Sydney Report Launch, Economic Analytical Unit Luncheon

Good afternoon, it is a pleasure to be a part of the EAU's report launch
today – titled India: New Economy, Old Economy. Let me
take the opportunity to briefly tell you about us.

Lumley Technology is an independent subsidiary of the Lumley Group of companies.
The Lumley Group is well over 80 years old in Australia. We have Lumley General
Insurance, a specialist commercial insurer, Lumley Life Assurance, a specialist
life risk Insurer, Lumley Finance, a specialist providing insurance premium
funding, and Lumley Technology.

Lumley Technology supplies facilities management and application packages
and support to the life, funds management and general insurance market, the
collision repair market and the insurance broking market.

Our customer base includes 14 general insurance companies, 10 life assurance
and funds management companies, 400 collision repairers and around 50 insurance
broking customers.

We sell systems and facilities to competitors of the Lumley Group because
we firmly believe that there is nothing strategic in application systems,
but I remind you ladies and gentlemen there is everything strategic in the
use of those application systems. Well, to be truthful, we supply hammers
- we don't turn people into carpenters.

Today, with the newspaper headlines filled with terror attacks, business
collapses and profit warnings, many may consider that it is all doom and gloom
for the software industry. However at Lumley Technology, we believe that
the times ahead are a test. Rather than being filled with doom and gloom,
we believe the future is filled with opportunity for companies like us in
Australia. We have just got to look outside the square.

As you may already be aware, Lumley Technology has taken advantage of some
of the opportunities that are described in the EAU's report, India:
New Economy, Old Economy.

Today, I want to share with you briefly in under 10 minutes about our experiences,
why we made this decision, and where we are with Lumley Technology India.

Before the opening of Lumley Technology India in March 2000, our company
had for some time been looking for an appropriate off shore region to successfully
expand our business into. This strategy was based on a combination of reasons
including:

• increasing our capability to respond quickly to market needs.
• decreasing costs associated with high staff attrition rates, as the demand
  for technically skilled software resources in Australia, the United
  Kingdom and in most western countries far outweighs the supply.
• finding a way to expand our company into the world market place by using
  our Australian talent, domain experience, research and development capability
  and understanding of the use of technology, and we needed to do it cost
  effectively.

We had for some time recognised the wealth of talent in India, stemming from
our past experience with Indian software companies. Initially, Lumley Technology
decided to test out the Indian software market by hiring two Indian software
companies to provide us with engineers. These companies came from two different
regions and it provided us with the R & D that was essential for a company
like ours.

I must congratulate our manager in charge of this project. We did get untold
benefit because we were able to cross check and qualify everything that we
were told.

We established our own company in March 2000 because with growing numbers
it became more cost effective for us to employ directly and further we wanted
control over our staff. Lumley Technology recognises strongly that we are
a people business, and that without the right talent and people care we would
not be a sustainable successful company. As Indian resources were becoming
an important contributor to our product, we wanted to ensure that our staff
programs were also implemented in India.

We investigated a number of regions to consider establishing our business
in. The Andhra Pradesh Government were highly proactive in all their dealings
with us. We were also impressed with the entrepreneurial leadership of this
government - particularly the Chief Minister, Mr Chandra Babu Naidu. The
availability of high quality infrastructure such as Hi-Tech City and other
software technology complexes as well as world-renowned education institutions
such as the Indian Institute of Information technology was also very desirable.
As a result of these points, we established our business in Hyderabad in Andhra
Pradesh.

Lumley Technology India is a 100% owned subsidiary of the Australian company.
Both the quality of people, education and infrastructure pointed to why there
is enormous potential for companies such as Lumley Technology Australia to
supplement their talents with such ventures. Lumley Technology India, now
operates as our world-wide support base, enabling Lumley Technology to enter
the highly competitive global markets as an applications systems provider.

In our business model, Lumley Technology Australia manages clients and interfaces
with our customer base world wide. Australia deals with product direction,
customers' detailed business requirement specifications, acceptance testing
criteria, and functional and technical design specifications. We use our
local skills and talents to exploit our domain knowledge and technology direction.

Lumley Technology India undertakes software programming from specifications,
systems testing and quality assurance. Our product manuals are also produced
in India but quality assured in Australia.

In establishing this business, Lumley Technology has experienced many challenges.
India has a lot of red tape, paperwork and rubber stamps. The Andhra Pradesh
Government has certainly taken major steps to make it easier to do business
there. I am sure that other state governments will be doing the same. At the
end of the day, though, this inconvenience is largely a onetime exercise.
Once done, it is done.

On the people side, yes, there are significant cultural differences:

I will do this for you by tomorrow morning means different things
to different people. In India it means that "I will try to do this for
you by tomorrow or as quickly as I can".

"Yes I understand" when the real answer is "I think I understand
but gee I am unsure."

Indian staff don't like questioning their supervisors. They will sometimes
do things knowing full well that it can be done better without questioning
it.

You need to work on this. You need to develop a culture of being precise
and of people being able to express their views. You eventually all start
to sing from the same hymn book.

To help things along, Lumley Technology India is run by one of our Australian
managers, who has been seconded to India for 3 years. I think that this factor
has made a huge difference to how readily we have established ourselves in
India. Lucky man, don't you think. The good bit is that he understands the
vernacular from me very clearly when things get tough for us.

Standards are very important. All parties must understand how you do business
and what is to be delivered. If you leave it up to common sense you will be
disappointed.

Clearly the processes and the procedures need to be right. This is where
we have had to put the most amount of effort in. Everybody needs to clearly
understand who is responsible for what. To be honest successful businesses
need these things anywhere in the world.

Between our two companies L.T. Australia and L.T. India, there is a close
collaboration covering product design and research based in Sydney and our
software manufacturing and services plant based at HI-TEC City in Hyderabad.
Staff from India are regularly flown to Australia to gain market and systems
knowledge as needed and vice versa.

Our confidence in the decision to expand into India has proved to be a good
move. Lumley Technology India is now expanding to around 100 staff in India
and growing. The justification for our initial investment is more than off-set
by the cost savings we are achieving, through the availability of skilled
and willing staff and the ability to scale quickly to meet new business opportunities
world-wide. For example our Indian systems analysts are much happier to
spend a month in freezing Poland during December than their Australian counterparts.

Recognising that our business is only as strong as the team of individuals
working for us, we attract high quality professionals in India by offering
candidates salary packages in the top quartile plus a premium. Staff in India
are also part of the same staff incentive scheme that rewards people equally
world-wide for their valued contribution. I believe the work ethic and talent
of people in India, coupled with the supportive education system, has been
critical to our success there.

In closing, I would like to acknowledge the EAU for their interest in developing
the global partnership opportunities between Australia and India. Lumley
Technology is proud to be partnering with the city of Hyderabad and the people
of India, and we look forward to continued success.

Please talk to us if you require help or assistance.