mauritius attractiveness as an offshore destination report sep 2009 final

8/6/2019 Mauritius Attractiveness as an Offshore Destination Report Sep 2009 FINAL

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Mauritius as an Emerging Location for

Delivery of Offshore Services

September 2009

Copyright © 2009, Everest Global, Inc.



Copyright © 2009, Everest Global, Inc.2

Table of contents (page 1 of 2)

Executive summary 4

Section I: Perspectives on global sourcing 9

Current state of play 10

Growth opportunity and outlook 15

Section II: A brief introduction to Mauritius 19

Key facts about the Island nation and its economy 20

ICT-sector – The Fifth pillar of the economy 23

Section III: Scope of current service delivery (IT-BPO) from Mauritius 29

Overall market size and growth 30

Key facts on current scope of services 33

Case studies that illustrate scope and maturity of services 40

Section IV: Comparison of Mauritius with other offshore locations 47

Costs 50

Talent pool 59

Structural factors and risks 69

Topic Page no.




Table of contents (page 2 of 2)

Section V: Implications for investors 81

Roles that Mauritius can play for global investors and supporting rationale 84

Section VI: Appendix 89

Research methodology and list of participants 94

Glossary 98

Acknowledgements and Authors 103

Topic Page no.




A. Introduction and context

Mauritius is emerging as an important offshore destination for IT/BPO. The industry currently employs ~10,500 people and has

attracted a number of marquee global companies. Also, the industry has grown rapidly at a rate of ~45% per year.1

Mauritius is widely regarded as a relatively developed nation even though it is a part of the African continent. Its economyregistered a healthy GDP growth (in excess of 5%) in recent years. Further, Mauritius witnessed a significant uptick in its serviceseconomy over the past decade. Though primarily driven by tourism, the services economy rapidly expanded into other sectorsincluding offshore financial services and IT/BPO. Mauritius has identified IT/BPO as a key pillar for its economic growth and has putin place an ambitious vision for this sector. It targets to attract ~29,000 jobs by 2011 and also aspires to move towards “high value-added” niches. Further, Mauritius has put in place several enabling initiatives to support the growth of the sector. These includesetting up infrastructure parks, talent development initiatives, and investor-friendly business policies.

This report presents a fact-based view of Mauritius’ current IT/BPO capabilities and highlights its key differentiators with respect toother offshore destinations. The reports also outlines potential ways investors could leverage Mauritius in offshore delivery of IT/BPO services. As a starting point, the report outlines the significant growth opportunity in offshore IT/BPO and the opportunity for Mauritius to participate in this global sourcing phenomenon.

B. Global sourcing market: Opportunity and outlook

Global sourcing of services is a mature phenomenon, and the market represents US$90 billion in annual revenue across IT andBPO services. Over the last 10 years, this industry grew exponentially to employ over four million people across 150+ locations .

While the industry is established, there remains significant untapped potential. Everest estimates put the addressable IT/BPOmarket opportunity at ~US$1 trillion, roughly 10 times the current market size.

The sector is currently witnessing slower growth (5-15%), given the recent economic crisis. However, the medium to long-termgrowth outlook is robust as firms will look to manage cost pressures by leveraging offshoring.

Further, as global firms expand their offshore footprint, they build global delivery networks. In doing so, they look beyond theestablished offshore locations (e.g., India, Philippines). This presents opportunities for Mauritius to participate in an increasingshare of the global offshore market. Mauritius has established a good starting point, as described in the following section.

Executive summary (page 1 of 5)

1 Compounded Annual Growth Rate between 2004-08




Exhibit 1

Exhibit 2


C. Scope of current IT/BPO service delivery from Mauritius

The report examines the scope of current IT/BPO service

delivery from the following perspectives: overall scale andgrowth of operations, types of functions delivered, languages,and client geographies served.

Overall scale and growth of operations

The IT/BPO industry in Mauritius currently employs ~10,500people and has been growing at a rate of ~45% each year. Anumber of leading global suppliers (e.g., Accenture, Ceridian,Infosys) and offshore captives (e.g., Orange, DHL, Huawei)

established operations in Mauritius. Further, some leading localsuppliers (e.g., Rogers, Infinity BPO, Euro CRM) also builtcredible presence in this sector.

The offshore market size in Mauritius is comparable to many of its larger peer group countries, as indicated in Exhibit 1.

Types of functions served

The industry is successfully delivering a wide array of IT andBPO services to offshore clients. The majority of the servicedelivery (85%) is BPO focused, with a good mix of voice andnon-voice BPO services. Exhibit 2 illustrates the split of themarket across types of functions served.

ITO

35%

9% 4%

11%41%

100% = 10,400

Employee split by outsourcing services

2009; Number of employees

Others1

Contact center

Non-voiceBPO

KPO

Offshore-experienced IT/BPO talent pool by country

2009; Number of employees in ‘000s

Has a large domestic marketof over 100,000 jobs

Poland

Morocco

Egypt

South Africa

Mauritius

Tunisia

Senegal

Jamaica

Kenya 0.8-0.9

5-6

6-7

7-8

9-10

9-10

13-14

44-45

31-32

1 Include Multimedia, 3D/Graphic design, Engineering services, etc.





While there are some examples of relatively large centers(~1000 FTEs), the typical scale of operations is between 100-500 FTEs depending on functions served. Exhibit 3 provides a

view of the typical scale of current delivery centers and alsoprofiles the types of services delivered.

As shown in Exhibit 3, though most of the work delivered istransactional in nature, Mauritius is starting to move up thevalue chain with few instances of relatively higher-order work.There are emerging examples of success in areas such ascustomer surveys, reporting and compliance (F&A), andbusiness research.

Languages and client geographies served

Mauritius has distinctive advantages in terms of its qualitybilingual skills in both French and English. Given thesestrengths, Mauritius presents strong opportunities to serveFrench-speaking markets (e.g., France, Africa, parts of Canada) across both voice and non-voice functions. In addition,companies can leverage Mauritius to serve English-speakingmarkets in some areas (especially non-voice BPO).

As shown in Exhibit 4, while French and bi-lingual workconstitute ~75% of the market, suppliers also deliver meaningful scale for English-speaking markets (e.g., US, UK).There are examples of global companies that have beensuccessful serving English-speaking markets from Mauritius.

Exhibit 3

Exhibit 4

Typical processes delivered

Typical scale of

large providers

Voice(French and English-

language call center)

Inbound: Customer service, helpdesk, queryresolution, bookings

Outbound: Campaigns, Customer surveys, telesales,collections

400-500 FTEs

Non-voice(Back-office BPO)

F&A and HRO (e.g., Account Payable, GeneralLedger, Accounts Receivable, Payroll, Employeebenefits, Global mobility, Reporting and Compliance)

Insurance claims and policy administration Account servicing

250-350 FTEs

IT services Applications development and maintenance usingMicrosoft technologies, Java/J2EE, etc.

Technical service desk Datacenter operations and disaster recovery

100-150 FTEs

Knowledge services Business research Information services Data and document management Content management and publishing

50-100 FTEs

25%

40%34%

100% = 10,400

Employment distribution by language of service delivery


Only FrenchBi-lingual

(English &French)

Other languages1 –1%

Pure English work ismostly non-voice BPO(e.g., payroll, claimsprocessing)

Limited English voicework in MauritiusOnly English

1 Spanish, Dutch, Italian and German


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7

Exhibit 5


D. Comparison of Mauritius with other offshore

destinations

The report compares Mauritius with its relevant peer groupacross three broad areas: costs, labor, and structural factors.

Costs

Mauritius is one of the lowest-cost emerging destinations for IT/BPO services as seen in Exhibit 5. Mauritius offerssignificant arbitrage potential (60-70% on an overall operatingcost basis) relative to source markets such as UK and France.Further, we expect telecom costs in Mauritius to reduce further with the introduction of the second fiber-optic cable, which will

further strengthen Mauritius’ cost position.

Labor pool

While Mauritius has a small labor pool (~9000 tertiarygraduates annually), it has certain key strengths with respect toits talent pool. First, the industry can tap into alternative talentpools (e.g., school leavers) that have proven effective for BPO.Second, the talent pool increasingly views IT/BPO as arelatively attractive career compared to other sectors. Third,

Mauritius’ bi-lingual skills provide a significant competitiveadvantage. Given these strengths, the talent pool in Mauritius issufficient to accommodate four to six new companies per year with moderate scale (~500 FTEs).

Structural factors

Mauritius has clear strengths due to its stability, investor-friendly policies, and infrastructure. Further, the governmentand other stakeholders are putting in place multiple talentdevelopment and training initiatives to augment supply.

ENGLISH WORK

Emerging offshoredestinations

Established offshoredestinations

Source destination

MARKET AVERAGES

13-1614-1615-1715-1717-1918-2019-2121-2323-25

54-58

66-70

U.S.Tier 2

UKTier 2

Lithuania SouthAfrica

Jamaica Egypt Ghana Mauritius Kenya Philippines India

Direct operating cost per FTE for English contact center services

2009; US$ ‘000 per annum per FTE

~68-74%

FRENCH WORK


Source destination

MARKET AVERAGES

44-46

30-3228-30 27-29 26-28 25-27

21-23 20-2215-17

FranceTier 2

Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius

Direct operating cost1 per FTE for French contact center services


~61-67%



8


Everest experience suggests that investors often evaluate cost-risk trade-offs in making location decisions. Exhibit 6 highlightsthese trade-offs between Mauritius and its peer group. Given

Mauritius’ strengths in bilingual skills, low costs, and itsconducive business environment, it emerges as an attractivelocation for moderate-scale (~500 FTEs) offshore servicestargeted at both French and English markets.

E. Roles that Mauritius can play for investors

Mauritius has a strong role to play in delivery networks of globalinvestors. Based on Mauritius’ structural advantages andcompanies’ experiences to date, the report highlights some

potential ways in which investors could consider leveragingMauritius for offshore IT/BPO services. These include:

Offshore hub for French work Bilingual work for multinationals with a pan-European

presence Small-scale, relatively higher-order work in some IT/BPO

areas (e.g., software development, finance & accounting,business research)

Regional delivery hub for Africa (e.g., shared services) Risk diversification (e.g., disaster recovery) option for

established offshore locations (e.g., India, Philippines)

Exhibit 6

High

Low

Low

High

Cost

Risk

Ghana

MauritiusKenya

South Africa

Egypt

Jamaica

India

Philippines

Established lowcost, locationsfor mega scale(multiple ‘000FTE) operations

Large English-speaking talentpool suited to support large-scale centers (1000-2000

FTE), but relatively higher cost

Low-cost, stable locationsuited to support moderate-

scale centers (<500 FTE)

Low cost however,small talent pool andrelatively less evolvedinfrastructure

Native English-speaking location; butrelatively higher costs

Cost-risk comparison for potential countries serving English-speaking markets

ENGLISH LANGUAGE WORK

Cost-risk comparison for potential countries serving French-speaking market

FRENCH LANGUAGE WORK

High

Low

Low

High

Cost

Risk

Senegal

Mauritius

Egypt

Poland Tunisia

Morocco

Lithuania

Romania

Low cost but relativelyless evolved infrastructureand small talent pool

Limited Frenchskills andrelatively higher costs

Scalable andstable locations,but relativelyhigher costs

Lowest cost, stable location,suited to support moderate-

scale centers (~500 FTE)



9

Table of contents

Section I: Perspectives on global sourcing

Current state of play Growth opportunity and outlook

Section II: A brief introduction to Mauritius

Section III: Scope of current service delivery (IT-BPO) from Mauritius

Section IV: Comparison of Mauritius with other offshore locations

Section V: Implications for investors

Section VI: Appendix



10

The IT-BPO market has been growing at a rapid pace

and has become an integral part of the global sourcing

phenomenon

Global offshoring market size

2004-2008; US$ billion Business Process Offshoring (BPO) market

Information Technology Offshoring (ITO) market

1 Compounded Annual Growth RateSource: Everest Research Institute (2009)

Offshoring of businessprocesses is becomingincreasingly mainstreamfollowing the success of the offshore delivery of IT services

The growth in BPO hasexceeded the growth in

the overall offshoremarket growth in the pastfive years

2004 2005 2006 2007 2008

~40%

~60%

20-23

10-12

44-47

26-29

30-35

70-76

59-65

47-51

89-93

30-32

17-19

37-40

22-25

54-56

35-37

~35%

~65%

BPO market growth (2004-2008 CAGR1): ~35% Overall offshore market growth (2004-2008 CAGR1): ~29%



11

Offshore BPO market captures a diverse set of

services and processes across industry verticals

Revenue distribution by service offerings

2008; US$ billion

Human Resources mgmt.

Industry-

specific

BPO

services

Customer Interaction &Support (call center)

Procurement services

Other BPOservices

Finance & accounting

100% = 13

Customer Interaction &Support, which hashistorically been the leadingsegment, continues toaccount for close to 40% of the market

Overall, over a quarter of themarket is now providingvertical-specific processes

Knowledgeservices

2%

13%

27%

9%

4%

42%

3%

Note: Revenues and employees for domestic BPO (Indian clients) excluded from the analysisSources: Everest analysis (2008); response from study participants; NASSCOM

INDIA EXAMPLE



12

The global sourcing location landscape is evolving

rapidly as investors have multiple options today

Eastern

EuropeWestern

Europe

Egypt

South

Africa

Caribbean

S.E. Asia

India

China

Canada

Nigeria

Kenya

Investors today have over 150+ credible offshore delivery options (cities); up from 50 four years ago

Source: Everest Research Institute (2009)

Philippines a key

destination Multiple emerging

countries (e.g., Malaysia,Vietnam, Thailand)

Multiple Eastern Europeancountries (e.g., Czech Republic,Poland, Hungary, Romania)

Number of options inNorth Africa

Multiple locationoptions (e.g.,Brazil, Mexico,Argentina, Chile)

Large domesticmarket, but nascentoffshore experience

Mauritius




As a result, multiple countries are competing to grab

share in the offshore market

India and Philippinestogether constitute

over half of theoffshore BPO market

Market share is

shifting towards

emerging offshore

locations, as they

become increasingly

significant

2004

52%45% 38%

32%27%

41%46%

49%52%

50%

7% 9% 13% 16%23%

10-12 17-19 22-25 26-29

2005 2006 2007

Share of offshore BPO market

US$ billion100% =

Established offshore

destinations(India, Philippines)

Traditional sourcingdestinations

(Canada, Ireland)

Emerging offshoredestinations1

2008

35-37

1 Includes Czech Republic, Romania, Poland, Hungary, South Africa, Mauritius, Egypt, Nigeria, Morocco, Mexico, Brazil, Argentina,Colombia, Chile, Costa Rica, Singapore, Malaysia, Jamaica, El Salvador, Peru, Panama, etc.


India

dominant in IT

BPO EXAMPLE




Mexico

Mexico city

Sao Paulo

Brazil

Santiago

Chile

Mumbai

Bangalore

India

China

Shanghai

Singapore

Poland

KrakowBelfast

Ireland

Dalian

BeijingBudapest

Hungary

Warsaw

IT work for Latin America

Application Developmentand Maintenance for NorthAmerica

F&A for Europe andMiddle East markets

Loans processing,contact center, andanalytics for globalbusinesses

Customer care,transactionprocessing for U.S. andAsia-Pacificbusinesses

Application Development andMaintenance, data processingfor global businesses

Regional delivery centers

Offshore delivery centers

Example: Global financial services major

Investors assess

locations based on a

combination of cost,

risk and labor pool

available.

In addition, the roleof each location in a

network is

determined based on

fit across the

following

dimensions:

Geographies

Functions

Industries

Scale

Opportunity for Mauritius to participate in the growing offshore phenomenon


Metro ManilaPhilippines

Further, investors are building global delivery networks

and in doing so, they are diversifying beyond the

established locations (India, Philippines)NOT EXHAUSTIVE




Table of contents


Current state of play Growth opportunity and outlook









However, the sector is witnessing some slowdown due

to the global recession

ACV1 of outsourcing transactions signed

US$ millionOutsourcing transactions signed

Number of transactions

Average deal size has shrunk over the previousseveral quarters

4,0743,804

4,011

2,602

3,207

3,553

2,972 2,989

Q3

2007

Q4

2007

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

The number of outsourcing transactions haveremained flat and range bound

385

333

403 417

481455

423

467

Q3

2007

Q4

2007

Q1

2008

Q2

2008

Q3

2008

Q4

2008

Q1

2009

Q2

2009

1 Annualized Contract ValueSources: Everest Research Institute (2009); NASSCOM

Average




While offshore market growth is likely to be tempered

over the next 12-18 months, the medium-long term

outlook remains robust

Offshore BPOindustry

Factors likely to affect offshore

BPO growth

Factors likely to drive offshore

BPO growth

Firms facing survival pressures

Drop in underlying businessvolumes

Uncertainty driving slower decision making

Political sentiments againstoffshoring (job losses)

Offshoring a key lever to cutcosts

Significant untappedopportunity

Mergers and acquisitionsdriving additional opportunities

Given these countervailing forces impacting growth, The Everest Research Institute expects the

growth rate of the offshore BPO market to be tempered (between 5-15%) over next 12-18 months.

However, the medium-outlook remains robust, with growth rate expected to pick up to 20-30% levels




Table of contents



Key facts about the Island nation and its economy

ICT sector – The fifth pillar








Quick facts on Mauritius

Situated off the coast of African continent east of Madagascar,Mauritius is a small island nation in the southwest Indian Ocean witha population of 1.28 million people

History of colonialization by the Dutch, French and then by the British.Under the French rule, the island developed a prosperous economybased on sugar production and exports. Achieved independence fromthe British in 1968

Mauritians are bilingual (speak both English and French). Creole, thelocal language spoken by over 80% of the population, is similar toFrench. Some Indian languages (e.g., Bhojpuri, Hindi) also spoken

Ethnic groups comprise of Indo-Mauritian (68%), Creole (27%), Sino-Mauritian (3%), and Franco-Mauritian 2%. Majority are Hindu (48%)with the others being Roman Catholic (24%) and Muslim (17%)

Mauritius, an island nation, has strong cultural affinity with France, UK, and India due to its history…

…and is supported by a growing economy conducive for foreign investment

Key indicators 2005 2006 2007 2008

GDP growth (percentage) 2.3 5.1 5.4 5.3

Per capita GNI (US$) 4314 4810 5576 6157

Inflation FY (percentage) 5.6 5.1 10.7 8.8

Budget deficit FY, (percentage GDP) 5.0 5.3 4.3 3.3

Unemployment rate (percentage) 9.6 9.1 8.5 7.2

The Mauritian economy has registered a

healthy average growth rate of 5.6% inrecent years

Government has undertaken major economic reforms to facilitate business inMauritius

These enable investors to set-up andoperate in the country seamlessly

Mauritius

Africa IndianOcean

Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank, Board of Investment; Everest Research (2009)




Even though a part of the African continent, Mauritius

is widely regarded as a relatively “developed” nation

GDP per capita

current prices US$ at PPP

Estimated at ~US$12,000 at PPP,

Mauritius has the sixth highest GDPper capita in Africa, after EquatorialGuinea, Seychelles, Botswana,Gabon and Libya

Widely regarded as a developedcountry, Mauritius has a higher GDPper capita than several Africancountries that are emerging asoffshore services locations

Mauritius has evolved from a low-income, agriculture-based economyto a growing middle-incomeeconomy reliant on sugar, textilesand apparel, financial services, andtourism

This has resulted in a moreequitable income distribution and amuch-improved infrastructure

0

1,000

2,000

3,0004,000

5,000

6,000

7,000

2007 2008 2009E

Mauritus

Senegal

Morocco

Tunisia

Egypt

South Africa

Ghana

Kenya

Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank; Everest Research (2009)




14%

37%

24%

5% 14%3%

11%

38%

25%

17%

25%

38%

31%

28%

48%

38%

59%

70%

48%

66%61%

Egypt Ghana Kenya Mauritius Morocco South

Africa

Tunisia

Uptick in services economy, primarily driven by the

hospitality sector but branching out into other services

Composition of GDP by country

2008; US$ billion

Agriculture

Industry

Services

100% = 16.1 34.5 8.6 86.3 276.7 40.1

Composition of the GDP is gradually shiftingfrom manufacturing and agriculture to wardsservices. The services sector accounted for 61% of the U$4.4 billion GDP in 1997, whileby 2008 its share increased to 70% of theUS$8.6 billion GDP

Rising tourism revenue is a key driver of thisincreasing share of services

Also, Mauritius has attracted more than32,000 offshore entities, many aimed atcommerce in India, South Africa, and China.

Investment in the banking sector alone hasreached over US$1 billion

Further, service sector is graduallyexpanding into information andcommunications technology, financialservices, hospitality and propertydevelopment

Tourism, agriculture, offshore financialservices and manufacturing have beenidentified as the four pillars of the economy

There is a conscious effort by thegovernment to grow the services economywith a focus on ICT

Key facts on the economy

Mauritius has a higher contribution of services to its GDP, than several other African nations. This underscores the

positioning of Mauritius as a services platform, especially customer service orientation from the hospitality industry

162.8

Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank; Everest Research (2009)




The ICT sector is being recognized as the ‘fifth pillar’

of Mauritius’ economy

It is forecasted that the IT-BPO sector will

contribute up to 7% of the country’s GDP by

2011

Mauritius’ vision for ICT

a. Enable the ICT sector to contribute into the GDP of Mauritiusb. Lead to the ICT sector employing more Mauritiansc. Make for sustained availability of skilled manpower to power the sector, andd. Facilitate contribution from the ICT sector into the Mauritian export basket, initiatives to create an

information society revolve around the instilling of a “technology temper” in Mauritians to bring aboutincreased adoption, ICT-enabled knowledge networking among citizens, and generally accepting ICT as astream of professional persuasion at par with others

National ICT strategic plan Target to create 29,000 jobs in the ICT sector by

2011 and contribute to 7% of GDP by 2011 Develop a sustainable ecosystem (i.e., talent pool,

physical infrastructure, policies, regulatoryenvironment, etc.) and create an investor-friendlyenvironment Increased adoption of ICT as a preferred career

choice Create an ICT-ready environment through increased

usage and adoption of ICT Inculcation of a ‘technology temper’ and

knowledge networking among citizens

Contribution of the IT-BPO sector to GDPPercentage

1

4

7

2005 2007 2011(E)

Sources: NICTSP; Everest Research (2009); Board of Investment




Mauritius has made significant progress in putting the

ecosystem in place from an ICT-readiness standpoint(page 1 of 2)

Developing an ICT

conducive

environment

Infrastructure

development

Ebene Cybercity Well-developed digital network infrastructure andhigh-bandwidth international leased lines through

the SAFE fiber optic cable Advanced services include the introduction of

WiMAX technology, HSDPA technology and 3Gmobile networks

Furthermore, the second fiber optic will connectMauritius to France and UK, amongst other destinations, in 2011 This is expected to further bring down costs and

increase availability Development of technology parks and free-trade

zones. For example, Ebene Cybercity, a state of theart cyber park, houses 52 IT/BPO companies

Additional technology parks under construction

Highest penetration of internet users in Africa(internet penetration estimated at 14.5% for 2008with a total of 185,000 internet subscribers)

Post liberalization of the telecom sector, thenumber of connected lines has grown to over 364,500 in 2008 from 65,00 in 1991.

Fixed line penetration of 28.7% for its 1.2 millionpopulation

Prevalence of e-banking and e-governance

Sources: Everest Research (2009); Board of Investment; NICT Survey, ICTA

14.513.1

10.910.3

6.35

2003 2004 2005 2006 2007 2008

Internet Penetration in Mauritius

Percentage




Mauritius has made significant progress in putting the

ecosystem in place from an ICT-readiness standpoint(page 2 of 2)

Year Relevant legislation

1998 Copyright Act (Amendment)2001 ICT Act

2002 Electronic Transactions Act

2003 Computer Misuse &Cybercrime Act

2006 Business Facilitation Act

2009 Data Protection Act

Talent

development

Formal education Significant rise in secondary and tertiary education

enrolments Increase in adoption of knowledge-based

programs (e.g., information technology,engineering, finance and accounting, businessmanagement) among students

Training and skill-development programs HRDC: Administers training grants for employers Empowerment Foundation: Supports special

training and skill-development programs for unemployed people

ICT Academy: Soft skills and technical/domaintraining to industry workers and aspirants

Customized networking and telecom courses

dispensed in French

Policy

Development

Rise in tertiary enrolments

‘000s

2629

33 35

2004 2005 2006 2007

Conducive business environment (e.g., low tax

rates) Streamlined process for investors to live and work

in Mauritius (Occupation permit issued in ~3working days)

Modern labour laws adopted to the needs of theICT industry

Data Protection Act to comply with EU IP anddata protection norms

Sources: Everest Research (2009); Education statistics department; Board of Investment




Overview of the education system in Mauritius

Number of

institutions

Type of institutions/

credentials awardedAnnual enrolments

~10,000 students in

2007/08; a 5.4%increase from thelast year

6 public institutions

3 polytechnics

30 private institutions

~8,500 students

appeared for HSCin 2007/08

~17,350 studentsexamined for SC

180 schools

180 schools

University-level first stage

(Diploma of 2 year duration)

University-level second stage (3-4 year Bachelor)

University-level third and fourthstages (Masters, M.Phil, PhD)

Upper secondary school

Length of program: 2 years

Primary and lower-secondaryschool

Length of program: 11 yearsincluding kinder garden

Universities, Institutes and collegesawarding Bachelor’s degrees,Diploma, Master’s Degree and PhDs

Tertiary

level

Higher School

Certificate (HSC) /

General Certificate of

Education A-level

School Certificate (SC)/General

Certificate of Education O-level

Education in Mauritius is provided free of cost till the senior secondary level and in government colleges till the

tertiary level

Some SC qualified studentsmay proceed directly for tertiary courses such asdistance education, diplomas

Sources: Everest Research (2009); Education statistics department, Mauritius




Key organizations involved in ICT development

The Board of Investment (BOI) is the official Investment Promotion Agency of the Government of Mauritius. It is viewed both locally and internationally as a strategic partner for any investor wishing

to set up its operations in Mauritius.http://www.boimauritius.com

The National Computer Board (NCB) was set up by the National Board Act to promote thedevelopment of Information and Communication Technologies in Mauritius. It vision is to be the keyenabler in transforming Mauritius into a Cyber Island and the regional ICT hub.http://www.ncb.intnet.mu/

Outsourcing & Telecommunications Association of Mauritius (OTAM) is an association of callcenters/BPO’s, software developers, Internet Service Providers, International Long Distanceoperators established to promote the creation of an environment conductive to the growth of the ICTindustry in Mauritius.http://www.otam.mu/

Human Resource Development Council was set up in accordance with the HRD Act with 27members representing the different sectors of the economy. It’s aim is to promote human resource

development in l ine with national economic and social objectives for successful transformation of thecountry into a Knowledge Economy.http://www.hrdc.mu/

The National Empowerment Foundation administers, controls and operates the Placement for Training Programme under the Empowerment Programme (EP). It attempts to address the problemof mismatch in the labor market, and the high rate of unemployment. The programme is designed toprovide the unemployed with an in-company placement coupled with a work-related formal trainingso as to make them employable.

http://www.boimauritius.com/

http://www.ncb.intnet.mu/

http://www.otam.mu/

http://www.hrdc.mu/

http://www.hrdc.mu/

http://www.otam.mu/

http://www.ncb.intnet.mu/

http://www.boimauritius.com/




Key organizations involved in ICT development

Enterprise Mauritius is a collaborative partnership between industry and the government that aims tohelp businesses in Mauritius expand into regional and international markets, and at the same time

develop their internal capability to meet the challenges of international competition. Focus areaswould be to promote exports, support enterprise development and provide competitive intelligence.www.enterprisemauritius.biz

Founded in 2003 the Chambre de Commerce et d'Industrie France-Mauritius (CCIFM) comprises of 96 companies and entrepreneurs from France and Mauritius. The CCIFM aims at nurturing thecommercial relationship that exists between the two countries and works in close collaboration withthe French embassy, the French economic mission, the Board of Investment (BOI) and the MauritiusEmployers Federation.

www.ccifm.intnet.mu/

Founded in 2001, the Mauritius IT Industry Association (MITIA) represents the interests of the dataprocessing industry near the government and contributes to the setting up of an environment whichwill support the prosperity and the competitiveness of the data processing industry at theinternational level and which is to strategic and commercial alliances. MITIA also nurtures theestablishment of close connections with other regional and international ICT associations.http://www.mauritius-mitia.org/join.html

http://www.enterprisemauritius.biz/

http://www.ccifm.intnet.mu/



http://www.mauritius-mitia.org/join.html







http://www.enterprisemauritius.biz/




Table of contents




Overall market size and growth

Key facts on current scope of services

Case studies that illustrate scope and maturity of services




Th IT BPO i d t i M iti h it d




2,3923,801

5,5136,960

10,440

29,000

2004 2005 2006 2007 2008 2011E

The IT-BPO industry in Mauritius has witnessed an

impressive growth of 45% annually between 2004-2008

Evolution of employment opportunities in Mauritius

2004-2008; Total employees in IT-BPO sector

The IT-BPO industry in Mauritius has experienced sustained growth from less than 100 companiesin 2004 to 250+ companies in 2008. Employment opportunities have grown ~5 times since 2004 withseveral marquee players establishing operations

The IT-BPO sector generated revenues of ~US$200 million during FY 2008-09

Target to create

29,000 jobs in theICT sector by 2011

Sources: Everest Analysis (2009); NICTSP, Questionnaire responses; Board of investment, Mauritius

A b f li d ti h t bli h d




A numbers of suppliers and captives have established

their operations in MauritiusNOT EXHAUSTIVE

Source: Everest Research (2009)

Local/regional

Mauritius suppliers

Captive operations

Global suppliers

Off h k t i i M iti i bl t th t

http://www.rogers.mu/index.php?langue=eng

http://www.huawei.com/

http://www.rogers.mu/index.php?langue=eng

http://en.wikipedia.org/wiki/File:Deutsche_Bank-Logo.svg

http://en.wikipedia.org/wiki/File:DHL_Express.svg

http://en.wikipedia.org/wiki/File:Obsenglish.png




Offshore market size in Mauritius is comparable to that

of other emerging destinations

Offshore-experienced IT/BPO talent pool by country

2009; Number of employees in ‘000s

Source: Everest Research (2009)

0.8-0.9

5-6

6-7

7-8

9-10

9-10

13-14

31-32

44-45Poland

Morocco

Egypt

South Africa

Mauritius

Tunisia

Senegal

Jamaica

Kenya

Number of leading global suppliers and

captives serving offshore markets

2009

Has a large domesticmarket of over 100,000

jobs

2-4

4-6

1-2

1-2

13-15

14-16

12-14

13-16

48-52Poland

Morocco

Egypt

South Africa

Mauritius

Tunisia

Senegal

Jamaica

Kenya

Offshore industry size in Mauritius is comparable to many of its larger peers (e.g., South Africa, Tunisia)

M j it f th i d li f M iti i BPO




11%

4%

85%

Majority of the service delivery from Mauritius is BPO

focused, with a fair mix of voice and non-voice BPO

services

BPO

ITO

100% = 10,400

Employee split by outsourcing services


Non-voiceBPO (52% of

the market)

Corporate services(F&A, HR)

Voice BPO(front-office)

Industry specific- BPO

(Insurance claims,account servicing)

Knowledge services (DataMgmt., business research,

and information services)

Others1

BPO employees split by types of BPO functions served


1 Include Multimedia, 3D/Graphic design, Engineering services, etc.Note: The analysis is representative of ~70% of the market ( ~7,280 employees) extrapolated to cover the entire market (~10,400 employees)

Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis

Mostly ADM

48%

28%

11%

13%

Number of employees

100% = 8,840

Voice BPO(48% of the

market)

Whil di f ti tl b i d




While diverse functions are currently being served

from Mauritius, the scalability is limited

Typical processes delivered

Typical scale of

large providers Player landscape

Voice

(French and English-

language call center)

Includes global and local/regionalsuppliers

Local/Regional suppliers have alarger average size of operationsthan their global counterparts

Inbound: Customer service, helpdesk,query resolution, bookings

Outbound: Campaigns, Customer surveys, telesales, collections

400-500 FTEs

Non-voice

(Back-office BPO)

Numerous captives operatingshared service centers

Significant presence of globalsuppliers running small scaletransaction processing operations

F&A and HRO (e.g., Account Payable,General Ledger, Accounts Receivable,Payroll, Employee benefits, Globalmobility, Reporting and Compliance)

Insurance claims and policyadministration

Account servicing

250-350 FTEs

IT services Evidence of IT work, though smallscale

Global suppliers more prominentin this space

Applications development andmaintenance using Microsofttechnologies, Java/J2EE, etc.

Technical service desk Datacenter operations and disaster

recovery

100-150 FTEs

Knowledge services Niche providers and globalsuppliers operating in this space

Business research Information services Data and document management Content management and publishing

50-100 FTEs

Sources: Everest Analysis (2009); Interviews with IT-BPO suppliers and captives in Mauritius

Tho gh most of the ork deli ered c rrentl is




Though most of the work delivered currently is

transactional in nature, Mauritius is starting to move up

the value-chain with few instances of higher-order work

Accounts payable | General accounting

ContactCenter

Back-office BPO

(F&A example)

Channel management

Lifecyclemanagement

Customer data acquisition

Customer service (simple queries)

Sales and marketing

Accounts receivable

Fixed assets | Tax

Reporting

Compliance

Management reporting

Cross sell

Customer analyticsCustomer surveys

Treasury & risk

Audit

Capital budget

Knowledge

services

Presentation support

Data management and archiving

Information services

Business research

Investment researchFinancial modeling

Risk analytics

Legal process

Majority of current service delivery in Mauritius

I n c r e a s i n g c o m p l e x i t y a n d

v a l u e d e l i v e r e d

Increasing scope/diversification of service delivery

Customer survey,high-value customer service, etc.

Compliance, MISand audit

Legal Process,Business Research

Early evidence of higher-order workRule-based/TransactionalJudgment oriented

Strategic

BPO EXAMPLE

Source: Everest Analysis (2009)

Majority of service delivery is Bi lingual with clear




25%

40%

34%

Majority of service delivery is Bi-lingual with clear

strengths in French-language delivery

Only French

Only English

Bi-lingual(English &French)

Other languages1 - 1%

1 Spanish, Dutch, Italian and GermanNote: The analysis is representative of ~70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)




100% = 10,400

Pure English work ismostly non-voiceBPO (e.g., payroll,claims processing)

Limited English voicework in Mauritius

Mauritius is one the few offshore locations that can support bilingual operations (French and English) in

meaningful scale

While France is the largest offshore market served




While France is the largest offshore market served,

there is meaningful work delivered for English-

speaking markets also

1 Includes Middle-East, Asia, Caribbean, Israel, RussiaNote: The analysis is representative of 70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)


Employment distribution by source geography served


7%

16%

3% 2%

10%

19%

43%

Domestic

U.S.,Canada

UK

France

Benelux

Africa Others1

French-speakingpopulation of Canada.However, there isevidence of U.Sfocused work as well

Key Anglo-Francomarket

Largely non-voice work

Largest marketserved acrossContact center, BPOand IT services

French-speakingpopulation of NorthAfrica and Englishspeaking population of sub-Saharan Africa

100% = 10,400

While local/regional service providers account for




While local/regional service providers account for

~70% of the industry, global companies drive scale

Employment distribution by type of provider Number of employees

17%

12%

71%

100% = 10,400

Globalsuppliers

Local/regionalsuppliers

Offshorecaptives

Average scale of operations by typeof provider

Employees

250

150

50

800

350

650

Scale of largest

provider

Employees


Multiple global suppliers and offshore captives in Mauritius (as illustrated on Page 26)

Globalsupplier

Offshorecaptive

Local/regional

supplier

A wide range of industry verticals are being supported




22%

8%

3%

26%

4%

14%

23%

A wide range of industry verticals are being supported,

with some spikes in Telecoms and high-tech, BFSI

Employment distribution by vertical supportedNumber of employees

BFSITravel, hospitality,

and tourism

Telecom andHi-tech

Other industries1

BFSI

The evolved domestic offshore investmentsindustry potentially provides ‘transferable skills’ tothe BPO industry

Tourism and Hospitality

An incubator of foreign language skills (e.g.,Spanish, Italian, German, Dutch), in addition tobeing fluent speakers of French and English

Customer service orientation helps in improved

employability for the BPO sector

Logistics

Several international logistics providers arepresent in Mauritius given its geographicalpositioning to serve the African region

Examples of captives leveraging Mauritius as ashared services delivery location

Telecom Liberalization of the telecom sector has resulted in

availability of domain-specific skills within thedomestic market. (e.g., Emtel, Orange)

Logistics

Manufacturing

E-commerce, mediaand entertainment

1 Others refer to all other client industry verticals (e.g., healthcare, pharmaceutical, retail, government etc.)Note: The analysis is representative of ~70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)


100% = 10,400

Several examples and case studies demonstrate that




Several examples and case studies demonstrate that

service providers in Mauritius are successfully

delivering a wide-array of services to offshore clients

Evidence of relatively

niche/domain-specific

work

IT and knowledge

services

Contact center

(French and bilingual)

Non-voice

transactional BPO

1 2

34

Wide scope of services and

multiple leverage models5

Non-voice transactional BPO case studies1




Non-voice transactional BPO case studies1

Sources: Questionnaire responses; Interviews with leading service providers

1 2

34

5

Examples of non-voice BPO work delivered

The client is UK’s leading hospitality company that hasoutsourced its HR and payroll to the service provider as apart of a 5-year outsourcing deal

Mauritius offshore delivery center along with the serviceprovider’s onshore facility in the UK, administers HRservices, payroll and related technology services to morethan 33,000 employees of the client worldwide

The Mauritius team has been set up with 50% of existingemployees and 50% new graduates from universities andthe domestic hospitality/tourism sector

The team operates 24/7 and provides non-voice andrelated-IT services in HRO

Software development using Microsoft technologies (e.g.,.net, VB, C#)

HR transaction processing and payroll as per UK norms

Third-party administration of Payroll and related HR

services for a UK client

Shared services unit of a large multinational deliverstransactional F&A processes (e.g., invoice processing,claims) for its offshore operations in French-speakingcountries

A global outsourcing services suppliers delivers F&A (AP,GL, AR, and business services (e.g., Visual aids) for itsFrench-speaking customers in Europe

A leading global BPO supplier provides order managementand transactional F&A to its French-clients

Qualified accountants of F&A shared service operationsperform claims approval, payments, compliance and auditfor the French-speaking African countries

Data capture, cleaning and data management services of media reports, press releases for a leading publication

house in France

Case Vignettes: Back-office processing for the French

market

Contact center (French and bilingual) case studies2




Contact center (French and bilingual) case studies2


1 2

34

5

Examples of contact center services delivered for French market

A global BPO supplier provides third-party sales support(e.g., quotations, follow-up, maintenance contracts) for theFrench operations of a leading high-tech and telecom MNC

Third party after-hours customer service for high-valueFrench customers (corporate and platinum/priority) of aleading credit card company

Third Party campaigns on new product offering, salessupport and post-sales customer service for a leadingglobal media and publishing corporation

Third Party inbound customer service for France’s leadingdirectory services/listing company focused on the French-market

Third-party outbound customer satisfaction surveys for theFrench customers of a leading auto manufacturer

Outbound fund-raising for the Art and donations for community service for a leading European insurer

Case vignettes: French Contact Center

The client is a leading player in the international assistancemarket operating in the vehicle, travel and lifestyle,medical, and home assistance space

The client sources inbound assistance services for France,Part of Europe and Canada and Southern African region,including transactional back-office services for the groupcompany in UK

The inbound English call center team in Mauritius delivershotline, emergency assistance, claims, helpdesk,concierge, and customer service for the client’s customers

On the non-voice side, the team in Mauritius providesclaims processing, medical and legal transcriptions andsoftware development services to its client’s groupcompany in the UK

The center is complaint with the European Data ProtectionAct for processing sensitive financial information of itsEuropean clients

Administration of bilingual inbound assistance services

for a leading assistance company

Evidence of relatively niche/domain-specific work3




Evidence of relatively niche/domain-specific work

Examples of relatively niche/domain-specific work delivered for offshore clients

3


1 2

34

5

With a team of over ~170 people, the offshore bankingentity at Mauritius provides a range of offshore bankingservices to financial institutions, international businessgroups and its private clients

The Fiduciary team provides middle-office support services(e.g., accounting, administration) to the bank’s corporatetrust structures and provides solutions for institutionalclients

The private wealth management team provides custodian,investment, portfolio management services to high-networth clients taking advantage of the extensive range of double taxation agreements available to the entity.Attractive concessions include reduction of withholding taxon bank interest in a number of DTA jurisdictions

The trust and securities team offers corporate services,

Fund services and Trust Services backed by a supportingteam providing Statutory and Fund Accounting support

The global transaction support team is responsible for theestablishment and ongoing administration of capitalmarkets special purpose entities through provision of management reporting, bookkeeping, accounting andaccompanying administration services

Offshore financial services center of a leading European

Bank

A leading European provider of worldwide businesscommunication solutions operates its global service center from Mauritius

The team at Mauritius provides LI and L2 technical supportfor incident and problem management, service deliverycoordination and project management for IT, Telecom andIP projects

~150 FTE managing service desk, ~50 engineers for network deployment, network optimization and IT security;~50 FTEs performing IP telephony support, maintenanceand upgrade functions

The talent pool employed are B.Sc graduates, engineers,A-levels with specialist networking certifications (e.g.,CCNA, MCSE)

Managed services in communication network solutions

IT and knowledge services case studies4




IT and knowledge services case studies4


1 2

34

5

Examples of IT application outsourcing and knowledge services work delivered

A large global supplier provides Application developmentand outsourcing services to its French-speaking Europeanclients using technologies such as Oracle family of applications, SAP, Java/J2EE and other Netcentrictechnologies, as well as dedicated testing services

Application development in Java/J2EE and MicrosoftTechnologies for supporting a large Anglo-Dutch bank’sapplications

Application development and maintenance of documentmanagement and content management platforms for aleading publishing and document services supplier

Case Vignettes: IT Applications development

A leading provider of database and analytical toolsproviding investment research information to theinvestment industry/community, operates its delivery andresearch operations in India and Mauritius

The delivery centers create, manage and administer several platform-based product offerings around databasesof environmental, social and governance informationcovering 2,500+ publicly listed companies

While the India team provides data mining and informationgathering, the team at Mauritius verifies, cleans, tests andcollates the information

~80 research analysts having backgrounds in Economics,Finance and Social sciences perform quantitative and judgment-based work from Mauritius

Delivery of platform-based business research and

information services

Investors leveraging Mauritius in multiple ways5




Investors leveraging Mauritius in multiple ways


1 2

34

5

5

Examples of distinctive role in global services supply chain

A leading global telecom equipment supplier operates itsshared services center for the African region from Mauritius

Has selected Mauritius over other locations for bilingualskills, low cost structure, stable business environment,investor friendly policies, and favorable quality of life for itsexpatriates

The 170+ strong team delivers transactional F&A (AP, GL,AR). In addition, some higher-order processes such ascompliance, closing of books, management reporting arealso delivered from the operation

Leverages technology (ebanking, ERP platforms) totransmit high-volume of data/transactions

Employs B.Com graduates with ACCA/CIMA qualifications

Regional hub for the African region and parts of Europe

A couple of leading global suppliers of outsourcing servicesleverage Mauritius to support delivery of their projects for the European market or French Canada

While a typical ‘follow-the-sun’ approach is used toleverage Mauritius in certain projects, the French-skills of Mauritians proves to be a distinctive capability in severalother projects

Reading technical specification documents, designdocuments, interacting with French-speaking client teamsconstitute areas in IT projects where Mauritius plays adistinctive role

Similarly, contact center (emails, chat) and processinginvoices in French in BPO

Complementing supplier’s global delivery network in

delivering IT projects

Investor experiences have been positive




Investor experiences have been positive


Investors express their satisfaction with Mauritius operations

Table of contents




Table of contents





Costs

Talent pool Structural factors and risks



The report compares Mauritius with other offshore




Costs

Fully loaded operating cost (including salaries, real estate,telecom, etc.)

Granular views to costs as applicable to the type of function Call center (French and English) F&A (transactional) IT ADM

Multiple views Entry-level pool Language skills Specialized skills Experienced pool

Telecom and other infrastructure

Connectivity/Accessibility Geo-political and

macroeconomic stability Safety and security

Quality of Life Legal and regulatory

environment Business environment Incentives

The report compares Mauritius with other offshore

destinations across three broad factors that most

companies trade-off in making location decisions

Note: FS stands for Financial Services

Mauritius has been compared with its relevant peers in




Mauritius has been compared with its relevant peers in

this assessment

Examples of countries Key characteristics

India Philippines

Suited to support large scale centers (multiple ‘000FTEs)

Account for >50% of the global offshore market

Established

locations

Types of offshore

locations

Emerging

locations

French-speaking locations

Morocco Tunisia Senegal Romania Poland Lithuania

English-speaking locations

South Africa Kenya Ghana Jamaica Egypt Sri Lanka Vietnam

Suited to support medium scale (1000-2000 FTE) tolimited scale (~500) centers

Increasingly being considered by investors as theyseek to diversify beyond established locations andbuild a global delivery network

Relevant peer group for Mauritius

The report primarily compares Mauritius with its peer group of emerging locations as relevant by function


Table of contents




Table of contents





Costs




Total cost of operations has been assessed based on a




ota cost o ope at o s as bee assessed based o a

bottom-up analysis of cost of delivery for a specific

function at a city level

Agentsalaries

Bonus Statutory

benefits Other

benefits:Transport,Meals

Supervisor and manager salaries

Bonus Statutory

benefits Other

benefits:Transport,Meals

Support staff (IT, HR,accounts)salaries

Statutory

benefits Training

costs Attrition-

related costs

Real estaterentals

Fixturesand fit-outs

Utilities

Telecom Equipment

(servers,switches,networking,

etc.)

Miscellaneousbucket

Captures 40+ dataelements

Does not include supplier margins, travel, and one-time expenses

Elements included in above heads

Direct operating cost per FTE per annum

US$ per FTE

Salariesand benefits Management Administration Facilitiesand realestate

Technology Other directoperatingexpenses

Total directoperatingcost per FTE

ILLUSTRATIVE

Costs benchmarked across functions: Call Center (French and English), F&A and IT


For English language work, Mauritius offers a cost




13-1614-1615-1715-1717-1918-2019-21

21-2323-25

54-58

66-70

U.S. Tier 2 UK Tier 2 Lithuania South

Africa

Jamaica Egypt Ghana Mauritius Kenya Philippines India

g g g ,

advantage over multiple emerging locations

Direct operating cost1 per FTE for English contact center services




1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 For Philippines and India, their respective capital cities Manila and New Delhi have been considered

Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009Source: Everest Research Institute (2009)

2 2

~68-74%

ENGLISH WORK

MARKET AVERAGES

Mauritius presents significant arbitrage opportunity (~70% on operating cost basis) over the UK

Source destination

Further, for French language work, Mauritius is the




44-46

30-3228-30 27-29 26-28 25-27

21-23 20-22

15-17

France Tier 2 Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius

, g g ,

lowest cost offshore delivery location



1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costsNote: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009


MARKET AVERAGES

FRENCH WORK

~61-67%

Source destination

Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) over France


Similarly, for F&A and IT, costs in Mauritius are lower




y, ,

than most other emerging destinations (page 1 of 2)

F&A cost comparisonDirect operating cost1 per FTE for transactional F&A services


15-17

34-36 33-35 30-3227-29

26-2823-25 22-24

19-2118-20 18-20

Poland Tunisia Morocco Romania Lithuania South

Africa

Jamaica Egypt Mauritius Kenya India

1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 New Delhi has been used as a proxy for India to get the F&A cost


MARKET AVERAGES



2

Similarly, for F&A and IT, costs in Mauritius are lower




Direct operating cost1 per FTE for IT Applications Development and Maintenance


41-43 41-43 40-4237-39

33-35

30-32

25-2722-24

21-23

Poland Morocco Tunisia Romania Egypt Lithuania Mauritius Vietnam India

y, ,

than most other emerging destinations (page 2 of 2)

IT cost comparison

1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 New Delhi has been used as a proxy for India to get the IT cost


MARKET AVERAGES



2

Key drivers are the lower salaries in Mauritius and in




Romania Tunisia Li thuania Poland Morocco Egypt Senegal Mauri tius

y

some cases, lower telecom costs relative to peers

30-3228-30 27-29

26-2825-27

21-23 20-22

15-17

Salaries,Management,

andAdministration

Facilities

Telecom

Breakup of direct operating cost per FTE per annum

2009; US$ ‘000 per FTE per annum

Miscellaneous1

C o

s t h e a d s

1 Miscellaneous costs include training, attrition cost etc.Note: Exchange rates for local currencies with respect to the Euro have been averaged for 7 months from 1-Nov-08 to 30-June-09


MARKET AVERAGES

FRENCH CALL CENTER

Entry-level salaries are lower in Mauritius compared to its peers for French call center work School-leavers (SC and HSC) typically employed in Mauritius, compared to tertiary graduates in many other countries However, school leavers have proven quite effective for call center work. Reasonably good employability of school leavers (20-25%), comparable to that of tertiary graduates in other countries

Salaries for experienced roles are higher given the relatively small pool of middle-senior management talent

While there are opportunities for reduction in




Mauritius’ telecommunication costs, they are lower

than North African countries even at current levels

Annual rental tariffs for IPLC (telecom)1

2009; US$ per E1 connection

1,63,200

1,36,800

1,33,200

1,26,000

93,600

79,080

72,000

67,200

66,737

60,000

58,800

46,691

13,325

Tunisia

Senegal

Romania

Jamaica

Morocco

Lithuania

Kenya

Egypt

Vietnam

Ghana

Mauritius

South Africa

India

Telecom costs in Mauritius have been falling significantly over the years (~30% each year) Costs expected to reduce further through connection to the fiber optic cable (expected in 2010) This is likely to strengthen Mauritius’ overall cost position

12,600

10,500

7,900

6,300

4,900

3,000

2003 Feb 2006 Jul 2006 Sep 2006 Jan 2009 2010(E)

Telecom rentals / license (IPLC 2 Mbps)MUR per annum

Trends in Mauritius’ telecom tariffs

Target

Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09Sources: Everest Research Institute (2009); Real estate reports, BOI

Telecom costs in Mauritius are expected to decline




further with the advent of the second fiber-optic cable

Planned initiative

A high-capacity underseafiber-optic cable linkingAfrica to Asia and Europevia the Middle East

Expected capacity of 1.28Tb/s enabling high-speed services

Cable expected to provideMauritius, and South andEast African countries withaccess to major businesscenters globally, andsupport the growing

demand for broadband

Current status

Cable went live in July 2009at a landing station in SouthAfrica to meet thebandwidth needs of theAfrica continent

Additional, landing stationshave been planned at

Mauritius, Kenya,Madagascar and other points along the east coastof Africa

Security teams have beenbeefed up at various places

to protect the slow movingcable layers

Impact and implications

The fiber optic is expectedto bring down internationalbandwidth costssubstantially

Significant increase inbandwidth, ~ 10 timescurrent capacity

Multiple telecom operatorsexpected to becometenants on the cable andpass on its benefits toconsumers

Higher availability andbetter SLAs are expected tobe offered

Source: Service Provider Executive Interviews

Table of contents








Costs




Multiple relevant views on talent have been



Copyright © 2009, Everest Global, Inc. 60

Relevant views reflective of multiple functions (call center, non-voice BPO and IT)

Views on talent pool

considered for this comparison

EmployabilityEntry-level pool

Entry-level

specialized skills

(e.g., accounting)Language skills

Mauritius has a relatively small talent pool




7-9

10-1211-13

34-36

42-44

58-60

62-64

126-128

160-162

274-276

328-330

500-502

30-32

13-15

Poland

Egypt

Vietnam

South Africa

Romania

Morocco

Tunisia

Lithuania

Ghana

Kenya

Jamaica

EstoniaSri Lanka

Mauritius

Annual tertiary education labor pool estimates1 by country

2008; ‘000s

1 Estimated based on assessment of total enrolments annualized over past 3 years and the structure of the education systemNote: Tertiary graduates in Mauritius refer to graduates from government universities, private education and distance mode

Sources: Everest Research Institute (2009); Country-specific education statistics

Further, the pool for specialized skills is small




2-4

13-15

14-16

15-17

15-17

18-20

31-33

60-62

62-64

147-49

3.5-4.5

2-4

Poland

Egypt

South Africa

Romania

Morocco

Lithuania

Tunisia

Ghana

Kenya

Mauritius

Estonia

Sri Lanka

Annual supply of engineering and IT1 graduates

2008; 000’sAnnual supply of F&A graduates

2008; 000’s

3-5

4-6

52-54

35-37

30-32

27-29

15-17

14-16

10-12

7-9

6-8

1.5-2.5

1-21-2

Poland

South Africa

Egypt

Romania

Vietnam

Morocco

Tunisia

Kenya

Lithuania

Ghana

Sri Lanka

Mauritius

EstoniaJamaica

Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications

1 IT graduates includes students from pure sciences, mathematics and computer science streamsNote: Excludes students enrolled in overseas programs outside the country


While the scale is relatively small, Mauritius has




certain strengths in terms of its talent pool

The labor pool in Mauritius is sufficient to support 4-5 additional centers annually with an

average center scale of 400-500 seats

High employabilityof entry-level talent

Alternative pools

available toaugment supply

Mauritius’ strengthsin talent pool

Willingness towork in IT-BPO

Competitiveadvantage inBilingual skills

1

2

3

4

School-leavers (HSC

and SC) in addition totertiary graduates

IT-BPO is a relativelyattractive career option, compared to

other sectors (e.g.,manufacturing)

Ability to support bothFrench and English

While the tertiary educated pool is small, providers are1




leveraging high-school and school leavers for

transactional and call center work in Mauritius

Mauritius: Total annual addressable1 entry level pool

2008; ‘000s

Tertiarygraduates2

SC qualifiedbut notpursuingHSC

Totaladdressableentry levelannual pool

2-3

7

12-13.5

3-3.5

HSC qualifiedbut notpursuingtertiary

education

Suitability for function / role in IT-BPO sector

Judgment-basedback-officeprocesses

IT outsourcing

Call centers Rule-based back-

office transactionprocessing

Contact center (Inbound/Outbound)

French and English

High school leavers and school leavers are typicallyemployed as entry level talent for call center andtransactional back-office work in Mauritius

Profile of talent pool being employed in Mauritius for

transactional BPO and contact center work

2008; ‘000s

1 Estimated based on assessment of total enrolments annualized over past 3 years and the structure of the education system2 Tertiary graduates in Mauritius refer to graduates from government universities, private education and distance mode


Tertiarylevel

Higher SchoolCertificate/

GeneralCertificate of

Education A-level

School Certificate/ GeneralCertificate of Education

O-level

Alternative pool

However, the unique strength of Mauritius lies in its

bi li l kill

2




bi-lingual skills…

Mauritius offers robust capabilities in both French andEnglish language skills

French is widely spoken in Mauritius Commonly used in day-to day communication Creole, the native language is very similar to French

and it typically requires 2-3 weeks of training time toconvert Creole speakers to French

French spoken skills leveraged for call center work

English is the medium of instruction in schools anduniversities English is also the official language for conducting

business As a result, the quality of written English tends to be

better than that of spoken English Written English skills are widely leveraged for non-

voice operations Some challenges with spoken English skills,

evidence of a ‘French accent’ that needs to beneutralized


…which gives Mauritius a competitive advantage over

it d ti ti

2




its peer group destinations

Comments

Low HighEnglish language

proficiency

French language

proficiency

Mauritius Better French accent and cultural fit as French is widely spoken

with a neutral accent; However, 2-3 weeks of training onbusiness French/diction is required for native Creole speakers Quality of written English tends to be better than spoken.

Spoken English even though fluent has a “French” accent

Morocco Large pool of French speakers Some training required to neutralize “Arabic” accent;

accent is better suited for outbound campaigns Limited English skills

Egypt ~25% of the graduate pool is fluent in English Limited French skills (3-4% of graduates)

South Africa Large pool of English speakers; high-quality English skillsdue to the high-level of cultural affinity with UK

Limited French skills

Mauritius is well positioned to support Anglo-French markets that require both French and English languages

Tunisia Large pool of French speakers Some training required to neutralize “Arabic” accent;

accent better suited for outbound campaigns Limited English skills

Senegal Large pool of French speakers Some training required to neutralize “Arabic” accent Limited English skills

Note: These estimates represent the relative share of the population that is reasonably fluent in the language, and do not reflect the absolutesize of the pool

Sources: Everest Research Institute (2009); Interviews with recruiters; investment agencies and BPO suppliers

In addition, the talent pool has reasonably good

l bilit f IT/BPO

3




employability for IT/BPO

30-35%

25-30%

20-25%Call Center

(French)

F&A

IT

Typical employability percentage of

entry level talent pool in Mauritius Typical profile employed Comments

Employability is comparable to other locations (e.g., Morocco, Tunisia, Egypt)that mostly employ tertiary educated or equivalent profiles for similar roles

F&A courses are modelled on the Britishsystem and impart industry-standard

practices Good written English skills Students opting for certification courses

(e.g., ACCA) have better employability

Suited to perform softwaredevelopment work on relatively

common programming languages Some pressures on talent due to

relatively small pool

A-levels O-levels Diplomas

University graduates (e.g.,Accounting, Economics,

Finance, Management) A-levels pursuing accounting

specializations (e.g., ACCA,CIMA)

Engineering graduates Technical diplomas with

certifications (e.g., CCNA,MCSE)

Sources: Everest Analysis (2009); Interviews with recruiters and service providers

The Government and the industry are putting in place

lti l i iti ti t h th lit f t l t i

4




multiple initiatives to enhance the quality of talent in

the IT-BPO sector

OTAM (Outsourcing & Telecommunications Association of Mauritius) is involved in creating anICT Academy with the Government of Mauritius, to cater to the sector’s talent needs

The Academy is envisaged to be a finishing school imparting skills-upgradation (“right-skilling”)programs to make students more employable Students finishing their Higher School Certificate would be offered focused courses tailored for

the ICT sector Conceived to be set-up as a public-private partnership with the University of Technology of

Mauritius

The ICT Academy would also offer training to people in Reunion and Madagascar tosupplement Mauritius’ talent pool The Academy is expected to train its first batch of 2,000 students before end of 2009

ICT Academy

Conceptualized and initiated by the HRDC (Human Resource Development Council), the 24/7Mauritius campaign is aimed at enhancing the competitiveness of Mauritius’ services-orientedeconomy by making businesses ready for 24/7 operations

The campaign is aimed at sensitizing the workforce to the needs of a “24/7” economy

The campaign also empowers authorities to provide the necessary support measures in theworkplace to facilitate 24/7 operations

24/7 Campaign

The IT-BPO sector is an attractive career option for most students and job-seekers in Mauritius

Sources: Everest Research (2009); HRDC, OTAM

Table of contents








Costs




Our risk assessment approach involves assessment of

i k lti l i k t i




risks across multiple risk categories

Description/key metrics used

Key risk categories

(risk weights)

Annual entry-level talent pool as relevantby function

Quality of infrastructure (rail, road etc.) Network Readiness

Scale and quality of French/English skills Scale of specialized skills (F&A, IT)

Political Stability Threat of natural hazards Macro-economic stability

Geopolitical and

macroeconomic

stability

Crime rates Enrolment in secondary education (%) Quality of educational system

Quality of life

Scale of experienced talent by function

Business

environment risk

Corruption perception Government Effectiveness Ease of doing Business Ease of starting a business

Legal framework IP protection regulation

Legal and

regulatory risk

Overall risk

assessment

Labor availability

Other

structural risks

Experiencedtalent

Fresh talent

Language/

specialized skills

Infrastructure

Environment

risk

Business risk

Physical

infrastructure

Connectivity

International air connectivity (e.g., Paris)

(55%)

(25%)

(20%)

C

A

B

Risk assessment based on Everest’s proprietary methodology, involving quantitative and qualitative factors


Summary of risk assessment




Risk scores for French language work

(Index: 0 to 1, higher score implies higher risk)

Morocco Tunisia Romania Mauritius Poland Senegal Lithuania Egypt

0.43 0.44 0.48

0.590.65

0.700.75 0.79

Labor availability

Other 1 structural

Infrastructure

Risk buckets

Mauritius is a relatively stable location with well developed infrastructure and conducive business environment

Challenges with relatively small scale talent pool

South Africa Egypt Jamaica Mauritius Kenya Ghana

0.41

0.62 0.64 0.670.78 0.80

Labor availability

Other 1 structural

Infrastructure

Risk buckets

Risk scores for English language work(Index: 0 to 1, higher score implies higher risk)

1 Other risks include geo-political, macro-economic environment, government support, ancillary support, overall business environmentrisks and legal/regulatory framework


A

B

C

Good overall infrastructure and stable environment





Breakup of comparative risk scores

(Index: 0 to 1; higher score implies higher risk)

Infrastructure risksB

Tunisia 0.12

Egypt 0.13

Mauritius 0.14

Poland 0.14

Lithuania 0.14

Romania 0.15

Morocco 0.15

Senegal 0.21

Connectivity risk

Physical infrastructure risk

Other structural risksC

Mauritius 0.10

Lithuania 0.11

Tunisia 0.12

Poland 0.12

Romania 0.13

Morocco 0.15

Egypt 0.16

Senegal 0.16

Environment risk

Business risk

Drivers of infrastructure risk (page 1 of 2)

Physical infrastructure

B




Network Readiness index1 (lower score implies higher risk)

3.25 3.35 3.59 3.67 3.76 3.79 3.79 3.80 3.97 4.03 4.07 4.07 4.34 4.40

Ghana Kenya Morocco Senegal Egypt SriLanka

Vietnam Poland Romania Jamaica Maurit ius SouthAfrica

Tunisia Lithuania

ICT conducive environment;sharp rise in number of internet and mobile users

Quality of infrastructure1 index (lower score implies higher risk)

(1=underdeveloped; 7=extensive and efficient) Good quality of commercial real estate,roads and telecom network; some concernover reliability of public transportation

Physical infrastructure

2.30 2.50 2.70 2.90 3.30 3.40 3.50 3.80 3.80 3.904.50 4.50 4.50 5.00

Romania Poland Vietnam Kenya Senegal Ghana Morocco Sri

Lanka

Jamaica Egypt Lithuania Mauritius South

Africa

Tunisia

Mauritius has made significant investments in enhancing infrastructure for IT/BPO

Establishment of IT Parks (e.g., Ebene Cyber City) Telecom costs have been declining by ~30% each year. Connection to the fiber optic cable is expected to provide additional bandwidth and

further cost reduction

1 Based on World Economic Forum ratingsSources: Everest Research Institute (2009); World Economic Forum (2008)

Drivers of infrastructure risk (page 2 of 2)

Connectivity and accessibility

B




Air connectivity to Paris, New York, and London

N/A 3 3.5 4.5 3 5.5 12 2.5

Number of direct

flights to Paris

Duration of flight

to Paris (hrs)

Average no.

of direct flights to

New York and

London

Connectivity and accessibility

While Mauritius is well connected to international destinations, the average flight time (e.g., to Paris) is longer compared

to its North African counterparts (e.g., Morocco, Tunisia)

NOT EXHAUSTIVE

Sources: Everest Research Institute (2009); Travel Websites (Kayak.com, Expedia.com)

0

4 5

2

9

1

5

8

Lithuania Morrocco Tunisia Egypt Romania Senegal Mauritius Poland

01 1 2 2 2 2

6

Lithuania Morrocco Tunisia Egypt Romania Senegal Mauritius Poland

Drivers of environment risk (page 1 of 2)

Geo political and macroeconomic stability

C




3.07

3.25

3.56

3.91

4.03

4.37

4.44

4.73

4.85

4.87

4.91

5.06

5.23

5.25

Sri Lanka

Jamaica

Egypt

Ghana

Mauritius

Kenya

Senegal

Morocco

Romania

Tunisia

Vietnam

South Africa

Lithuania

Poland

10

60

65

86

831

874

1,057

1,137

1,234

1,439

1,735

5,384

11,434

Mauritius

Lithuania

Tunisia

Jamaica

Romania

Ghana

South Africa

Senegal

Poland

Egypt

Morocco

Kenya

Vietnam

Political stability(Percentile Rank; higher=better)

Risk of natural hazards

6

16

22

27

38

43

47

51

51

53

56

67

72

75

Sri Lanka

Kenya

Egypt

Morocco

Senegal

Jamaica

Tunisia

Romania

South Africa

Ghana

Vietnam

Poland

Mauritius

Lithuania

Deaths from Natural Disasters1990-2009

Macro-economic stability score(Index: higher = better; 1 = low; 7 = high)

Low risk of natural

hazards

Someconcernsgiven highfiscaldeficit

Stabledemocraticsystem

Fairly stable location; better positioned relative to peers especially in Africa

Geo-political and macroeconomic stability

1 Based on World Economic Forum ratingsSources: Everest Analysis (2009); World Economic Forum (2008)

Drivers of environment risk (page 2 of 2)

Quality of life

C




2.3

2.5

2.7

2.9

3.3

3.4

3.5

3.8

3.8

3.9

4.5

4.5

4.5

5.0

Romania

Poland

Vietnam

Kenya

Senegal

Ghana

Morocco

Sri Lanka

Jamaica

Egypt

Lithuania

Mauritius

South Africa

Tunisia

Crime rates per 100,000inhabitants2008; lower = better

Secondary educationenrolmentPercentage

Human Development Index1

(Index: Higher score = better)Quality of educational system(1 = does not meet the needs, 7 = meetsthe needs of a competitive economy)

Secondaryeducationis providedfree of cost

Quality of life

1 World Economic Forum rating reflective of multiple factors such as literacy rate, standard of living, etc.Sources: Everest Analysis (2009); World Economic Forum (2008)

Safe location; also offers a good quality of life for expats, which is often a key consideration for investors

0.4

0.5

1.1

1.2

1.6

2.5

2.5

3.5

6.7

9.4

38.6

49.0

Egypt

Morocco

Vietnam

Tunisia

Poland

Romania

Mauritius

Kenya

Sri Lanka

Lithuania

South Africa

Jamaica

0.50

0.52

0.55

0.65

0.67

0.71

0.73

0.74

0.74

0.77

0.80

0.81

0.86

0.87

Senegal

Kenya

Ghana

Morocco

South Africa

Egypt

Vietnam

Sri Lanka

Jamaica

Tunisia

Mauritius

Romania

Lithuania

Poland

23.8

49.3

50.3

52.4

64.5

84.9

85.9

87.1

87.8

88.4

94.7

98.8

99.6

Senegal

Ghana

Kenya

Morocco

Vietnam

Tunisia

Romania

Jamaica

Egypt

Mauritius

South Africa

Lithuania

Poland

Drivers of business risk (page 1 of 2)

Business environment

C




Corruption perception indexHigher score = less corruption

Ease in doing businessPercentile Rank; lower = easier

Government effectivenessPercentile Rank; higher = better

Ease of starting a business1

Percentile Rank; lower = easier

Clear strengths in terms of its investor-friendly business environment and government support to ICT sector growth

Business environment

1 Includes procedures, time, cost of starting a business and minimum capital requiredNote: Based on World Economic Forum ratings

Sources: Everest Analysis (2009); World Economic Forum (2008)

5.5

4.9

4.6

4.6

4.4

3.9

3.8

3.5

3.4

3.2

3.1

2.8

2.7

2.1

Mauritius

South Africa

Lithuania

Poland

Tunisia

Ghana

Romania

Morocco

Senegal

Sri Lanka

Jamaica

Egypt

Vietnam

Kenya

77

75

72

69

67

60

55

55

53

47

45

41

39

30

Lithuania

South Africa

Mauritius

Tunisia

Poland

Jamaica

Morocco

Ghana

Romania

Sri Lanka

Senegal

Vietnam

Egypt

Kenya

24

28

32

47

63

73

76

82

87

92

102

114

128

149

Mauritius

Lithuania

South Africa

Romania

Jamaica

Tunisia

Poland

Kenya

Ghana

Vietnam

Sri Lanka

Egypt

Morocco

Senegal

7

11

26

29

37

41

47

62

74

95

108

109

137

145

Mauritius

Jamaica

Romania

Sri Lanka

Tunisia

Egypt

South Africa

Morocco

Lithuania

Senegal

Vietnam

Kenya

Ghana

Poland

Drivers of business risk (page 2 of 2)

Legal and regulatory environment

C




Legal frameworkIndex: 1= inefficient; 7= efficient and follows a neutral process

Legal and regulatory environment

Note: Based on World Economic Forum ratingsSources: Everest Analysis (2009); World Economic Forum (2008)

Robust legal and regulatory environment in Mauritius; likely to be strengthened further through the Data Protection Act

IP Protection regulationIndex: 1 = weak; 7 = strong and enforced

3.0

3.1

3.3

3.3

3.4

3.5

3.5

3.5

3.6

3.7

4.0

4.1

4.4

5.3

Vietnam

Kenya

Morocco

Ghana

Poland

Senegal

Romania

Jamaica

Egypt

Sri Lanka

Lithuania

Mauritius

Tunisia

South Africa

2.9

3.1

3.2

3.2

3.2

3.5

3.7

3.8

3.8

3.9

4.3

4.7

4.9

5.2

Poland

Senegal

Romania

Kenya

Jamaica

Lithuania

Morocco

Sri Lanka

Vietnam

Egypt

Ghana

Mauritius

Tunisia

South Africa

Mauritius provides attractive incentives for investors




Fiscal Incentives

Network of Double Taxation AvoidanceTreaties (DTA’s) with several countries

Free repatriation of profits, dividends andcapital

Income and corporate tax-rate of 15% (flatrate for new companies after 2006 is15%)

VAT at 15% refundable; no capital gains tax;tax free dividends

No min foreign capital required; 100% foreignownership permitted

ICT sector-specific scheme

Occupation permits granted to three categories; namely investors, professionals and self-employed

Multiple training related incentives available to investors under the HRDC Levy Grant Incentives Scheme

Indirect Incentives

Additional grants under the placement for training scheme for unemployed youth as per NEF’s scheme

Exemption from customs duty on equipment

50% annual allowance on declining balancefor the purchase of electronic and computer equipment

Smooth process to facilitate set-up: Startwithin 3 days for non-regulated activities and15 days for regulated activities

Liberal policy and quick on granting workpermits

Sources: Board of Investment, Mauritius, HRDC; NEF; Everest Research (2009)

Also, Mauritius also offers attractive training

incentives for the IT/BPO sector




incentives for the IT/BPO sector

Levy Grant Incentives Scheme, Human Resource Development Council (HRDC)

The HRDC has been vested with the responsibility to administer, control and operate the National Training Fund. Thisfund provides the necessary incentives to companies to develop their human resources. The HRDC has worked incollaboration with the Mauritius Employers’ Federation and other stakeholders in developing the new schemes andoffers various types of training incentives to employers

Types of incentives that companies can avail include Support of training needs analysis Pre-operational training Multimedia facilities Use of foreign expertise

Overseas training Financial Support to individuals following first Degree and those pursing Masters programs In-house training

Placement for Training Programme, National Empowerment Foundation (NEF)

The National Empowerment Foundation administers and operates the Placement for Training Programme

The Placement for Training Programme is one of the programs under the Empowerment Programme (EP). The

programme is designed to provide the unemployed with company placement coupled with a work-related formaltraining so as to make them employable. At the end of the training, the employer has to offer employment to at least75% of those who complete the program

The National Empowerment Foundation offers a one off contribution to the employer, to meet 60% of the costs of formal training for each trainee and contributes on a cost sharing basis towards the stipend of the trainee for amaximum period of one year

Sources: Board of Investment, Mauritius, HRDC; NEF; Everest Research (2009)

Table of contents








Section V: Implications for investors Roles that Mauritius can play for global investors and supporting rationale


Cost-risk trade off across countries serving English

speaking markets




speaking markets

High

Low

Low

High

Cost

Risk

Ghana

MauritiusKenya

South Africa

Egypt

Jamaica

India

Philippines

Established low cost,locations for megascale (multiple ‘000FTE) operations

Large English-speaking talentpool suited to support large-scale centers (1000-2000FTE), but relatively higher cost

Low-cost, stablelocation suited to

support moderate-scale

centers (<500 FTE)

Low cost however, smalltalent pool and relativelyless evolved infrastructure

Native English-speakinglocation; but relativelyhigher costs

ENGLISH LANGUAGE WORK


Cost-risk comparison for potential countries serving English-speaking markets

Cost-risk trade off across countries serving French

market




market


Cost-risk comparison for potential countries serving French-speaking market

High

Low

Low

High

Cost

Risk

Senegal

Mauritius

Egypt

Poland Tunisia

Morocco

Lithuania

Romania


and relatively higher costs

Scalable and stablelocations, but relativelyhigher costs

Lowest cost, stablelocation, suited to

support moderate-scale

centers (~500 FTE)Low cost but relativelyless evolvedinfrastructure and smalltalent pool

FRENCH LANGUAGE WORK

Roles that Mauritius can play for investors




French language

BPO

Distinctive ability to serve French language BPO work Lowest cost position amongst competitive North African locations

Better accent and cultural fit Stable location with good quality infrastructure

Risk diversification / complementary location for India/Philippines Investors looking to diversify beyond India/Philippines Mauritius can complement scaled centers in India/Philippines. Examples

Handling overflow volumes Supporting French-based work as part of global service delivery

Distinct role in

delivery network of

global companies

Regional delivery hub for Africa (e.g., shared services) Ability to support both North Africa (given French skills) and sub-Saharan Africa (given

English skills) Lowest-cost position among potential African sourcing destinations Stable location with good quality infrastructure

Bilingual BPO for

pan-European

multinationals

Competitive advantage in terms of bi-lingual skills (French, English) Significantly lower cost than competitive Eastern European (EE) locations Some challenges in terms of not having multiple European language skills (beyond French)

when compared to other EE locations (e.g., Romania, Poland)

Supporting rationale

Small scale work in

some relatively

higher order work

Opportunity to serve certain relatively high value areas in small scale (100-200 FTEs) IT; especially in helpdesk and software development in skills such as Microsoft, Java Back-office (F&A, HR); especially for transactional processes (e.g., invoice processing) Evidence of serving both French and English markets in these areas

A

B

4

3

2

1

French language BPO work1




French speaking talent pool in reasonable scaleLowest cost location for French skills

Experience serving French markets Stable location with some risks on scalability of

talent

44-46

30-3228-30 27-29 26-28 25-27

21-23 20-22

16-18




Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customersMauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers

MARKET AVERAGES MARKET AVERAGES

FRENCH CALL CENTER FRENCH CALL CENTER

~60-65%

Mauritius: Total annual addressable entry level pool

2008; ‘000s

Tertiary

graduates 2

SC qualified

but not

pursuing

HSC

2-3

7

12-13.5

3-3.5

HSC qualified

but not

pursuing

tertiary

education

High school leavers and school leavers are typically

employed as entry level talent for call center andtransactional back -office work in Mauritius

Employment distribution by source geography served


100% = 10,400

7%

16%

3%2%

10%

19%

43%

Domestic

U.S.,Canada

UK

France

Benelux

Africa Others1

French-speakingpopulation of Canada.However, there isevidence of U.Sfocused work as well

Key Anglo-Francomarket

Largely non-voice work

Largest marketserved acrossContact center, BPOand IT services

French-speakingpopulation of NorthAfrica and Englishspeaking population of sub-Saharan Africa

Risk scores for French language work(Index: 0 to 1, higher score implies higher risk)

Morocco Tunisia Romania Maur it ius Poland Senegal Li thuania Egypt

0.43 0.44 0.480.59 0.65

0.700.75 0.79

Labor availability

Other 1 structural

Infrastructure

Risk buckets

Bilingual operations for pan-European multinationals2




Offshore experienced pool with bilingual skillsCompetitive advantage in bilingual skills

Low cost location for English skills Lowest cost location for French skills

25%

1%

40%

34%Only French

Only English

Bi-lingual

(English &French)

Other langauges



100% = 10,400

Direct operating cost1 per FTE for English Contact Center services2009; USD ‘000 per annum per FTE


ENGLISH CALL CENTER ENGLISH CALL CENTER

~67-72%

13-1614-1615-1716-1817-1918-2019-21

21-2323-25

54-58

66-70

U S T i e r - 2

U K T i e r - 2

L i t h u a n i a

S o u t h A f r i c a

J a m a i c a

E g y p t

G h a n a

M a u r i t i u s

K e n y a

P h i l i p p i n e s

I n d i a

2 2

13-1614-1615-1716-1817-1918-2019-21

21-2323-25

54-58

66-70

U S T i e r - 2

U K T i e r - 2

L i t h u a n i a

S o u t h A f r i c a

J a m a i c a

E g y p t

G h a n a

M a u r i t i u s

K e n y a

P h i l i p p i n e s

I n d i a

2 2

44-46

30-3228-30 27-29 26-28 25-27

21-23 20-22

16-18




Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customersMauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers


FRENCH CALL CENTER FRENCH CALL CENTER

~60-65%

CommentsLow HighLow HighEnglish language

proficiencyFrench language

proficiency

Mauritius Better French accent and cultural fit

Quality of written English tends to be better than

spoken.

Morocco Large pool of French speakers, however some

training required to neutralize “Arabic” accent;

Limited English skills

Egypt ~25% of the graduate pool is fluent in English

Limited French skills (3-4% of graduates)

South Africa Large pool of English speakers; high-quality English

skills


Mauritius is well positioned to support Anglo-French markets that require both French and

English languages

Mauritius is well positioned to support Anglo-French markets that require both French and

English languages

Tunisia Large pool of French speakers

Some training required to neutralize “Arabic” accent;


Senegal Large pool of French speakers

Some training required to neutralize “Arabic” accent


Small scale higher-order work for Anglo-French

markets

3




Early evidence of niche work in some areasLow-cost location for specialized work

Small scale of specialized talent pool… …but, with good employability

Direct operating cost1 per FTE for IT Applications Development and Maintenance


41-43 41-43 40-4237-39

33-3530-32

25-2722-24

21-23

Poland Morocco Tunisia Romania Egypt Lithuania Mauritius Vietnam India






2

30-35%

25-30%

20-25%Call Center

(French)

F&A

IT

Typical employability percentage of

entry level talent pool in Mauritius Typical profile employed Comments

F&A coursework is modeled on theBritish system and impart industry-standard practices

Good written English skills Students opting for certification courses

(e.g., ACCA) have better employability

Suited to perform commoditizedsoftware development work on basicprogramming languages anddatabases

Pressure for talent due to relativelysmall pool

A-levels O-levels Diplomas

University graduates (e.g.,Accounting, Economics,Finance, Management)

A-levels pursuing accountingspecializations (e.g., ACCA,CIMA)

Engineering graduates Technical diplomas with

certifications (e.g., CCNA,MCSE)2-4

13-15

14-16

15-17

15-17

18-20

31-33

60-62

62-64

147-49

3.5-4.5

2-4

Poland

Egypt

South Africa

Romania

Morocco

Lithuania

Tunisia

Ghana

Kenya

Mauritius

Estonia

Sri Lanka

Annual supply of engineering and IT1 graduates

2008; 000’s

Annual supply of F&A graduates

2008; 000’s

3-5

4-6

52-54

35-37

30-32

27-29

15-17

14-1610-12

7-9

6-8

1.5-2.5

1-2

1-2

Poland

South Africa

Egypt

Romania

Vietnam

MoroccoTunisia

Kenya

Lithuania

Ghana

Sri Lanka

Mauritius

Estonia

Jamaica

Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications

Examples of relatively niche/domain-specific work delivered for offshore clients

Team of over ~170 people

The Fiduciary team provides middle-officesupport services (e.g., accounting,administration)

The private wealth management teamprovides custodian, investment, portfoliomanagement services to high-net worth clientstaking advantage of the extensive range of double taxation agreements available to theentity.

The trust and securities team offers corporateservices, Fund services and Trust Servicesbacked by a supporting team providing

Statutory and Fund Accounting support

Offshore financial services center of aleading European Bank

Team of over ~170 people

The Fiduciary team provides middle-officesupport services (e.g., accounting,administration)

The private wealth management teamprovides custodian, investment, portfoliomanagement services to high-net worth clientstaking advantage of the extensive range of double taxation agreements available to theentity.

The trust and securities team offers corporateservices, Fund services and Trust Servicesbacked by a supporting team providing

Statutory and Fund Accounting support

Offshore financial services center of aleading European Bank

A leading European provider of worldwidebusiness communication solutions operates itsglobal service center from Mauritius

The team at Mauritius provides LI and L2technical support for incident and problemmanagement

~150 FTE managing service desk, ~50engineers for network deployment, networkoptimization and IT security; ~50 FTEsperforming IP telephony support, maintenanceand upgrade functions

The talent pool employed are B.Sc graduates,engineers, A-levels with specialist networking

certifications (e.g., CCNA, MCSE)

Managed services in communication networksolutions

A leading European provider of worldwidebusiness communication solutions operates itsglobal service center from Mauritius

The team at Mauritius provides LI and L2technical support for incident and problemmanagement

~150 FTE managing service desk, ~50engineers for network deployment, networkoptimization and IT security; ~50 FTEsperforming IP telephony support, maintenanceand upgrade functions

The talent pool employed are B.Sc graduates,engineers, A-levels with specialist networking

certifications (e.g., CCNA, MCSE)

Managed services in communication networksolutions

Investors leveraging Mauritius in multiple ways4




Complementing supplier’s global delivery networkin delivering IT projects

A couple of leading global suppliers leverageMauritius to support delivery of their projects for theEuropean market or French-speaking Canada

While a typical ‘follow-the-sun’ approach is used toleverage Mauritius in certain projects, the

Frenchskills of Mauritians proves to be a distinctivecapability in other projects

The Mauritius center plays distinct roles in IT project areas that require good French

skills (e.g., reading technical specificationdocuments, interacting with French-speakingclient teams)

French BPO including contact center (emails,

chat) and invoice processing

Regional shared services hub for the African regionand parts of Europe

A leading global telecom equipment supplier operates its shared services center for the Africanregion from Mauritius

Has selected Mauritius over other locations given itsbilingual skills, low cost s, stable business

environment, investor friendly policies, and favorablequality of life for its expatriates

The 170+ strong team delivers transactional F&A(AP, GL, AR). In addition, some higher-order processes such as compliance, closing of books,and management reporting are also delivered

Leverages technology (ebanking, ERP platforms) to

transmit high-volume of data/transactions

Employs B.Com graduates with ACCA/CIMAqualifications


Examples of distinctive role in global services supply chain

A B

Table of contents










Key data tables

Research methodology and list of participants

Glossary

Acknowledgements and Authors

Salaries for French Call Center Work




35-37

29-31

35-37

39-41

28-30

25-27

30-32

13-15Senegal

Mauritius

Tunisia

Egypt

Lithuania

Romania

Morocco

Poland17-19

12-14

14-16

16-18

11-13

12-14

6-8

6-8Senegal

Mauritius

Tunisia

Egypt

Lithuania

Romania

Morocco

Poland13-14

10-11

9-10

8-9

7-8

6-8

5-6

4-5Senegal

Mauritius

Tunisia

Egypt

Lithuania

Romania

Morocco

Poland

Entry-level agent Supervisor

Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09Sources: Everest Research Institute (2009); Recruiter interviews; salary survey inputs

27-29

17-19

20-22

21-23

19-21

16-18

11-13

9-11Senegal

Mauritius

Tunisia

Egypt

Lithuania

Romania

Morocco

Poland

Average annual salary by role (including benefits and bonus)

2009; US$ ‘000 per annum

MARKET AVERAGES

Sr. Agent Manager

Salaries for English Call Center Work







MARKET AVERAGES

44-45

27-28

25-26

33-34

17-18

25-26

30-311st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

13-14

10-11

7-8

7-8

6-7

9-10

6-71st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

7-8

6-7

6-7

5-6

5-6

5-6

5-6Mauritius

Jamaica

Kenya

Ghana

Egypt

Lithuania

SouthAfrica

Supervisor

19-20

15-16

11-12

11-12

8-9

15-16

11-121st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

Entry-level agent Sr. Agent Manager

Salaries for Finance and Accounting Work







MARKET AVERAGES

49-50

19-20

43-44

64-65

54-55

22-23

26-27

31-32

34-351st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

21-22

13-14

19-20

18-19

14-15

12-13

9-10

9-10

9-101st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

16-17

10-11

10-11

10-11

9-10

7-8

7-8

6-7

6-7Mauritius

Kenya

Egypt

Lithuania

South Africa

Romania

Morocco

Jamaica

Poland

Sr. Agent Supervisor

37-38

16-17

28-29

42-43

26-27

18-19

15-16

12-13

13-141st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

Entry-level agent Manager

Salaries for IT Applications Development and

Maintenance (ADM) Work







MARKET AVERAGES

60-61

71-72

58-59

25-26

51-52

49-50

17-181st Qtr

2nd

Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

26-27

31-32

24-25

15-16

20-21

13-14

6-71st Qtr

2nd Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

17-18

17-18

16-17

11-12

10-11

8-9

5-6Vietnam

Mauritius

Egypt

Lithuania

Romania

Morocco

Poland

Sr. Agent Supervisor Manager

38-39

54-55

34-35

17-18

32-33

21-22

8-91st Qtr

2nd

Qtr

3rd Qtr

4th Qtr

5th Qtr

6th Qtr

Entry-level agent

Table of contents










Key Data Slides


Glossary


The research used four key types of input sources




Description

Questionnaires

Questionnaires to 33 leading players to better understand scope of current

delivery Represent ~70% of the overall market Players with scale >100 FTE Representative of all key IT/BPO segments

Qualitative

interviews

Interviews with 20 players to understand maturity of the industry and their experiences Mix of global suppliers (e.g., Accenture, Ceridian), regional/local suppliers

(e.g., Infinity BPO, Rogers, Euro CRM) and captives (e.g., DHL) Interviews with other key market participants (universities, training

providers, recruiters, telecom operators)

Interviews with

potential

investors

Interviews with 5 market participants who are not currently in Mauritius tounderstand their perceptions (demand-side view)

Everest’s

knowledge and

IP

Everest knowledge and IP: proprietary cost models, data on 150+ offshorelocations (costs, talent pool, risks etc.)

Relationship with agencies, recruiters in 150+ locations for an ‘on-the-ground’perspective

List of questionnaire participants




33 companies represent ~70%of market

Representative of all keyIT/BPO segments in Mauritius

Includes all players with scale>100 FTEs

Also includes few players(<100 FTEs), who perform

niche/complex work

Rationale for selecting the

companies indicated

Global suppliers Accenture Mauritius Ceridian Hinduja Infosys Intelenet Global

Global playersGlobal players

Offshore captives Axa Assistance Asset IV DHL Deutsche Bank Huawei Orange Business services Thomson Digital TNT Document Services

Apollo Blake Airmate Ltd ABC Datacall Euro CRM

Evolution pre-press Infinity BPO Rogers Outsourcing Solutions ProContact Resaplanet Ltd. Vinivi Ltd.

Global playersRegional and local suppliers

Astek (Mauritius) Batch Image Processing Diadeis Dodo Outsourcing

MMS Ltd. Parfip Mauritius TNC Consulting TheoFinance Satim Ltd. Valldata Services

List of interviewees




21 interviews across thesesegments

Representative of IT/BPOsegments and types of playersin Mauritius

Global suppliers Accenture Ceridian Intelenet Infosys

Global playersGlobal players

Offshore captives Deutsche Bank DHL Huawei Orange Business Services TNT Document services

Scaled suppliers

Infinity BPO Rogers Outsourcing Euro CRM ABC DataCall

Global playersRegional and local suppliersNiche suppliers

Airmate/Maureva Asset IV data services

Superfund Theofinance

Data Protection Office HRDC National Empowerment Fund Recruiters (DCDM Consulting) and trainers (Cyber IT Services) University of Technology Mauritius

Global playersOther market participants

Table of contents










Key Data Slides


Glossary


Overview of commonly used terminology in IT-BPO




99

Call Center

Corporate

services

Industry-specific

back-office

KPO

Inbound Outbound Technical Helpdesk

Finance & Accounting Human Resources Procurement

Insurance Travel Telecom

Functional groups Sub-functions

Non-voice

(Back office)

Voice

(Front office)

B P O

Data Management Document Management Investment Research Transcription

Disaster Recovery Web hosting RIM

Infrastructure

Management

ADM Application development Application Maintenance

I T

O t h e r s

Others Multimedia, Animation Graphic Design Engineering Services Architecture services

Claims

processing

Policy

servicingBusiness

origination

Product

development

Processes

Glossary of key terms used in this report (page 1 of 3)




100

BPO Business Process Outsourcing refers to the contracting of some or all business processes toservice providers

Buyers Buyers are companies/entities that purchases offshoring services from a supplier of BPOservices. In the case of captive BPO providers, the buyers are the parent company which arereferred to in the report as parents

Domestic

captives

Domestic captives refers to 100% subsidiaries of companies in South Africa, which provide servicesexclusively to the parent company

Back-office

functions

All non-customer facing services including corporate services, knowledge services and industry-specific services

Corporate

services

Back-office functions including Finance & Accounting (F&A), Human Resources (HR) andProcurement

FAO/F&A Finance & Accounting Outsourcing refers to the transfer of ownership of some or all finance andaccounting processes or functions to providers. This could include administrative, delivery or management-related processes or functions

Term Definition





101

HRO Human Resources Outsourcing is the transfer of ownership of some or all human resourcesprocesses or functions to providers. This could include administrative, delivery, or management-related processes or functions

Global Sourcing /

Offshoring

Transferring business process activities or its complete ownership to a different country from thecountry (or countries) where the company receiving the services is located is referred to asoffshoring or global sourcing

FTE Full-Time Equivalent. An effort equal to one employee working 100% of the time

FS The Banking, Insurance and Asset Management sub-verticals collectively referred to as FinancialServices (FS)

Infrastructure Infrastructure refers to the availability of basic services and social capital necessary to support BPOdelivery from a location. Infrastructure includes physical infrastructure elements such as theavailability of transportation services, real estate, facilities management, catering, security services,and recruitment agencies and social infrastructure such as availability of schools, hospitals, andentertainment options

Industry-specific BPO refers to BPO offerings that require a high degree of vertical-specificknowledge and that are not easily replicable across industries such as claims processing for theinsurance industry and credit card collections for the credit services industry

Industry-specific

services

Front-office

functions

All customer facing services including general query handling, after-sales support, and sales andmarketing services

Term Definition





102

Term Definition

Procurement

services

Procurement services is the transfer of ownership of some or all procurement processes or functions to providers. This could include administrative, delivery, or management-relatedprocesses or functions

Offshore captives Offshore captives refers to 100% subsidiaries of multinational companies in an offshore location,which provide services exclusively to the parent company

Labour arbitrage Savings gained during offshoring due to the difference in the labour costs between the source anddestination locations

Third-party

supplier

Third-party suppliers or vendors are companies/entities that supply outsourcing/offshoringservices to other companies/entities (buyers)

Service offerings Service offerings refers to BPO offerings across horizontal BPO and vertical-specific BPO offerings

Sourcing models Sourcing models refers to the offshore business models adopted by buyers and includes theoffshore captive model, third-party vendor offshoring, and other hybrid models

Service providers Service providers in this BPO report refers to third-party suppliers as well as offshore captives

Knowledge services refers to offshoring of some or all knowledge-intensive services such as businessresearch, market research, data management, data analytics, and legal and IP support to providers

Knowledge

services

Insurance The Financial Services sub-vertical that includes life & pensions, property & casualty, and healthinsurance

Table of contents




103







Key Data Slides


Glossary


Acknowledgements

We would like to thank the following organizations for their assistance/participation in the study




104

We would like to thank the following organizations for their assistance/participation in the study

Accenture Mauritius Axa Assistance Indian Ocean Ceridian Mauritius Infosys Mauritius Intelenet Global Orange Business services DHL Thomson Digital Deutsche Bank Huawei Shared Service Mauritius TNT Document Services Rogers Outsourcing Solutions Euro CRM ProContact Infinity BPO Apollo Blake Airmate Ltd Satim Ltd. Batch Image Processing Valldata Services Theofinance Asset IV Data services Parfip Mauritius MMS Ltd. Dodo Outsourcing Evolution Ltee Heaven Multimedia

Service providers

Ministry of ICT, Government of Mauritius Board of Investment (BOI) National Computer Board (NCB) Human Resource Development Council (HRDC) National Empowerment Foundation Commissioner, Data Protection Office OTAM DCDM Consulting and Recruitment Services Cyber IT Training Services University of Mauritius University of Technology, Mauritius

Other organizations associated with the IT-BPO sector

Authors




105

Everest Group is a global consulting and research firm that comprehensively serves theoutsourcing and offshoring market. An industry leader since creating the sourcingconsultancy practice in 1991, Everest has earned a worldwide reputation for ongoing

innovation by helping clients capture optimum value through sourcing strategies andimplementation. Everest provides information, insight, and advice to help buyers,suppliers, and enablers of services effectively navigate all stages of the sourcing lifecycle.Committed to thought leadership, Everest is noted for its fact-based analyses and insightson the outsourcing and offshoring marketplace.

Everest Group has extensive experience working with country associations and investment

agencies. Everest partnered with Nasscom to develop the roadmap for the Indian BPOindustry, engaged with the South African BPO program since 2007, created a whitepaper on Bogota’s potential as an offshore location, and recently authored a BFSI BPO report.

Everest Group Website: www.everestgrp.comEverest Research Institute: www.everestresearchinstitute.com

Report authors:

1.Nikhil Rajpal ([email protected])2.H. Karthik ([email protected])3.Shyan Mukerjee ([email protected])4.Arshmeet Ahluwalia ([email protected])

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