March 2012
iSoftStone – History & Development
• Entered Korea &
Japan market
• Gained scale
through
acquisition
• Founded in Oct
2001
• Substantial R&D
investment in
solutions
• Aggressive
expansion into Tier2 cities
• US expansion
• Launched BPO
service
• Established Wuxi
iCarnegie
Institute
• Established sales
team in Europe
• Implemented
regional growth
strategy
• 16 delivery centers
• 7,676 employees
2007
• 14 delivery centers
• 4,205 employees
2001-06
• 6 delivery centers in
2006
• 40–1,527 employees
2
2010
2011
• 24 delivery centers
• 11,750 employees
(As of Sept 30, 2011)
2009
2008
• Listed on NYSE
(NYSE: ISS)
• Increased
penetration of
high-end BFSI
market
• Strengthen ERP
capabilities in
global marketplace
• Breakthrough in
Smart City and
Healthcare
• 9 delivery centers
• 3,116 employees
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• 19 delivery centers
• 9,285 employees
iSoftStone Snapshot – Leadership in China IT Services
Employees1
Sales and Delivery
Centers
Clients2
Over 14,000
24 in total, of which 17 in Greater China
Over 80 Fortune 500 companies
Net Revenue by
Geography3
56% Greater China clients, 44% Global clients
Net Revenue by
Service Offering3
29% Consulting & Solutions, 67% IT Services, 3% BPO Services
135.2
134.4
90.0
82.5
2008
2009
3Q 2009
3Q 2010
1
As of March, 2012
2 For the 12 months ended Sept 30, 2011
3 For the 9 months ended Sept 30, 2010
4 Total revenues from operations, less business taxes
5 Based on period end numbers
3
7,676
3,116
36.4
2007
Headcount5
Net Revenue4 (US$mm)
Track Record of Strong Growth
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2007
9,172
4,205
2008
2009
3Q 2010
Global Presence and Resource Distribution
Kirkland
Beijing
Tianjin
Dalian
Seattle
London
Hamburg
Boston
New York
Xi’ an
Osaka
Tokyo
Fukuoka Hiroshima
Nanjing Yancheng
Wuxi
Zhenjiang
Chengdu Wuhan
Shanghai
Hangzhou
Changsha
Taipei
Guangzhou
Shenzhen
Hong Kong
Greater China
• Beijing
• Tianjin
• Dalian
• Xi’an
• Shanghai
• Wuxi
• Nanjing
• Hangzhou
• Wuhan
• Guangzhou •Hong Kong
• Taiwan
• Changsha • Shenzhen
• Chengdu • Yancheng
• Zhenjiang
US / Europe
•Boston
•New York
•Seattle
• London
• Hamburg
Japan
• Tokyo
• Osaka
•Fukuoka
• Hiroshima
On-shore, Near-shore and Off-shore Services to Clients Globally
4
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End-to-End Suite of Services across Industry Verticals
Industry Verticals
Consulting
Research &
Development Services
Infrastructure &
Software services
Communications
IT Services
Technology
Application Development
& Maintenance
Industry Specific
Energy, transportation
and public sector (ETP)
Solutions
Banking, financial services
and insurance (BFSI)
Consulting
and
Solutions
BPO
Functional
Common and Consistent Business Processes
5
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Benefits of a
Comprehensive
Service Offering
 Multiple growth
drivers
 Large addressable
markets
 Cross-selling
opportunities among
services
 Deep penetration of
clients
Numerous Third-Party Accolades
ISO9001:2008,
ISO27001:2005
2011/2010/2009 Top 100
Chinese Enterprise for
Software Sales Revenue
6
2011/2010 IAOP
Global Outsourcing 100
2006-2009 Deloitte
Technology Fast 50 China
2009 Red Herring Global
100
2010/2009 China
Outstanding Corporate
Citizen
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2011/2010/2009
China Top 10 Leading
Service Provider
2010 China’s Best
Employer Enterprise
Global and Greater China Marque Clients
Industry Verticals
Greater China Clients
Technology
Communications
Banking,
Financial Services
and Insurance
(“BFSI”)
Energy,
Transportation
and Public Sector
(“ETP”)
Other
7
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Global Clients
Success Factor #1: Strategically Established
U.S. Headquarters
Key drivers to select the Pacific Northwest
1
Favorable business climate
2
Highly educated and experienced IT resource pool
3
Marque companies in high-tech, bio-tech, aerospace, telecom, retail…, that
spur innovations
4
International environment, nearest port to Asia from Mainland U.S.
5
Strategic engagements with diverse blue-chip clients
6
Revenue & size have grown 8 fold since early 2008
Well positioned to sustain high growth, scale profitably and maintain a leadership position
9
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Success Factor #2: Strong Alliances with
Municipalities
iSoftStone Wuxi
iSS Wuxi Expansion
Phase I Completed: Oct. 2010
Square Meters: 38,000
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Cloud Computing Center in Wuxi
Collaboration with IBM
Overview
Wuxi wanted to build a data center as part of
their supporting platform for IT Services. In
collaboration with Wuxi K-Park and IBM teams,
iSoftStone carried out design, implementation,
testing and transition
Features
• Total Area around 1,800 square meters
• Across the street from iSoftStone Wuxi Main
Campus and iCarnegie
• Data hosting, disaster recovery, and other
associated value added services
• Provides software renting services including
IBM Rational, Tivoli, WAS, and DB2
• High Reliability with N+1 redundancy
architecture design
• 7x24 Service
• Technical staff have rich experience, and
strong technical backgrounds
• Advance resource management system
12
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World Class Training Through iCarnegie Institute
iCarnegie–iSoftStone Institute
 Training center located in Wuxi
 Jointly owned by iSoftStone, Wuxi and
iCarnegie
 Utilizes technical curriculum and professional
certifications developed and maintained by
iCarnegie Inc., an affiliate of Carnegie
Mellon University
 Annual training capacity of up to 10,000
students
 Tailored training programs
 Long term curriculum (4+ years)
 Short term program (1- 6 months)
 Provide on-the-job training as well as distant
learning program
 Graduation exams and review from on-the-
job trainings for hiring and placement
 Tailored training for clients with client specific
materials and client internship
 All courses taught in English
13
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Success Factor #3: 360° Partnerships with
Strategic Clients
Go to Market Together
iSoftStone as a GTM Partner and System Integrator
GTM Process
VAR Qualification
Marketing Plan
Sales and
Engineering
Training
Targeted
Outreach
Solution
Implementation
Closeout and
Maintenance
Feedback
GTM Experience
• iSoftStone has a 50 person solutions
sales team organized by region and
industry that participate in go-to-market
efforts in Greater China (and about 33%
have 10-12 years of experience from
organizations like IBM and Oracle)
Go to Market Partners
In addition to its own proprietary solutions,
iSoftStone has implemented over 150 GTM
partner products for more than 60 customers.
Industry Targets
Healthcare Organizations
Telco Operators
Manufacturing
Domestic Consumer Goods
• 2009 GTM revenue is $15M (via VAR
agreements and Systems Integration)
• iSoftStone has been an active GTM
partner with Microsoft MCS
Industries Served
Banking • Insurance • Telecommunications • Energy and Utilities • Manufacturing
15
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© 2010iSoftStone
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Reserved.
360° Partnership
Partner
•
•
•
•
Vendor
Business Productivity & Collaboration Go-toMarket Partner
Business Intelligence (BI)
Mobile Application Development &
Infrastructure
Web Application Design
& Development
•
•
•
Consulting
Dual-shore & Pure Offshore IT
Outsourcing
Business Process Outsourcing
iSoftStone has supported Microsoft as
a strategic vendor for almost ten
years. We are currently on the
approved vendor list (Global AVLS)
for Project Management/Consulting,
Web Development, Application
Development and Testing Services.
iSoftStone offers Microsoft
consulting and IT outsourcing
services in addition to go-tomarket opportunities for sellthrough of Microsoft
technologies.
Customer
• 100% Genuine Advantage Compliance
16
16
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iSoftStone maintains its integrity as a
customer of genuine Microsoft software.
We have signed an Enterprise Agreement
including Software Assurance benefits for
several Microsoft product suites to
support our business.
Connected Health Innovation Lab
3-way Partnership between iSoftStone, Microsoft, Wuxi City Government
17
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Doing Business in China
From an IT Services Perspective
Confidential ©2011 iSoftStone Holdings Limited. All Rights Reserved.
• Which one
is central
to future
long term
global
plans and
strategies?
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What to do in China?
• “Victorious
warriors
win before
going to
war;
defeated
warriors go
to war
then try to
win”
– Sun Tzu
China vs. Other?
Ancient Wisdom
Fortune Favors the Prepared Mind
• Which part
of business
to do in
China?
• What kind
of teams in
China?
IT Services Growth Rates, Asia/Pacific Region
2010
China
India
Malaysia
Singapore
Hong Kong
Thailand
Korea
Taiwan
Australia
New Zealand
2011
13.0
18.0
8.5
6.2
5.7
-0.4
3.9
-3.5
1.5
1.1
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15.2
16.6
8.2
6.1
5.7
4.6
3.6
3.6
2.8
1.9
2012
19.1
16.2
8.7
6.0
5.8
5.4
3.8
3.8
3.1
2.4
2010-2015
17.8
16.4
8.7
5.9
5.8
5.3
4.2
3.8
3.0
2.3
Location Choice involves many Aspects
First tier vs. second tier cities
Business opportunities
Talent pool
Expenses
Local government support
Turnover rate
Guan Xi (relationships/connections)
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IP Protection & Data Security
 Laws, regulations
 Contractual commitments
 Enforcement: civil, criminal and
Legal
administrative
 24x7 guarded building
 Card access to offices
Physical
 Restricted access to the server rooms
 Segregated network
 Other security measures implemented based on
each client’s requests
Client
 International standards, security policies, processors, training,
Logical
Personnel
monitoring
 ISO27001 compliant corporate policies, procedures and
enforcement
 Background checks
 Regular security training
 Individual NDA
22
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It takes
patience and
flexibility to
overcome
obstacles
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Team Matters Most
Do not expect
to simply
duplicate or
transfer a
business from
the U.S. to
China
Things work differently
Duplication Doesn’t Work
Duplicating U.S. Businesses?
Well-balanced
mix of eastern
and western
principles is
often the best
way to develop
a successful
business
American Brands, Chinese Ingredients
Made in for China
YUM! Brands’ success in China
• Egg custard at KFC
• Deep sea eel is the best selling topping at Pizza Hut
Wal-Mart vs. Carrefour
• Record number of people on Wal-Mart’s opening day because of the
brand name; downhill after that
• China specific changes were made later
• Carrefour has been more tailored to Chinese customs from the beginning
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Talent Pool
More honor students than total students in the U.S.
About 400,000 new engineers every year.
Rapidly improving quality
Overseas talent returns to China – over 100k a year
Challenge: very experienced software architects are
rare
25
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The Management Gap Challenge in China
Expatriate Managers – Lack
of Culture and Language
skills is becoming an issue
“Sea Turtles” - Returnees like
Daniel Saw, new Asia head of
Campbell Soup
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Local Managers – Lacking in
Western Management skills
Communication
“China will
soon become
the number
one English
speaking
country in the
world.”
Computer
science
students must
pass foreign
language test
before they
graduate
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Biggest
challenge is
spoken
English
Work and Reward
Work Ethic
• 70% of Shanghai white collar workers work 12+ hours per day
• It’s normal to ask employees to work late and on weekends
• (Recent labor law changes heavily favor employees)
Pay
• It’s normal for people to ask each other’s salaries
Rewards and Incentives
• Organized trips and events
• Bonuses
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Recommendations to U.S. Service Providers in China
Provide focused services in a good targeted market
Grow or expand through present clients in the U.S.
that are expanding into China
Start from your core competencies and domain
expertise
Develop a China BU with a balanced mix of practices
29
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Loci
Soft
ware
,
Inc.
ww
w.lo
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Innovation Across Borders
Contact us: Weiling Li
Weilingl@isoftstone.com
206-353-1570
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