March 2012
Innovation Across BordersPartnering for Success
Confidential ©2011 iSoftStone Holdings Limited. All Rights Reserved.
2011
• Strengthen ERP capabilities in global marketplace
• Breakthrough in Smart City and Healthcare
• 24 delivery centers
• 11,750 employees
(As of Sept 30, 2011)
2007
• Substantial R&D investment in solutions
• Aggressive expansion into Tier-2 cities
• 9 delivery centers• 3,116 employees
2001-06
• Entered Korea & Japan market
• Gained scale through acquisition
• Founded in Oct 2001
• 6 delivery centers in 2006
• 40–1,527 employees
2009
• Established Wuxi iCarnegie Institute
• Established sales team in Europe
• Implemented regional growth strategy
• 16 delivery centers
• 7,676 employees
2010
• Listed on NYSE (NYSE: ISS)
• Increased penetration ofhigh-end BFSI market
• 19 delivery centers
• 9,285 employees
2008
• US expansion• Launched BPO
service
• 14 delivery centers• 4,205 employees
2
iSoftStone – History & Development
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3,1164,205
7,6769,172
2007 2008 2009 3Q 2010
iSoftStone Snapshot – Leadership in China IT Services
36.4
82.5
134.4
90.0
135.2
2007 2008 2009 3Q 2009 3Q 2010
CAGR of 92%
Track Record of Strong Growth
CAGR of 57%
1 As of March, 20122 For the 12 months ended Sept 30, 20113 For the 9 months ended Sept 30, 20104 Total revenues from operations, less business taxes5 Based on period end numbers
YoY of 50%
Net
Rev
enue
4 (U
S$m
m)
Hea
dcou
nt5
Employees1 Over 14,000
Sales and Delivery Centers 24 in total, of which 17 in Greater China
29% Consulting & Solutions, 67% IT Services, 3% BPO ServicesNet Revenue by Service Offering3
Net Revenue by Geography3 56% Greater China clients, 44% Global clients
Clients2 Over 80 Fortune 500 companies
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Kirkland
Seattle Tokyo
FukuokaNew YorkBosto
nDalian
Shanghai
Wuhan
Taipei
TianjinXi’ an
Wuxi
Guangzhou
Shenzhen
Beijing
Nanjing
ChangshaHangzhou
HamburgLondon
4
Global Presence and Resource Distribution
On-shore, Near-shore and Off-shore Services to Clients Globally
US / Europe JapanGreater China• London• Hamburg
• Shanghai• Wuxi• Nanjing• Hangzhou
• Tokyo• Osaka
• Guangzhou• Shenzhen• Yancheng
• Wuhan• Changsha• Chengdu• Zhenjiang
• Beijing• Tianjin• Dalian• Xi’an
•Boston •New York•Seattle
Chengdu
•Hong Kong• Taiwan
YanchengZhenjian
g
Hong Kong
•Fukuoka• Hiroshima
OsakaHiroshima
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Functional
Infrastructure & Software services
Consulting
Application Development & Maintenance
Research & Development Services
Solutions
Industry Specific
Consulting and
Solutions
IT Services
BPO
Common and Consistent Business Processes
Tech
nolo
gy
Com
mu
nic
atio
ns
En
erg
y, tran
sp
orta
tion
an
d p
ub
lic s
ecto
r (ETP
)
Ban
kin
g, fi
nan
cia
l serv
ices
an
d in
su
ran
ce (B
FS
I)
End-to-End Suite of Services across Industry Verticals
5
Multiple growth
drivers
Large addressable
markets
Cross-selling
opportunities
among services
Deep penetration of
clients
Benefits of a Comprehensive Service Offering
Industry Verticals
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ISO9001:2008, ISO27001:2005
2011/2010 IAOP Global Outsourcing 100
2011/2010/2009 China Top 10 Leading Service Provider
2011/2010/2009 Top 100 Chinese Enterprise for Software Sales Revenue
2009 Red Herring Global 100
2006-2009 Deloitte Technology Fast 50 China
2010 China’s Best Employer Enterprise
2010/2009 China Outstanding Corporate Citizen
Numerous Third-Party Accolades
6
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Global and Greater China Marque Clients
7
Banking, Financial
Services and Insurance (“BFSI”)
Communications
Technology
Energy, Transportation
and Public Sector (“ETP”)
Other
Industry Verticals Greater China Clients Global Clients
Success Factor #1: Strategically Established U.S. Headquarters
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Key drivers to select the Pacific Northwest
9
International environment, nearest port to Asia from Mainland U.S.
Marque companies in high-tech, bio-tech, aerospace, telecom, retail…, that spur innovations
Favorable business climate
Strategic engagements with diverse blue-chip clients
Highly educated and experienced IT resource pool
1
2
3
4
5
Well positioned to sustain high growth, scale profitably and maintain a leadership position
Revenue & size have grown 8 fold since early 2008 6
Success Factor #2: Strong Alliances with Municipalities
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iSS Wuxi Expansion
Phase I Completed: Oct. 2010
Square Meters: 38,000
iSoftStone Wuxi
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Cloud Computing Center in WuxiCollaboration with IBM
Features
• Total Area around 1,800 square meters• Across the street from iSoftStone Wuxi Main
Campus and iCarnegie• Data hosting, disaster recovery, and other
associated value added services• Provides software renting services including
IBM Rational, Tivoli, WAS, and DB2• High Reliability with N+1 redundancy
architecture design• 7x24 Service• Technical staff have rich experience, and
strong technical backgrounds• Advance resource management system
OverviewWuxi wanted to build a data center as part of their supporting platform for IT Services. In collaboration with Wuxi K-Park and IBM teams, iSoftStone carried out design, implementation, testing and transition
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World Class Training Through iCarnegie Institute
13
Training center located in Wuxi Jointly owned by iSoftStone, Wuxi and
iCarnegie Utilizes technical curriculum and
professional certifications developed and maintained by iCarnegie Inc., an affiliate of Carnegie Mellon University
Annual training capacity of up to 10,000 students
Tailored training programs Long term curriculum (4+ years) Short term program (1- 6 months)
Provide on-the-job training as well as distant learning program
Graduation exams and review from on-the-job trainings for hiring and placement
Tailored training for clients with client specific materials and client internship
All courses taught in English
iCarnegie–iSoftStone Institute
Success Factor #3: 360° Partnerships with Strategic Clients
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Go to Market TogetheriSoftStone as a GTM Partner and System Integrator
Go to Market PartnersIn addition to its own proprietary solutions, iSoftStone has implemented over 150 GTM
partner products for more than 60 customers.
VAR Qualification Marketing Plan
Sales and Engineering
TrainingTargeted Outreach
Solution Implementation
Closeout and Maintenance Feedback
GTM Process
• iSoftStone has a 50 person solutions sales team organized by region and industry that participate in go-to-market efforts in Greater China (and about 33% have 10-12 years of experience from organizations like IBM and Oracle)
• 2009 GTM revenue is $15M (via VAR agreements and Systems Integration)
• iSoftStone has been an active GTM partner with Microsoft MCS
GTM Experience
Industry Targets
Healthcare OrganizationsTelco OperatorsManufacturingDomestic Consumer Goods
Industries Served
Banking • Insurance • Telecommunications • Energy and Utilities • Manufacturing
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360° Partnership
1616
Partner• Business Productivity & Collaboration Go-to-
Market Partner • Business Intelligence (BI)• Mobile Application Development &
Infrastructure• Web Application Design
& Development
Customer
iSoftStone offers Microsoft consulting and IT outsourcing services in addition to go-to-market opportunities for sell-
through of Microsoft technologies.
iSoftStone maintains its integrity as a customer of genuine Microsoft software. We have signed an Enterprise Agreement including Software Assurance benefits for several Microsoft product suites to support our business.
iSoftStone has supported Microsoft as a strategic vendor for almost ten years. We are currently on the approved vendor list (Global AVLS) for Project Management/Consulting, Web Development, Application Development and Testing Services.
• 100% Genuine Advantage Compliance
Vendor• Consulting• Dual-shore & Pure Offshore IT
Outsourcing• Business Process Outsourcing
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Connected Health Innovation Lab3-way Partnership between iSoftStone, Microsoft, Wuxi City Government
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Doing Business in China
From an IT Services Perspective
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Fortune Favors the Prepared MindAn
cien
t Wis
dom • “Victorious
warriors win before going to war; defeated warriors go to war then try to win” – Sun Tzu
Chin
a vs
. Oth
er? • Which one
is central to future long term global plans and strategies?
Wha
t to
do in
Chi
na? • Which part
of business to do in China?
• What kind of teams in China?
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IT Services Growth Rates, Asia/Pacific Region
2010 2011 2012 2010-2015 China 13.0 15.2 19.1 17.8 India 18.0 16.6 16.2 16.4 Malaysia 8.5 8.2 8.7 8.7 Singapore 6.2 6.1 6.0 5.9 Hong Kong 5.7 5.7 5.8 5.8 Thailand -0.4 4.6 5.4 5.3 Korea 3.9 3.6 3.8 4.2 Taiwan -3.5 3.6 3.8 3.8 Australia 1.5 2.8 3.1 3.0 New Zealand 1.1 1.9 2.4 2.3
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Location Choice involves many Aspects
First tier vs. second tier cities
Business opportunitiesTalent pool
Expenses
Local government support
Turnover rate
Guan Xi (relationships/connections)
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IP Protection & Data Security
22
Legal
Physical
Logical
Personnel
Client
Laws, regulations Contractual commitments Enforcement: civil, criminal and
administrative
24x7 guarded building Card access to offices Restricted access to the server rooms Segregated network Other security measures implemented based on
each client’s requests
International standards, security policies, processors, training, monitoring
ISO27001 compliant corporate policies, procedures and enforcement
Background checks Regular security training Individual NDA
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Duplicating U.S. Businesses?D
uplic
ation
Doe
sn’t
Wor
k Do not expect to simply duplicate or transfer a business from the U.S. to China Th
ings
wor
k di
ffere
ntly It takes
patience and flexibility to overcome obstacles
Team
Matt
ers
Mos
t
Well-balanced mix of eastern and western principles is often the best way to develop a successful business
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American Brands, Chinese Ingredients
Made in for ChinaYUM! Brands’ success in China• Egg custard at KFC• Deep sea eel is the best selling topping at Pizza Hut
Wal-Mart vs. Carrefour• Record number of people on Wal-Mart’s opening day because of the
brand name; downhill after that• China specific changes were made later• Carrefour has been more tailored to Chinese customs from the beginning
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About 400,000 new engineers every year.
Rapidly improving quality
Challenge: very experienced software architects are rare
Overseas talent returns to China – over 100k a year
25
Talent Pool
More honor students than total students in the U.S.
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The Management Gap Challenge in China
Expatriate Managers – Lack of Culture and Language
skills is becoming an issue
“Sea Turtles” - Returnees like Daniel Saw, new Asia head of
Campbell Soup
Local Managers – Lacking in Western Management skills
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Communication
“China will soon become the number one English
speaking country in the
world.”
Computer science
students must pass foreign
language test before they
graduate
Biggest challenge is
spoken English
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Work and Reward
Work Ethic• 70% of Shanghai white collar workers work 12+ hours per day• It’s normal to ask employees to work late and on weekends• (Recent labor law changes heavily favor employees)
Pay• It’s normal for people to ask each other’s salaries
Rewards and Incentives• Organized trips and events• Bonuses
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Grow or expand through present clients in the U.S. that are expanding into China
Start from your core competencies and domain expertise
Develop a China BU with a balanced mix of practices
29
Recommendations to U.S. Service Providers in China
Provide focused services in a good targeted market
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Loci Software, Inc. www.locisoftware.com
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Innovation Across BordersContact us: Weiling Li