Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Paris, October the 9th 2006
Siemens Business Services
Effects of Globalization on firms
Elie COHENChief Executive OfficerSiemens Business Services France
Page 2 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Agenda
Company profile
Globalization overall context
Impacts on Siemens’ strategy
Q&A session
Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Company profile
Page 4 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Siemens overall profile
Over 155 years of expertise
World leader: 21st largest company in the world Largest company in the electrical & electronics sector 8th largest business in Europe 6th biggest employer in the world with a global network of
426,000 people in 190 countries
Sound financial management with global revenues of € 80 billions
Investment of € 500m p.a. in workforce skills
Innovation is the key to entrepreneurial success generating more than 30 inventions a day
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Active in six business areas
LightingAutomation and Control
Information andCommunications Power Transportation Medical
OSRAMAutomation andDrives
Industrial Solutions and Services
Communications
SiemensBusinessServices
Power Generation
PowerTransmission andDistribution
TransportationSystems
Siemens VDOAutomotive
Medical Solutions
26%23%
16%10%
19%
6%
External sales of Operations Groups excluding Other Operations
Siemens Building Technologies
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Major R&D investments
Our patent positions (2005): Germany: No. 1 Europe: No. 2 U.S.: No. 10
Recent breakthroughs: Piezo injection
(reduces fuel consumption by 20%)
Softswitch(true carrier-grade reliability: 99.999%)
syngo(workflow integration – up to 25% time savings)
Combined cycle power plant(increases degree of efficiency: 58.8%)
Major innovations
€5.2 billion in fiscal 2005 47,000 R&D employees
worldwide 30,000 software engineers 150 R&D locations in over
30 countries around the world 8,800 inventions in 2005 53,000 active patents
Innovation is our lifeblood
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Canada
USA
Argentina
Brazil Australia
Singapore
China
Russia
South Africa
India
CIS
Italy Turkey
HungaryAustria
Poland
Czech Republic
Finland
Sweden
Norway
Switzerland
Great Britain
Denmark
Netherlands
Belgium
FranceGermany
Ireland
SpainPortugal
Greece
CroatiaSlovakia
Romania
Thailand
Fujitsu partner for ASP
Overall presence
Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Globalization overall context
Page 9 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Over centuries, the economy centre of gravity has made a full loop
1300 years
250 years
310 years
45 years
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Initial concept and consequences
Started in the early nineties with an ‘export’ model of democracy, society, way of life and economy model to emergent countries
Culture, history, existing models and utopias were not taken into account
Balance of trading and richness were not anticipated
Risks and benefits to population were not appreciated
People aspiration to better life in their context and culture
Developing countries claim to raise local added value
Elite has to be educated initially in developed countries
Infrastructure services must be developed to market and social standards
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Globalization : threats or opportunities ?
Heavy social impact
Knowledge evaporation
Coordination increase
Heavy image impact
Challenged servicequality
Challenged securitymanagement
Complex reversibility
New markets access
Competitiveness increase
Defined rules and duties
Defined formal SLAs
Defined policies and tools
Long term partnership
Reinforced methods & ICT
Levers
Strong ethic policies
Partnership instead of purchasing
Enhancement of Governance
Companies will balance threats and opportunities by structuring themselves stronger than actually
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Globalization : opportunities and opportunities
Heavy social requirements
Knowledge evaporation
Non adapted Education
Infrastructure saturation
Culture unfit
Ethic challenges
Levers
Transparency
Investment instead of subsides
Sharing instead of concentrating
Low and high cost Countries will benefit from globalization by balancing commercial exchanges and experience sharing
Educational programs sharing
Infrastructure Projects
Shared ethic policies andImage
Multi-Culture benefits
Staff retention programs
Set up social pre-requisites
Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Impacts on Siemens Strategy
We must be
Well prepared to master global challenges, leveraging on permanent innovation and differentiation, to growth
Well prepared to master global workforce, leveraging on off shoring, to insure competitiveness and continuity
Page 14 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Global Mega trends
Urbanization Today: 280 million people in mega cities (> 10 million) 2007: First time in human history
more people living in cities than in rural areas
2015: 350 million people in mega cities
Challenge for infrastructure
Demographic change Average life expectancy increases globally Population growth from more
than 6 billion to 8 billion by 2025
Challenges for infrastructure and healthcare
Global Mega Trends : shaping tomorrow’s markets
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Siemens today No. 1 in healthcare IT Technology leader in imaging systems Innovation leader in healthcare processes
Percentage of 80+ generation to grow globally Healthcare costs in industrialized nations rise to €3.8
trillion in 2010 (2002: €2.9 trillion) In Germany, healthcare costs account
for 10.7% of GDP
Increasing consumption of oil (until 2030 CAGR 1.8%), natural gas (2.5%) and coal (1.6%) to fuel global energy demand requires efficient systems and solutions for mining industries
Increasing world population requires efficient production and supply of food and goods
Siemens today Leading solution provider for mining,
oil & gas industries Number 1 in industry automation
Well prepared to master global challenges
Healthcare
Industry
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Siemens today Drinking water treatment Water distribution Wastewater treatment
1.2 billion people without drinking water 2.4 billion people not connected to waste
water systems 40% increase in water consumption by 2025
More than 40% increase in worldwide energy demand in the coming 25 years
Increase of CO² emission risk to global climate
Siemens today Strong No. 2 in power technologies worldwide Complete range of fossil fuels, wind power, biomass
and fuel cells Trendsetter in intelligent power generation
and distribution Low-loss electricity transport
Well prepared to master global challenges
Water
Power
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2010: Per passenger airline mileage will double compared to 1995
Americans spend 3.5 billion hours a year stuck in traffic jams
Need for more efficient urban security systems Larger and more frequent events in mega-stadiums
Siemens today High-performance rail systems Telematics solutions Fleet management Communications solutions
Mobility
Security
Well prepared to master global challenges
Siemens today Single supplier of integrated electronic security solutions Ticketing systems Biometric identification systems
Page 18 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Global Data CentersGlobal Call Centers
Partnerfor Asia
Delivery locations are key competitive factors
India (Bangalore, Chennai) Application Support Application Management Center Outsourcing Transition support
China Shared Service Center
Russia (Voronezh) Inbox, Invoice Services
Turkey (Istanbul) Customer Interaction Center Remote Management Services
Ireland (Cork) Customer Interaction Center Marketing Services
Czech Republic (Prague) Accounting Services
Singapore Shared Service Center
South East Europe (e.g. Bratislava) Inbox Services
Canada (Toronto) Customer Interaction
Center
Skill base, Cost, Language, Time zone, Stability
USA (Mason, Chicago) Customer Interaction Center Data Center
Germany (Fuerth, Munich, Paderborn) Customer Interaction Center Data Center
Austria (Vienna) Customer Interaction Center Data Center
Delivery location selection criteria:ICT, Collaborative, Knowledge Mngt, Workflow
Conditions:
Page 19 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
India• BPO for Barclays• Reservation Centre for major Car
rental company• Accounts payable for Siemens US
China• HR processes for
Siemens Companies• Accounts Payable for
Siemens Companies
Voronezh, Russia• HR back-office for
Siemens in Germany
Turkey• Helpdesks for
global electronics corporation
Bratislava• Airline back-office
for major European Carrier
UK• BPO for Financial
Services, Siemens UK, and Government
Ireland• Multi-lingual Service Desk
South Africa• IT and Business
Process Services for Department of Labor
Global delivery backbone is a support of competitiveness, innovation and growth
Permanent increase of the local added value
Page 20 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
22% 25%33%
101 19.1 96
€
27%33%
21%
125 24.4 61
€
36%
21%25%
165 15.7 72
€
3%8% 6%
1212 6.1 18
€
12% 13% 15%
58 10.1 44
€
Employees (thousands)
Sales (billions of euros)
Major facilities
€
Global presence : basis for competitiveness
Americas
Europe(excl. Germany)
Germany
Others
Asia-Pacific
As of September 30, 2005
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Corporate Responsibility at its best
Corporate Governance
Corporate Citizenship Generation21 (education program)
Caring Hands (charity program)
Support for the arts and sciences
Business Practices
Sustainability
Page 22 October-06 Confidential / © Siemens AG / Siemens Business Services 2006. All rights reserved
Questions and Answers