1. Telecom Outsourcing In China Tony Chang 6/24/06

2. Topics Outsourcing Strategy China Telecom Outsourcing Firms Strength & Weakness Recommendations Future Telecom Demands

3. Outsourcing Strategy R&D Cost Reductions Market Perceptions Customer Support Accountability

4. China Telecom Outsourcing Firms Telecom Outsourcing is still in infancy stage BJ, SH, CD, CC, SZ Company size is small compare to India Focus Area: –Product localization –Multimedia localization Flash, video, audio – S/W Development –Localization testing Functionality testing Linguistic verification Post-translation UI and UA testing

5. Strength & Weakness Strength: Large Resource Pool Government Encouragements Energetic & Enthusiasm Cost Management Market demands Weakness: Communication, Communication and Communication Large Scale Project Management People Development

6. BJ Outsourcing Firm Evaluation Summary 2 BJ Local Outsourcing/Contacting firms -- Worksoft & Beyondsoft Both have 800+ Software engineers Mainly working on -- Localization, Testing, DBS Application, Financial Services, Server/OS Testing and minimum Telecom Worksoft has more Global experience & focus -- IBM, Microsoft, HP, Oracle, SONY and PeopleSoft Beyondsoft has excellent marketing strategy LLR for both Contracting firms is around $30K In general there are several Global Telecom vendors' R&D centers in China -- Alcatel, E///, LU, Motorola, Nokia, Nortel… but Telecom Outsourcing is still at infancy stage in China The company will need to invest lots of efforts in Technical training/transferring at the initial stage and may lose some trained people in the future Ideal way may be: find a new/small local company and set up the agreement/partnership to assure "Fixed cost" & "Attrition Avoidance"

7. Recent Progress in BeyondSoft BeyondSoft has about 1,000 S/W engineers now (grew 200+ people in 6 months) Has just moved to a new campus Can grow 200 engineers in 3 months Has lots of S/W Testing experiences Can be On-Site/Off-Site LLR for Telecom Engineer == $38K

8. Ideal Outsourcing Model Find a company that is eager to partner with Set up the Fixed rate ($30-$35K) for the next 2-3 years Working on the projects exclusively in the next 2-3 years May invest some shares to this company May send several key SMEs to the site for Training & Project Ownerships May recruit some key retired industry leaders for short term assignment

9. Future Opportunity IOT Service -Vendor funded, Existing Revenue stream with incremental growth potential Customer Acceptance Testing Service - Customer/Account Team funded, Existing Revenue stream with scope and revenue growth potential Multi-vendor System Integration -Un-tapped Revenue stream with large growth potential OEM Integration Service - Vendor funded, Existing Revenue stream with moderate to large growth potential System Integrity Assurance Service - Un-tapped Revenue stream with unknown growth potential (targeted regression)