march 2012

March 2012

Innovation Across BordersPartnering for Success

Confidential ©2011 iSoftStone Holdings Limited. All Rights Reserved.

2011

• Strengthen ERP capabilities in global marketplace

• Breakthrough in Smart City and Healthcare

• 24 delivery centers

• 11,750 employees

(As of Sept 30, 2011)

2007

• Substantial R&D investment in solutions

• Aggressive expansion into Tier-2 cities

• 9 delivery centers• 3,116 employees

2001-06

• Entered Korea & Japan market

• Gained scale through acquisition

• Founded in Oct 2001

• 6 delivery centers in 2006

• 40–1,527 employees

2009

• Established Wuxi iCarnegie Institute

• Established sales team in Europe

• Implemented regional growth strategy


• 7,676 employees

2010

• Listed on NYSE (NYSE: ISS)

• Increased penetration ofhigh-end BFSI market


• 9,285 employees

2008

• US expansion• Launched BPO

service

• 14 delivery centers• 4,205 employees

2

iSoftStone – History & Development

Confidential ©2011 iSoftStone Holdings Limited. All Rights Reserved.3

3,1164,205

7,6769,172

2007 2008 2009 3Q 2010

iSoftStone Snapshot – Leadership in China IT Services

36.4

82.5

134.4

90.0

135.2

2007 2008 2009 3Q 2009 3Q 2010

CAGR of 92%

Track Record of Strong Growth

CAGR of 57%

1 As of March, 20122 For the 12 months ended Sept 30, 20113 For the 9 months ended Sept 30, 20104 Total revenues from operations, less business taxes5 Based on period end numbers

YoY of 50%

Net

Rev

enue

4 (U

S$m

m)

Hea

dcou

nt5

Employees1 Over 14,000

Sales and Delivery Centers 24 in total, of which 17 in Greater China

29% Consulting & Solutions, 67% IT Services, 3% BPO ServicesNet Revenue by Service Offering3

Net Revenue by Geography3 56% Greater China clients, 44% Global clients

Clients2 Over 80 Fortune 500 companies


Kirkland

Seattle Tokyo

FukuokaNew YorkBosto

nDalian

Shanghai

Wuhan

Taipei

TianjinXi’ an

Wuxi

Guangzhou

Shenzhen

Beijing

Nanjing

ChangshaHangzhou

HamburgLondon

4

Global Presence and Resource Distribution

On-shore, Near-shore and Off-shore Services to Clients Globally

US / Europe JapanGreater China• London• Hamburg

• Shanghai• Wuxi• Nanjing• Hangzhou

• Tokyo• Osaka

• Guangzhou• Shenzhen• Yancheng

• Wuhan• Changsha• Chengdu• Zhenjiang

• Beijing• Tianjin• Dalian• Xi’an

•Boston •New York•Seattle

Chengdu

•Hong Kong• Taiwan

YanchengZhenjian

g

Hong Kong

•Fukuoka• Hiroshima

OsakaHiroshima


Functional

Infrastructure & Software services

Consulting

Application Development & Maintenance

Research & Development Services

Solutions

Industry Specific

Consulting and

Solutions

IT Services

BPO

Common and Consistent Business Processes

Tech

nolo

gy

Com

mu

nic

atio

ns

En

erg

y, tran

sp

orta

tion

an

d p

ub

lic s

ecto

r (ETP

)

Ban

kin

g, fi

nan

cia

l serv

ices

an

d in

su

ran

ce (B

FS

I)

End-to-End Suite of Services across Industry Verticals

5

Multiple growth

drivers

Large addressable

markets

Cross-selling

opportunities

among services

Deep penetration of

clients

Benefits of a Comprehensive Service Offering

Industry Verticals


ISO9001:2008, ISO27001:2005

2011/2010 IAOP Global Outsourcing 100

2011/2010/2009 China Top 10 Leading Service Provider

2011/2010/2009 Top 100 Chinese Enterprise for Software Sales Revenue

2009 Red Herring Global 100

2006-2009 Deloitte Technology Fast 50 China

2010 China’s Best Employer Enterprise

2010/2009 China Outstanding Corporate Citizen

Numerous Third-Party Accolades

6


Global and Greater China Marque Clients

7

Banking, Financial

Services and Insurance (“BFSI”)

Communications

Technology

Energy, Transportation

and Public Sector (“ETP”)

Other

Industry Verticals Greater China Clients Global Clients

http://images.google.com/imgres?imgurl=www.nyse.com/images/listed/snp-l.gif&imgrefurl=http://www.nyse.com/events/1051530338482.html&h=158&w=234&sz=8&tbnid=akHDvQ6ZdvIJ:&tbnh=70&tbnw=103&start=27&prev=/images?q=sinopec&start=20&hl=zh-CN&lr=&ie=UTF-8&sa=N

Success Factor #1: Strategically Established U.S. Headquarters


Key drivers to select the Pacific Northwest

9

International environment, nearest port to Asia from Mainland U.S.

Marque companies in high-tech, bio-tech, aerospace, telecom, retail…, that spur innovations

Favorable business climate

Strategic engagements with diverse blue-chip clients

Highly educated and experienced IT resource pool

1

2

3

4

5

Well positioned to sustain high growth, scale profitably and maintain a leadership position

Revenue & size have grown 8 fold since early 2008 6

Success Factor #2: Strong Alliances with Municipalities


iSS Wuxi Expansion

Phase I Completed: Oct. 2010

Square Meters: 38,000

iSoftStone Wuxi

Confidential ©2011 iSoftStone Holdings Limited. All Rights Reserved.Confidential © 2010 iSoftStone Group. All Rights Reserved.12

Cloud Computing Center in WuxiCollaboration with IBM

Features

• Total Area around 1,800 square meters• Across the street from iSoftStone Wuxi Main

Campus and iCarnegie• Data hosting, disaster recovery, and other

associated value added services• Provides software renting services including

IBM Rational, Tivoli, WAS, and DB2• High Reliability with N+1 redundancy

architecture design• 7x24 Service• Technical staff have rich experience, and

strong technical backgrounds• Advance resource management system

OverviewWuxi wanted to build a data center as part of their supporting platform for IT Services. In collaboration with Wuxi K-Park and IBM teams, iSoftStone carried out design, implementation, testing and transition


World Class Training Through iCarnegie Institute

13

Training center located in Wuxi Jointly owned by iSoftStone, Wuxi and

iCarnegie Utilizes technical curriculum and

professional certifications developed and maintained by iCarnegie Inc., an affiliate of Carnegie Mellon University

Annual training capacity of up to 10,000 students

Tailored training programs Long term curriculum (4+ years) Short term program (1- 6 months)

Provide on-the-job training as well as distant learning program

Graduation exams and review from on-the-job trainings for hiring and placement

Tailored training for clients with client specific materials and client internship

All courses taught in English

iCarnegie–iSoftStone Institute

Success Factor #3: 360° Partnerships with Strategic Clients


Go to Market TogetheriSoftStone as a GTM Partner and System Integrator

Go to Market PartnersIn addition to its own proprietary solutions, iSoftStone has implemented over 150 GTM

partner products for more than 60 customers.

VAR Qualification Marketing Plan

Sales and Engineering

TrainingTargeted Outreach

Solution Implementation

Closeout and Maintenance Feedback

GTM Process

• iSoftStone has a 50 person solutions sales team organized by region and industry that participate in go-to-market efforts in Greater China (and about 33% have 10-12 years of experience from organizations like IBM and Oracle)

• 2009 GTM revenue is $15M (via VAR agreements and Systems Integration)

• iSoftStone has been an active GTM partner with Microsoft MCS

GTM Experience

Industry Targets

Healthcare OrganizationsTelco OperatorsManufacturingDomestic Consumer Goods

Industries Served

Banking • Insurance • Telecommunications • Energy and Utilities • Manufacturing


360° Partnership

1616

Partner• Business Productivity & Collaboration Go-to-

Market Partner • Business Intelligence (BI)• Mobile Application Development &

Infrastructure• Web Application Design

& Development

Customer

iSoftStone offers Microsoft consulting and IT outsourcing services in addition to go-to-market opportunities for sell-

through of Microsoft technologies.

iSoftStone maintains its integrity as a customer of genuine Microsoft software. We have signed an Enterprise Agreement including Software Assurance benefits for several Microsoft product suites to support our business.

iSoftStone has supported Microsoft as a strategic vendor for almost ten years. We are currently on the approved vendor list (Global AVLS) for Project Management/Consulting, Web Development, Application Development and Testing Services.

• 100% Genuine Advantage Compliance

Vendor• Consulting• Dual-shore & Pure Offshore IT

Outsourcing• Business Process Outsourcing


Connected Health Innovation Lab3-way Partnership between iSoftStone, Microsoft, Wuxi City Government


Doing Business in China

From an IT Services Perspective


Fortune Favors the Prepared MindAn

cien

t Wis

dom • “Victorious

warriors win before going to war; defeated warriors go to war then try to win” – Sun Tzu

Chin

a vs

. Oth

er? • Which one

is central to future long term global plans and strategies?

Wha

t to

do in

Chi

na? • Which part

of business to do in China?

• What kind of teams in China?


IT Services Growth Rates, Asia/Pacific Region

2010 2011 2012 2010-2015 China 13.0 15.2 19.1 17.8 India 18.0 16.6 16.2 16.4 Malaysia 8.5 8.2 8.7 8.7 Singapore 6.2 6.1 6.0 5.9 Hong Kong 5.7 5.7 5.8 5.8 Thailand -0.4 4.6 5.4 5.3 Korea 3.9 3.6 3.8 4.2 Taiwan -3.5 3.6 3.8 3.8 Australia 1.5 2.8 3.1 3.0 New Zealand 1.1 1.9 2.4 2.3


Location Choice involves many Aspects

First tier vs. second tier cities

Business opportunitiesTalent pool

Expenses

Local government support

Turnover rate

Guan Xi (relationships/connections)


IP Protection & Data Security

22

Legal

Physical

Logical

Personnel

Client

Laws, regulations Contractual commitments Enforcement: civil, criminal and

administrative

24x7 guarded building Card access to offices Restricted access to the server rooms Segregated network Other security measures implemented based on

each client’s requests

International standards, security policies, processors, training, monitoring

ISO27001 compliant corporate policies, procedures and enforcement

Background checks Regular security training Individual NDA


Duplicating U.S. Businesses?D

uplic

ation

Doe

sn’t

Wor

k Do not expect to simply duplicate or transfer a business from the U.S. to China Th

ings

wor

k di

ffere

ntly It takes

patience and flexibility to overcome obstacles

Team

Matt

ers

Mos

t

Well-balanced mix of eastern and western principles is often the best way to develop a successful business


American Brands, Chinese Ingredients

Made in for ChinaYUM! Brands’ success in China• Egg custard at KFC• Deep sea eel is the best selling topping at Pizza Hut

Wal-Mart vs. Carrefour• Record number of people on Wal-Mart’s opening day because of the

brand name; downhill after that• China specific changes were made later• Carrefour has been more tailored to Chinese customs from the beginning


About 400,000 new engineers every year.

Rapidly improving quality

Challenge: very experienced software architects are rare

Overseas talent returns to China – over 100k a year

25

Talent Pool

More honor students than total students in the U.S.


The Management Gap Challenge in China

Expatriate Managers – Lack of Culture and Language

skills is becoming an issue

“Sea Turtles” - Returnees like Daniel Saw, new Asia head of

Campbell Soup

Local Managers – Lacking in Western Management skills


Communication

“China will soon become the number one English

speaking country in the

world.”

Computer science

students must pass foreign

language test before they

graduate

Biggest challenge is

spoken English


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


Grow or expand through present clients in the U.S. that are expanding into China

Start from your core competencies and domain expertise

Develop a China BU with a balanced mix of practices

29

Recommendations to U.S. Service Providers in China

Provide focused services in a good targeted market


Loci Software, Inc. www.locisoftware.com


Innovation Across BordersContact us: Weiling Li

[email protected]

march 2012

Documents

isoftstone isoftstone

isoftstone holdings

delivery centers11

delivery centers24

delivery centers3

greater china clients

china everbright

shore services