INVESTMENT IN BPO SECTOR

Liber Orden

OPPORTUNITIES IN THE LOCAL INDUSTRYThe financial sector has been one of the most dynamic sectors in mobile internet demand, based on a mass bancarization dynamic sought by the government to offer everyone the possibility to manage their finances using mobile devices. This trend has created many opportunities for the provision of back office and call center services in the country.

Due to the sustained expansion of the health sector and the growing demand of the population (47 million inhabitants), this sector requires increasing support in mobile telecommunication services for remote monitoring of patients (Telemedicine) and information consolidation (Data Entry).

Qualified human capital availability, its strategic and competitive geographical location with easy access to world markets, and location in the center of 5 time zones, sharing time zone with important business centers, have allowed Colombia to become a distribution regional hub for outsourcing, software, and IT services.

Colombian energy generation, transport and distribution companies, significant growth, and current regional expansion processes, increasingly demand more BPO and IT services

The Oil & Gas sectors demand more services related to mobile telecommunications as well as control and drilling, extraction, and oil transport processes for their daily activities increase.

The National Government is currently carrying out an ambitious plan, more than COP $90 trillion over the next years, for the development of road, port, railway, and airport infrastructure in the country, that will require accounting, finance, and logistics support services to control projects operation.

COLOMBIA, A MARKET THAT DOUBLES THE GROWTH OF LATIN AMERICAN MARKET

The BPO industry in Colombia has created more than 130,000 jobs. Diario Económico Portafolio, 2012

2014 IT Services and BPO companies target markets in Colombia will focus on Engineering Services, Research and Development, IT Services and Value Added BPO Services. Tholons, 2010.

Companies such as Sutherland, Teleperformance, and Convergys are recognized for its bilingual operations ACDCC1, 2012.

For third consecutive year Colombia was included in the “Top 30 destination countries for Offshore Services” Report. The report emphasizes the strengths of the country as a location for call center operations and transactional BPO jobs, the proactive government support to the IT sector and the competitive costs. Gartner, 2013.

The industry continues to grow at sus-tained levels: 13.58% between 2010 and 2011. ACDCC, 2012.

Exports value increased 125% over the past five years, reaching US$141 Million during 2011. ACDCC, 2012.

Telecomunications 39%

Others 32%

Automotive Sector 1%

Media 1%Mass Consumption 2%

Insurance 6%

State 5%

Banking and Financial

services 13%

Transport and Tourism 1%

BPO Industry in Colombia –Mayor Segments Served 2011 Source: ACDCC. Contact Center and BPO Colombian Association, 2012.

A GROWING MARKET WITH HIGH CAPACITY OF SKILLED LABOR

• AfterMexico,Colombiawith47.1million inhabitants is the second largest Spanish-speaking country in the world. It has multiple areas of development: nine metropolitan areas with population over 500,000 inhabitants. DANE, 2012

• Colombiaisthetwenty-eighthlargest economy in the world and one of the largest Non-OECD economies.

• Thecountryhasthesecondfastest growing labor force in the region. IMD, 2012.

• ColombiaisthethirdLatinAmerican country with the highest number of graduates in the areas of Business and Engineering. Euromonitor, 2012.

• Eachyearmorethan200thousand people graduate from higher education in Colombia: 55% undergraduate and 30% in Masters and Specialization degrees. Observatorio Laboral - Ministry of National Education, 2012.

Number of graduates in Engineering and Business Administration 2011

Number of graduates in business & engineering fields (2011)

Source: Observatorio Laboral (Employment Beacon)– Ministry of Education. 2012

11.919

8.7517.0655.101

4.601

1.167

44.352

BusinessAccountingIndustrial Engineering

Computer Engineering

EconomicsElectronics Engineering

Electrical Engineering

11.029 49.442 48.130 69.825 118.069 112.297 399.225Source: Ministry of

Education 2011.

TOTAL GRADUATES2001 - 2011

INFRASTRUCTURE, ATTRACTIVE COSTS SAVINGS AND A PRIVILEGED LOCATION Primestrategiclocation:Locatedintheheartlandof the main commercial and financial centers of the hemisphere; shares cultural-affinity-patterns suitable to consolidate operations in the region.

Infrastructure capable of supporting world-class operations: 5 submarine cables, supplemented by an internal optical fiber ring that will connect 1,078 municipalities in 2014. MinTIC ( Ministry of Information and Communications Technologies) , 2013.

NEW MARKETS OPENINGContinuous strengthening of commercial relations between Colombia and the world, opening a window of opportunities for investment in all business outsourcing services.

ATTRACTIVE REGULATORY FRAMEWORKAvailable tools to enable operations in areas such as services exports (PlanVallejo),intellectualpropertyrights,StatutoryLawofHabeasData,value added tax (“VAT”) exemption for services provided from Colombia, possibilityofapplyingtothefreetradezonesregime,FirstJobLawandopportunities to benefit from Telework.

GOVERNMENT’S COMMITMENT WITH THE SECTORThe Government is committed to support and provide aid through the Productive Transformation Program – PTP – a strategy aimed at promote sector growth; in recent years the program has created a favorable environment to consolidate sector worldwide recognition. Program efforts develop throughoutfourmainthemes:HumanCapitalandRegulatoryFramework, Consolidation, Promotion and Sector Innovation and Infrastructure and Sustainability.

Source: MinTic, 2013.

VIVE DIGITALGovernment plan aimed at generate economic growth based on the use and appropriation of ICT in Colombia and the development of a national digital ecosystem. The Presidency of the Republic and the MinTIC (Ministry of Information Technologies and Communications) lead the plan. In terms of connectivity, by 2014 it is expected to have 1,078 municipalities online out of 1,100 in the country.

TELECOMMUNICATION INFRASTRUCTURE OF SUBMARINE CABLES

PAN-AM

CFX - 1

SAM - 1MAYA - 1

ARCOS

PCCS

GLOBENET

AMX - 1

IN PROCESS

COLOMBIA, A COUNTRY WITH MULTIPLE AREAS OF DEVELOPMENT

• VoiceBPO: Telemarketing – Collections – Sales – Customer Service

• BackOffice:Outsourcing of Financial and Accounting Services–HumanResources

• KPO: Outsourcing Engineering Services – Telemedicine – R+D+I –GraphicDesign–LegalServices– Medical Transcriptions

• VoiceBPO: Telemarketing – Collections – Sales – Customer Service

• BackOffice:Outsourcing of Financial and Accounting Services–HumanResources– Document Management Services–2ndTierHelpDesk

• KPO: Business Intelligence Services

Bogota

Medellin

• VoiceBPO:Services – Collections• BackOffice:- Outsourcing of

Financial and Accounting Services • KPO:-Healthcare–

Pharmaceutical – Aerospace

Cali

• VoiceBPO:Call Centers - Outsourcing of Financial and Accounting Services

• KPO: Outsourcing of Engineering Services

Barranquilla

• VoiceBPO• KPO:Telemedicine - Outsourcing of

Engineering Services

Bucaramanga

• VoiceBPO: Basic Voice Services (Manizales) – Telesales (Pereira)

• BackOffice(Pereira)• KPO: Biodiversity (Center for

Bioinformatics and Computational Biology Colombia – Manizales)

Eje cafetero

• VoiceBPO

Tunja - Santa Marta – Ibague – Neiva Popayan - Cucuta

MAJOR FOREIGN COMPANIES HAVE CHOSEN COLOMBIA AS AN INVESTMENT DESTINATION

• IBM,USA: Opened a new center aimed at systems integration, process outsourcing and support services.

• Genpact,India: Value-added operations service center specialized in financial and accounting areas for the region.

• HP,USA:Opened a new global service center in the city of Medellin.

• Convergys,USA: Customer Center Facility to service the United States

“Colombia offers a favorable business climate for Genpact and for our clients – a rich talent pool with a high literacy rate and complementary skill sets, a healthy and growing economy, a number of universities with strong business curricula, a diverse array of industries, and open trade practices. Genpact is honored to establish its

roots here in Colombia and become a part of its culture and thriving business community.”

Pramod Bhasin, Non-Executive Vice ChairmanGenpact