best positioned for new highs Adecco Investor Days Adecco Investor Days Miami September 2010
India an attractive growth market for Adecco Sudhakar Balakrishnan Country Manager India
Agenda The Indian economy The Indian labour market The Indian staffing market Adecco in India Strategy for growth in India Slide 3
The Indian economy Slide 4
Economic data Important indicators Real GDP growth rates Unemployment rates 10.0% 8.0% 6.0% 4.0% 2.0% 9.2% 9.0% 10% 8.6% 9.5% 9.7% 6.7% 9.0% 10.0% 8% 7.0% 7.0% 6% 4.5% 5.0% 4.9% 2.5% 4.0% 3.8% 3.6% 3.6% 3.7% 4% 9.5% 9.1% 9.0% 8.5% 8.4% 8.0% 8.2% 8.0% 7.2% 57% 5.7% 5.2% 7.5% 8.5% 0.0% 2% -2.0% -1.1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 2007 2008 2009 2010 2011 2012 2013 2014 India GDP growth World GDP growth India unemployment rate India G7 unemployment rate Inflation rate forecast to reach 6.5% in 2010, after 10.1% in 2009 Interest rate forecasted to reach 6.0% in 2010, after 5.0% in 2009 GDP per capita of USD 1,041 in 2009 Source : UBS Research Slide 5
Growth drivers Economic growth in India India 2009 GDP and occupation by sector in % of GDP in % of occupation Agriculture Industry Service 17% 28% 55% 52% 14% 34% Labour has moved from agriculture to industry Capital has moved into the service sector India 2009 GDP by sector and 5 year government investment plan Sector In % of 2009 GDP 5 year government investment plan in USD billion Growth rates (2009-2012) Infrastructure 16% 200 18-22% Power 12% 120 9-12% Retail / Service / Telecom / Logistics 42% 475 23-27% Healthcare 6% 60 16-18% Manufacturing & Industrial 18% 110 12-14% (incl. Farm Inputs & Machinery) Information Technology 6% 73 22-24% Source : IBEF, Ernst & Young, Frost & Sullivan Slide 6
The Indian labour market Slide 7
Labour Market India has the youngest working population Population (2009): 1,203 million people Workforce (2009): 462 million people Organised workforce: 76 million people Average age of population (2009): 25.3 years Source: UBS Research, CIA Factbook, World population map Slide 8
India s population The demographic dividend 2009 population by geography in millions grouped by age Age group India China European Union USA 20 29 237 182 80 45 30 39 159 262 95 39 40 49 143 226 68 45 50 59 105 87 57 38 Total 644 757 300 167 India has the youngest workforce 237 million people aged between 20 and 29 India has a population which is aging by far the slowest Temping is used as entry level employment Source : WHO, ILO Slide 9
Maximising the demographic advantage Tackling human capital and physical capital challenges Human capital challenges Creation of job opportunities in manufacturing and service To enable workforce movement away from low productivity agriculture sector To employ an increasing workforce Expansion of quality education Greater female participation in workforce Physical capital challenges Increase in investment to enable productivity and job increases Improvement of infrastructure especially in urban areas Increasing private funding in infrastructure Public Private Partnership (PPP) infrastructure investment is assumed to be USD 500 billion Slide 10
Workforce distribution Transition into the organised workforce 1,500 1,250 1,000 Government policies Infrastructure development Urbanisation 750 500 250 0 76 83 92 100 108 115 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 By 2015, approximately 40 million additional people will move into the organised workforce Organised labour force Unorganised labour force Total population Source : ILO Slide 11
Economic growth and job creation Preparing for the ensuing urbanisation challenge 350 300 250 200 150 100 50 0 Growth in number of large cities in 36India 56 3 12 41 82 4 23 55 115 6 35 74 153 50 94 9 198 10 68 120 244 17 85 142 291 25 108 330 36 129 158 165 1981 1991 2001 2011 2021 2031 2041 2051 41 Cities > 0.5m people Cities > 1m people Cities > 5m people 140 million people are expected to move to cities by 2020, and 700 million by 2050 Urbanisation occurs through the development of new cities and metropolitan areas There will be 68 cities with a population p of more than 1 million compared to only 12 in 1981 and 35 in 2001 Every minute, 30 Indians move to already overpopulated cities; Estimates predict that in the near future India will need 14 Delhis, 18 Mumbais or 30 Bangalores Client needs IT S TIME TO BUILD NEW CITIES Source: Census Bureau, Goldman Sachs Research, Booz & Company analysis Slide 12
The Indian staffing market Slide 13
The Indian staffing market Staffing market and penetration rate evolution Volume in thousands 1,200 Penetration rate 1.0% 1,000 0.8% 800 600 400 0.3% 0.5% 0.6% 0.4% 200 02% 0.2% - 2005 2009 future Penetration rate 0.0% The staffing market volume in 2010 is estimated at 416,000 (0.6% penetration rate) and expected to increase to above 900,000 (1% penetration rate mid-term) The organised labour force accounts for 76 million people in 2010 and is expected to increase to 108 million mid-term Source: Adecco estimate Slide 14
India market share overview Based on temp count 1) 22% 36% Key success factors 13% Extern/intern ratio Branch footprint Low cost structure 3% 4% 4% 4% 4% 10% Adecco India Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 7 Others 1) Temp count as per end of June 2010, Adecco estimates Slide 15
Adecco India Slide 16
Presence in India Adecco operates the largest branch network in the country Jammu Udaipur Ahmedabad Indore Pithampur Nashik Mumbai Pune Goa Cochin Chandigarh Baddi Ludhiana Delhi Gurgao Noida n Jaipur Lucknow Bhopal Varanasi Raipur Hyderabad Vizag Vijayawada Bangalore gao Mysore Sriperambadur Coimbatore Ranipet Madhurai Siliguri Guwahati Jharkhand Patna Kolkata Bhubaneshwar H1 2010 vs. H1 2009 Branches + 76% 60 Temps +61% 90,000000 Customers +125% Slide 17
Evolution of Adecco in India 2000-2010 October 2004 March 2008 FY 2009 revenue June 2010 YTD Adecco acquires 67% of PeopleOne Consulting Network of 7 branches Adecco acquires Ajinkya Industrial Staffing with 3,800 with 7,000 temps temps growth of 26% in constant currency despite global economic downturn revenue growth accelerates to 60% in constant currency 2000 2004 2007 2008 2009 2010 2000 PeopleOne Consulting founded October 2007 Adecco increases its ownership in PeopleOne Consulting to 100%; Network of 36 branches with 34,000 temps December 2008 Adecco operates a network of 38 branches with more than 51,000 temps December 2009 Adecco operates a network of 39 branches with more than 74,000 temps June 2010 Adecco operates a network of 60 branches with more than 90,000 temps Since the acquisition of PeopleOne Consulting, the number of Adecco temps has grown 165% Slide 18
Developments in India A strong growth track record 100 88% 100% 80 73 80% 60 40 20 21 51% 31 37 32% 42 21% 60% 60% 40% 20% 0 H1 2006 H1 2007 H1 2008 H1 2009 H1 2010 0% Revenues in EUR million Growth in constant currency Temp hours sold in % Temp hours sold in % Revenues in % of Emerging g Market (H1 2010) of Adecco Group (H1 2010) of Emerging g Markets (H1 2010) India Adecco Group 16% 12% India Emerging Markets 48% 52% 84% 88% India Emerging Markets Slide 19
Business profile Office vs. Industrial H1 2009 based on temps H1 2010 based on temps Today we are mainly active in General Staffing, but there is untapped potential in Professional Staffing The penetration rate of temporary staffing is expected to grow to 1% mid-term Source: Adecco estimate Slide 20
Business profile Sectorial presence Sector In % of Number of Adecco 2009 GDP temps as of June 2010 Fast Moving Consumer Goods & Consumer Durables 6% 21,171 Telecommunications 8% 35,502 Infrastructure / Power 28% 2,777 Manufacturing & Industrials 12% 12,572 Logistics 8% 4,476 Services 38% 16,551 Adecco temps by sector as of June 2010 18% 24% Fast Moving Consumer Goods & Consumer Durables Infrastructure / Power Telecommunications Manufacturing & Industrials 5% 14% Logistics Services 3% 36% Source : Ernst & Young, Frost & Sullivan Slide 21
Business profile Client mix based on FY 2009 lnternational and domestic clients by revenue International and domestic clients by temps 8% 30% 92% International clients Domestic clients 70% International clients Domestic clients Top 10 clients - % of total revenue Customer split by size 3% 9% 68% 32% Top 10 clients Other Large > 501 associates Medium 51-500 associates Small < 50 associates 88% Slide 22
Staffing in India Benefits provided by Adecco Client needs Adecco s offering Attractions of being temp in India Manage strong economic growth Execution of projects Flexibility Outsourcing of HR functions Access to labour Cope with high attrition Just-in-time workforce Recruitment support Readily available associates (just-in-time) Strong compliance Branch network offers accessibility and better service Efficiency Cost advantage First time job opportunity Pathway for temp to perm Economic / financial independence Flexibility Access to multi-nationals Slide 23
Customer example BSES (Reliance Energy) Customer need End-to-end management of data centre billing and meter reading Adecco service Solution for managing data centres Implementation Personnel planning Hiring Productivity monitoring Differentiation from competition Efficient delivery model Increase in productivity through monitoring tools / training Growth potential Similar potential in other power, utilities and distribution companies Slide 24
Customer example Bayer in India Customer need Personnel to sell and educate farmers about Bayer s products in rural India Standardised associate management, compliance & MIS Adecco service Managing life cycle of the associates Implementation Onsite account management Branch (local) delivery Differentiation from competition Branch network & account management Slide 25
Strategy t for growth in India Slide 26
Challenges in India Managing challenges in a rapidly evolving market Manage volatility Low pay rates Manage rapid growth Low penetration of temporary staffing Ability to make strategic / structural / Low gross margin mindset of Indian clients financial and operational changes Fragmentation unorganised competitors Market challenges Commercial challenges Pricing/ Profitability Operational challenges Retention of internal talent t Quality of service Slide 27
Strategy to capture the market Adecco India focus areas Expansion of distribution model Potential IT and M&A investments Enhance leadership position and increase profitability Sales force build-up for vertical penetration Business segmentation Professional Staffing MSP, RPO, Perm, Office, Training Slide 28
Developing people Force multiplier for growth Quo vadis values Nurture a strong value-based organisation Leadership ppp pipeline Create & develop talent in-house Enhance execution capability and augment potential in leadership Assessment centre Right talent based on pre-defined competencies Develop competence and processes to sharpen our competitive advantage Balanced score card Right measures and metrics, connecting performance of people to organisational goals CIP Continuous Improvement Plan to monitor performance and take improvement measures quarter on quarter MTP Management Trainee Programme talent pool for future branch expansion Slide 29
Strategy execution Mid-term targets Growth Exceed market growth Value creation Substantially increase EVA Number of branches Double existing branches Position Enhance market leadership position Adecco is best positioned to capture the Indian opportunity Slide 30
Our Vision for Adecco India One of the largest private sector employers in India The key player in the labour market reforms in India The HR partner of choice by India Corp. The preferred employer for colleagues and associates Slide 31
Adecco India A Great Global Brand with an Indian Heart Thank you www.adecco.co.in Slide 32
Q&A Slide 33
best positioned for new highs Adecco Investor Days Adecco Investor Days Miami September 2010
The impact of social media and web trends on our business Ed Blust, Chief Marketing Officer Adecco North America
Agenda What s happening on the web? What is Adecco doing? What do you want to know more about? Slide 36
What s happening on the web? Slide 37
Top 2010 trends on the web globally 27% of the world s population is on the web 27.3 million tweets on Twitter per day 6% 3% 1% 500 million+ Facebook fans 10% 50% Facebook users log in every day 42% 1 billion videos served on YouTube in one day 14% 79% of Fortune Global 100 companies use at least one social network There will be over 1 billion heavy mobile data users by 2013 Over 3 billion mobile phones around the world, making the technology the most widely used Mobile phone sales totaled 1.2 billion units in 2008 and 2009 and expected to increase to 1.3 billion this year 24% Asia North America Africa Oceania/Australia Europe Latin America Middle East Source: Internetworldstats.com Slide 38
The top web sites by traffic are social networking or search oriented Rank Website Country 1 Google US 2 Facebook US 3 YouTube US 4 Yahoo! US 5 Windows Live US 6 Baidu China 7 Wikipedia US 8 Blogger US 9 MSN US 10 QQ China Source: Alexa.com Slide 39
Smart phones also significantly alter the digital landscape and how consumers interact with brands, products and services Worldwide mobile phone penetration rate 60% penetration rate in 2009 600 Annual unit shipments (in millions) 75% penetration rate in 2011 400 In early 2009 there were around 4 billion mobile subscribers worldwide, with some of the more mature markets having over 100% penetration. Average mobile penetration across 0 Europe reached 125% by the beginning of 2005 2006 2007 2008 2009 2010 2011 2012 2009 while sustaining subscriber growth PC Smartphones of about 8%. 200 Source: Global Mobile Communications Statistics, Trends & Forecasts, Paul Budde Communication Pty Ltd, March 12, 2009 Slide 40
The online ecosystem as a whole is changing How consumers interact & engage with brands on the web Former traditional offline experiences (searching for jobs, booking vacations, networking, etc.) have all moved online in innovative & efficient ways LinkedIn Becoming a primary recruiting channel for recruiters and employers who want access to employed professionals Facebook & Twitter Where users spend a majority of their online time now (6 hours per user per month 1) ) with access to all information (email, news, friends, referrals etc.) Apple With the iphone, ipod, ipad, itunes and the App Store, Apple commands unprecedented consumer loyalty y by owning the relationship on all levels and creating an unparalleled customer experience 1) Source: Neilsen Slide 41
In the recruitment space, even newer sources are changing Slide 42
Traditional web talent supply channels Delivering diminishing returns Average 23% decrease Average 24% decrease Average 8% decrease in monthly unique in monthly unique in monthly unique users users users Source: Quant cast publisher (Quantcast.com), YTD August 2010 Slide 43
Newer sources growing and delivering results Average 8% increase Average 2% increase Average 1% increase in monthly unique in monthly unique in monthly unique users users users Source: Quant cast publisher (Quantcast.com), YTD August 2010 Slide 44
What does tomorrow look like? Slide 45
What is Adecco doing? Slide 46
Our objective smart sourcing and selling while enhancing Adecco Group s value proposition Sourcing Reduce the overall sourcing spend by capitalising on organic channels, reducing reliance on paid job boards, re-engaging associates and innovating with new web and mobile channels Sales Enhance our value proposition and brand perception to clients Engagement Provide constant touch points to our candidates, associates and clients while positioning Adecco Group as a thought leader in the space Slide 47
Our presence on the web Slide 48
US Adecco branded business sees significant results from newer, non-paid sources like search engines and aggregators 2008 2009 35% revenue generated from free sources 2% 4% 4% 7% 80% revenue generated from free sources 29% 13% 65% 20% 56% adeccousa.com Search Engines Paid Boards Aggregators adeccousa.com Search Engines Social Media Paid Boards Aggregators Slide 49
Diverse talent sourcing pool for a lower cost! Strong growth in job applications from free sources 2009 2008 68% 79% 80% of applications 1) from free sources 31% 79% of placements 2) from free sources 48% of revenues 2) from free sources 35% of applications 1) of placements 2) of revenues 2) from free sources from free sources from free sources 1) Represents US Adecco & Ajilon applications 2) Represents US Adecco branded business Slide 50
We grew our brand, while reducing our marketing spend Statistics based on Q4 2009 400,000+ 000+ 7% 4% Monthly unique impressions 1) from Social Media 7% Adecco s applications 2) from Social Media Adecco s revenue 3) from Social Media 2.6 million Shares of jobs and content 1) 1.8 million Impressions 1) on You Tube videos 180 Average daily discussions 1) 1) Adecco Group North America & Google Analytics 2) Represents US Adecco & Ajilon applications 3) Represents US Adecco branded business Slide 51
Positioning the Adecco Group to clients in the US Statistics based on Q4 2009 numbers 300,000+ 000+ 10 000+ 10,000+ 000+ Clients engaged 10,000+ Monthly impressions on client e-tools Business leads 7.5% Response rate on client specific campaigns 200 Career transition leads 500,000+ Monthly unique impressions on client specific content Source: Adecco Group North America & Google Analytics Slide 52
Our US outreach on the web is best compared with peers General Staffing 800,000000 300,000000 Professional Staffing 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 250,000 200,000 150,000 100,000 50,000 0 Adecco 1 2 3 4 Ajilon 1 2 3 2009 2008 2009 2008 Talent management solutions 70,000 60,000 50,000 40,000 30,000 Measured by average unique monthly visitors 20,000 10,000 0 LHH 1 2 2009 2008 US internet properties only Source: Google Analytics & Quant cast publisher Slide 53
Since 2007, we have substantially reduced marketing spend While significantly increasing our outreach and conversion numbers In 2009, we... Touched Reached over 25 million people across Group digital channels Engaged Interacted with over 9 million job seekers and 300,000 clients Converted Generated over 1.2 million applications, while placing 22% as candidates for our Adecco US branded business Slide 54
Overall digital strategy Slide 55
We ve got an app for that! Slide 56
What do you want to know more about? Slide 57
best positioned for new highs Adecco Investor Days Adecco Investor Days Miami September 2010