Premedia Services Globalization

The India Opportunity

DJ Balodi, Nov 2011
PROPRIETARY: INTERMEDIA GLOBAL. 2011

PARTNER

Context & Scope

Premedia is a term that has become commonplace over the past decade across the media & graphic communications industries such as packaging graphics, publishing & marcoms.
This presentation specifically focuses on opportunities for PRINT premedia services in the brand communications (packaging, advertising & marcoms) verticals. Related industry terms
Production Agency Graphics Production Media Production Brand Production Digital Prepress Cross-media Production

Type of businesses offering premedia services

Prepress tradeshops & service bureaus Design studios Ad agencies Print service providers Specialist knowledge process outsourcing (KPO) firms.

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Premedia Services Defined

BRAND OWNER PRODUCT DESIGN AGENCY BRANDING AGENCY PREMEDIA/ PRODUCTION AGENCY PRODUCTION PREPRESS PRINTER/ CONVERTER RETAIL/ PRINT MEDIA

Takes marketing briefs and translates to physical form of products (Package/ POS) CORE SKILLS: Conceptual design Consumer research CAD/CAM Materials Science

Takes marketing briefs and translates to visual branding/ graphics.

Translates Converts printbrand design ready electronic to consistent, artworks to error-free printing plates & execution cylinders. across all media forms.

Manufactures the printed product (packaging, POS materials etc.)

PROPRIETARY: INTERMEDIA GLOBAL. 2011

CORE SKILLS: Brand communications Graphic design Media planning Campaign execution Brand guardianship

CORE SKILLS: Design & artwork adaptation Reprographics Color Mgmt. Project Mgmt. Digital asset/ workflow Mgmt. Print Mgmt.

CORE SKILLS: Reprographics Color Mgmt. Proofing Plate/ Cylinder making

CORE SKILLS: Printing Finishing & postproduction Logistics & Inventory Mgmt.

Premedia Market Realities

Global Brand Owners
Expect their service providers to leverage globalization to drive down costs, increase service levels, widen geographic coverage
Need the same quality of service in India as they get in developed markets Pressure on go-to-market timelines force localized fulfillment of production India is a significant print market especially for packaging

Global Premedia Service Providers

Margin pressures, high labour costs + cost-reduction/ time-to-market expectations of brand owners Clients expect global service capabilities including in emerging markets Growth opportunities in Europe/ N.A now very limited market saturation India emerging as a highly attractive future market retail growth and strong consumer demand Setting up global delivery centers out of India a proven strategy now in the graphic arts industry

PROPRIETARY: INTERMEDIA GLOBAL. 2011

The India Opportunity

GREATER MUMBAI: Indias commercial capital Population: 16 mln Largest commercial hub. Headquarters to several large Indian & MNC companies. Advertising & print industry hub DELHI (NCR)
GURGAON/ NOIDA

DELHI (NCR): National Capital Region Population: 18 mln Second largest commercial hub after Mumbai. Headquarters to several large Indian & MNC companies. Gurgaon & Noida major BPO hubs

INDIA AS A LOW-COST PREMEDIA HUB FOR GLOBAL NEEDS

MUMBAI
PROPRIETARY: INTERMEDIA GLOBAL. 2011

INDIA AS A GROWING MARKET FOR PREMEDIA SERVICES

PUNE HYDERABAD HYDERABAD: Major IT/BPO hub Population: 8 mln Home to major print companies CHENNAI: Indias financial back office Population: 8 mln Automotive, software & BPO hub. Emerged as a major publishing BPO centre last 2 decades.

PUNE: 2nd largest city in west India. 160 Kms from Mumbai Population: 7 mln Major IT/ BPO hub BANGALORE: Indias Silicon Valley. Population: 8 mln Automotive, software & BPO hub. Home to Indias biggest IT companies

BANGALORE CHENNAI

INDIA: THE GLOBAL DELIVERY HUB FOR PREMEDIA SERVICES

PROPRIETARY: INTERMEDIA GLOBAL. 2011

India: The Destination of Choice

India has natural and multiple advantages over countries like China or other Asian or Latin American countries that are emerging as outsourcing hubs. In the recent past, India Inc has been able to establish its brand in the international market. Its extraordinary quality of human resource and domain knowledge clearly puts it in an advantageous position.
PROPRIETARY: INTERMEDIA GLOBAL. 2011

Bruce Chizen
President & CEO Adobe Systems Inc, USA

India: The Global Services Leader

FINANCIAL ATTRACTIVENESS

Compensation costs Infrastructure costs Tax & Regulatory costs

PEOPLE SKILLS & AVAILABILITY

Remote services sector experience & quality rating Labour force availability Education & Language Attrition risk
PROPRIETARY: INTERMEDIA GLOBAL. 2011

BUSINESS ENVIRONMENT

Politico-economic environment Infrastructure quality Cultural exposure

Source: A.T.Kearney Global Services Location Index, 2011

India: Advantages
LOW LABOUR COSTS
Artworker with skills on Adobe, ESKO platforms 8-10 years in packaging/ commercial prepress
USA: US$ 28,000 40,000 p.a

LANGUAGE SKILLS
Indias education system is typically bi-lingual with English as the primary medium of education. Urban Indians grow up speaking their local language as well as English. The Times of India is the worlds largest circulated English daily newspaper.

TIME ZONE DIFFERENCE

Indias geographic location puts it right in the heart of a East-West timezone divide. A regular 10 a.m 6 p.m work shift in India is the equivalent of an additional 4-5 hours work time for Europe/ UK & ANZ and a full shift for America 10.00 am in India is: 3.30 p.m in Sydney 4.30 am in London 5.30 am in Berlin 1.30 a.m in New York, Toronto 10.30 p.m in Los Angeles (prev. day)

UK:
India:

US$ 32,000 48,000 p.a

US$ 8,000 12,000 p.a

Europe: US$ 32,000 48,000 p.a

MNC BRAND PRESENCE

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Consumer Goods: Unilever, P&G, Reckitt Benckiser, Kellogs, Kraft, Coca Cola, Pepsico Pharma: Pfizer, Merck, Glaxo Smithkline, J&J. Retail: M&S, Walmart, Tesco, Carrefour, Metro, Kenneth Cole.

MATURE BPO / KPO INDUSTRY

From market research & analytics to engineering design, IT support, software services, legal, accounting & publishing

Outsourceable Premedia Services

Hi
Artwork Production

MECHANICAL/ RULES-BASED WORK (Collaboration Not Necessary)

Repro/ File Preparation

Design Adaptation

3D Visualization

Artwork Adaptation Image Retouching

Ideal for Offshore Production

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Packaging/ Structural Design Graphic Design

Lo Lo
LABOUR COSTS DEPLOYMENT (High-volume Labour Deployment)

Hi

Premedia Globalization: First Movers

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Source: Intermedia Global research, updated Nov, 2011 This list is representative. We believe between 50-60 other small, medium & large premedia & graphic services players from Europe, America & ANZ currently outsource with multiple Indian suppliers across commercial publishing & packaging premedia.

Lenovos Global Marketing Hub

Lenovo zeroed in on India for its global marketing hub for many reasons: India is among Lenovo's fastest growing markets, offers a cost advantage and has a large pool of marketing talent. India was the first market outside of China where Lenovo introduced its consumer products in March 2006. (Lenovo entered the global consumer space later in 2008.) It was not just its own marketing communications and services teams that Lenovo grouped in one location. At that time, Lenovo worked with advertising agency Ogilvy & Mather in 25 different locations across the world. In a parallel move, Lenovo convinced Ogilvy to centralize all its operations for Lenovo and locate its own

hub in Bangalore. Both Lenovo's global marketing hub and the Ogilvy team in Bangalore have executives dedicated to the various geographies in which Lenovo operates. These executives work closely with each other and with the Lenovo teams to fulfil their specific requirements, taking into account geographical and local cultural sensibilities.

PROPRIETARY: INTERMEDIA GLOBAL. 2011

The hub, which currently has around 40 members, began with baby steps. The translation and production work that were happening in different regions of the world moved to Bangalore as did some aspects of creative development.
Source: Excerpted from an article by Knowledge@Wharton, June 2010

PROPRIETARY: INTERMEDIA GLOBAL. 2011

INDIA: THE NEXT BIG MARKET

India The Market: A Snapshot

The 11th largest world economy in 2010
Real GDP GDP (PPP) Workforce labour Middle class consumer base
PROPRIETARY: INTERMEDIA GLOBAL. 2011

: ~ $1.5 trillion. : $4 trillion. (5th largest)

GDP Growth Rate (last 5 years) : ~6 - 8.5% p.a : ~ 500 million (2nd largest) : 300 mln by 2015 (~ the US population)

Exports
Imports Mobile phone penetration
Source: IBEF

: $210 billion (17th largest)

: $327 billion (11th largest) : 700 million users (2nd largest)

US $ = ~ 49 | GBP = ~ 75 | Euro = ~ 68.5 | AUD = ~ 52 | CAD = ~ 49

Global Brand Owners Believe

The Indian market is at the cusp of a revolution in packaged beverages. As a general rule, we expect India to outgrow the world average; outgrow Eurasia and the Africa group... Ahmet C Bozer President, Eurasia and Africa, Coca-Cola
PROPRIETARY: INTERMEDIA GLOBAL. 2011

We cannot remain a global industry leader without a strong presence in India.

Karl Slym Head, GM India

We will be investing one of our biggest amounts in the Indian market this year and a part of the investment will be used for developing new products and technologies.
Stefano Pelle MD, Perfetti Van Melle

India has a huge opportunity to We are very optimistic become a food basket about India as a brand for the world. destination. Scott Price
President and CEO Wal-Mart Asia Martin Jones CEO, Marks & Spencer Reliance India

India is a long-term investment for us and we are keen on building the supply chain.
Herve Clec'h Managing Director Carrefour WC&C India

Source: IBEF

International Brand Gurus Say

Compared to China, India has a much stronger and selfsufficient skill base... India is truly the powerhouse of the future.
Michael Maedel President, JWT Worldwide
PROPRIETARY: INTERMEDIA GLOBAL. 2011

What's struck me is the energy and restless ambition in India. You can actually, tangibly feel the drive...
Peter Knapp Executive Creative Director, Landor Associates

India has a fantastic future in terms of the communications industry.

John Hegarty Chairman & Worldwide Creative Director, BBH

Here in India and Asia the evolution has reached revolution. In a good sense.
John Dooner Chairman & CEO, McCann Worldgroup

India is an interesting combination world class talent that can speak English and a strong technological expertise.
Tony Wright Chairman, Lowe Worldwide

Source: IBEF

Leading Business Analysts Think

If you put one dollar in the US, you may get two dollars in three years. But if you put the same dollar in India, there is a high chance of getting three dollars.
Wayne W Tosu Managing Director, Carlyle Group

The dynamism shown by India in the last 15 years is phenomenal.

Paul Wolfowitz President , World Bank

PROPRIETARY: INTERMEDIA GLOBAL. 2011

India's highly educated workforce, management talent, rule of law, transparency, cultural affinity and regulator environment are more favourable than China's.
A T Kearney FDI index report

India is now truly a land of opportunity.

John Redwood Economic Competitiveness Policy Group, UK

Asia should not be painted with one brush; India has separated itself from the pack; it is not unduly dependent on external demand, and it has an increasingly powerful IT-enabled, services-led growth dynamic.
Stephen Roach Chief Global Economist & Managing Director Morgan Stanley
Source: IBEF

Global Political Leaders Feel

America cannot ignore the fact that the centre of gravity is moving eastwards to Asia, away from Europe and North America, and India will be the motor force in globalisation.
Frank G Wisner Former US Ambassador to India and Vice President American International Group External Affairs

India is not simply emerging: India has already emerged.

Barack Obama President, US

PROPRIETARY: INTERMEDIA GLOBAL. 2011

The courageous reforms have led to enormous economic growth in India. With a growth rate of over eight percent, India ranks at the top even in this very difficult period globally.
Gerhard Schroeder Chancellor, Germany

India's unprecedented economic growth over the past decade makes it an attractive prospect for companies seeking new markets for their products and services...
Bertie Ahern Prime Minister, Ireland

Source: IBEF

The Rise of Indian Retail

By 2015:
India is set to be a US$ 450 bln retail market. In 2008, Italy was at US$ 462 bln and Brazil at US$ 258
PROPRIETARY: INTERMEDIA GLOBAL. 2011

Organized retail in India to be 14-18% of total retail (5% of market in 2008) Indian retail will cater to 300 mln shoppers about the size of US population.
Source: McKinsey & Co., The Great Indian Bazaar, 2008

ORGANIZED RETAIL SEGMENTS, INDIA

Source: Dun & Bradstreet

Global Retailers & India

On November 23rd 2011, the Government of India in a landmark decision allowed new norms for FDI in the retail sector: 51% FDI allowed in multi-brand retail & 100% in single-brand retail (up from 51%)

MAJOR GLOBAL RETAILERS WITH INDIA PLANS:

MULTI-BRAND
Wal Mart Currently in India with a 50:50 JV with Bharti Enterprises Carrefour Likely to tie up with Future Group Tesco JV with Tata Group since 2008.
PROPRIETARY: INTERMEDIA GLOBAL. 2011

SINGLE-BRAND
M&S 51:49 JV with Reliance Retail Giorgio Armani 51:49 JV with DLF Group Tommy Hilfiger JV with Arvind Brands Versace Licensed reseller arrangement with Blues Clothing Zara JV with Tata Group Mothercare JV with DLF Group IKEA/ H&M/ GAP plans for a 100% subsidiary

Metro AG Currently in India with a 50:50 JV with Bharti Enterprises

Auchan plans not known

Target plans not known Best Buy plans not known Ahold plans not known

Source: Dun & Bradstreet

PROPRIETARY: INTERMEDIA GLOBAL. 2011

IMPLEMENTING YOUR INDIA STRATEGY

Your India Strategy Options

Strategic Establish presence in emerging Indian market
WHOLLY-OWNED SUBSIDIARY

JV B.O.T MODEL

INTENT BEHIND INDIA STRATEGY

Develop a global services capability

3rd PARTY B.O.T

Your ownership/ Turnkey managed by vendor/ Operations transferred to you over pre-agreed time plan

Company control is transferred to you in a phased, pre-agreed time plan

JV MODEL

Be price competitive on global projects

Long-term strategic relationship/ Dedicated Resourcing/ Dedicated Company (co-branded)/ Equity participation

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Manage peakload/ production overflow Reduce current operating costs

LONG-TERM CONTRACTUAL VENDOR RELATIONSHIP

Dedicated staff/ Acct. Mgmt/ Space/ Assured work volumes Option: Dedicated company (no Equity participation)

Tactical

CLIENT-SUPPLIER PRICING AGREEMENT BASED RELATIONSHIP

On-demand resources typically project based

Immediate
Vendor-sourced path

TIMELINE
Self-ownership path

Long-term

How We Can Help

- Build-Operate-Transfer (BOT) captive operations
Your ownership, your investments, our management expertise. - Intermedia Global (IMG) takes turnkey responsibility to set-up facility, hire resources, transition processes, operate the studio and manage delivery of services on your behalf. - Over a pre-agreed timeline, IMG hands over operations to your team and exits/ continues to provide advisory services.

- Manage vendor-sourced operations

- IMG helps you identify right vendor, ensure allocation of right resources, manage process migration (project management) and provides on-going management oversight as your India representatives.
M&A AND STRATEGIC ADVISORY SERVICES PARTNER

PROPRIETARY: INTERMEDIA GLOBAL. 2011

- JV partner/ acquisition services - Custom projects

Intermedia Global Credentials

Marketing and management consulting firm with strong roots in the graphic arts, ITeS/KPO, publishing and brand communications industries. Over 20+ man years of our unique professional and managerial experience in setting up and running successful premedia KPO businesses & large-scale outsourcing projects across:
Packaging Premedia Marketing Communications Publishing Prepress Services ePublishing/ Cross-media Production

PARTNER

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Strong relationships with top-of-the-line Indian print, premedia, publishing & graphic communications companies Satisfied global customers Access to specialist skills and expertise across production, technology, industry knowledge within India and overseas.

Client Engagements (Representative)

Top UK packaging premedia company (Clients include Pepsico,
Cadbury, M&S) looking for India supplier for offshore artwork production.

Strategic partner of imaging & digital print MNC IMG services: Strategy/ design &
development of new services in partnership with large IT company/ Business model/ Go-to-market/ Business development

IMG services: Vendor/ partner

identification & evaluation Offshore strategy development

German premedia consortium

(Clients include Nestle, Suzuki Motors)
PROPRIETARY: INTERMEDIA GLOBAL. 2011

Leading Indian commercial prepress provider (Looking to transform into

premedia KPO services provider)

IMG services: Vendor/ partner

identification & evaluation

IMG services: Strategy/ business design

Capability development/ marketing & operations excellence/ KPO culture

Clientspeak
Intermedia Global did great work for us in first giving us a very detailed and precise analysis of the Indian advertising, marketing and media production industry. And they showed deep understanding of the prepress and print industry again in providing and managing relationships to great potential partners for our company. The companies all fitted our needs perfectly! Managing Partner & Director of a leading German premedia (packaging, commercial, design) services group. Intermedia Global has been an outstanding business partner, exceptionally goal oriented and a thorough professional. On a project we worked on together, Intermedia Global demonstrated exceptional business acumen, solution and customer management skills. They have gone out of the way to set up a new line of business and delivered services with a third party. A very committed and dedicated professional team that brings high energy and enthusiasm. General Manager & Practice Lead, Media & Entertainment, Top 5 IT services firm.

PROPRIETARY: INTERMEDIA GLOBAL. 2011

Clientspeak
I have worked with Intermedia Global on market and business development projects where their strong skills in strategic planning and tactical execution were critical. I have found them to be professional and honest in all our dealings and would recommend Intermedia Global for any marketing or market development role. Leading Packaging Industry Consultant based in New York area.

PROPRIETARY: INTERMEDIA GLOBAL. 2011

I had the distinct pleasure of working with Intermedia Global while leading a global packaging initiative. Their team provided tremendous support and professional service, while partnering on the initiative. As a thought leader within the global

outsourcing of premedia solutions, Intermedia Global is knowledgeable,

proactive and has the experience to deliver success. I highly recommend Intermedia Global.
Program Manager/ Sr. Consultant at a Top 3 global branding agency.

Author Profile
DJ is Founder & Managing Partner at Intermedia Global a strategic marketing and premedia KPO consultancy and an Esko Artwork consulting partner. Over a 19 year career, DJ has successfully built and managed premedia offshoring businesses, led e-Commerce & IT services initiatives at a Top 5 IT services company, launched and edited a popular German magazine in the Indian market and designed and developed a collaborative publishing workflow software. DJ is currently involved in a consulting role with Eastman Kodak for a global strategic initiative involving the development & market rollout of a new managed services business. He has been consulting for premedia and marketing services businesses across Europe & America interested in the India opportunity. Earlier, DJ was Managing Partner in a joint venture with a leading commercial prepress company where he successfully led the business transition into a global premedia outsourcing supplier in the packaging & commercial premedia services market. In October 2008, DJ was invited to be panelist at the US FTAAs (Flexographic Technical Trade Association) annual conference to speak on trends in premedia offshoring.

PROPRIETARY: INTERMEDIA GLOBAL. 2011

DJ can be reached on email at dj@intermediaglobal.com or on cell phone at +91 98923 23661.