open to the world

In 2008, KPMG recognized Lviv

as one of the best IT-BPO1

destinations along with 30 other

cities in the world and among 11

cities in the EMEA2 region.

Source: Exploring Global Frontiers, KPMG, February 2009

The Program for Economic Development

and Increasing Lviv City Competitiveness

was launched by the Foundation for

Effective Governance (FEG) together with

Lviv city authorities and Monitor Group in

October 2008. According to the developed

strategy Lviv needs to accelerate economic

development by driving the development

of key highly competitive clusters such as

Business Services and Tourism and supporting

overall economic growth through focusing on

four key economic pillars namely, aligning

education with business needs, investment

promotion, boosting governance transparency,

and investing in supporting infrastructure.

In order to implement the strategy, the

City Administration together with the

city leadership have established Lviv City

Competitiveness Center with two focused Task

Forces – Business Services and Tourism.

1 IT -BPO - Information Technology and Business Process

Outsourcing; 2 EMEA – Europe, Middle East, and Africa

LVIV CITYCOUNCIL

We are making every effort to fulfill this ambition and your participation will facilitate the process.

Lviv does have unique advantages such as geographical, cultural and mental proximity to Europe as well as highly educated and talented labor pool.

We aim at attracting large-scale investments in order to develop state-of-the-art infrastructure with particular emphasis on public transportation, hotels, business parks, airport and railway to bring them in line with international standards.

The City Administration is strongly committed to providing investors with administrative support, local tax incentives, transparent and business-friendly regulations, and consulting.

We believe that our local government, city environment, unique atmosphere, and bright talents – engineers, developers, scientists, and managers – will do their best to bring change in the world.

Andriy Sadovyy

Lviv City Mayor

Lviv can become one of the most comfortable and attractive cities in Europe to live and work in as it has already become for the Ukrainians.

OvErvIEw

The • ancient but ever-growing city of Lviv has been repeatedly recognized by international experts as an attractive destination for foreign investments in the field of Business Services and Innovations.

Lviv’s key advantages are its favorable •geographical location, historical heritage, rich cultural traditions, and western mentality of its citizens, which make it a true European city.

Lviv has become an important technological •and r&D center of Ukraine since the end of the 20th century due to high-quality educational basis and research traditions.

Intellect, creativity, and foreign language •skills have become the crucial catalysts of a rapid sustainable growth of IT and Business Services in the city.

Nowadays IT-BPO sector in Lviv is very •attractive due to its high potential of development and insufficient capitalization.

Lviv city authorities are striving to create a •welcoming business climate for investors by providing them with information support, facilitating business set-up procedures, improving business infrastructure, and offering various economic incentives.

Lviv is open to the world and invites investors •and business partners for cooperation!

IT-BPO DesTInaTIOn OPPOrTunITIes

3

CITy SNAPShOT

Geographic Locationwest of Ukraine, 75 km from the Polish border

Transport FacilitiesInternational airport, railways, A3 and A5 international routes

Time Zone: GMT +2

Population: 735,0001 people

ClimateModerate continental, with average tempera-tures + 20°C (65°F) in June and – 4°C (27°F) in January

Main IndustriesIT, tourism, electronics, engineering, food, chemical, and construction

Direct air Connection Kyiv – 1 hour (550 km), Moscow – 2 hours (1100 km), Munich – 2 hours (900 km), warsaw – 1 hour (400 km), vienna – 1.5 hours (700 km)

GrP: $31 bn

GrP per capita: $4,3001

average salary: $2601

FDI: $275 mln ($30 mln in innovations)1

KEy CITy ASSETS

DIsCOver LvIv

Competitive Human Capital

Average monthly salary in the Business Services •sector two times lower than in Kraków, wroclaw or Budapest1

130,000 students and a pool of highly educated •graduates

Western Mentality

Strong historical and cultural ties with Austria, •hungary, and Poland

Cultural center of Europe, included in UNESCO •world heritage List

Sister cities with Budapest (hungary), Freiburg •(Germany), Kraków (Poland), rochdale (UK), Saint Petersburg (russia), winnipeg (Canada)

strategic Location

The very center of Eastern Europe•

Key transportation corridors connecting Lviv •with the EU (to be modernized in accordance with EU standards)

Growing Infrastructure and Office Space

Total construction investment of $1 bn to •significantly improve city infrastructure

rapid growth in ICT infrastructure, mainly •telecommunications and Internet services

EBrD loan of €38 mln granted to develop •public transportation

Office space supply: 60,000 m• 2 in 2009 and more than 150,000 m2 by 2012 (forecast)

The number of 3* and 4* hotels to be doubled•

Quality of Life

The title of The Best Ukrainian City To Live In, •according to Focus magazine (2009)

relatively low cost of living (half of what it is •in Kyiv or CEE capitals), including housing costs

Low-level air pollution compared to average •in Ukraine

1 2007

Source: Monitor Group, Lviv Bureau of Statistics

4

EDUCATIONAL FACILITIES & FOrEIGN LANGUAGE CAPACITy

PeOPLe MaTTer

Lviv is a leading educational center inukraine and one of the largest ones in Cee:

38 higher education institutions•

130,000 students •

30,000 highly educated graduates each year, •with 50% specializing in IT, Engineering, Applied Sciences, and Foreign Languages

Lviv has a large pool of university students...

Krakow

Lviv

Bucharest

Budapest

Prague

Brno

Bratislava

170128

100

91

80

63

56Key trends in Lviv education sphere:

Lviv is attracting more and more students •from year to year

Quality of education is improving, especially •after recent reforms initiated by the national government

Graduates of Lviv universities are sought •after by leading Ukrainian employers.

Lviv universities are aligning their •educational programs and degree requirements with international standards and business needs

Due to its proximity to Europe and active international cooperation, Lviv can boast of a large number of students and graduates with a good command of foreign languages, where English prevails.

...and multilingual population

native: Ukrainian, russian, PolishEasy to find: English, GermanCan be found: Bulgarian, Czech, French,hungarian, Italian, Slovak, Spanish

thousand people, 2007Source: Monitor Group, Lviv Bureau of Statistics

National Polytechnic University

Ivan Franko National University

Lviv Commercial Academy

National Forestry University

D. halytskyy National Medical University

31,000

25,000

8,500

7,000

5,000

25%

20%

7%

5%

4%

Applied Sciences & Engineering

humanities and Applied Sciences, especial-ly in Foreign Languages and Mathematics

Commerce, Management, Science of Law and Economics

Ecology, Forest Management, Technologies

Medicine, Pharmacy

university specializationnumber

of students% of the

total pool

5

SKILLED LABOr FOrCE

QuaLITy PLus CreaTIvITy

Lviv, as well as the whole ukraine, stands outfor its vast pool of highly educated, talented,and skilled labor force.

Low operational costs of setting up and housing business, together with competitivesalaries of well-trained and hard-workingspecialists, make Lviv an attractive place for outsourcing business operations.

average wages in comparison with some of Cee capitals

Krakow

riga

vilnius

Budapest

Prague

Kyiv

Lviv

1,958

1,595

1,320

1,611

1,291

1,038

598

Key facts about Lviv’s Business services workforce:

workforce is highly flexible and trainable due •to their low average age

Most IT specialists have high-level •engineering knowledge

Technically experienced staff is also •equipped with managerial skills

Almost all the personnel of Business Services •companies have a good command of foreign languages - English, German, French, Spanish, Italian, and Slavic ones

Lviv “exports” its intellectual capital •engaged in ICT sphere to the EU and North-American markets.

$, PPP (based on purchasing power parity), 2007Source: Monitor Group, Lviv Bureau of Statistics

6

BUSINESS INFrASTrUCTUrE

yOur COMFOrTaBLe PLaCe TO WOrK

In 2009, Lviv was recognized as the culturalcapital of ukraine and the most comfortableukrainian city to live in.

As Lviv business infrastructure is still underinvested, Lviv City authorities are actively looking for co-investors in developing modern public transportation system, new hotels and business parks, in upgrading airport and railway facilities to international standards.

Office Space Supply:

More than 60,000 m• 2, with 70% of classes B and C

To be doubled by 2012, especially class B•

Most popular office locations in Lemberg •Business Center, Dominant Plaza, Optima Plaza, and NTON Business Center

Modern exhibition hall in Lemberg Business •Center

Hotels and Private accommodations:

50 hotels in the city, including five 4* hotels•

2,115 hotel rooms in Lviv hotels•

100 hotels in Lviv region•

high supply of private apartments for rent•

Quality of Life:

relatively low cost of living (half of what it is •in Kyiv or CEE capitals), including housing costs

wide public transportation network (to be •modernized with the help of EBrD loan of €38 mln)

Moderate crime rate•

Low-level air pollution compared to average •in Ukraine

Proximity to recreation areas (the Carpathian •Mountains, Truskavets health resorts)

7

OvErvIEw OF BUSINESS SErvICES SECTOr

reaDy TO GrOW

In 2005-2008, Lviv Business Services sector demonstrated rapid growth that could be attributed to boosting domestic and foreign service markets, a skilled labor pool, and initial direct investments.

Business services Clustersales Growth in Lviv, %

CAGr: +33%

05 06 07 08

100

134

213

234

Today Business Services is one of the fastest growing industries in Lviv, with an average annual growth rate of 33% for the last 4 years.

More than 20 foreign Business Services companies have already invested in doing business in Lviv. Among them:

establishing a Foreign Direct Investment Agency •

providing comprehensive information support•

simplifying business set-up procedures•

initiating business-friendly regulations •

improving governance transparency, and•

developing the • incentive system for investors.

Minimum Total yearly Cost per IT specialist, 2007, in thousand $

Poland

hungary

Estonia

romania

Czech

Bulgaria

ukraine

32.8 32.430.7 30.1 30.0

27.326.0

2005 is taken as the base period

Source: Monitor Group, Lviv Bureau of Statistics

a General Look at the Industry

Source: Monitor Group, Lviv Bureau of Statistics

8

The world economic slowdown of 2008-2009 has resulted in further decline in wages and operational costs that had traditionally been lower in Lviv than in CEE BPO Centers.

Current Trends and Opportunities

recent almost 40% depreciation of the Ukrainian national currency (hryvnia) has further increased local cost competitiveness for foreign investors.

In addition, the economic crisis caused a significantinflowofhighlyskilledspecialistsfrom other industries into Lviv Business Services sector.

In 2009, the City Council started the implementation of Lviv Economic Development Strategy that includes:

KEy IT-BPO ArEAS IN LvIv

OuTsOurCInG? BraIn sOurCInG!

attractiveness and Competitiveness of the Key service areas in Business services

software • Localization

Full-Cycle software • Development

Cee Contact Centers•

Payroll services•

embedded systems•

software for CDMa•

IT Consulting•

KPO / LPO•

Financial • Transactions

Procurement•

Finance and accounting• Network Services•

Data Storage•

Enterprise Application •hosting

record / Account Management•

Bookkeeping•

Competitiveness (Local Assets, Incumbent Firms, Location . . .)

Attractiveness (Size, Market Growth . . .)

low

Full-Cycle Software

CEE Contact Centers

Embedded Systems

Software for CDMA

Software Localization

IT Consulting

KPO / LPO1

Payroll Services

Finance & Accounting

Financial Services

high

education/ Linguistic skills

expertise/ Competencies Capacities Customer base Examples of leading companies in the field

SoftServe, ELEKS Software, Lohika, N-iX

high

Austrian Airlines, Adelina Call Center, Kyivstar

SoftServe, GlobalLogic, N-iX, ELEKS Software

Impulsis

ELEKS Software, N-iX, Lohika

SoftServe, Epam

Lviv Juridical Center, Pravo

Skelia

DK-Ukraine, J&L Consulting, Contracty-Audit

Source: Monitor Group

Bank Lviv

Lviv has a number of competitive Business Services subindustries. Ten of them are highly attractive due to their growth potential, deep knowledge and expertise of Lviv labor force.

Leading IT-BPO companies focus their efforts on knowledge-intensive services, customer-tailored IT-solutions, r&D activities, and consulting.

Legend - emerging - moderate - good - strong

9

By stating that Lviv is an emerging IT-BPO center in Europe,

I would like to emphasize:

First of all, the key driver of investments in IT and R&D in Lviv is its

large pool of brilliant minds, highly educated and skilled young people.

Secondly, now is the right time to start. Recent decline in costs and

wages, together with strong commitment of the local government to

economic reforms, make Lviv your prospective business services hub.

Last but not least, since Lviv has missed the first wave of investments

in the CEE BPO industry, nowadays it is seriously underinvested.

The city, like an uncut diamond, offers a great opportunity for those

who plan to come first and be served first.

Oleksiy SkrypnykBoard Chairman of Business Services Cluster

10

Many reputable industry studies confirmed Lviv’s well-deserved place

among world centers of software development outsourcing.

Lviv’s legacy of an R&D center in electronics and IT brought in the

tradition of strong technical schooling. Explicit technical knowledge

delivered by Lviv software engineers in combination with a profound

industry experience makes local development companies reliable

partners for customers worldwide that appreciate the convenience of

working with a company in Europe.

Lviv fills a market niche at the high end of the outsourcing industry

and is a place-to-be for independent software vendors looking for

technology and processes to help them achieve strategic results.

Taras Kytsmey, Ph.D.Member of Lviv Competitiveness Board

Oleksiy SkrypnykBoard Chairman of Business Services Cluster CEO of ELEKS Software+38 (032) 297 12 51 oleksiy.skrypnyk@eleks.com

victoriya DovzhykBoard Co-chair of Business Services Clusterhead of Economic Development Division of Lviv City Council+38 (032) 297 57 64dovzhyk@city-adm.lviv.ua

Serhiy KiralHeadofForeignEconomicRelations&InvestmentOfficeofLvivCityCouncil+38 (032) 254 60 47serhiy.kiral@city-adm.lviv.ua

Contact Information

Taras KytsmeyMember of Lviv Competitiveness BoardPresident of SoftServe, Inc.+38 (032) 240 90 90tkytsmey@softserveinc.com

www.lvivbusinesscluster.org