BPO Sector Research - 2016

Georgian National
Investment Agency
IT&BPO Sector Research
This report has been extracted and amended by

the Georgian National Investment Agency from
the report prepared by KPMG Georgia LLC on
IT&BPO Sector Research in November 2015.
For the full report, please, contact the Georgian
National Investment Agency.
Disclaimer
Our findings, observations and/or recommendations are those that we could reasonably derive from the procedures or scope of
services performed. The specific procedures performed were agreed with Georgian National Investment Agency (the Client) and
were performed by us as set forth in the Report.
Our work was carried out solely based on the publicly available research data.
We have indicated within our Report the sources of the information presented and have satisfied ourselves, so far as possible, that
the information presented in our Report is consistent with other information which was made available to us inthe course of our work
in accordance with the terms of the Contract. We have not, however, sought to establish the reliability of the sources by reference to
other evidence.
All recommendations, provided to you with/in this Report that refer to the future have some limitations in the sense that they are
based on the assumptions valid on the issuance date. These assumptions could change with time, after the date of this Report
issuance, and so could lose their value.
References to 'KPMG Analysis' in this Report indicate only that we have (where specified) undertaken certain analytical activities on
the underlying data to arrive at the information presented; we do not accept responsibility for the underlying data.
We note that this report has been extracted and amended by the Georgian National Investment Agency from the report prepared by
us on IT&BPO Sector Research in November 2015. For the full report, please, contact the Georgian National Investment Agency.
2015 KPMG Georgia LLC, a company incorporated under the Laws of Georgia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity.
All rights reserved.
Acknowledgment
During our analysis we have interviewed a number of CEOs and HR professionals of different companies in Georgia to get their view on the
investment climate, talent pool, IT&BPO potential in Georgia.
The brief description of these companies is given below:
Companies interviewed
HR outsourcing company focused on recruitment, training and consulting
HR outsourcing company focused on recruitment, consulting and HR function outsourcing, such as payroll maintenance
HR company focused on recruitment
BPO company focused on call centre
Local call center
ITO company focused on IOS games and mobile applications
ITO company focused on software development
ITO company focused on web development and data analysis
ITO company focused on web development, hosting and training
Largest Georgian IT services company
Georgias Innovation and Technology Agency
International real estate company focused on valuation, brokerage, development services and construction services
International real estate company focused on feasibility studies, brokerage, valuation and capital markets/investment
Local real estate company focused on valuation, leasing and consulting
International law firm
International company engaged in real estate development
International energy company engaged in hydropower plant operation
International company engaged in port operation
A group engaged in hospitality industry across Georgia
Audit, tax and advisory firm
Top Georgian Bank (HR and IT departments)
Georgian insurance company
Georgian healthcare organization
Georgian medical centre
Business Association of Georgia
Table of Contents
Contents
Section 1: Assessment of the Global Market
Page 7
Section 2: Top services outsourced
Page 21
Section 3: IT&BPO Market Overview in Georgia
Page 30
Section 4: Overview of Human Resources and Cost Base in Georgia
Page 34
Section 5: Benchmarking of Georgia vs Competitor Countries
Page 66
Section 6: Investment proposals - Targeted IT&BPO segments
Page 85
Appendices
Page 104
Section 1
Assessment of the Global Market
What is the regional demand for offshoring/ outsourcing?
North America and Europe continue to generate bulk of the demand for IT&BPO
services, with APAC increasing its share in recent times
Historical IT&BPO demand (in bn USD)
866.5
913.5
948.1
Geography-wise break-up of IT&BPO demand in 2014 (in bn USD)

Rest of
EMEA
489.4
1,001.0
247.7
24%
Central
Europe
49%
7%
157.2
282.4
267.9
296.3
321.3
631.1
651.8
IT
679.7
IT
BPO
AMERICAs
2011
2012
2013
53.4
90.5
12.7
306.8
182.6
598.7
BPO
IT
BPO
APAC
197.8
162.2
2014
BPO
20%
35.6
IT
IT
66.1
% share of the global demand
BPO
Note: Numbers might not add to 100% because of rounding off
North America and Europe together constitute over 80% of demand. APAC is gradually increasing its share of
demand, through increased offshoring adoption by countries such as Japan, Australia and New Zealand
North America, largest market for IT&BPO grew above industry average, supported by revival of economy and
higher technology adoption
Source: KPMG Research and Analysis, HFS Global IT and BPO Services Market Report 2013
Note: Central Europe includes Austria, Croatia, Czech Republic, Germany, Hungary, Liechtenstein, Poland, Romania
Slovakia, Slovenia, Switzerland
What is the growth by functional demand expected over the next five years?
The global IT&BPO industry is expected to continue an upward trajectory
IT&BPO CAGR
(2011-14): 4.9%
IT CAGR 4.5% to 5.0%

BPO CAGR 5.7% to 6.3%
1,219
1,347
1,281
1,172
1,054
275
1,111
259
245
234
64
220
60
207
IT&BPO Market 2015-2020 Forecast

(in Bn USD)
53
47
57
29
135
344
50
61
32
65
34
145
140
363
57
68
36
150
382
392
76
72
39
42
160
155
432
412
87
92
103
82
97
78
156
164
172
179
187
196
2015E
2016E
2017E
2018E
2019E
2020E
IT Infrastructure Management
ADM
IT Professional Services
Other IT Services
F&A BPO
CRM BPO
HR BPO
Industry Specific
Note: Industry-specific BPO processes includes sector/ vertical specific activities like: Securities processing, payment processing, mortgage processing in Banking, Health payer, property & casualty admin in Insurance. Welfare benefits administration in Government. Medical
records maintenance in Healthcare. Billing in Telecom. Ticketing, reservations management in Transportation
What is the demand for offshoring/ outsourcing in AMERICAs?
AMERICAs have pioneered offshoring in terms of adoption across functions

and industry verticals, as well as cost to business value led propositions
Key countries for IT&BPO demand
Demand by function*
IT services
20.0%
48.7%
306.8
10.7%
20.7%
BPO services
Total Demand
Other IT
services
IT Professional
Services
ADM
IT
Infrastructure
Management
Canada
USA
59.2%
182.6
Mexico
17.3%
15.3%
8.2%
*Demand in
2014 (in bn
USD)
Total DemandIndustry Specific
HR
CRM
F&A
USA generates over 90% of the total demand for IT&BPO

services in this region
Strong Demand
Moderate Demand
IT outsourcing market demand is characterized by increased

Low Demand
use of cloud-based and automated services
Note: Industry-specific BPO processes includes sector/ vertical specific activities like: Securities processing, payment processing,
mortgage processing in Banking, Health payer, property & casualty admin in Insurance. Welfare benefits administration in
Government. Medical records maintenance in Healthcare. Billing in Telecom. Ticketing, reservations management in Transportation
What is the demand for offshoring/ outsourcing in EMEA?
EMEA demonstrates continued growth in adoption and is characterized by

diverse nature of demand across countries
Demand by function*
IT services
53.4
6.6%
12.3%
Central Europe
10.0%
Rest of EMEA
36.3%
157.2
2.5%
10.1%
6.2%
15.9%
Total Demand
BPO services
12.7
Other IT
services
IT Professional
Services
ADM
4.1%
IT
Infrastructure
Management
UK
Poland
Germany
55.8%
90.4
*Demand in
2014 (in bn
USD)
Czech Republic
France
0.3%
11.1%
HR
Spain
1.3%
16.9%
CRM
0.3%
10.2%
F&A
Strong Demand
Moderate Demand
Low Demand
IT&BPO market in Russia was estimated at

USD 1.9 bn in 2013, growing 15% from 2012.
Main demand comes from international
companies, governmental, trade and financial
organisations. IT infrastructure management is
the most demanded/developed.segment.
EMEA constitutes over 30% of global demand
Increased demand, driven by cost pressures emanating

from sovereign debt crisis, economic challenges and
regulatory constraints
Note: Central Europe includes Austria, Croatia, Czech Republic, Germany, Hungary, Liechtenstein, Poland, Romania
Slovakia, Slovenia, Switzerland
Source: KPMG Research and Analysis, HFS Global IT and BPO Services Market Report 2013, news articles
What is the demand for offshoring/ outsourcing in APAC?
Demand across APAC region has accelerated in recent times, with consolidation
and business efficiency as key drivers rather than only wage arbitrage
Demand by function*
IT services
20.5%
45.5%
163.8
9.8%
24.2%
BPO services
Total Demand
Other IT
services
IT Professional
Services
ADM
IT
Infrastructure
Management
69.0%
China
35.8
3.1%
Japan
India
21.7%
*Demand in
2014 (in bn
USD)
6.2%
HR
CRM
F&A
There is a strong domestic market for IT&BPO services in

many of the APAC countries which primary offshoring being
done from Australia and New Zealand
Strong Demand
Australia
Moderate Demand
New Zealand
Low Demand
Language and culture are some of the key barriers for
offshoring in these regions
10
Vertical trends
Financial Services, Manufacturing and Telecom continue to be largest verticals

in terms of IT&BPO spend
Deal Value (USD billion)
127
125
162
64
83
19.8
74
85
46
6.4 27
58
1.8 1.7
Financial
Services
Insurance
22
1.4 1.5
Automotive
and
Aerospace
2.9 2.4
Travel and
Logistics
4.4 4.8
5.8
Energy and
Utilities
77
12.3
89
33
101
23
41
11
2.2 2.1 2.4
Manufacturing
28
20
7.6
5.6
4.2
27
51
58
22
15.5
66
70
23
8.5
6.7
78
50
14
10.8
50
15
0.8 1.7 0.6
Pharma and Publishing, Media

and
Healthcare
Entertainment
40
3.2 3.9
1.9 1.1 0.6

Retail
Telecom
2012
2013
4.3
Others
2014
No. of contracts
Financial services, Telecom and Manufacturing industries are major consumers of IT and BPO services due to the
presence of relatively higher coverage of both horizontal processes and domain-specific work
While organizations have explored both captives and service providers across the value chain, each of them have
their own set of pros and cons which have been carefully analyzed to decide the sourcing model
Source: KPMG Research and Analysis, KPMG Deal Tracker
11
Vertical trends
Emerging verticals like Healthcare, Retail and Utilities will drive the next wave of
IT&BPO market growth
% of users in each industry willing to outsource in
the next 12 months*
Market Demand % by verticals

100% = Total IT&BPO
Market Demand
Chemicals
12%
Telecom
31%
Manufacturing
6%
11%
14%
25%
Government
Healthcare
Energy
32%
Retail
Financial Services
Manufacturing
Communication & Media
Financial Services and Manufacturing contribute majority of

the IT&BPO market demand
Emerging verticals like Retail, Healthcare, Travel &
Transportation and Utilities are the new growth areas for
IT&BPO market
22%
24%
26%
Emerging**
Pharma
Source: KPMG Global Pulse Survey 1Q15, NASSCOM Strategic Report 2015, KPMG Research and Analysis
18%
28%
Financial
Services
Demand for outsourcing by Industry
*KPMG Pulse survey is a quarterly review of global business services (GBS) market trends with
inputs taken from 500+ KPMG sourcing advisors and leading global service providers
** Emerging verticals: Retail, healthcare, travel & transportation, utilities,
government and education
45%
12
Brief review of the key industries
Financial Services
(1/2)
Industry Overview
Key Delivery locations
Financial Services account for 31% of the total

vertical spend. The banking sub vertical is the
largest segment in this vertical
The vertical contributes to more than one third of the
market in terms of total employee headcount
Nearly 15% of the captive market in terms of
number of centers present across the globe is
accounted for by Financial Services vertical
Bengaluru, Mumbai, Metro Manila, Chennai and

Singapore are the major locations preferred by
Financial Services firms for outsourcing and setting
up captives
The preference of a location also depends on the
functions performed:
BPO: India (Bengaluru, Mumbai, Delhi NCR),
the Philippines (Metro Manila) and Malaysia
(Kuala Lumpur)
IT: India (Bengaluru, Mumbai, Chennai) and
the Philippines (Metro Manila)
Key Drivers for Offshoring in Financial Services
Transformation focused
Impact on the overall revenues

through sophisticated financial
analyses and cash management to
offer better credit terms to
customers, thereby increasing
customer base
Optimization focused
Re-engineering full processes like:

Cash management, resulting in
higher float
Forecasting, resulting in better
accuracy of forecast
Savings/ Efficiency focused
Reduce cost per FTE by offshoring

transactional processes:
Accounts Payable
Accounts Receivable
Source: KPMG Research and Analysis
13
Financial Services
(2/2)
ILLUSTRATIVE
Services which
may be
Offshorable/
Outsourceable
Marketing
Product
development
75%
Channel
Management
Business
acquisitions
Account
servicing
90%
90%
Control/
compliance
Transaction
processing
80%
75%
80%
Treasury
operations
Merchant
services
50%
50%
Institutional
relationships
% of
Activities
10%
25%
Retained in
business unit
/ head office
50%
25%
40%
10%
10%
20%
20%
50%
60%
This graph indicates the typical percentage of
processes split between the offshored/ outsourced
organization and the parent organization
90%
The Financial services industry is the most mature when it comes to offshoring/ outsourcing and have leveraged
the same for many of their industry specific processes.
The industry is now pioneering the offshoring of functions like real-time analytics to enhance their capabilities in
opportunity identification, risk management etc.
14
Manufacturing
(1/2)
Industry Overview
Manufacturing along with Financial Services

continue to be largest verticals accounting for more
than 60% of the total vertical spend
Nearly one-fourth of the captive market in terms of
number of centers present across the globe is setup
by firms in Manufacturing
IT services outsourced include application
development, maintenance, helpdesk and data
center support
Bengaluru, Chennai, Krakow and Singapore are the

major locations preferred by manufacturing firms for
outsourcing and setting up captives
BPO: India (Bengaluru, Chennai, Pune), the
Philippines (Metro Manila), Poland(Krakow)
and Singapore
IT: India (Bengaluru, Chennai) and the
Philippines (Metro Manila)
Key Drivers for Offshoring in Manufacturing
Use offshoring to lower the basic

cost of the product
Penetrate new markets using
providers presence in several
countries to open up markets
Create the optimal environment to
support delivery and management of
production through effective:
Supply Chain Management
Logistics
Deductions management
Warehouse management
Achieve direct cost savings by

offshoring transactional pieces
Benefit Admin
Query resolution
Accounts payable
15
Manufacturing
(2/2)
ILLUSTRATIVE

Services which
may be
Marketing
Sales and
after-sales
operations
75%
75%
25%
25%
Offshorable/
Outsourceable
% of
Activities
Production
operations
Logistics
10%
10%
Material
management
Warehouse
management
10%
10%
Compliance
management
Quality
management
20%
20%
Safety
management
10%
Retained in
business unit /
head office
80%
90%
90%
90%
90%
80%
90%
Offshoring in Manufacturing industry has been largely concentrated on horizontal services with Customer
interaction and F&A support being relatively more mature
While the level of retained processes will remain the same, HR and Procurement as new areas of opportunity
which the sector is yet to explore
16
Telecom
(1/2)
Industry Overview
Telecom, one of the mature sectors continues to

implement large scale outsourcing
The vertical contributes to around 6% of the market
in terms of total employee headcount
Nearly 5% of the captive market in terms of number
of centers present across the globe is accounted for
by Telecom vertical
Bengaluru, Delhi NCR, Chennai , Metro Manila and

Budapest are the major locations preferred by
Telecom firms for outsourcing and setting up
captives
BPO: India (Chennai, Delhi NCR), the
Philippines (Metro Manila) and Hungary
(Budapest)
IT: India (Bengaluru, Delhi NCR)
Key Drivers for Offshoring in Telecom
Move towards advanced capabilities by

Allowing greater control over
operations
Flexibility to change business
models when required
Ability to bring quickly new
products and services into
market
Improve process accuracy and create

operational excellence by creating an
optimal environment to support various
activities
Inbound customer service
Customer invoicing
Service renewals, up selling and
cross- selling

offshoring
Telecom infrastructure into cloud
thereby eliminating cost of
ownership
Professional technical support
lowering payroll costs
17
Telecom
(2/2)
ILLUSTRATIVE
Assurance
Services which
may be
Marketing
Offshorable/
Outsourceable
% of
Activities
Billing
Fulfilment
80%
75%
Product
Development
Channel
Management
10%
10%
20%
25%
Retained in
business unit
/ head office
90%
90%
90%
90%
Customer
Acquisition &
Support
75%
10%
Network
Management
80%
10%
25%
20%

The Telecom industry is the one of the most mature industry when it comes to offshoring/ outsourcing and have
implemented large scale outsourcing
A number of players in the industry are now offshoring entire domains like IT, mobile network operations and cable
network to service providers
18
Healthcare
(1/2)
Industry Overview
Healthcare along with retail, government and utilities

are the emerging verticals accounting to around
30% of the total vertical spend
Within overall captive market, healthcare vertical is
small accounting to only 4% of the number of
captives across the globe
The vertical contributes to only 1% of the market in
terms of total employee headcount
Bengaluru, Mumbai, Hyderabad, Singapore, Cork

and Poznan are the major locations preferred by
healthcare firms for outsourcing and setting up
captives. Majority of the healthcare captives are
present in India
BPO: India (Bengaluru, Mumbai, Hyderabad),
Singapore, and Ireland (Cork)
IT: Poland (Poznan)
Key Drivers for Offshoring in Healthcare
Increase patient access and usage

by lowering cost of healthcare
Move towards advanced
capabilities, thereby :
Reduced medication errors
Evidence based medicine
Multi-media EMR
Consumer & Physician driven
portals
Improve process accuracy by creating

an optimal environment to support
patient-focused activities and crossfunctional care
Medical records management
Patient administration
Revenue cycle management
Claims denial management
Medication errors

offshoring transactional pieces
Customer data acquisition and query
resolution
Medical transcription
19
Healthcare
(2/2)
ILLUSTRATIVE
Policy
servicing
and reporting
Services which
may be
Offshorable/
Outsourceable
New business
Product
development
and Business
Acquisition
90%
Claims
processing
90%
Revenue cycle
management
75%
50%
50%
Healthcare
collections
Medical
records
management
90%
90%
10%
10%
Denial
management
50%
Eligibility
services
% of
Activities
10%
10%
10%
25%
Retained in
business unit /
head office
50%
50%
90%
50%

Increasingly dynamic and active regulatory environment and escalating geopolitical risks are some of the key
drivers which determine the offshorability of the processes in the healthcare space
While many of these industry specific processes have a high degree of offshorability, healthcare captives are
found to a minimal extent as compared to other industries
20
Section 2
Top services outsourced
Services outsourced by companies with strong demand for IT&BPO services
IT infrastructure support drives the need for offshoring among the top 30
companies
Services outsourced % by functions
100% = Total annual
contract value by top
30 companies
ADM
5% 1%
34%
35%
6%
2%
1%
1%
Processes outsourced in each function
17%
IT Infrastructure
ADM
F&A
KPO
IT Professional Services
HRO
Other IT services
CRM
Application Development
Application Testing
IT
Infrastructure
Maintenance & Support

Data Management
Security
IT
Professional
Services
System Integration
Information Management
Software Implementation
Other IT
Services
ILLUSTRATIVE
Network Support
Network Security
Multimedia Services
F&A
Finance & Accounting

Payment Processing
HRO
Payroll Management
CRM
Customer Care
Sales & Marketing
KPO
R&D
Product Engineering Services
Other BPO Services
IT Infrastructure and other IT services contribute to

almost 70% contract value of the functions outsourced
by the top 30 companies
Other BPO
Services
Logistics
Facility Operations and Management Services
Source: KPMG Research and Analysis, KPMG Deal Tracker
22
How much do companies save by outsourcing/ offshoring?
Depending on the outsourcing destination, typical cost savings for companies

range from 30% to 80%
Typical TCO1 savings between US and captive destinations2
2014; percentage
80-82%
BPO Services
69-71%
56-58%
47-49%
41-43%
29-31%
74-76%
IT Services
65-67%
49-51%
41-43%
41-43%
28-30%
India
Philippines
China
Mexico
Poland
Brazil
1. TCO (Total Cost of Operations): Indicates total cost incurred by captives in providing support for service
delivery. This includes operating cost as well as costs associated with set-up transition and governance of the
captive
2. Costs of US destinations corresponds to tier-2 cities, while costs of captive destinations correspond to tier-1
cities
Source:: KPMG Research and Analysis
23
What are sub-functions/areas likely to be offshored/ outsourced?
F&A services with varied complexity across the value chain are being
offshored/ outsourced
ILLUSTRATIVE
Accounts
Services which Payable/

General
may be
Receivable Accounting Fixed Asset
Travel
Period Close expenses
and Consolidation
Accounting
Offshorable/
Outsourceable
Business
Analytics
93%
90%
80%
Tax
Management
20%
% of
Activities
7%
10%
Treasury
Management
5%
Compliance
Management
60%
50%
7%
50%
Retained in
business unit /
head office
Low level of
Complexity
High level
of
Complexity
95%
100%
20%
20%
80%
93%
Payroll
40%
80%
This graph indicates the typical percentage of processes split between
the offshored/ outsourced organization and the parent organization
Order
Capture,
Revenue
Accounting
Journal
Entries,
Accounting
Policies
Cost
Accounting,
Inventory
Accounting
Tax
Accounting
Banking
operations
Management
Reporting and
analysis
New
Product
Evaluation
Financial
Consolidation,
Statement
Prep
AP
Helpdesk
Inventory
Accounting
Capital planning
and budgeting
Tax Returns,
Transaction
Tax
Capital
Planning &
Allocation,
Debt
Management
Internal Audit,
SOX project
management
Decision
Support,
Performan
ce
Manageme
nt
Investor
Relations,
Regulatory
Filings
Travel &
Expenses
Payroll
services
F&A offshoring segment has seen rapid growth over the past decade . A large % of various processes in F&A are readily offshorable
Captives/ Service providers are evolving into specialist delivery centers to deliver greater impact to the business in terms of higher
value and greater cost savings
Source: KPMG Research and Analysis, NASSCOM Strategic Review 2014
24
Multiple HR services are being offshored; however global vs. regional models
need to be considered for each sub-function
ILLUSTRATIVE
Services which
may be
Payroll
Services
Benefits
Administration
Employee
Care
Services
Offshorable/
Outsourceable
87%
% of
Activities
13%
82%
18%
81%

Recruitment
Administration Compensation
Services
Workforce
Deployment
40%
37%
31%
60%
63%
69%
Governance
Mobility
Services
22%
19%
78%
Retained in
business unit /
head office
Low level of
Complexity
High level of
Complexity
Payroll
Processing,
Reimburseme
nts
Health &
Welfare
Administration
Severance
Administration,
Employee Data
Management
Offer Mgmt., HR
support line
Rewards
statement,
Survey and
job analysis
Learning
Administration,
Performance
Planning
Domestic travel
& relocation
Garnishments
and liens
Claims,
Annual
Enrolment,
Workers
compensation,
Safety
Administration
Executive
Sourcing,
Background
verification
Executive
Compensatio
n, Union Pay
management
Training
Provisioning,
Temporary
workforce mgmt
Expatriate tax
compliance,
International
relocation
100%
HR Policy, Labor
Relations
HR outsourcing is relatively in a nascent stage compared to IT and F&A with selected process being offshored
Workforce administration, leave management, payroll & recruiting & staffing are the most offshored functions
Captives/service providers play a critical role in providing the bandwidth for HR organization to resolve critical issues
HR processes have a strong dependency on organizational and country culture as well as local regulations/ legislations which need to be
thoroughly analysed while deciding the sourcing
Source: KPMG/ Equaterra survey covering more than 50 HR outsourcing contracts
25
Customer Relationship Management support is driven by the need for specific

regional market understanding
ILLUSTRATIVE
Services which
may be
Offshorable/
Outsourceable
Lead
Generation
Requirements Analysis
& fulfilment
Finalize
solution
Planning &
Identification
Delivery
Management
87%
60%
38%
13%
Periodic update &

Knowledge session
87%
57%
% of
Activities

47%
13%
40%
43%
62%
53%
Retained in
business unit /
head office
Low level of
Complexity
High level of
Complexity
Identify revenue
opportunities, Data
base creation of
prospective clients
Lead Generation
through email/
phone, Create
customer
awareness
RFI process, Identify

right solution
Coordinate with
technical team for
implementation
Reporting/
escalating issues,
liaising between
internal
departments
Day to day interaction

with leading vendors
Resource
requirements,
Target Market
Understanding
Market strategy for

lead generation,
Market research on
client organization
Presentation/ proof of
concept,
understanding
customer needs
Deal finalization and

closure
Arrange site visits,

coordinate with
client
representatives
Business review with

customers once a
quarter
Organizations are leveraging offshored/ outsourced sales team for hosting live online demos for potential end users, and help them with
the product information
The key drivers for offshoring sales function are time zone advantage and regional market understanding to penetrate the market
The function is gaining importance since customers prefer talking directly to a representative of the parent organization rather than a
distributer/ a reseller/ a retailer
Source: KPMG Research and Analysis,
26
KPO services scope has expanded significantly, driven by adoption across

engineering services and analytics
ILLUSTRATIVE
Market research &
data analytics
Services which
may be
Legal services
Engineering
services
Content
development &
publishing
75%
75%
25%
25%
Offshorable/
Outsourceable
50%
% of
Activities
50%
90%
90%
10%
10%

Retained in
business unit /
head office
Contract Drafting,
Patent Search
Finite Analysis
Writing, editing &

designing, Content
planning & proofing
Secondary Research,
Report Writing
Industry Research,
Company Valuation
Legal Research,
Coding & Transcription,
Litigation support
Value Engineering, 2D
& 3D modelling
Data Warehousing
Primary research,
surveys
Equity Research &

Analysis, Due
Diligence & Risk
Management
Low level of Complexity
High level of Complexity
Financial research
& analytics
Knowledge economy, access to specialized skill, time-to-market are some of the key drivers for KPO growth
Increasing awareness and the advent of digital economy has shifted the mindset of key business decision makers to use data for
competitive advantage through business analytics and intelligence driven KPO functions
27
Within IT services, offshoring penetration across sub-functions and

organizations continues to increase, besides ongoing delivery model innovation
ILLUSTRATIVE
End User
Services
Services which
Application
may be Development &
Offshorable/ Maintenance
Outsourceable
60%
Data
Centre
Compliance
/ Controls
Mgmt
Data
Mgmt.
85%
55%
Enterprise
Program
Mgmt.
60%
40%
25%
% of
Activities

Infrastruc
ture
50%
Network
IT
Governance
Mgmt.
Mgmt.
Support
30%
35%
60%
15%
40%
Retained in
business
unit / head
office
45%
40%
60%
75%
50%
40%
70%
65%
Low level of
Complexity
Low level
design,
Coding &
Review
Maturity
Assessment
Data Centre
Support
Information
Management
Desktop
Support
On Site &
On call
Risk
Management
Maintenance
& Support,
Database
Management
Policy
Monitoring
Asset
Management
Network
Support
High level
of
Complexity
Business
Requireme
nt, High
Level
Design
Data
Security
Data Centre
Security, Data
Centre
Strategy &
Architecture
Business
Intelligence
Enterprise
Computing
Quality
Management &
Assurance,
Performance
Management
Security,
Planning &
Design
Policy
Administra
tion
Quality
Management
Network
Security
Most of IT processes are readily offshorable and IT is one of the pioneering services when it comes to offshoring
Captives/ Service providers are evolving into IT shared service centers or delivery centers to deliver greater impact to the business in
terms of higher value and greater cost savings
IT Outsourcing has over the years been a key focus of process improvement initiatives and overall service delivery excellence
28
How is the function-wise adoption changing over time?
F&A and IT have the highest preference for offshoring/ outsourcing, followed by
HR, Supply Chain Management, CRM and other functions
61% 62%
64%
65%
1Q13
59%
1Q14
1Q15
55%
35%
32%
30%
21% 17% 20%

15%
10%
IT
F&A
IT offshoring/ outsourcing is
increasing globally with all
pervasive adoption of SMAC**
services which will continue over
the next few years
Source:: KPMG Research and Analysis, KPMG Global Pulse Survey 1Q15
HR
Supply Chain
Management
F&A and Supply Chain

Management processes are the
low-hanging fruit when
Organizations look at offshoring/
outsourcing and these are the
functions which drive the BPO
growth globally
CRM
12%
12%
7% 6%
Industry specific
Supply chain and HR are

increasingly offshored. While end
to end offshoring/ outsourcing is
still nascent, companies leverage
offshoring for definite cost
advantages
*The interpretation of the graph from the KPMG Pulse Survey 1Q15: 62% of Respondents indicate that the demand for IT will increase in the next 12
months in 1Q15 as compared to 1Q14 when 61% said that there will be an increase in demand
** SMAC refers to the social, mobile, analytics and cloud platforms
KPMG Pulse survey is a quarterly review of global business services (GBS) market trends with inputs taken from 500+ KPMG sourcing advisors and
leading global service providers
29
Section 3
IT&BPO Market Overview in
Georgia
Current state of Georgian
IT&BPO industry
Service industry in
Georgia
Current state
Current state of the Georgian IT&BPO market
Service
industry
There is no established IT&BPO industry but potential for leveraging

experienced talent from other industries
Current state of the IT&BPO industry
Existing IT&BPO
companies
No established IT&BPO industry

Few market players
Mainly based on one-off factors affecting the decision
to establish the business
Mostly small scale up to 50 FTE, but few large
IT&BPO providers over 100 FTE
We estimate total employed in IT&BPO sector at
750-850 FTEs
IT&BPO companies interviewed employ mainly
Georgians
No specific sectorial focus although largest IT&BPO

companies seem to be providing call center, HR
outsourcing and IT services
No specific regional focus, IT&BPO companies
service both domestic, as well as English and
Russian speaking countries
The general trend on the market is the growth in the
number of small IT outsourcing companies
No specific expansion plans were identified at the
IT&BPO companies interviewed
Potential for call centers
Presence of inhouse call

centers
In-house call centers extensively used in banking,

insurance and telecom industries
Language skills available
Communication skills available
According to call centers, banks and insurance
companies interviewed currently non of the large
Georgian banks, telecoms or insurance companies
considers outsourcing their call center
31
Current state
Overview of service industry in Georgia
Service
industry
Georgia has established service culture evidenced by high contribution to GDP

Average CAGR of
the key services
industries 18%
GEL 5,994
GEL 6,512
Retail trade
GEL 5,551
GEL 4,712
Tourism
Turnover by industry
mln GEL
GEL 4,229
GEL 2,318
GEL 1,759
GEL 1,223
GEL 1,920
GEL 1,293
GEL 1,104
GEL 384
2010
GEL 1,144
2011
2012
GEL 2,047
GEL 1,887
GEL 1,196
GEL 2,623
GEL 2,358
GEL 1,217
GEL 1,219
GEL 787
GEL 730
GEL 574
GEL 2,349
GEL 2,215
GEL 1,698
GEL 1,491
GEL 1,023
Overall key services

industrys contribution
to GDP in 2014:
69.1%
2013
GEL 730
2014
Note: (1) 2015 turnover was estimated by annualizing 2015 H1 data on a straight line basis
(2) Turnover for the Banking industry comprises interest and commission income
Key service industry in Georgia saw an overall rise during

the past 5 years
This resulted in a significant number of employees with
service orientation that can be leveraged for the IT&BPO
industry
The total number of employees in Retail trade, Hotels and
restaurants, Tourism, Post and communication and
Banking services as at the end of 2014 was 136,143
The average salary across these industries was GEL
1,033 (USD 585) whereas average salary in Retail trade
and Hotels and restaurants only was GEL 556 (USD 315)
Source: KPMG Research and Analysis, Geostat, National Bank of Georgia
Post&communicat
ions
Contribution of the key

service industries
highlighted to GDP in
2014:
42%
Hotels and
restaurants
Banking
GEL 832
2015E
Employment by industry
1,600
1,400
1,200
1,000
800
600
400
200
-
60,000
50,000
40,000
30,000
20,000
10,000
-
Number of employees 2014
Average monthly salary in GEL 2014
Note: Number of employees for the Banking sector is available for the Q2 2015, however no significant difference expected
32
Current state
Overview of top industries in Georgia
Service
industry
Wholesale and retail trade dominates the Georgian market by annual turnover
Turnover by industry, 2014 in mn GEL
6,899
19,237
2,047
Wholesale and retail trade

Industry
Transport and communication
730
2,114
Construction
3,356
Real estate, renting and business

activities
Hotels and restaurants
Sectors with higher potential in Georgia

Energy
Hospitality and Real estate

Manufacturing
Agriculture and Food processing
Regional logistics corridor
Regional services hub
Banking
Others
5,167
8,637
Note: Banking turnover was calculated from National Bank of Georgia report
Georgian National Investment Agency has

identified Hospitality and Real estate and Regional
services hub as sectors with higher potential in
Georgia. Consequently, various initiatives and
improvements shall be expected by investors in
these areas.
Top industries in Georgia during

the last three years are:
Wholesale and retail trade,
Industry, and
Transport and communication.
33
Section 4
Overview of Cost Base and Human
Resources in Georgia
Cost base
Approach for talent

assessment
Probable and readily

employable talent pool
Supporting assessment
of talent
Estimation of the cost base - Cost per FTE
Cost base
Analysis of
talent
We have estimated the maximum total monthly gross cost per FTE at GEL 1,396
(USD 790) excl. management overheads. No other infrastructure set up costs
are identified
Cost in
Cost in
Cost in
Cost in
Description
People Costs
Real Estate
Costs
IT Costs
Travel &
Transport
Costs
Other Costs
Components
Frequency
USD per USD per
GEL per
of
month per month per month per
expenditure
FTE Net FTE Gross FTE Net
GEL per
month per
FTE Gross
Salaries
Monthly
200.0
250.0
353.2
441.5
Bonus
Annual L&D
New Hire - Recruitment & Relocation
New Hire - Training
Employee insurance costs (not mandatory)
Total People Costs
Annual
Annual
One-time
Annual
Annual
30.0
11.1
7.0
16.0
11.3
275.4
37.5
13.1
8.3
18.9
14.2
341.9
53.0
19.6
12.4
28.2
20.0
486.3
66.2
23.1
14.6
33.3
25.0
603.7
Rental Costs (Net USD 15 for 10 sq.m.)
Monthly
150.0
177.0
264.9
312.6
Utilities (Net USD 2.5 for 10 sq.m.)

Repairs & Maintenance (Net 5.35 for 10 sq.m)
Monthly
Annual
25.0
7.4
29.5
8.7
44.1
13.1
52.1
15.4
Asset Rental Charges (for conference rooms etc.)Quarterly
1.9
2.2
3.3
3.9
Other Admin & Infra (Net USD 0.03 for 10 sq.m)

Total RE Costs
Laptop/Desktop Lease Costs
Bandwidth Charges MPLS & Internet
End User Software Licenses
Telecom costs
Print Managed Services - printer
Print Managed Services - consumable
IT Admin costs
Repairs & Maintenance
Total IT Costs
Travel
Transport
Total T&T Costs
Marketing & Sales
Total Other Costs
Total monthly cost
0.4
184.7
33.3
9.0
6.3
8.0
0.5
4.6
56.6
3.5
122.0
27.1
1.9
29.0
41.0
41.0
652.1
0.5
217.9
39.3
10.6
7.5
9.4
0.6
5.5
70.8
4.2
147.9
32.0
2.2
34.2
48.4
48.4
790.3
0.7
326.1
58.9
15.9
11.2
14.1
0.9
8.2
100.0
6.3
215.4
47.9
3.3
51.2
72.5
72.5
1,151.5
0.8
384.8
69.5
18.8
13.2
16.7
1.1
9.7
125.0
7.4
261.2
56.5
3.9
60.4
85.5
85.5
1,395.6
Annual
One-time
Monthly
One-time
Monthly
One-time
Monthly
Monthly
Annual
Monthly
Monthly
Annual
Rationale
Closer to the lower end of the average salaries was

used for IT&BPO average monthly salary . However,
increased based on the population survey. Refer to
slide 15
A- class offices rent prices used for calculation.

Please refer to slide 17
Amortized during 3 years

Note: (1) Average of 8 to 12 sq.m was used for area per FTE calculation in accordance with employment density guide. Refer to slide 17
Costs in USD was translated into GEL using average 2014 rate of 1.77
35
Estimation of the cost base - Cost per FTE
Cost base
Analysis of
talent
We have estimated the minimum total monthly gross cost per FTE at GEL 1,128
(USD 639) excl. management overheads. No other infrastructure set up costs
are identified
Description
People Costs
Real Estate Costs
IT Costs
Other Costs
Components
Cost in
Cost in
Cost in
Cost in
GEL per
Frequency of USD per USD per GEL per
expenditure month per month per month per month per
FTE Net FTE Gross FTE Net FTE Gross
Salaries
Monthly
200.0
250.0
353.2
441.5
Bonus
Annual L&D
New Hire - Recruitment & Relocation
New Hire - Training
Total People Costs
Annual
Annual
One-time
Annual
20.0
5.5
7.0
8.0
240.5
25.0
6.5
8.3
9.4
299.2
35.3
9.8
12.4
14.1
424.8
44.1
11.5
14.6
16.7
528.4
Rental Costs (Net USD 13.2 for 10 sq.m.)
Monthly
132.0
155.8
233.1
275.0
Utilities (Net USD 2.5 for 10 sq.m.)

Repairs & Maintenance (Net 5.35 for 10
sq.m)
Total RE Costs
Laptop/Desktop Lease Costs
Bandwidth Charges MPLS & Internet
End User Software Licenses
Telecom costs
Print Managed Services - printer
Print Managed Services - consumable
IT Admin costs
Repairs & Maintenance
Total IT Costs
Marketing & Sales
Total Other Costs
Total monthly cost
Monthly
25.0
29.5
44.1
52.1
Annual
3.7
4.4
6.5
7.7
160.7
16.7
9.0
6.3
8.0
0.5
2.3
45.3
3.5
91.7
32.8
32.8
525.7
189.6
19.7
10.6
7.5
9.4
0.6
2.7
41.0
4.2
111.4
38.7
38.7
639.0
283.8
29.4
15.9
11.2
14.1
0.9
4.1
80.0
6.3
161.9
58.0
58.0
928.4
334.8
34.7
18.8
13.2
16.7
1.1
4.8
100.0
7.4
196.6
68.4
68.4
1,128.3
One-time
Monthly
One-time
Monthly
One-time
Monthly
Monthly
Annual
Annual
Rationale
Closer to the lower end of the average salaries

was used for IT&BPO average monthly salary .
However, increased based on the population
survey. Refer to slide 15
B- class offices rent prices used for calculation.

Please refer to slide 17.

Note: (1) Average of 8 to 12 sq.m was used for area per FTE calculation in accordance with employment density guide. Refer to slide 17
Costs in USD was translated into GEL using average 2014 rate of 1.77
36
Analysis of
talent
Cost base
Labour cost
Highest salaries are earned in the financial intermediation sector
Generally largest average monthly gross salaries are in the Financial intermediation sector and the lowest are in Education, Hotels and
restaurants and Agriculture. Overall average monthly salary for 2014 was GEL 865 (USD 490 at average 2014 exchange rate).
Average monthly gross salary, 2014
1,594.9
Average GEL 865

1,160.7
1,156.1
GEL
1,233.1
1,048.7
1,090.7
Median GEL 786
970.4
727.4
719.4
772.0
504.6
Financial
Public
Transport and Construction Production and
intermediation administration communication
distribution of
electricity, gas
and water
Mining and
quarrying
Real estate,
renting and
business
activities
Health and
social work
Fishing
865.2
786.0
Other
Manufacturing Wholesale and
community,
retail trade;
social and
repair of motor
personal service
vehicles and
activities
personal and
household
goods
538.4
534.2
Agriculture,
hunting and
forestry
Hotels and
restaurants
786.0
457.0
Education
Average
Median
Average salary for IT&BPO sector is

estimated to be closer to the lower end of
the average salaries at USD 250
Source: GEOSTATE. National Bank of Georgia, KPMG Analysis
Note: Information from GEOSTATE was obtained in Georgian Lari and average salaries in USD were calculated using National Bank of Georgias information of FX rates during first quarter of 2015.
Source: Caucasus Barometer
37
Analysis of
talent
Cost base
Office stock in Georgia (1/2)
Around 460,000 sq.m leasable offices are available in Tbilisi

Total office stock supply in Georgia
Vacancy rates in business centers in Tbilisi
In Tbilisi office stock supply grew significantly in 2014

In 2015 and 2016 Tbilisi office stock supply is predicted to
increase slightly, compared to 2014, while no changes are
expected in the stock of the regional business centers
Around 52% of the office stock in Tbilisi is leasable, the rest is
owner-occupied
The biggest share in leasable office space is C and D class
offices, under which old Soviet Union buildings and offices in
apartments are considered
From 2010 to 2014 there was significant decrease of vacancy

rate for A class offices.
Vacancy rate for B+ class offices also decreased and is
currently below 5%
Vacancy rate of A- class offices increased from 5% in 2010 to
16% in 2014
Average modern business centre vacancy rate in Tbilisi stands
at around 7% in 2014
1200
Thousands sq.m
1000
160
160
160
45%
40%
800
39%
35%
600
160
890
400
467
200
902
30%
927
25%
52%
leasable
20%
0
2013
25%
24%
19%
15%
2014
2015 F
2016 F
Tbilisi
Regional business centers
5%
A7%
D
42%
C
20%
16%
14%
12%
16%
8%
5%
0%
2010
B+
23%
23%
17%
10%
A
7%
Leasable office space

in Tbilisi by class, 2014
30%
4%
4%
2011
2012
A
A-
2013
2014
B+
B
1%
Source: Colliers 2014 report
38
Analysis of
talent
Cost base
Office stock in Georgia (2/2)
Average rent prices range from USD 13 (GEL 23) to USD 22 (GEL 39) per sq.m
for B+ to A class offices
Weighted average rent prices in Tbilisi for leasable office
stock (USD per sq.m per month excl. VAT and service
charges)
After 2008 average rent prices in Tbilisi for leasable office stock
(excl. VAT and service changes ) were decreasing for all
categories of offices
Since 2012 weighted average rents in business centres have
been constant to date.
The prime office rent in Tbilisi is around USD 21 (GEL 37) per
sq.m. The figure is the same as CEE average.
Rent price in the regions (USD per sq.m per month excl.
VAT and service charges)
Rent prices in Batumi and Kutaisi are almost the same USD
14.3 (GEL 25.3) and USD 14.5 (GEL 25.6) respectively.
For Poti and Rustavi prices per sq,m are USD 8 (GEL 14.1)
and USD 6 (GEL 10.6) respectively.
35
16
28.9
USD
20
15
26.7
24.5
25
20.8
17.9
18
17.7
16.5
15.5
10
14
25.3
17
14
22.4
22.4
22.4
15
15
15
13.2
13.2
13.2
12
USD
30
10
8
14.3
14.5
0
2008
8
6
2009
2010
2011
2012
2013
2014
0
Source: Colliers 2014 report
A-
B+
Average space per FTE is estimated at 8-12 sq.m in

accordance with employment density guides
IT&BPO industry is expected to use B+ (lower vacancy) and A(higher vacancy) class of leasable spaces
Batumi
Kutaisi
Poti
Rustavi
Utilities are generally paid by the landlord and a fixed

surcharge of around USD 2.5 (GEL 4.4) added to the rent
price
Source: KPMG Research and Analysis, OffPAT 2010
39
Cost base
Telecom, internet and energy distribution
Analysis of
talent
Internet and energy distribution
Internet
There are four main Internet providers in Georgia - Caucasus Online, Silknet, Magticom and Geocell they cover almost whole territory of
Georgia. Price and speed are nearly similar for the companies but generally it depends on the packages that companies offer and can
range from GEL 60 (around USD 27) to GEL 200 (around USD 90) depending on the speed.
In our experience, the average internet cost is GEL 20 (around USD 9) per FTE.
Energy Distributors
Energy distribution companies
Telasi
Energo-Pro Georgia
Coverage
Other terms
The prices per kw/h vary from 0.0728 Gel (0.032 USD) to 0.1356 Gel (0.061
USD) excluding VAT. On Consumption stage there are also three types of
Covers the whole territory of Tbilisi network: 101kw/h, from 101kwh to 301 kw/h and 301 kw/h and more. Prices per
kw/h are: 0.08 Gel (0.0036 USD), 0.1056 Gel (0.047 USD) and 0.15 Gel (0.067
USD) accordingly, excluding VAT.
For voltage stage network prices per kw/h vary from 0.1154 Gel (0.0518 USD)
to 0.168 Gel (0.075 USD), excluding VAT. For Consumer stage network prices
Covers the rest territory of Georgia
per kw/h vary from 0.1098 Gel (0.0493 USD) to 0.1818 Gel (0.0816 USD),
excluding VAT.
Source: KPMG Research and Analysis, telecom websites, Energy distributor websites
40
Cost base
Legal environment
Analysis of
talent
Beneficial legal environment for IT&BPO

Labor Code of Georgia
Tax Code of Georgia
Legal age 16 years old

Holidays 24 working days paid and 15 working days unpaid annually
Minimum salary no minimum wage requirements
Standard working hours 40 hours per week (48 hours for specified sectors)
Overtime and shifts to be agreed between employer and employee. Rest time
of minimum 12 hours between working days
Payment for overtime more than for standard working hours but the exact rate
to be agreed between employer and employee
Termination by employer 1 month prior written notice and 1 months salary or
3-day prior written notice and at least two months salary/compensation within
30 calendar days of the contract termination
The tax legislation of Georgia comprises the Constitution of

Georgia, international treaties and agreements, this Code
and subordinate normative acts adopted in compliance with
them
Tax
Personal income tax
Profit tax
VAT
Rate
20%
15%
18%
Georgia does not have social security tax
Law on Entrepreneurs
Company set-up costs
A business entity shall be registered by the National Agency of Public Registry,

a legal entity under public law within the Ministry of Justice of Georgia
The registration of a foreign enterprise may be re-domiciled in Georgia without
interrupting the continuity of the business of the enterprise
Unless otherwise provided for by the Charter, annual profits and loss shall be
fixed and each partner's share shall be calculated at the end of each fiscal year
on the basis of the annual balance sheet
No exception is for services provided within Georgia or abroad.
The state registration in Georgia is performed by National

Agency of Public Registry (NAPR)
The registration should be carried out within one working day
after submitting all required documentation to the NAPR and
paying a state due in the amount of GEL 100 (approximately
USD 50)
A representative office/LLC can be registered on the same
day of submission of documentation and the state due
payable is GEL 200 (approximately USD 100)
All copies of documentation provided from the country of
incorporation of the Company are to be notarized and
apostilled/legalized in that country (where possible), if any.
Afterwards the documents are to be translated into Georgian
and notarized in Georgia
Normally the translation costs amount of GEL 15-20
(approximately USD 7-10) per each translated standard page
Law on personal data protection

Georgia has adopted a law on personal data protection which regulates the
requirements for processing personal data and data security, as well as the
rights of the personal data subject in relation to processing the data
The law also regulates the transfer of data to other countries and international
organisations
Source:: KPMG Research and Analysis
41
Experienced
Fresh candidates for
candidates for IT&BPO
IT&BPO
Approach for talent assessment
Below Middle Management
Existing fresh
graduates from
universities in
Georgia
Experienced
Unemployed
Multiple filters are being

applied to identify the
probable talent pool from
each of the sources

readily employable talent
pool from each of the
sources
Probable fresh
talent pool
(between 20 and
30 years)
Existing
experienced talent
across multiple
industries
Current
employable
talent pool for
IT&BPO sector
- Fresh
candidates
- Experienced
candidates
Probable
experienced talent
pool (between 30
and 40 years)
Existing
unemployed talent
pool
Fresh Grads
Experienced
Unemployed
Filter 6
Filter 5
Filter 4
Filter 3
Filter 2
Filter 1
42
Middle mgt. candidates

for IT&BPO
Experienced
-
Middle Management
probable middle
management talent pool
from each of the sources
Existing middle
managers from the
experienced talent
across multiple
industries

readily employable middle
management talent pool
from each of the sources
Current
employable
middle
management
talent pool for
IT&BPO
sector
Probable
middle
management
talent pool
Filter 6
Filter 5
Filter 4
Filter 3
Filter 2
Filter 1
43

In a typical organization, at least 70 percent of the employees are below middle
management
Personnel in the band
10%
Top Management
20%
Middle Management
70%
Below Middle
Management
Employees
Recruitment Strategy of
Personnel
Top Management includes

CXOs and the Head of
Functions
Recruitment strategy is a leadership

planning and road mapping exercise
Middle Management
includes Account
Managers, Heads of
Projects etc.
Recruitment strategy involves

sourcing from the middle
management pool of the existing
experienced talent pool
Includes all personnel like

agents, team leads, quality
personnel etc.
Recruitment strategy involves

sourcing for
1. Experienced IT&BPO personnel
from:
1. Existing experienced
talent
2. Unemployed talent
2. Fresh IT&BPO personnel from:
1. Fresh Graduates
2. Existing experienced
talent
3. Unemployed talent
44

Candidates between 20-40 years will form IT&BPO talent pool
Sources of IT&BPO
Employees
Fresh Graduates
Middle Management
Experienced candidates
for IT&BPO

IT&BPO
Experienced Talent
Pool
Unemployed Talent
Pool
Middle management is to be
recruited only from experienced
talent pool because we could
leverage the skills of existing
middle managers from similar
service industries
Below Middle Management
Refer to pages
24-27
Experienced candidates will

primarily be tapped from the age
group between 30 and 40 years.
This bucket needs to be carefully
analyzed during recruitment by
the IT&BPO company. While most
of them are from the existing
experienced talent pool, the
unemployed talent pool also may
be leveraged to a smaller extent.
Refer to pages 32-34
Refer to pages 35-36
Refer to pages
28-31
Fresh candidates for IT&BPO

sector will be sourced from all the
three talent pools.
45
Probable middle management talent for IT&BPO
Middle management
Talent pool (in 000)
There is a pool of around 33 thousand experienced talent for the

middle management level in IT&BPO
Fresh Grads
Experienced
Unemployed
691
864
2
110
173
171
61
Total number of
employees
Non middle management Non-relevant industries for Industries with higher

IT&BPO
median salary than IT&
BPO
In a typical organization,
around 20 percent of the
employees are at middle
management level
Employees from
Agriculture and Fishing
industries may not be
candidates for the
IT&BPO sector
6
55
22
33
32.8
Industries with
Unwilling to relocate from
Probable middle
comparable work culture the regions to IT&BPO management level talent
as IT&BPO
hubs
pool for IT&BPO
Some industries like

Construction may not
have a work culture
which is comparable
with the IT&BPO sector
Total number of experienced

talents was adjusted for talents
unwilling to relocate from
regions to capital of GeorgiaTbilisi estimated at 40%
46
Current employable middle management talent for IT&BPO
Middle management
There is a pool of around 1.3 thousand experienced talent for the

Fresh Grads
Experienced
Unemployed
23
33
6
1
Probable middle
Lack of propensity for BPO
management level talent
pool for BPO sector
Propensity for IT&BPO was

determined based on our
assessment of the interest
for IT&BPO and career
opportunities in each
industry in accordance with
our analysis and perception
Lack of language skills
Lack of computer skills
Total number of talent

employable for IT&BPO industry
was adjusted for English
language skills in accordance
with the self reported statistics
of the age group
1
Lack of soft skills
Total number of
talent employable for
IT&BPO industry
was adjusted for
computer skills in
accordance with
Caucasus barometer
2013 research
1
Middle management level
talent who are readily
employable in BPO sector

was adjusted for soft skills in
accordance with our assessment
based on experience
47
Assessment of middle management talent for IT&BPO sector (1/2)
Middle management
for IT&BPO

Profession
Agriculture,
hunting,
foresting
Fishing
Industry
Construction
Experienced
Unemployed
Middle
Talent who Talent
management
Talent with
Talent Talent in
work in a willing to Talent who Talent
comparabl
Talent with Talent with level alent
middle industries
similar relocate to have a
with
who are
e median
Number of
requisite requisite
manageme relevant
work
IT&BPO propensity requisite
readily
salary as
employees
Computer Soft Skills
nt (%) for IT&BPO
culture as hubs(%)
for
Language
1
employable
IT&BPO
Skills (%)
(%)
Note 1
IT&BPO
(%)
Note 2 IT&BPO(%) Skills (%)
in IT&BPO
(%)
(%)
sector
9,677
20%
0%
0%
0%
60%
30%
34%
55%
70%
409
104,116
20%
20%
0%
100%
0%
20%
0%
0%
60%
60%
30%
30%
34%
34%
55%
55%
70%
70%
53,410
20%
100%
20%
0%
60%
30%
34%
55%
70%
Wholesale and
retail trade;
repair of motor
vehicles and
123,460
personal and
household
goods
20%
Hotels and
restaurants
20%
27,428
100%
20%
100%
60%
30%
34%
55%
70%
118
Rationale for the estimates
- The profession is considered to

be not relevant for the IT&BPO
sector
+ Relevant skillset for IT&BPO,

such as communication and
interpersonal skills, especially
in retail
-
100%
80%
100%
60%
30%
34%
55%
70%
105
Average salaries are

relatively high, also sales
bonuses are common
+ Relevant skillset for IT&BPO,
such as communication and
interpersonal skills
-
Average salaries are

comparable
Transportation
-
Transportation
and
56,765
communications
20%
100%
20%
100%
60%
30%
34%
55%
70%
54
Industry is not directly

relevant to IT&BPO sector
Communication and tourism

+ Relevant skillset for IT&BPO
-
On average salaries are

relatively high
Source: GEOSTAT, KPMG Research and Analysis

Note:
(1) Number of experienced talents was adjusted to arrive at managerial level talents for IT&BPO sector. The percentage used represents general trend on the market
(2) Basis of our estimates for unwilling to relocate is based on actual population in Tbilisi (30%) and estimation of additional 30% of population willing to move to Tbilisi
48
Assessment of middle management talent for IT&BPO sector (2/2)

Profession
Talent
Middle
Talent
Talent in
who work
management
with
Talent NonTalent who Talent
Talent
industries
in a
level talent
middle
relevant
with
with
comparabl
have a
Talent with
similar
who are
Number of
relevant
managem
e median
age group propensity requisite requisite requisite Soft
work
readily
for
employees
ent (%)
salary as
to IT&BPO
for
Language Computer Skills (%)
employable
IT&BPO
culture as
Note 1
IT&BPO
(%)
IT&BPO(%) Skills (%) Skills (%)
in IT&BPO
(%)
IT&BPO
(%)
sector
(%)
Middle management
for IT&BPO
Experienced
Unemployed
Real estate
operations,
renting and
providing
business
services
68,225
20%
100%
20%
100%
60%
30%
34%
55%
70%
65
Education
159,582
20%
100%
80%
100%
60%
30%
34%
55%
70%
608
+ Low average salaries
Health and
social work
67,824
20%
100%
40%
100%
60%
30%
34%
55%
70%
129
+ Relevant skillset for Healthcare

IT&BPO
Average salaries are relatively

high, also sales bonuses are
common
+ Relatively low average salaries
Providing
utility, Social
57,326
and personal
services
20%
100%
40%
100%
60%
30%
34%
55%
70%
109

high

Financial
31,813
intermediation
20%
100%
10%
100%
60%
30%
34%
55%
70%
15
Public
104,073
administration
20%
100%
20%
100%
60%
30%
34%
55%
70%
99
Total
864,108

high and better career
opportunities
common
1,302
49
Assessment of fresh talent for IT&BPO sector
More than 25 percent of fresh graduates pursue higher education

or migrate abroad, 65 percent of them are probable candidates for a
IT&BPO job

IT&BPO
Fresh Grads
Experienced
Unemployed
0.1
Talent pool (in 000s)
4.4
65% of total
graduates
1.5
17.1
11.1
Total number of
graduates
Non-relevant faculties of
Loss to higher
education
education/ migration
abroad
Considering the employment

scenario, students from most
faculties will be candidates for an
IT&BPO job except niche faculties
like Agriculture
Due to the current economic

situation, there is a higher
propensity to either pursue
higher studies or move abroad
Unwilling to relocate
from regions to IT&
BPO hubs
Probable fresh talent

pool for IT&BPO
We estimate that students

studying in Tbilisi would prefer
continuing to work there and 75%
willing to relocate from the regions,
resulting in around 88% students
willing to work in Tbilisi
50

IT&BPO
Economics and Business, Law and Humanities faculties are some

of the areas from where fresh talent can be tapped
Per the Ministry of Education and Science of Georgia, there are
72 registered and authorized higher educational institutions
in Georgia (Research Universities-28, Teaching Universities-31,
Colleges-13).
Most popular faculties during the last three years are Economics
and Business, Law and Humanities/Arts.
Faculty
Economics and Business
Law
Humanities/Arts
Other faculties
Total
Total number of Bachelor graduates of HEIs, 2014-2015
12,223
The number of graduates from

HEIs increased by 40% in 2 years.
If such growth trend is maintained,
the pool of fresh talent for IT&BPO
will gradually increase
TSU provides more than 50 programs. The most popular

programs based on the number of graduates during the last
three years are shown below.
Number of graduates
Public Institutions
Private Institutions
Source:: GEOSTAT
TSU top programs graduates, 2012-2014

1,000
900
800
Number of Graduates
52
HEIs
2014-2015 2013-2014 2012-2013

3,718
3,346
3,138
3,338
2,693
1,935
3,278
2,746
1,849
6,807
6,731
5,332
17,141
15,516
12,254
Source:: TSU
4,918
20
HEIs
Fresh Grads
Experienced
Unemployed
879
840
782
663
700
639
600
500
388
400
300
Tbilisi State University (TSU) is the key HEI.

In 2014-2015, TSU students represented 18.5%
of total bachelor graduates (3,171 out of 17,141)
Source:: TSU
200
131 112 145
137 125 127
86
2014

English philology
Psychology
2013
2012
Law
Computer Science
113 101
100
51

IT&BPO
Over 17,000 fresh talent graduated HEIs in Georgia in 2015
Bachelor Graduates in 2014-2015
Private
Institutions
Public Institutions
Total
Fresh Grads
Experienced
Unemployed
Fresh talent pool for IT&BPO sector was estimated based on the
following information and assumptions:
Total bachelor graduates in 2014-2015
Number of graduates
12,223
4,918
17,141
Less agriculture sector
(52)
(84)
(136)
TSU programs and number of total graduates of each program in

2014-2015
Total number of graduates except agriculture

sector
12,171
4,834
17,005
Graduates of Agriculture faculty were excluded from total bachelor

graduates as agriculture students are not considered to be suitable
for IT&BPO industry
Faculties
TSU graduates Share in total
Extrapolated total
bachelor graduates
879
33%
3,718
Mathematics and Natural Sciences, except

Computer Science
246
9%
Engineering, manufacturing and construction
n/a
n/a
Computer Science
118
4%
Law
789
30%
Medicine
n/a
n/a
Social and Political Sciences
418
16%
Journalism
111
4%
Tourism
84
3%
Humanities
n/a
n/a
3,278
Total
2,645
100%
17,005
Due to lack of detailed breakdown of total bachelor graduates by

faculty for Sciences, Education, Services, Business and Law, the
number of graduates was extrapolated based on the breakdown in
TSU. No extrapolation is used for Engineering, Medicine and
Humanities graduates
1,041
1,264
499
3,338
1,274
1,768
470
Total number of fresh talent employable for IT&BPO industry was

adjusted with loss to higher education and migration abroad,
based on statistical information obtained from GEOSTAT
Total number was adjusted for those unwilling to move to Tbilisi
based on extrapolated data of students graduated in Tbilisi and
students graduated from Universities in the regions and willing to
move to Tbilisi
The adjusted number of 2014-2015 graduates by faculty was
further adjusted based on our estimate of the propensity of the
graduates to IT&BPO. Please see the calculations and
assumptions on the next slide
355
Total number of fresh talent employable for IT&BPO industry was
adjusted for English language skills in accordance with the
perception of business representatives (60% as described in the
previous slide), computer skills (80%) and soft skills (50%).
Source: GEOSTAT, TSU, KPMG Research and Analysis
52
Economics, Business and Law are the key faculties in which the
IT&BPO industry would find probable candidates
Faculties
Extrapolated total
bachelor graduates
Talent who do not

Talent willing to
pursue higher
relocate to IT&BPO
education or migrate
hubs(%)
abroad (%)
Probable fresh talent for

IT&BPO
3,718
74%
88%
2,434
Mathematical and Natural Sciences
1,041
74%
88%
681
Engineering, manufacturing and

construction
1,264
74%
88%
827
Computer Science
499
74%
88%
327
Law
3,338
74%
88%
2,185
Medicine
1,274
74%
88%
834
Social and Political Sciences
1,768
74%
88%
1,158
Journalism
470
74%
88%
307
Tourism
355
74%
88%
233
Humanities
3,278
74%
88%
2,146
Total
17,005

IT&BPO
Fresh Grads
Experienced
Unemployed
Talent who do not pursue

higher education or
migration abroad
- Many pursue higher
education or migrate abroad
Talent who do not pursue
higher education and
migration abroad is based
on statistical information of
Georgia
Talent willing to relocate to
IT&BPO hubs
+ Due to the lack of other
options in the region,
there is a higher
willingness to relocate.
We estimate that
students studying in
Tbilisi would prefer
continuing to work there
and 75% willing to
relocate from the
regions, resulting in
around 88% students
willing to work in Tbilisi
11,132
53
Assessment of experienced talent for IT&BPO sector
Experienced
IT&BPO
Around 8% of the employed workforce are probable

candidates for the IT&BPO
Experienced
Unemployed
Fresh Grads
Experienced
Unemployed
Split of probable candidates for IT&BPO
Experienced
259.2
25 , 38%
7.1
IT&BPO
864.1
40 , 62%
384.4
7.6% of total
employee
pool
22.1
103.4
22.3
Total number
of employees
Middle
management
and above
In a typical
organization, at least
70 percent of the
employees are below
middle management
Non-relevant Industries with Industries with Non-relevant

age group
industries for higher median comparable
salary than IT& work culture as
IT&BPO
IT&BPO
BPO
Employees from
Agriculture and
Fishing industries
may not be
candidates for the
IT&BPO sector
Some industries like

Construction may
not have a work
culture which is
comparable with the
IT&BPO sector
Age group 2040 years old is

considered the
most relevant
for the IT&BPO
sector
Unwilling to Probable talent

pool for
relocate from
IT&BPO
the regions to
IT&BPO hubs
Total number of experienced

talents was adjusted for
talents unwilling to relocate
from regions to capital of
Georgia-Tbilisi estimated at
12% of age group 20-30 and
40% of age group 30-40
65.7
54
Assessment of experienced talent for IT&BPO sector (1/2)
Experienced
IT&BPO
Education is the key industry in which the IT&BPO

industry would find probable candidates
Profession
Agriculture,
hunting,
foresting
Fishing
Industry
Construction
Experienced
Unemployed
Talent between 20 - 30 Talent between 30 - 40

Talent who
yrs (%)
yrs (%)
Talent with
Talent
Probable
Talent in
work in a
Talent
comparable
below
NonNonTalent
experience
industries
similar
Number of
willing
to
middle
median
relevant
relevant
willing to d talent for
work
employees
relevant for
relocate to
manageme
salary as
age
group
age
group
relocate
to IT&BPO
1
culture as
IT&BPO (%)
IT&BPO
nt (%)
IT&BPO (%)
IT&BPO (%) to IT&BPO hubs(%)2 to IT&BPO IT&BPO2
(%)
(%)
hubs(%)
9,677
70%
0%
0%
0%
24%
88%
22%
60%
409
104,116
70%
70%
0%
100%
0%
20%
0%
0%
24%
24%
88%
88%
22%
22%
60%
60%
53,410
70%
100%
20%
0%
24%
88%
22%
60%
Wholesale and
retail trade;
repair of motor
vehicles and
123,460
personal and
household
goods
70%
Hotels and
restaurants
70%
27,428
100%
20%
100%
24%
88%
22%
60%
5,931
Fresh Grads
Experienced
Unemployed
- The profession is considered to be

not relevant for the IT&BPO sector
+ Relevant skillset for IT&BPO, such

as communication and
interpersonal skills, especially in
retail
-
100%
80%
100%
24%
88%
22%
60%
5,271

common
+ Relevant skillset for IT&BPO, such
as communication and
interpersonal skills
- Average salaries are comparable
Transportation
-
Transportation
and
56,765
communications
70%
100%
20%
100%
24%
88%
88%
60%
2,727
Industry is not directly relevant to

IT&BPO sector
Communication and tourism

-
On average salaries are relatively

high

Note:
(1) Number of experienced talents was adjusted to arrive at non managerial level talents for IT&BPO sector. The percentage used represents general trend on the market
55
Assessment of experienced talent for IT&BPO sector (2/2)
Experienced
IT&BPO
Education is the key industry in which the IT&BPO

industry would find probable candidates
Profession
Experienced
Unemployed
Talent between 20 - 30 Talent between 30 - 40

Talent who
yrs (%)
yrs (%)
Talent with
Talent in
work in a
Talent
comparabl
Probable
industries
similar
below
e median
experienced
Number of
NonTalent
NonTalent
work
middle relevant for
salary as
talent for
employees
culture as relevant willing to relevant willing to
manageme IT&BPO
1
IT&BPO
IT&BPO
IT&BPO age group relocate to age group relocate to
nt (%)
(%)
(%)
to
IT&BPO
IT&BPO
to
IT&BPO
IT&BPO
(%)
2
2
hubs(%)
hubs(%)
(%)
(%)
Fresh Grads
Experienced
Unemployed
Real estate
operations,
renting and
providing
business
services
68,225
70%
100%
20%
100%
24%
88%
22%
60%
3,278
Education
159,582
70%
100%
80%
100%
24%
88%
22%
60%
30,666
+ Low average salaries
Health and
social work
67,824
70%
100%
40%
100%
24%
88%
22%
60%
6,517
+ Relevant skillset for Healthcare

IT&BPO
+ Relatively low average salaries
Providing utility,
Social and
57,326
personal
services
70%
100%
40%
100%
24%
88%
22%
60%
5,508
Financial
31,813
intermediation
70%
100%
10%
100%
24%
88%
22%
60%
764
Public
104,073
administration
70%
100%
20%
100%
24%
88%
22%
60%
5,000
Total

common
864,108
Average salaries are relatively high

Average salaries are relatively high
and better career opportunities
common
65,662
Note:
(1) Number of experienced talents was adjusted to arrive at non managerial level talents for IT&BPO sector. The percentage used represents general trend on the market
56
Assessment of unemployed talent for IT&BPO sector (1/2)
There is a large pool of young unemployed people

around 3% of which are probable candidates for IT&BPO
Experienced
IT&BPO
Fresh Grads
Experienced
Unemployed
Experienced
Unemployed
for IT&BPO
IT&BPO
1,004.4
1,250.3
7.2
Total
People outside
unemployed
labor force
People outside
labour force are
retired people and
those not actively
looking for work
Loss to
migration
Approximately 3
percent of the
unemployed talent
pool migrates
abroad
145.2
30 , 68%
3.5% of total
unemployed
pool
0.7
Non-graduates Non-relevant
faculty of
graduation
Only about 40
percent of the
unemployed talent
are graduates with
~1 percent of them
belonging to nonrelevant faculties
like Agriculture
14 , 32%
36.3
13.2
Non-relevant
age group
Unwilling to
relocate from
the regions to
IT& BPO hubs
Age group 20-40

years old is
considered the
most relevant for
IT&BPO sector
43.3
Probable
unemployed
talant pool
Considering the unemployment

scenario, we estimate that 88
percent of talents between 2030 years and 60 percent
between 30-40 years of the
unemployed talent pool will be
willing to relocate to the
IT&BPO hubs
57
Experienced
IT&BPO
Assessment of unemployed talent for IT&BPO sector (2/2)
Large share of unemployed are in Tbilisi
Experienced
Unemployed
Fresh Grads
Experienced
Unemployed
Unemployed by regions, 2014
Unemployed by age groups, 2014 in thousand persons
The remaining
Kakheti
regions
4%
5%
2.3, 1%
12.6, 5%
42.5, 17%
Imereti
16%
15-19 years
20-29 years
89.3, 36%
38.7, 16%
30-39 years
40-49 years
Total unemployed:
246 thousand (39%
females and 61%
males)
50-64 years
Tbilisi
38%
Samegrelo and
Zemo Svaneti
12%
65+ years
60.5, 25%
Adjara A/R
12%
Kvemo Kartli
8%
Unemployed persons suitable for IT&BPO sector
Unemployment rate in Georgia (2014)

Total unemployed persons in Georgia
People outside labor force
Total unemployed persons in Georgia (actively looking for work)
Emigration estimate
Talent pool who are graduates (%)
Talent from relevant faculty of graduation (%)
Unemployed persons from 20 to 30
Unemployed persons from 30 to 40
Talent between 20-30 years who are willing to relocate from the regions to IT&BPO
hubs (%)
Talent between 30-40 years who are willing to relocate from the regions to IT&BPO
hubs (%)
Probable unemployed talent for IT&BPO
12.4%
1,250,322
1,004,364
245,958
2.9%
39%
99%
36%
25%
88%
Shida Kartli
5%
61% of the unemployed are 20-40

years old. 100% literacy rate and
92% of at least secondary
education in Georgia confirms
their ability to work for IT&BPO.
According to the national
statistics 73% of the unemployed
pool actively looking for work
has some work experience.
60%
43,350
Source: GEOSTAT, Caucasus Barometer 2013, KPMG Research and Analysis
58
Probable below middle management talent pool for IT&BPO
There is a pool of around 120 thousand fresh and

experienced talent for IT&BPO
Experienced candidates for IT&BPO
Experienced
IT&BPO
Experienced
Unemployed
Fresh Grads
Experienced
Unemployed
38.9
25.2
32%
Experienced
candiates for
IT&BPO
13.7
Fresh candidates
for IT&BPO
Experienced
Unemployed
Slide 32
Slide 35
68%
Total pool of
experienced
candidates for
IT&BPO
Fresh candidates for IT&BPO

81.2
40.4
29.6
11.1
Fresh Grads
Slide 28
Experienced
Slide 32
Unemployed
Slide 35
Total pool of
fresh
candidates for
IT&BPO
The ratio of probable

experienced candidates
and probable fresh
is 1:2.3 which helps us
build a better pyramid
structure of an IT&BPO
organization
59
Assessment of current employability of fresh talent in IT&BPO sector
Graduates from Mathematical and Natural Sciences, Social and

Political Sciences, Engineering and Humanities are more likely
to choose IT&BPO
Faculties
Talent who Talent with

Probable
have a
requisite
talent for
IT&BPO propensity for Language
Skills (%)
sector
IT&BPO(%)
Talent with
requisite
Computer
Skills (%)
Talent with
requisite Soft
Skills (%)
Talent who are

readily
employable in
IT&BPO sector

IT&BPO
Fresh Grads
Experienced
Unemployed
Basis for our estimate of propensity to IT&BPO
Economics and
Business
2,434
15%
60%
80%
50%
88
+ Skills in finance and accounting

- High competition from banks, insurance companies,
different international/local companies, better career
development and higher salaries
Mathematical and
Natural Sciences
681
70%
60%
80%
50%
114
+ Computational skills
+ Low competition from the industry
Engineering,
manufacturing and
construction
827
60%
60%
80%
50%
119
+ Computational skills
+ Low competition from industry
Computer Science
327
50%
60%
80%
50%
39
+ IT skills, however insufficient as per business

representatives
+ Moderate competition from the industry
Law
2,185
15%
60%
80%
50%
79
+ Skills for medical industry IT&BPO

+ Low salaries in the industry
- More likely to continue studying for a doctor and high
competition from Pharmacies and Insurance
No relevant skills for IT&BPO

High competition from the industry, higher salaries
Medicine
834
15%
60%
80%
50%
30
Social and Political

Sciences
1,158
60%
60%
80%
50%
167
Journalism
307
60%
60%
80%
50%
44
Tourism
233
30%
60%
80%
50%
17
+ Communication and interpersonal skills

- High competition from hospitality and tourism sectors
with higher salaries
Humanities
2,146
60%
60%
80%
50%
309
+ Basic skills for low end IT&BPO

+ Low competition from the industry
Total
11,132
+
+
+
+
Basic skills for low end IT&BPO

Low competition from the industry
Basic skills for low end IT&BPO
Low competition from the industry
1,006
60
Assessment of current employability of experienced talent (1/2)
Experienced
IT&BPO
Largest pool of experienced talent is expected to come

from education
Talent between 20-30
Profession
Probable
talent for
IT&BPO
sector
Talent with
Talent who have Talent with
requisite
requisite
a propensity for
Computer
Language
Skills
IT&BPO (%)
1
2
Skills (%)
(%)
Experienced
Unemployed
Fresh Grads
Experienced
Unemployed
Talent with
Talent with
Talent with
Talent with
requisite
requisite
requisite Soft
requisite Soft
3
3
Language Skills Computer Skills
1
2
Skills (%)
Skills (%)
(%)
(%)
Talent who are

readily
employable in
IT&BPO sector
Wholesale and retail trade; repair

of motor vehicles and personal 5,931
and household goods
30%
71%
64%
50%
74%
47%
50%
366
Hotels and restaurants
5,271
30%
71%
64%
50%
74%
47%
50%
325
Transportation and
communications
2,727
30%
71%
64%
50%
74%
47%
50%
168
Real estate operations, renting

3,278
and providing business services
30%
71%
64%
50%
74%
47%
50%
202
Note: (1) Basis of our estimates for languages skills (both English and Russian) is Caucasus Barometer analysis for Georgia in 2013
(2) Basis of our estimates for computer skills is Caucasus Barometer analysis for Georgia in 2013
(3) Number of talents was adjusted with soft skills for IT&BPO sector in accordance with the perception of business representatives
61
Assessment of current employability of experienced talent (2/2)
Experienced
IT&BPO
Largest pool of experienced talent is expected to come

from education
Profession
Probable
talent for
IT&BPO
sector
Talent who have Talent with

Talent with
a propensity for
requisite
requisite
IT&BPO (%) Language Skills Computer
1
2
Skills (%)
(%)
Experienced
Unemployed
Fresh Grads
Experienced
Unemployed
Talent with
Talent with
Talent with
Talent with
requisite
requisite
requisite Soft
requisite Soft
3
3
1
2
Skills (%)
Skills (%)
(%)
(%)
Talent who are

readily
employable in
IT&BPO sector
Education
30,666
30%
71%
64%
50%
74%
47%
50%
1,890
Health and social work
6,517
30%
71%
64%
50%
74%
47%
50%
402
Providing utility, Social and

personal services
5,508
30%
71%
64%
50%
74%
47%
50%
339
Financial intermediation
764
30%
71%
64%
50%
74%
47%
50%
47
Public administration
5,000
30%
71%
64%
50%
74%
47%
50%
308
Total
65,662
4,047
62
Assessment of current employability of unemployed talent
Experienced
IT&BPO
There is a pool of around three thousand unemployed

talent for IT&BPO
Description
Probable
talent for
IT&BPO
sector
Unemployed persons suitable for

43,350
IT&BPO sector
Talent who have

a propensity for
IT&BPO (%)
30%
Talent with
Talent with
requisite
requisite
Language Skills Computer
1
2
Skills (%)
(%)
71%
64%
Experienced
Unemployed
Talent with
Talent with
Talent with
Talent with
requisite
requisite
requisite Soft
requisite Soft
3
3
1
2
Skills (%)
Skills (%)
(%)
(%)
50%
Fresh Grads
Experienced
Unemployed
74%
47%
50%
Talent who are

readily
employable in
IT&BPO sector
2,721
63
Current employable below management talent for IT&BPO
There is a pool of around 8 thousand readily employable

fresh, experienced and unemployed talent for IT&BPO
Experienced
IT&BPO
Fresh Grads
Experienced
Unemployed
Experienced
Unemployed
Split of readily employable candidates for IT&BPO

6% of total
active
population
for IT&BPO
2, 26%

IT&BPO
5.8, 74%
83.25
120.1
0.4% of total
active
population
10.96
36.89
Probable talent pool for

BPO sector
Lack of propensity for

BPO
Propensity for IT&BPO was

determined based on our
assessment of the interest
for IT&BPO and career
opportunities in each
industry in accordance with
our analysis and perception
10.38
25.93
Lack of language skills

was adjusted for English and
Russian language skills in
accordance with the perception
of business representatives
interviewed and self reported
statistics of the age group
15.55
7.77
7.77
Lack of computer skills
Lack of soft skills
Total number of
talent employable for
IT&BPO industry
was adjusted for
computer skills in
accordance with
Caucasus barometer
2013 research
7.77
Talent who are readily

employable in BPO sector

was adjusted for soft skills in
accordance with the perception
of business representatives
interviewed as well as our
assessment based on
experience
64
Assessment of language and computer skills
Significant share of young talent has sufficient English knowledge while the
older population prefers Russian
Self reported knowledge of Russian and
English by age groups, 2013
Self reported knowledge of English by

age groups, 2013
0%
33%
34%
41%
52%
15%
65%
1%
1%
1%
1%
26%
27%
73%
72%
31-40
41+
1%
0%
22%
2%
36%
54%
76%
29%
89%
78%
26%
51%
Self reported knowledge of Russian by

age groups, 2013
59%
27%
38%
22%
45%
23%
8%
18-19
20-30
31-40
Other cases
Basic or no knowledge
Intermediate and advance knowledge
41+
63%
18-19
20-30
31-40
Not responded
Basic knowledge or no knowledge
Intermediate and advanced knowledge
9%
18-19
41+
20-30
Not responded
Basic knowledge or no knowledge
Intermediate and advanced knowledge
Note: Other cases means not responded or knows one out of two languages
Around 60% of young population and 40% of overall population has some level of English. Vast
majority of the population have some level of Russian but only 22-36% have advanced knowledge.
Self reported knowledge, some level of

computer skills
Self reported knowledge, some level of

English
63
32
27
33
32
35
37
54
39
Russian
47
25%
38
28
42
41
2011
2012
29
23
English
2008
2009
2010
Source: Caucasus Barometer
2011
2012
60%
2008
2013 2014E 2015E
2009
2010
2013
2014E 2015E
65
Section 5: Benchmarking of
Georgia vs Competitor Countries
City selection
Benchmarking
City selection
Benchmarking
City selection
Tbilisi is the first choice for the potential IT&BPO hub in the short run (1/2)
Although Tbilisi is less financially attractive, it has a much larger pool of

available talent, higher quality of life and is much better connected to the
potential demand countries. In the short-term period Tbilisi is the first
choice for a potential IT&BPO hub which is consistent with the global
trend of the most developed city in a country becoming a Tier I IT&BPO
hub and the hub gradually expanding into Tier II cities.
Russia
FIZ
Black sea
Poti
Kutaisi
Batumi
Financial
Attractiveness
Sub-Category
Tbilisi
Tbilisi
FIZ
FIZ
Turkey
Category
Georgia
Armenia
Azerbaijan
Potential Tier II cities: Kutaisi and Batumi
Employee Salary Cost
Average wage in 2014 in Adjara region (Batumi)

Average wage in 2014 was GEL 920 (USD 509) was GEL 645 (USD 357) and in Imereti region
(Kutaisi) was GEL 505 (USD 280)
Real Estate Costs
Average rent in Tbilisi of A- and B+ offices was

USD 14.1 per sq.m in 2014
Average rent in Batumi was USD 14.3 per sq.m and

in Kutaisi was USD 14.5 per sq.m in 2014
Utility Costs
Electricity costs range from USD 0.04 (GEL

0.07) to USD 0.07 (GEL 0.13) for residential and
equal to USD 0.08 (GEL 0.15) for nonresidential customers (net of VAT)
Internet costs do not vary between regions
Electricity costs range from USD 0.06 (GEL 0.11) to

USD 0.10 (GEL 0.18) for residential and from USD
0.06 (GEL 0.12) to USD 0.09 (GEL 0.17) for nonresidential customers (net of VAT)
Internet costs do not vary between regions
Source:: KPMG Research and Analysis, GEOSTAT, Colliers

Note: Average exchange rate of 2014 was used for the conversion of GEL amounts to USD
67
City selection
Benchmarking
City selection
Tbilisi is the first choice for the potential IT&BPO hub in the short run (2/2)
Category
Talent
Considerations
Sub-Category
Tbilisi
Potential Tier II cities: Kutaisi and Batumi
New Talent Availability
9 public and 37 private HEIs in Tbilisi

We estimate that 88% of total number of
graduates are willing to stay/move to Tbilisi
2 public and 2 private HEIs in Kutaisi and 3 public

and 4 private HEIs in Batumi.
We estimate that only 12% of total number of
graduates are willing to stay/move back to regions
Existing Talent Availability
Small number of IT&BPO companies and other

companies where talent may be sourced are
mainly situated in Tbilisi
Over 63% of all persons employed during 2014
were located in Tbilisi
Less than 9% and 8% of all persons employed

during 2014 were located in Adjara region (Batumi)
and Imereti region (Kutaisi), respectively
Although Adjara has high concentration of persons
employed in Hotels and restaurants sector (19%)
Computer skills
59% of the population in Tbilisi reported to have

intermediate or advanced computer skills in
2013 survey
42% of the population in other urban areas reported

to have intermediate or advanced computer skills in
2013 survey
Language Capability
35% of the population in Tbilisi reported to have

intermediate or advanced knowledge in both
English and Russian in 2013 survey
21% of the population in other urban areas reported

to have intermediate or advanced knowledge in both
English and Russian in 2013 survey
Higher, more active social life, larger expatriate

community
Significantly higher in comparison to Kutaisi and
not significantly higher than in Batumi
Lower, less active social life (especially in Kutaisi),

smaller expatriate community
Kutaisi has significantly lower apartment rent prices
and food prices compared to both Tbilisi and Batumi
Total office space in 2014 was 912 thousand

sq.m
Tbilisi international airport has 28 international
destinations
Total office space in 2014 was 53 thousand sq.m in

Batumi and 58 thousand sq.m in Kutaisi
Batumi and Kutaisi international airports have 6-7
international destinations each
Social life suitability

Quality of life
Cost of living
Real estate availability
Inter & intra city connectivity
Infrastructure
Telecom infrastructure
availability
Mobile and high speed internet is available in all Mobile and high speed internet is available in all
three cities
three cities
Reliability of power supply
All three cities have uninterrupted power supply
All three cities have uninterrupted power supply
Source:: KPMG Research and Analysis, Caucasus Barometer, Colliers
68
City selection
Benchmarking
Summary
Takeaway
Advantages of Georgia
Georgia
is
among
Weaknesses of Georgia
best
Georgia does not offer sector specific
countries for doing business
government incentives offered similar
Georgia is leading in terms

employee salary costs (slightly
behind Egypt) and utility costs
Georgia
has
much
more
flexible labour laws and lower

taxation rates
All the cities have reliable

power supply with hardly any
power cuts
Telecom
infrastructure
is
comparable across all cities
to the benchmarking countries
While Georgia ranks

high in Ease of doing
business
and
is
financially attractive,
the main areas for
improvement are:
- Development
of
talent
- Inter
city
connectivity
- Government
incentives
Georgia has higher real estate costs

compared to most of the European
benchmark countries
Georgia is not well connected to the
major destinations
All the benchmarking countries have
existing
IT&BPO
experienced
existing
industry
with
talent
while
Georgia is doing its first steps. Also

the number of graduates is much
higher in most of the benchmarking
No major business constraints

were identified in any of the
countries, except that no data
privacy law is established in
Egypt
countries due to the larger size of the

countries
Georgia is still slightly behind in
computer skills but ahead Egypt
69
City selection
Benchmarking
Assessment Model
Category Parameters Used

Category
Financial
Attractiveness
Business
Environment
Sub-Category
Description
Employee Salary Cost
Manpower Costs in IT&BPO Sector
Real Estate Costs
Real Estate Costs A- and B+ category premises - USD/sqm/month.
Utility Costs
Telecommunications - Voice and Internet, Power/Electricity Costs - USD/per FTE
Ease of doing business
Country/City ranking in ease of doing business constituting resolving insolvency, enforcing

contracts, trading across borders, paying taxes, investor protection, getting credit, registration of
property, getting electricity, dealing with permits, starting a business
Business Constraints
Regulatory and operational constraints for BPO sector
Labour laws
Key laws governing the labour market which includes minimum wages, standard working hours,
key contributions by employer and employee, employee contracts, termination and severance
pay
Real estate availability
Vacancy rate, total office space, office locations, availability of SEZs
Inter & intra city connectivity
Airports, flights, passenger traffic, transportation
Telecom infrastructure availability
Major telecommunication players and services availability
Reliability of power supply
Availability of power supply
Infrastructure
70
Benchmarking by
categories
Financial Attractiveness
Business Environment
Infrastructure
Benchmarking by
categories
Infrastructure
City selection
Benchmarking
Financial attractiveness Salary trends
Georgia has the second lowest average gross salary but the highest inflation
Average gross salaries, 2014
1,335
1,183
959
Czech Republic
Hungary
Georgia has the second lowest

average gross salary among
the benchmarking countries.
The average gross salary is
highest in Estonia, while it is
lowest in Egypt
USD
928
490
335
Egypt
Georgia
Slovak Republic
Estonia
560-830
710-1,060
980-1,600
1,500-2,580
1,990-2,660
1,330-2,520
ITO
250-490
280-510
800-1,270
860-1,940
1,130-1,990
1,060-1,730
BPO
Source: KPMG Analysis, GEOSTAT, Czech republic yearbook, Slovak Republic yearbook, Hungarian Central Statistics Office, Statistics Estonia, Statistics of Egypt, Recruitment Agency websites
Wage Inflation
Annual Inflation in 2014
(In %)
Wage inflation is a critical factor in

the evaluation of long-term Cost
attractiveness of a location
In 2014 the lowest inflation
(deflation) was recorded in Slovak
Republic
Georgia
3.8
Czech Republic
2.4
Slovak Republic -0.2

Estonia
Egypt
Hungary
2.1
1.3
3.1
73
Financial attractiveness Real estate costs, utility costs
City selection
Benchmarking
Georgia has slightly higher office rents than Slovak Republic, Hungary and
Estonia but the lowest utility costs among the benchmarking countries
Office Rent, capital cities
18.5
15.3
USD per sq.m.
14.1
11.6
10.0
10.0
Slovak
Hungary
Estonia
Georgia
Czech
Egypt
Republic
Republic
Source: KPMG Analysis, Colliers Country reports
Note: Egypt 2015 Grade A office space costs was extrapolated to arrive at A- and B office costs based on 2012 data
Office rent costs in Georgia are slightly

higher than in Slovak Republic, Hungary
and Estonia
In Georgia average monthly office rent for
A- and B+ offices amounts to USD 14.5 per
sq.m. with the highest rent being USD 30
The average office rent costs in the Czech
Republic and Egypt are higher than in
Georgia by 8% and 30%, respectively
Utility Costs
USD per sq.m.
48.83
2.5
Georgia
5.6
7.4
Hungary
Slovak
Republic
Utility Costs per sq.m.
20.44
18.02
17.27
17.13
Georgia is the most economical location in

terms of utility costs
23.09
5.7
6.2
Czech
Republic
Estonia
3.0
Egypt
Utility costs per sq.m. are highest in Slovak

Republic (around 268% higher compared to
Georgia) and internet costs are the highest
in Egypt
Monthly Internet cost (broadband 6 mbps)
Source: KPMG Analysis, Eurostat,

Note: 1) Utility Costs for benchmarking countries were calculated based on average households and industry
electricity price adjusted per Georgia Utility cost ratio
74
Benchmarking by
categories
Infrastructure
City selection
Benchmarking
Business Environment: Ease of doing business
Georgia is among the best countries for doing business

Ease of doing business ranking
Ease of doing business
ranking from 1-189 indicates
regulatory environment is
more conducive to the
starting and operation of a
local firm
131
It includes variety of
indicators with equal
weights:
o Starting a business
o Dealing with construction
permits
o Getting Electricity
24
29
42
36
16
Estonia
Georgia
Slovak Republic
Czech Republic
Hungary
Egypt
o Property registration
o Getting Credit
Source: KPMG Research & Analysis, World Bank Group/ doing business
o Protecting investor
o Paying taxes
The number of procedures required to register a firm in Egypt amounts to 7 and it takes 8 days
o Trading across borders
11.5 days and 6 procedures are needed in order to register a firm in Slovak Republic
o Enforcing contracts
o Resolving insolvency
In Czech 15 days and 8 procedures are required to register company

In Hungary it requires 5 days and 4 procedures to register a firm
In Estonia it requires 3.5 days and 3 procedures to start a business
It takes only 2 days to register a firm in Georgia and only 2 procedures need to be undertaken
Source: KPMG Analysis, The World Bank

76
City selection
Business Environment: Labour Laws (1/2)
Benchmarking
Georgia has simpler taxation system and lower rates

Georgia
Working hours per 8
day
Working days per 5
week
Holiday (minimum) 24
Minimum wage
Remuneration is
defined by the
counterparties
Social security tax
None
Czech Republic
Estonia
Hungary
Slovak Republic
Egypt
20
28
Social security
contributions 45%
(employee - 11%,
employer - 34%)
Social tax - 33 % of
which 20 % is
allocated for pension
insurance and 13 %
for health insurance
20-23 working days 20

21
depending on years of
tenure
CZK 7,955 (around EUR 355 (around
HUF 105,000 (around 317 EUR (around
Remuneration is
USD 288) per month USD 396) per month USD 452) per month USD 421) per month defined by the
counterparties
Unemployment
insurance - 2.4%
(employer - 0.8%,
employee - 1.6%)
Social contribution Social security tax

tax (employer) - 27% (employer) - 33%
Vocational training Unemployment
contribution
insurance 3%
(employer) - 1.5%
(employer -1%,
employee -2%)
Pension plan
contribution
(employee) - 10%
Health insurance
contribution in kind
- 4%, health
insurance
contribution in cash
- 3%
Employee paid
social insurance
contributions - 13%
on basic salary, 10%
on variable salary
Employer paid
social insurance
contributions - 23%
on basic salary, 21%
on variable salary
Employee paid
payroll tax - 20%
Unemployment fund
(employee) - 1.5%.
Source: KPMG Analysis, Labour laws of individual countries, government websites of the countries
77
Business Environment: Labour Laws (2/2)
City selection
Benchmarking
Georgia is more flexible in terms of employee compensation

Georgia
Czech Republic
Estonia
Hungary
Slovak Republic
Flat tax rate of 15% 20%
16%
21%
and an additional
7 percent (the
solidarity tax
increase) is applied
to income in excess of
the maximum annual
assessment base for
social security
contributions (CZK
1,277,328 (around
USD 54K) in 2015)
Payment of overtimeOvertime work shall Maximum amount of Additional
An employee may be The average weekly
be compensated by overtime that can be remuneration per hourrequired to work not work time (including
increasing the amount ordered by the
of overtime paid to an more than 250 hours overtime), must not
of hourly pay rate or employer is 150 hours employee shall not be in any given calendar exceed 48 hours
by granting additional per year and
less than 50% of the year in overtime. In
time off to an
maximum amount of rate of the hourly
case of collective
Employer and
employee in return of overtime with the
wage
agreement the hours employee can agree
overtime
consent of employee
of overtime may
either to compensate
compensation that
must not exceed 416 Work during holidays exceed 250 but shall overtime or to take
shall be determined hours annually
may be compensated not exceed 300 hours additional holiday
by parties
either by offering time
Overtime
off or by extra
Work during holidays
compensation
remuneration of at
may be compensated
includes a
least 50% of the wage either by extra
supplement of 25% of rate
remuneration of at
average hourly wage
least 50% of the wage
and in case of
Work on public
rate
holidays surcharge of holidays is required to
50% of the average be compensated at a
hourly wage
double rate
Income tax
20%
Egypt
Up to EGP 5,000
0%;
EGP 5,001 to EGP
30,000 10%;
EGP 30,001 tp EGP
45,000 15%;
EGP 45,001 tp EGP
25,000,000 - 20%;
Over EGP 25,000,000
25%
USD/EGP 8.03
Premium for overtime
work amounts 35% of
an hourly pay for day
working hours and
70% for night working
hours
Source: KPMG Analysis, Labour laws of individual countries, government websites of the countries
78
City selection
Benchmarking
Slovak Republic
Egypt
Business Environment: Business Constraints (1/2)
Regulations are similar and not restrictive in nature
Temporary Employees
Foreign Employees
Georgia
Czech Republic
Estonia
Hungary
No work permit
No work permit is
No work permit is
and/or visa/
needed for employees
residence permit
from EU/EEA or
from EU/EEA or
is needed for
Switzerland
Switzerland for up to
citizens of EU, the Citizens from other
three months. After 3
US and number of
countries must obtain a
months temporary
other states for up
work permit r
residence (for 5 years)
to 365 days (total
residence permit
and afterwards
of 94 countries)
permanent residence
Usually temporary
should be obtained
residence permit
Work permit must be
is obtained
obtained by thirdcountry nationals
For EU/EEA citizens,

depends on bilateral
agreements that exist
between Hungary and
the EU citizen's home
country
Third country citizens
require a residence
permit and work permit
No specific
requirements
were identified
Generally allowed.
In Slovak Republic
No specific
However, it is forbidden
temporary assignment
requireme
to hire temporary
of employees takes
nts were
employees for unlawful
place via the Agency or
identified
work, to break a strike or
directly with the
if the same employee
employer
had their employment
The temporary assigned
with the firm terminated
employees are
in the last six months,
compensated
during the trial period or The temporary
by way of ordinary
assignation shall
dismissal for reasons in
terminate by lapse of its
connection with the
agreed duration or by
employers operations
agreement of the
participants of the
employment relationship
It is not allowed to
mediate temporary
employment for
persons with
disabilities and foreign
nationals from third
countries
There is no limit in
regulations on number
and duration of the
contracts between the
temporary work
agencies and the
employee
No work permit is
from EU/EEA or
Switzerland
Citizens from other
countries must obtain a
work permit and
residence visa, or they
must be holders of the
newly enacted Green
Card
Work
permit
must be
obtained
Source: KPMG research & analysis, news articles, government websites of the countries
79
City selection
Benchmarking
Business Environment: Business Constraints (2/2)
Regulations are similar and not restrictive in nature
Data privacy
Repatriation of Taxes
Georgia
The Country does
not have
restrictions on
currency
convertibility or
repatriation of
capital and profit
Czech Republic
Estonia
Hungary
Foreign investors are

No legal restrictions on
No limitations exist
guaranteed unrestricted
the payment of returns
concerning the
repatriation of profits and on investments (e.g.
distribution and
capital
dividends, interest,
expatriation of profits
repayment of loans) to
by Czech Republic
foreign shareholders
subsidiaries to their
foreign parent
companies, other than
the obligation of joint
stock and limited
liability companies to
generate a mandatory
reserve fund and pay
withholding taxes
(dividends and certain
types of other sourced
income is taxed at
15%)
The Company has The Company has to

The Company has to
to be in
be in compliance with
compliance with
Act No. 101/2000 Coll.,
Personal Data
law of Georgia on
on the Protection of
Protection Act of
personal data
Personal Data of
Estonia
protection
Czech Republic
Slovak Republic
No limits exist
concerning taxes
repatriation
The Company has to be The Company has to

in compliance with
Hungarian General Data
Slovak Republic Act.
Protection Act
on Protection of
Personal Data
Egypt
The law
allows 100
percent
foreign
ownership
of
investment
projects and
guarantees
the right to
remit
income
earned in
Egypt and
to repatriate
capital
No data
privacy law
Source: KPMG research & analysis, news articles, government websites of the countries
80
Benchmarking by
categories
Infrastructure
City selection
Benchmarking
Infrastructure: Real Estate Availability
Georgia has comparable infrastructure with Estonia, Egypt and Slovak Republic
Office stock, capital cities
3,277,900
3,198,590
m2
2,000,000
1,543,000
912,367
Hungary
Czech
Republic
Egypt
Slovak
Republic
Georgia
698,930
Out of total office space in Tbilisi 46% is modern office stock.

54% of modern stock is leasable. Traditional stock is distributed
equally between leasable and owner-occupied offices. The
share of office spaces located in A class business centers in
total rented space is 7%. A-, B+ and B class offices occupy 7%,
23% and 1% respectively. The biggest share (42%) is C and D
class offices, under which old Soviet Union buildings and offices
in apartments are considered
Estonia
In Bratislava almost 60% of the space is represented by A

Grade office space and more than 40% by B Grade office space
Source: Colliers country reports
Vacancy rate
20.0%
Occupancy rates in the key locations within Tbilisi are above

90%
16.8%
11.8%
13.5%
7.0%
4.8%
Estonia
Georgia
Slovak
Republic
Hungary
Czech
Republic
Egypt
The vacancy rate in Tallinn continued to trend downwards in

Class B1 office buildings, while new office supply somewhat
decreased the occupancy rate in the Class A office segment in
the first half of the year
Source: Colliers country reports
82
City selection
Benchmarking
Infrastructure: Power Reliability and Telecom Infrastructure
All cities have good telecom infrastructure and uninterrupted power supply
Georgia
Czech Republic
Estonia
Hungary
Slovak Republic
Egypt
Broadband network Fiber optic network

available
Fiber optic network

available
Main telecom
operators
Caucasus Online,
Silknet, Magticom,
Geocell, Beeline
T-Systems, T-Mobile, EMT, Tele2, Elisa

Vodafone, O2, Volny,
U:fon
Magyar Telecom, T- Slovak Telecom, TMobile, Vodafone,

Mobile, Orange, O2
Telenor
Telecom Egypt,
Vodafone Egypt,
Mobinil, Etisalat Egypt
Networked
Readiness index,
2015
4.2
4.5
5.3
4.3
4.2
3.6
Power supply
Generally
uninterrupted, rare
outage
Generally
uninterrupted, rare
outage
Generally
uninterrupted, rare
outage
Generally
uninterrupted, rare
outage
Generally
uninterrupted, rare
outage
Generally
uninterrupted, rare
outage
Fiber optic network

available
Fiber optic network

available
Fiber optic network

available
Fiber optic network

available
Source: KPMG Analysis, World Economic Forum website, news articles, government websites of the countries
Note: The World Economic Forum's Networked Readiness Index (NRI) measures the propensity for countries to exploit the opportunities offered by information and communications
technology (ICT) and seeks to better understand the impact of ICT on the competitiveness of nations
83
City selection
Benchmarking
Infrastructure: Inter and Intra City Connectivity
Georgia, Estonia and Egypt score poorly on overall connectivity

Connectivity
124
99
On an average, the travel time by air from major

European cities is around three to four hours to all
benchmarking cities, slightly more for Egypt
62
24
28
31
Estonia
Georgia
Egypt
Hungary
Number of international destinations connected
Czech Republic, Slovak Republic and Hungary are

well connected to major European cities
Slovak
Republic
Czech
republic
Estonia and Georgia are far behind in terms of the

number of direct flights to worldwide destinations
Egypt has 72 direct international flights, out of which 41
to less countries in Africa (except UAE which is a
common destination among benchmarking countries)
Source: KPMG Analysis, airport websites of the countries

84
Section 6
Investment proposals
Targeted IT&BPO segments
F&A Segment
F&A Market
42
F&A Market 2015-2020 Forecast

(in Bn USD)
CAGR 7.7%
29
32
34
39
36
100%
2.2
90%
80%
9.2
70%
60%
0.0
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
50%
40%
30%
Current demand for F&A outsourcing is USD 26.5 billion

Most of the demand comes from Americas, however the demand from the
EMEA region represents 35% of the total demand and stands at USD 9.3
billion
F&A sector is expected to grow 43% in the next 5 years
15.0
20%
10%
0%
F&A Market demand 2014
Americas
Central Europe
Rest of EMEA
APAC
Source:: KPMG Research and Analysis, HFS Global IT and BPO Services Market Report 2013
86
F&A Segment
Competitive forces and Georgias competitive advantage
Competitive forces
With the largest pool of skilled resources, and process maturity accruing from the established IT industry, India is a leading destination for F&A
segment. There is good competition from CEE countries as well
Talent availability and quality

F&A BPO in Georgia is in a nascent stage, however talent
available among graduates and industry
Fresh talent in F&A is expected to come from Economics and
business faculty which is the top faculty in Georgia, showing
38% growth in the last 2 years
Ability to tap fresh talent from the young pool of unemployed
with 100% literacy rate and 92% of at least secondary education
Experienced talent in F&A is available in all industries
Quality of fresh F&A talent with basic skills is assessed as high
by business representatives
Cost attractiveness
Lower wage cost compared to other locations in CEE region
Lower utility and internet costs compared to other locations in
CEE region
Comparable office rental prices to CEE countries and high
availability of A-, B+ class office stock
Opportunity to move to Tier II cities in the long-term, with even
lower costs per FTE
Business environment
Presence of attractive business environment, ease of setting up
a business
Relatively stable macroeconomic environment compared to the
region
Association Agreement with EU
Flexible labour laws, no minimum wage, no fixed overtime
premium
Low taxation (corporate tax 15%, no social security tax)
Ability to fully depreciate capital investment in the first year of
operation generating a significant amount of tax loss-carry
forward to be used during the first years of operation
Nearshoring opportuinities
Close proximity and similar time zone with both European and
CIS markets
Presence of cultural affinity with both Europeans and Russians
Scalable English speaking talent but also a large pool of Russian
speaking talent
Source:: KPMG Research and Analysis, HFS blueprint reports, Progressive Finance & Accounting Business Process Outsourcing Services, March 2015, BPO company websites
87
F&A Segment
Target operational and financial model
Operational
Processes full range of low-end processes

Accounts payable
Travel and expense
Credit
Accounts receivable
Billing/invoicing
Collections
Order capture, revenue
accounting
o Journal entries,
accounting policies
o Cost accounting,
o
o
o
o
o
o
o
Current level of talent is suitable for serving the demand from Russia and
the CIS in the short term
Georgia might target BPO companies with no current locations in CIS
(for example Genpact or CapGemini) to set up a location in Tbilisi
In the longer term, given the increase in the number of available talent
and increase in their experience level, European market may be targeted
both for direct offshoring and through attracting large BPO companies
(for example Infosys) to set up locations in Tbilisi as an alternative to
CEE countries
Revenue per FTE for low-end work is estimated at USD 11,000 per year
Cost per FTE excluding management overheads is estimated at USD
7,700 per year
Management overheads are estimated at 20% of Cost per FTE
Currently around 7,700 fresh and experienced staff are readily available
for the industry from which 1,500 to 2,000 can be allocated to F&A
segment
Average EBIT margin on similar companies in the industry in Europe
ranges from 4% to 9%
EBIT margin in Georgia is estimated at 16%
million USD
Financial
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
o
o
o
o
o
o
inventory accounting
Fixed asset accounting
Payroll
Intercompany
accounting
Regulatory/statutory
reporting
Management reporting
Risk
management/Treasury
3.5
3.1
EBIT
2.6
Management
overheads
Cost
2.3
22.0
16.5
15.4
Revenue
11.6
Conservative
Aggressive
Source: KPMG analysis, SPI Research, CapIQ

88
CRM Segment
CRM Market
CRM Market 2015-2020 Forecast

(in Bn USD)
CAGR 5.7%
57
61
65
72
68
76
100%
7.8
90%
80%
70%
15.3
60%
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
0.2
50%
40%
30%
Current demand for CRM outsourcing is USD 51.1 billion

EMEA region represents 30% of the total demand and stands at USD
15.4 billion
CRM sector is expected to grow 32% in the next 5 years
27.9
20%
10%
0%
CRM Market demand 2014
Americas
Central Europe
Rest of EMEA
APAC
89
CRM Segment
Georgias competitive advantage

Competitive forces
CRM is a long developed IT&BPO segment with established market players all across the world and most companies having locations in CEE/CIS
Contact center outsourcing market is heavily fragmented with top 20 players accounting for less than 40% of the market share, but the market has
seen consolidation over the last 18 to 24 months

CRM in Georgia is the most developed among the BPO
segments with a number of relatively large call centers (between
200 and 500 FTEs) servicing both local and international markets
Fresh talent in CRM is expected to come mostly from
Humanities/Arts faculty which is in top 5 faculties in Georgia
showing 77% growth in last 2 years
Ability to tap fresh talent from the young pool of unemployed with
100% literacy rate, 92% of at least secondary education and
average English and Russian skills of 38% and 63% respectively
CRM experienced specialists are available in the BPO industry as
well as in industries employing large call centers, such as banks,
telecoms and insurance companies which are in the top 3
industries in Georgia by number of FTEs
Cost attractiveness
CEE region
lower costs per FTE
a business
region
premium
CIS markets
speaking talent
Source:: KPMG Research and Analysis, , Everest Group, news articles, BPO company websites
90
CRM Segment
Operational

o Campaign execution
(loyalty program
management, coupon
and gift card
management)
o Content management
o Lead generation
o Cross-sell/Up-sell
o Omni-channel
customer care
(SMS/web chat/email/
social media/voice)
Considering availability of experienced talent in CRM, Georgia can offer

direct offshoring/ nearshoring to demand companies
Georgia might also target BPO companies with no current locations in CIS
(for example Teletech which is expanding geography) to set up a location
in Tbilisi
Full range of low-end processes throughout Marketing, Sales and
Customer care may be provided in short-term
Due to low availability of IT talent, digital CRM should be tapped in the
longer term perspective
Georgia should leverage talent in economics/ mathematics to couple
voice/non voice customer care with data analytics for improved offering
o Search engine and

social media
marketing
o Data cleansing and
consolidation
o Marketing and
campaign analytics
o Call center analytics
o Customer analytics
o Web development, ecommerce support
18.0
Financial
16.0
2.6
14.0
2.3
12.0
million USD
7,700 per year
for the industry from which 1,000 to 1,500 can be allocated to CRM
segment
1.8
1.5
10.0
8.0
6.0
4.0
EBIT
Management
overheads
Cost
16.5
11.6
11.0
Revenue
7.7
2.0
0.0
Conservative
Aggressive

91
HR Segment
HR Market
HR Market 2015-2020 Forecast

(in Bn USD)
CAGR 6.5%
47
50
53
60
57
64
100%
1.1
90%
10.0
80%
0.0
70%
60%
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
50%
40%
31.6
30%
Current demand for HR outsourcing is USD 42.8 billion

10.1 billion
HR sector is expected to grow 37% in the next 5 years
20%
10%
0%
HR Market demand 2014
Americas
Central Europe
Rest of EMEA
APAC
92
HR Segment
Competitive forces
The top 5 providers continue to dominate the market, both in terms of revenue and number of active deals, holding 55% share of the market
Indian heritage service providers have been steadily increasing their share of new deals signed in the market reaching 37% share in 2014
The top providers engaged in HRO all have locations in CEE and CIS including Kazakhstan, Ukraine, Azerbaijan and Russia
While new deals, renewals and scope expansions contributed to market growth, terminations, de-scopes, and non-renewals hampered growth,
indicating a scope for new entrants

HR BPO in Georgia is relatively developed with a number of
small companies servicing both local and international markets
Fresh talent in HR is expected to come from Social and political
sciences faculty as well as Economics and Business which are
in top 5 faculties in Georgia. Social and political sciences faculty
showed 90% growth in he last 2 years
HR experienced specialists are available in the BPO and other
industries
with 100% literacy rate and 92% of at least secondary
education, as well as average English and Russian skills of 38%
and 63% respectively
Cost attractiveness
CEE region
lower costs per FTE
a business
region
premium
CIS markets
Scalable English speaking talent but also a large pool of
advanced Russian speakers with ability to understand Russian
Labour legislation
Source:: KPMG Research and Analysis, Everest Group, news articles, BPO company websites
93
HR Segment
Operational

background
o Payroll
interviews, exit
administration:
interviews, and wage
Produce cheques,
reviews
handle taxes, deal
with sick/vacation time o HR analytics
o Employee benefits:
solutions:
Health, Medical, Life
performance
management,
o HR management:
employee satisfaction,
Recruiting, hiring, and
retention
firing. Also
Considering availability of some experienced talent in HRO, Georgia

can offer direct offshoring/ nearshoring of low end processes to
demand companies
Georgia might also target growing BPO companies with no current
locations in CIS (for example Genpact) to set up a location in Tbilisi
In the longer term, given the increase in the number of available
talent and increase in their experience level, as well as the increase
in the demand from the CIS region, Georgia might target top BPO
companies (for example NGA HR) to set up locations in Tbilisi as a
better alternative to CEE and other CIS countries
18.0
Financial
16.0
2.6
14.0
EBIT
2.3
12.0
million USD
7,700 per year
for the industry from which 1,000 to 1,500 can be allocated to HR
segment
1.8
1.5
10.0
8.0
6.0
4.0
Management
overheads
Cost
16.5
11.6
11.0
Revenue
7.7
2.0
0.0
Conservative
Aggressive

94
Industry Specific Telecom Segment
Industry specific Market 2015-2020 Forecast

(in Bn USD)
IS Telecom Market
CAGR 5.8%
207
220
234
259
245
275
100%
6.2
90%
80%
12.6
70%
60%
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
0.1
50%
40%
30%
Current demand for industry specific BPO is estimated at USD 183.8

billion of which Telecom related demand is estimated at USD 45.9 billion
Most of the demand for industry specific BPO comes from Americas,
however the demand from the EMEA region represents 28% of the total
demand and stands at USD 51 billion of which Telecom related demand is
estimated at USD 12.7 billion
Industry specific BPO sector is expected to grow 32% in the next 5 years
27.0
20%
10%
0%
Industry Specific Telecom Market demand
2014
Americas
Central Europe
Rest of EMEA
APAC
95

Competitive forces
There are about 700-800 Telecom firms in the world, but only about 100 or so tier 1 firms in selected countries have embraced outsourcing of
operations services. Now there is an opportunity to provide services to tier 2 and tier 3 Telecom firms too
India, Philippines and Hungary are the major locations preferred by Telecom firms for outsourcing and setting up captives
Top telecom specific BPO companies are all represented in CEE but on a smaller scale compared to other BPO segments. None of the top
players has locations in CIS.
Currently there is no Telecom Specific BPO in Georgia
Fresh talent in Telecom specific BPO is expected to come from
Economics and business faculty, as well as Engineering,
manufacturing and construction which are top faculties in
Georgia. Economics and business faculty has shown 38%
growth in the last 2 years
Experienced talent is available in telecom industry which is in
the top 3 industries in Georgia
Cost attractiveness
CEE region
lower costs per FTE
a business
region
premium
CIS markets
speaking talent
Currently no top Telecom focused BPO company has locations
in CIS
Source:: KPMG Research and Analysis, HFS blueprint reports, Telecom Operations Services, December 2014, news articles, BPO company websites
96
Operational
Georgia might target top Telecom focused BPO companies with

no current locations in CIS and limited representation in CEE
(for example Tata Consultancy Services or Tech Mahindra) to
set up a location in Tbilisi
Full range of telecom processes provided by these BPO
companies might be provided in Georgia
Automation is high on the agenda in the telecom operations
services marketplace. In the longer term Georgia should
develop IT talent to cope with the industry requirements
Processes full range of telecom processes

o Assurance technical help desk, o
incident and problem management,
service level management
o Billing bill generation, validation,
pricing management
o Interconnect/roaming relations
o
report generation, exchange
between partners
o Fulfilment all back office functions
pertaining to setting up a new
o
connection, such as order
management, provisioning,
activation, order fallout mgt
Network management network

design and planning, network
rollout management, network
inventory management, network
performance management, e.g.
monitoring downtimes
Customer acquisition and support
cold calling, lead generation,
sentiment analysis, customer
support
Data analytics churn analytics,
billing analytics, network and
assurance analytics, etc
Financial
20.0
18.0
2.4
16.0
2.9
EBIT
14.0
million USD
Revenue per FTE for Telecom specific work is estimated at USD

13,000 per year
Cost per FTE excluding management overheads is estimated at
USD 9,500 per year
Currently around 7,700 fresh and experienced staff are readily
available for the industry from which 1,000 to 1,500 can be
allocated to Telecom specific BPO segment
Average EBIT margin on similar companies in the industry in
Europe ranges from 4% to 9%
1.6
1.9
12.0
10.0
19.5
8.0
6.0
4.0
Management
overheads
Cost
14.3
13.0
Revenue
9.5
2.0
0.0
Conservative
Aggressive
97
Industry Specific Manufacturing Segment
Industry specific Market 2015-2020 Forecast

(in Bn USD)
IS Manufacturing Market
CAGR 5.8%
207
220
234
259
245
275
100%
7.9
90%
80%
16.1
70%
60%
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
0.2
50%
40%
30%
Current demand for industry specific BPO is estimated at USD 183.8

billion of which Manufacturing related demand is estimated at USD 58.8
billion
Most of the demand for industry specific BPO comes from Americas,
however the demand from the EMEA region represents 28% of the total
demand and stands at USD 51 billion of which Manufacturing related
demand is estimated at USD 16.3 billion
Industry specific BPO sector is expected to grow 32% in the next 5 years
34.6
20%
10%
0%
Industry Specific Manufacturing Market
demand 2014
Americas
Central Europe
Rest of EMEA
APAC
98

Competitive forces
India, Philippines, Poland and Singapore are the major locations preferred by manufacturing firms for outsourcing and setting up captives
Top BPO companies focused on manufacturing are represented in CEE but on a smaller scale compared to other BPO segments
The services offered by top companies in Manufacturing BPO span the functional areas of procurement, production planning, manufacturing
operations, warehousing and inventory, and distribution and delivery across all manufacturing segments: industrial manufacturing, metals and
mining, engineering and construction, high technology
Currently there is no Manufacturing Specific BPO in Georgia
Fresh talent in Manufacturing related BPO is expected to come
from Engineering, manufacturing and construction faculty which
is in the top 5 faculties in Georgia showing 56% growth in the
last 2 years
Experienced talent is available in manufacturing industry which
is in the top 3 industries in Georgia
Cost attractiveness
CEE region
lower costs per FTE
a business
region
premium
CIS markets
speaking talent
Source:: KPMG Research and Analysis, news articles, BPO company websites
99
Operational
Processes typical processes to focus on

o Supply chain
management:
Sourcing, purchasing,
contracts, invoicing
and payment
o Deductions
management: pricing
discrepancies, freight
discrepancies
Considering the smaller presence of top manufacturing specific BPO

companies in CEE as well as presence of Free Economic Zones in
Georgia, these companies should be targeted for setting up locations
in Georgia
Georgia can target any of the manufacturing segments serviced by
the top Manufacturing BPO companies
However, considering the large size of the Metals & Mining industry
in the CIS, Georgia could focus on the Minerals, Metals and Mining
industry specific BPO and the related typical processes
Revenue per FTE for Manufacturing specific work is estimated at USD

14,000 per year
9,500 per year
for the industry from which 1,000 to 1,500 can be allocated to
Manufacturing specific BPO segment
million USD
Financial
22.0
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
o Warehouse
management
analytics: monitoring
and tracking of inflow
and out flow of
materials in
warehouses, materials
re-order level
3.9
EBIT
2.9
Management
overheads
Cost
2.6
1.9
21.0
14.3
14.0
Revenue
9.5
Conservative
Aggressive

100
IT Infrastructure management Segment
IT Infrastructure management Market

2015-2020 Forecast (in Bn USD)
IT Infrastructure management Market
CAGR 4.6%
156
164
172
187
179
196
100%
90%
39.6
80%
70%
2015E
2016E
2017E
2018E
2019E
2020E
Demand factors
60%
25.0
50%
3.3
40%
30%
Current demand for IT Infrastructure management outsourcing is USD

131.5 billion
28.3 billion
IT Infrastructure management sector is expected to grow 25% in the next
5 years
63.5
20%
10%
0%
IT Infrastructure management Market demand
2014
Americas
Central Europe
Rest of EMEA
APAC
101

Competitive forces
With the largest pool of skilled resources, and process maturity accruing from the established IT industry, India is a leading destination for any
ITO. There is good competition from CEE countries as well.
Most of the largest IT infrastructure outsourcing providers have locations in CEE countries, as well as in CIS and in Russia
Apart from top international IT Outsourcing companies, local companies in CIS countries are also active in the local and European markets
ITO, and especially IT infrastructure management, in Georgia is
in a nascent stage
Fresh talent in ITO is expected to come from Computer Science
faculty which is not in top 5 faculties in Georgia showing a
moderate growth at 11% in the last 2 years
with 100% literacy rate, 92% of at least secondary education
and an average of 37% with moderate or advanced level of
computer skills
Experienced IT specialists are available in a small number of
ITO companies and in all industries
Cost attractiveness
CEE region
Significantly lower energy costs compared to CIS and CEE.
Price per kw/h in the range of USD 0.032 to USD 0.061
lower costs per FTE
a business
region
premium
CIS markets
speaking talent
Source:: KPMG Research and Analysis, Everest Group, news articles, BPO company websites
102
Operational
Processes typical processes to focus on
Georgia has an anchor data center outsourcing project which should be

marketed to achieve offshoring/nearshoring from tier 2 demand
companies as well as bring in top ITO companies with no/little presence
in CIS (for example Accenture) to set up a location in Tbilisi
Russian ITO market is in its infancy in 2015 but expected to grow fast.
Georgia is well positioned to benefit from this.
In the longer term, given the increase in the number of available talent
and increase in their experience level, European tier 1 market may be
targeted both for direct offshoring and through attracting top ITO
companies (for example CSC) to set up locations in Tbilisi as an
alternative to CEE countries
o Data centers
o Desktop services
o Database
administration
o Directory service
support
o Storage system
management
o Service desks
o Network
administration
o Back up and data
recovery service
16.0
Revenue per FTE for IT work is estimated at USD 15,000 per year
11,000 per year
for the industry from which 500 to 1,000 can be allocated to IT
Infrastructure segment
million USD
Financial
14.0
1.8
12.0
2.2
10.0
8.0
0.9
1.1
6.0
4.0
2.0
EBIT
Management
overheads
Cost
15.0
11.0
Revenue
7.5
5.5
0.0
Conservative
Aggressive

103
Appendix
Appendix 1
What are the key aspects of Information Technology and Business Process
offshoring/ outsourcing?
Information Technology
Focuses on the IT which supports the business.
Combination of hardware, software, support and related
management.
Typically includes, IT Infrastructure Services - Data Centre
operations (including server and storage management),
end user computing services, service desk services,
network management.
Application Services - development, testing and
maintenance.
IT sourcing is typically service based often (but not
always) focussed on reducing IT operating expenditure but
could require significant capital expenditure investment to
drive transformation of existing services.
The IT sourcing market started with Y2K and is now
mature:
Established global and local service providers
Business Process
Focuses on the specific processes which support the
business.
Combination of people, activities and related functional
management .
Typically includes Finance & Accounting, Human
Resources & Procurement.
Can also include other business specific processes like
insurance claims and underwriting or music royalties.
BP sourcing is typically focused on improving
performance, efficiency and productivity of an entire
business process (or processes).
BP sourcing has many more variances but they share a
common theme of FTE transfer followed by continuous
process improvement.
BP sourcing market is more people dependant and
relatively less mature:
Well understood strengths and weaknesses
Fewer global players than IT sourcing
Established commercial models which can be customised
Service providers tend to be functional specialists
Many clients use ERP and testing services and are now
into 3rd or 4th generation
Less established complex commercial models

Many clients are still 1st generation, with some emerging
2nd generation.
105
Appendix 2
Definitions of some key terminologies used in this deck
Sourcing strategy
Outsource
Offshore
Nearshore
Captive/ Shared
Strategy for deciding what to source from whom, where and how to get strategic advantages
Long term result oriented relationship with third party service provider for business processes to get
strategic advantages
Relocation of processes and activities to a different country for strategic advantages of lower cost,
talent, skills and round the clock coverage
Relocation of processes and activities to a nearby country or region often to take advantage of both
local language support and lower cost
A wholly-owned unit to perform particular services for a single or multiple divisions e.g. Finance or
services
HR Shared Services (SS) at remote, low cost location
Centre of
A central unit which develops expertise in specific areas and provides resources and services to
Excellence
Business
Partner/Joint
Venture
different parts of the firm as needed e.g. Product Development Centre of Excellence (CoE)
The customer and the service provider each contribute capital, intellectual property (IP), personnel
and other resources to design and implement a new service business
106
Appendix 3
Glossary
(1/6)
Terms
Definition
ADM
Application development and maintenance
AMERICAs
North America and South America
APAC
Asia Pacific
Baht
Thai Baht
BOT
Build Operate Transfer, a framework where one party (a service provider for instance) designs and operates the
offshored services center for a fixed time, post which the control and operational responsibility are transferred to
other entity (client organization)
BPAP
Business Process Association of the Philippines
BPO
Business Process Outsourcing
CA
Chartered Accountant
CAGR
Compound annual growth rate
CC
Customer care
CEE
Central & Eastern Europe
CFA
Chartered Financial Analyst
CIS
Commonwealth of Independent States
CoE
Center of Excellence
107
Appendix 3
Glossary
(2/6)
Terms
Definition
CMMI
Capability Maturity Model Integration
Content Management
Data management services (e.g. document management, print management, etc.)
CRM
Customer Relationship Management solutions and services
CZK
Czech Koruna
EIU
Economic Intelligence Unit
ERP
Enterprise resource planning implementation and support services
EMA, EMEA
Europe, Middle East and Africa
EU/EEA
European Union / European Economic Area
F&A
Finance and Accounting services
FTA
Free trade agreement
FTE
Full time equivalent
GBS
Global Business Services
GDP
Gross domestic product
GEL
Georgian lari
GEOSTAT
National Statistics Office of Georgia
108
Appendix 3
Glossary
(3/6)
Terms
Definition
GIC
Global In-house Center
HDI
Human development index
HEI
Higher educational institution
HR
Human resources
HRO
Human Resource outsourcing services
HUF
Hungarian Forint
ICT Services
Information and communication technology services (e.g. contact centre technology, telecommunication, and
related services)
IOS
Internetworking operating system
IPO
Initial Public Offering
IPR
Intellectual Property Rights
IRR
Internal Rate of Return
IT
Information technologies
IT Consulting
Information technology consulting services
IT Infrastructure
IT hardware deployment (e.g. data centre outsourcing, network management, hardware deploy and support,
hosting services, etc.)
IT Products
Software products typically developed and branded by IT companies and sold as own Intellectual Property
109
Appendix 3
Glossary
(4/6)
Terms
Definition
ITO
Information Technology Outsourcing
JV
Joint Venture
KB
Knowledge Base
KPO
Knowledge process outsourcing services
MBA
Master in Business Administration
Middle office
Departments of a company (normally financial services) that manage position-keeping (i.e. control
representation of transactions)
MES
Manufacturing Execution System
Mln
Millions
MoU
Memorandum of Understanding
MS
Managed services
NASSCOM
National Association of Software and Services Companies
Near shore
Within the same geographic region
NRI
Networked readiness index
Off shore
Outside of the same geographic region
OLA
Operating level agreement
110
Appendix 3
Glossary
(5/6)
Terms
Definition
On shore
In the same country
OO
Off shored outsourcing
OO
Off shored outsourcing
Outsource service
provider
Provider of outsourcing service
Other IT Services
Typically services that do not fall in other buckets (e.g. Software testing, IT helpdesk support services, Cyber
security)
PaaS
Platform as a service
PIKOM
National ICT Association of Malaysia
PR
Public Relations
R&D
Research & Development
SA
Staff augmentation is a hybrid offshoring strategy which involves dynamically staffing a project as per the need
of the business where the staff can be either from a service provider or from a captive
SaaS
Software as a Service
SCADA
Supervisory Control And Data Acquisition
SEZ
Specific economic zones
SLA
Service level agreements
111
Appendix 3
Glossary
(6/6)
Terms
Definition
SMAC
Social, mobile, analytics and cloud
SME
Small and medium entities
SoA
Service-oriented Architecture
Sq.m
Square meters
SSC
Shared Services Center
STPI
Software Technology Parks of India
System Integration
IT system integration services (application or enterprise system integration services)
TESDA
Technical Education and Skills Development Authority
Transactional Services
Services like billing services, payment processing, claims processing, mortgage processing, etc.
TSU
Tbilisi State University
VC
Virtual captive is a model of hybrid offshoring where the control of the people and infrastructure is with the
parent organization while the ownership is with the service provider
WOS
Wholly owned subsidiary. A company whose common stock is completely owned by another company called
parent company
Y2K
Year 2000
112
2015 KPMG Georgia LLC, a company

incorporated under the Laws of Georgia, a
member firm of the KPMG network of
independent member firms affiliated with
KPMG International Cooperative (KPMG
International), a Swiss entity. All rights
reserved.
The KPMG name, logo and cutting through

complexity are registered trademarks or
trademarks of KPMG International Cooperative
(KPMG International), Swiss entity.

BPO Sector Research - 2016

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BPO Sector Research - 2016

Uploaded by

Copyright:

Available Formats

Georgian National

This report has been extracted and amended by

Section 2: Top services outsourced

Section 3: IT&BPO Market Overview in Georgia

Section 4: Overview of Human Resources and Cost Base in Georgia

Section 5: Benchmarking of Georgia vs Competitor Countries

Section 6: Investment proposals - Targeted IT&BPO segments

What is the regional demand for offshoring/ outsourcing?

Geography-wise break-up of IT&BPO demand in 2014 (in bn USD)

% share of the global demand

Note: Numbers might not add to 100% because of rounding off

The global IT&BPO industry is expected to continue an upward trajectory

IT CAGR 4.5% to 5.0%

IT&BPO Market 2015-2020 Forecast

What is the demand for offshoring/ outsourcing in AMERICAs?

AMERICAs have pioneered offshoring in terms of adoption across functions

Total DemandIndustry Specific

USA generates over 90% of the total demand for IT&BPO

IT outsourcing market demand is characterized by increased

What is the demand for offshoring/ outsourcing in EMEA?

EMEA demonstrates continued growth in adoption and is characterized by

Total DemandIndustry Specific

IT&BPO market in Russia was estimated at

EMEA constitutes over 30% of global demand

Increased demand, driven by cost pressures emanating

What is the demand for offshoring/ outsourcing in APAC?

There is a strong domestic market for IT&BPO services in

Financial Services, Manufacturing and Telecom continue to be largest verticals

0.8 1.7 0.6

Pharma and Publishing, Media

1.9 1.1 0.6

Market Demand % by verticals

Communication & Media

Financial Services and Manufacturing contribute majority of

Brief review of the key industries

Key Delivery locations

Financial Services account for 31% of the total

Bengaluru, Mumbai, Metro Manila, Chennai and

Key Drivers for Offshoring in Financial Services

Impact on the overall revenues

Re-engineering full processes like:

Savings/ Efficiency focused

Reduce cost per FTE by offshoring

Source: KPMG Research and Analysis

Brief review of the key industries

Source: KPMG Research and Analysis

Brief review of the key industries

Manufacturing along with Financial Services

Bengaluru, Chennai, Krakow and Singapore are the

Key Drivers for Offshoring in Manufacturing

Use offshoring to lower the basic

Savings/ Efficiency focused

Achieve direct cost savings by

Source: KPMG Research and Analysis

Brief review of the key industries

This graph indicates the typical percentage of

Source: KPMG Research and Analysis

Brief review of the key industries

Key Delivery locations

Telecom, one of the mature sectors continues to

Bengaluru, Delhi NCR, Chennai , Metro Manila and

Key Drivers for Offshoring in Telecom

Move towards advanced capabilities by

Improve process accuracy and create