Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. 13 Apr 2023© 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circulated, quoted without prior written approval from Atos Origin or the client.

Atos Origin NASSCOM 2008

Hubert Tardieu EVP C&SI

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Characteristics and Trends in European Market

TRENDS CHARACTERISTICS

Selective Outsourcing With Multiple Providers

» Embraced by majority of European companies» Objectives: IT excellence and cost optimization» Integration and governance challenges

Global Sourcing and Global Delivery Models

» Close-shore & Near-shore proximity key for European market» Expanding portfolio of outsourcing services» Key area of investment for providers and buyers

IT Utility

» Industrialization is accelerating» Convergence of IT utility and global delivery» Key drivers: flexibility, efficiency, optimized cost, speed

Aggressive ESPCompetitive Landscape

» National, "global" and offshore ESPs converging» Mergers, acquisitions and divestitures to continue» Providers are implementing new business models» New offshore market entrants

Application Outsourcing to Grow» Drivers: portfolio rationalization, legacy modernization» Global delivery will gain acceptance» Multitude of providers competing

Growing focus on Remote infrastructure management

» Clients seek 24x7 “follow the sun” coverage and global footprint» Variable pricing, SLA provisions, and more flexible contract models are prevalent» Small players offering remote services for niche markets

Source : Gartner

» IT is taking on a strategic role » There is a clear trend towards contracts linked to business outcome (e.g. savings, margin, contract

value)» The focus is on generating value and not just cost reduction

» Highly flexible solutions which help reduce response time to market variance» Core business process optimization using industry specific IT solutions» Reduction in TCO

» IT is taking on a strategic role » There is a clear trend towards contracts linked to business outcome (e.g. savings, margin, contract

value)» The focus is on generating value and not just cost reduction

» Highly flexible solutions which help reduce response time to market variance» Core business process optimization using industry specific IT solutions» Reduction in TCO

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Clear Trend in European Market Towards Fixed Price End to End Application Management Contracts

European IT Market

Fixed Price

Time and Material

Movement towards Fixed price projects

Packaged Solutions Custom Solutions

End-to- EndApplication

Management

Projects

Higher share of Package solution

Focus On End-to-End Application

management

» Higher customer maturity is resulting in movement towards fixed price » There is greater focus on package solution due to

» Clients willingness to move towards package solutions» Evolution of packaged solutions over the years to account for customer specifics

» Higher customer maturity is resulting in movement towards fixed price » There is greater focus on package solution due to

» Clients willingness to move towards package solutions» Evolution of packaged solutions over the years to account for customer specifics

High growth potential for End-to-End Application

managementUsing Packaged Solutions

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Outsourcing Potential of European Market

Key Highlights

» Application outsourcing to grow

» Selective outsourcing with multiple providers

» Focus on generating value and not cost reduction

» Movement towards fixed price contracts

» Focus on package solutions

» Aggressive ESP competitive landscape

» Business driven SLAs

Country 2005 2010 CAGR

UK & Ireland € 17.2 B € 25.7 B 8.3 %

Netherlands € 3.4 B € 5 B 8 %

France € 6.6 B € 10 B 8.4 %

Germany € 10.6 B € 16 B 8.6 %

Spain € 2.9 B € 4.2 B 7.8%

Italy € 3.6 B € 4.6 B 4.7%

TOTAL € 44.3 B € 65.5 B 8.13%

Outsourcing Market (In Billions of Euros) trend

Source : Gartner

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» The European market is not a single market in terms of offshoring and can be divided into 3 parts» Nordic countries and UK are comparatively more open to offshoring

» Central European countries viz. France and Germany, where the potential for global sourcing is high, are opening up gradually to offshoring

» Southern European countries viz. Spain and Italy are in the nascent stages of offshoring

» Language and culture issues also results in different preference for offshoring» UK & Netherlands based companies prefer India

» French companies prefer the Mediterranean region

» German companies like delivery centers based in Poland and The Czech Republic

» Spanish companies prefer Latin America

» Italian companies look towards Romania

» Language constraints reduce the extent of offshoring possible to India along the service axis e.g. requirement gathering and documentation activities.

» The IT functions that are being sent offshore at the moment are still primarily low-added-value offerings

Offshoring Wave Traveling From North to South Europe

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Differences Between US and Continental Europe

Criteria US Europe Remarks

In-sourcing Low HIGH Reasons for Europe•Volume not high enough to out-task •High emphasis on staff transfer•Package solutions hence higher skill requirement

Out Tasking High Low

Out-sourcing Medium maturity & readiness

High maturity & readiness

Technology Adoption(Custom v/s Package)

First movers hence faster adoption of new technologies

Lags US and hence leapfrogging from US.

This has led to higher focus on packaged solutions in Europe

Deal size in terms of Volume of work

Large number of big deals

Relatively lower number of big deals

Difficulty in out – tasking due to lower volume of out-tasking work

Type of Contracts More contracts on T&M Higher proportion of Fixed Price contracts

Europe is ahead of USA in multi-year Fixed Price contracts for transformational outsourcing

Currency $ becoming weaker against major global currencies

€ and £ have appreciated against $ in the last couple of years

Profitability of IT vendors strongly relying on US market is getting impacted. More and more vendors are trying to penetrate the European market.

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How Atos Origin Addresses European Market

ClientClient

IncidentIncident

Change RequestChange Request

Atos Origin Service Delivery UnitAtos Origin Service Delivery Unit

Front Office / PMOFront Office / PMO Back OfficeBack Office

Un

ified

Serv

ice

De

sk

Un

ified

Serv

ice

De

sk

DevelopmentsDevelopments

Qualification and Design

Qualification and Design

Quality & TestQuality & Test

Analysis Analysis

Analysis and Correction

Analysis and Correction

InformationRequest

InformationRequest

Knowledge Base

111

222 333

444555

666

1’1’1’

6’6’6’

1’’1’’1’’

6’’6’’6’’

CSDM/ ITIL

CMMI

ClientClient

IncidentIncident

Change RequestChange Request

Atos Origin Service Delivery UnitAtos Origin Service Delivery Unit

Front Office / PMOFront Office / PMO Back OfficeBack Office

Un

ified

Serv

ice

De

sk

Un

ified

Serv

ice

De

sk

DevelopmentsDevelopments

Qualification and Design

Qualification and Design

Quality & TestQuality & Test

Analysis Analysis

Analysis and Correction

Analysis and Correction

InformationRequest

InformationRequest

Knowledge Base

111

222 333

444555

666

1’1’1’

6’6’6’

1’’1’’1’’

6’’6’’6’’

CSDM/ ITIL

CMMI

Process & ToolsDiversified Global Sourcing

Supplier Rationalization &Mutualization

Service catalogue & Units of Work

ADM/IM sourcing

Cost reduction

Portfolio Rationalization

Demand Management

Functional stream demands

Functional stream demands

Functional stream demands

SFR SI Sourcing

PMO

SFR SI Sourcing

PMO

Strategic project

Strategic project

Strategic project

ADM block

ADM block

ADM block

Demands from investement process

Strategic demands

Application changes

Demands to reassess

Changes flow Inter blocks demands

Redundant /duplicate systems

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Atos Origin commitment on ADM operations costs

Average Cost Savings Using Atos Origin Solution

- 35%

•Resource optimization, •Mutualization•Start offshore•Demand Management

•Best efficiency (CMMI)•Stabilized Offshore model

•Continous offshoring•Mutualization 100%•Scale savings•Demand Management efficiency

CMMI 340% Offshore

0%

10%

20%

30%

Cost reduction

Year 1 Year 2 Year 3 Year 4

• Continuous• Improvement

Additional savings due to portfolio rationalization

60% Offshore

95% subco’s replaced

20% Offshore

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Atos Origin’s Position vis-a-vis Indian IT companies

Source : Derived from annual reports

Significantly Higher Proportion of Revenues from Fixed Price Contracts

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Conclusion

» The European market is significantly different from the US market

» Outsourcing of application management is catching up with infrastructure management

» Best practices learned from infrastructure outsourcing are being implemented successfully in outsourcing application management

» To become successful in European market needs different skills and capabilities

With our leadership position in Europe and our track record in infrastructure management we are best positioned to ride the new wave of global sourcing in

Europe

With our leadership position in Europe and our track record in infrastructure management we are best positioned to ride the new wave of global sourcing in

Europe

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Thank You!

Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. 13 Apr 2023© 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circulated, quoted without prior written approval from Atos Origin or the client.

Atos Origin www.atosorigin.com