaria Agency www.investbg.government.bg Thank you for your attention! Contact: InvestBulgaria Agency Polina Valcheva p.vulcheva@investbg.government.bg