Software, IT and BPO Industrial Real Estate Perspective. Presented by: Hieu Le, Senior Manager, Industrial & Logistics Services September 20 th, 2012

Transcription

1 Software, IT and BPO Industrial Real Estate Perspective Presented by: Hieu Le, Senior Manager, Industrial & Logistics Services September 20 th, 2012

2 AGENDA OPPORTUNITIES WHO / WHERE / WHY TRENDS DRIVING FACTORS Q&A

3 CONCENTRATION MAP Industrial Park Export Processing Zone - Hi Tech Park Economic Zone Page 3

4 BPO IT OUTSOURCING Opportunity Migration of business functions occur for numerous reasons; increased confidence in pairing high value operations with domestic labor is high among numerous industry sectors Sample Business Functions Accounting Human Resources Administration (e.g. Payroll) Information Technology Customer Support (e.g. Call Centers) Product Development Research and Development Production Marketing Right-Shoring Rationale Better utilization of labor Lower labor costs and labor availability Favorable tax rates and tax incentives Cultural affinity to base company Quality of training and education Strong government support Stable business / political environment Page 4

5 BPO IT OUTSOURCING Opportunity Onshore Nearshore Offshore Page 5

6 BPO IT OUTSOURCING Market Share Page 6

7 BPO IT Outsourcing Velocity and Volume Growing Growing fast Origin of the biz Page 7

8 BPO IT OUTSOURCING Ranking A.T.Kearney Top 20 countries in 2011 Page 8 Government support / financial incentives / grants play important factor in creating a conducive environment. Labor market and language skill drive location decision Salary costs once the primary driving factor behind offshore location decisions; increasingly this is balanced with skill set and language availability Asia dominates the top 10 positions on the GSLI. The different strengths of these countries vary from India, with a deep and broad skill base, to Vietnam, which ranks as the most financially competitive country in the Index.

9 BPO IT OUTSOURCING Ranking Hochiminh City ranks 17 and Hanoi ranks 21 in Tholons s report on top 100 global outsourcing cities Source: Vietnam ICT Outlook 2012 Page 9

10 BPO IT OUTSOURCING Ranking Financial attractiveness Source: A.T. Kearney Global Services Location Index, 2011 Page 10

11 BPO IT OUTSOURCING Ranking People skill & availability Source: A.T. Kearney Global Services Location Index, 2011 Page 11

12 BPO IT OUTSOURCING Sectors Financial and Insurance Key Drivers Cost minimization to remain competitive Cheaper cost of capital Efficient management of data The need to increase productivity (e.g. work can be performed across time-zones) Closer integration with targeted markets Key Functions being outsourced Data Management Financial Modeling & Analysis Human Resources Risk Legal Page 12 Results Cost effectiveness Centralization of function Right labor pool and availability Lower attrition rate Diminished portfolio exposure

13 BPO IT OUTSOURCING Sectors IT and High Tech Key Drivers Cutting costs to remain competitive Risk management Management of talent Hyper-competition Key Functions being outsourced Human Resources Research & Development Support Centers Training Facilities Results Improved focus on core operations Support business growth Economies of scale Right labor pool and availability Improved financial flexibility Page 13

14 BPO IT OUTSOURCING Sectors IT and High Tech Vietnam BPO Outsourcing Digital Content Data Services Telecom Software Page 14 Spill over effects: BPO and IT Outsourcing projects, especially from financial and insurance sectors, create demand for data center owners and builders and other related industries.

15 BPO IT OUTSOURCING Implications FDI Inflow Makati Quezon City Eastwood City Taguig City (Bonifacio Global City & McKinley Hill) Page 15

16 BPO IT OUTSOURCING Implications Jobs Creation Forecasts Page 16

17 WHO / WHY / WHERE Capgemini, from Europe to Vietnam Now moving to Vietnam to: - Gain from low cost labor supply - Gain from attractive offers from government (2009) India 19,000 people as of June 2009 (2011) Hochiminh Phase 1: 150 staff, IT & BPO outsourcing Page 17

18 WHO / WHY / WHERE Hewlett Packard, from US to Vietnam Now moving to Quang Trung Software City in Hochiminh City, Vietnam to - Gain from low cost labor supply - Gain from attractive offers from government Two R&D centers in China and India (2010) Hochiminh investment cap: $US18 million, 1,000 people, testing & global services Page 18

19 WHO / WHY / WHERE Rockwell Automation, from US to Vietnam Now moving to Saigon Hi-Tech Park in Hochiminh City, Vietnam to - Capture opportunities for automation software - Gain from attractive offers from government 15 centers in Asia. Strong in China & Singapore (2012) Hochiminh 50 people, software & global services Page 19

20 WHO / WHY / WHERE Aricent, from US to Vietnam Now moving to Tan Thuan EPZ in Hochiminh City, Vietnam to - Tap on skilled labor with language competency - High growth on telecoms & network software 7 centers in Asia (India, China, Japan, Korea, Sing, Taiwan) (2011) Hochiminh 300 people, software development Page 20

21 WHO / WHY / WHERE Bosch, from Europe to Vietnam Now moving to E-Town in Hochiminh City, Vietnam: - Synergy with manufacturing plant in Dong Nai to service customers in Japan & Asia - Young labor force - Attractive government incentives 4 R&D centers in Asia. India, China, Japan, Singapore (2011) Hochiminh investment cap: $US4.5 million, 1,000 people, software & embedded system services Page 21

22 TRENDS HCMC still captures the lion share Page 22

23 TRENDS Binh Duong & Dong Nai rises Perfect Office Solution in Binh Duong High specs Competitive rental Breathtaking and Stunning Façade Page 23

24 TRENDS Decentralized & business parks Mapletree Office Building TT EPZ QTSC Page 24 SHTP E Tan Binh Phu Nhuan

25 DRIVING FACTORS Specs Well-Planned Building Design & Specifications 39 x office units ~ 190 to 250 sqm each 62.3 m Column-Free Space ~ 2,000 sqm per floor 15.6 m Highly Efficient Layout 39 m Tall Ceiling Height: 4.5m Ample Natural Light Floor Loading: 500kg Page 25 Mapletree Floor Layout Typical office floor Layout

26 DRIVING FACTORS Rents Source: CBRE Market View Q2/2012 Page 26 Business parks office rent Possible short-term bottom in office rents Average business parks office rent below $20/m2/month. In par with office rent in HCMC s peripheral area and Da Nang (~$12/m2/month) 60% saving on rental vs. downtown buildings

27 DRIVING FACTORS Strong supports / Fast track services Licenses & Permits Approval & issuance of investment Certificates One Stop Service Availability of tax incentives HR support Page 27

28 DRIVING FACTORS Strong supports / One stop services SOFTWARE UP 10% ($US1.17 bil.) 79,000 people DIGITAL CONTENT UP 25% ($US1.16 bil.) 60,000 people Source: Vietnam ICT Outlook 2012 Steps in the right direction Information technologies and telecom are consider the primary infrastructure to enable Vietnam s development. e.g. High Tech Law, Information Technologies Law. PM Decision 50/2009/QD-TTg on 4/29/2009, "Regulation on Management & Development Program of the software industry and the development program of the digital content industry in Vietnam" in order to remove obstacles and promote the implementation of development programs and software industry. IT-related industries are entitled to high tech incentives. MOF Circular 96/2011 extending Tax Incentives for supporting industries in (1) Electronics and (2) IT Personal income tax reduction for IT workers is in serious consideration Page 28 ELECTRIC & ELECTRONIC PRODUCTS UP 101% ($US11.3 bil.) 167,000 people

29 109 Europe Offices 55 Asia Offices 187 U.S. and Canada Offices 14 Latin America Offices 25 Middle East and Africa Offices 30 Australia & New Zealand Offices CBRE Market View June 2012 Page 29 Thank you for your attention.