India Outsourcing Services PLC 09 February 2006 For immediate release 9 February 2006 INDIA OUTSOURCING SERVICES PLC ('India Outsourcing' or 'the Company') Placing to raise £3.0 million Consolidation of Shares, Grant of Options and Admission to AIM Notice of Extraordinary General Meeting India Outsourcing Services plc (AIM: IOS), a company formed to capitalise on acquisition and investment opportunities primarily within the Indian business process outsourcing ("BPO") industry, is pleased to announce that it has, through Daniel Stewart, conditionally placed 6,666,667 new ordinary shares (the "Placing Shares") raising a total of £3.0 million before expenses ("the Placing "). The Placing Shares are being placed at 45p a share, on the basis of the proposed consolidation of every 10 ordinary shares of 1p each into 1 ordinary share of 10p. Application has been made to AIM for the Placing Shares and for the Ordinary Shares of the Company to be admitted to trading, which is expected to commence on 7 March 2006. Highlights The Placing to raise a total of £3 million before expenses will allow the Company to pursue its strategy of identifying, evaluating and, ultimately, completing acquisitions in the business process outsourcing industry primarily within India. India Outsourcing intends to acquire a small number of companies that demonstrate qualities including strong growth prospects, recurring revenue streams, scalable delivery platforms and established client relationships. The Indian BPO market is estimated to have grown by about 40 per cent during 2004/5 to reach $5 billion and is forecast to reach $21 billion by 2008 (source: NASSCOM - McKinsey). The global BPO market is forecast to reach $230 billion in 2008 (source: Deloitte Consulting, India). Since its flotation on AIM in December 2004, India Outsourcing has made significant progress in identifying suitable acquisitions and the Directors believe the Placing will increase the credibility of the Company with vendors of potential targets, will broaden the Company's institutional shareholder base and provide increased working capital. The Company has identified support services to the healthcare sector and the document management sector of the Indian BPO industry as being of particular interest. It is proposed to consolidate the ordinary shares of the Company so that every 10 ordinary shares of 1p each will become 1 ordinary share of 10p each. The share consolidation will be included in resolutions to be put before an Extraordinary General Meeting ("EGM") of the Company to be convened on 6 March 2006. It is proposed that Amit Pau will be granted options over Ordinary Shares of 10p equivalent to 10 per cent of the enlarged issued share capital, at an exercise price of 45p per share amounting to a total of 847,916 Ordinary Shares of 10p, which will vest over a period of three years. The Company is seeking readmission of its Ordinary Shares to AIM following approval of the resolutions of the EGM. Amit Pau, Chief Executive of India Outsourcing Services, commented: "We have been delighted by the support we have received from new institutional and existing investors who are excited by the potential of the BPO industry in India. We now look forward to building on the progress that we have made so far in identifying a suitable acquisition target and in delivering value to all our shareholders through the successful execution of our strategy." For further information: India Outsourcing Services plc Tel: 020 7297 0012 Haresh Kanabar, Chairman Amit Pau, Chief Executive Daniel Stewart & Company plc Tel: 020 7776 6550 Lindsay Mair Nicholas Marren Buchanan Communications Tel: 020 7466 5000 Mark Court/Elly Williamson Details of the EGM The EGM of the Company will be held at the offices of Daniel Stewart & Company plc, Becket House, 36 Old Jewry, London EC2R 8DD at 10am on 6 March 2006 at which resolutions will be proposed to approve the continuation of the Company for a further 12 months and of its stated strategy, admission to AIM of the Ordinary Shares, consolidation of the Company's share capital, increase the authorised share capital of the Company, authorise the Directors to allot up to 9,380,000 ordinary shares and to dis-apply pre-emption rights over up to 1,865,417 ordinary shares (in addition to the Placing Shares and the Grant of Options). The Grant of Options is a related party transaction for the purpose of the AIM rules and accordingly Haresh Kanabar and Nigel Robertson, "the Independent Directors", consider that having consulted with its nominated adviser the terms of the Grant of Options is fair and reasonable insofar as you are concerned. In advising the Independent Directors, Daniel Stewart has relied on their commercial assessments. Amit Pau (Chief Executive) and Blue Star Capital Plc (which is associated with Nigel Robertson, a Director) has subscribed for an aggregate of £350,000 in the Placing, which constitutes a related party transaction for the purpose of the AIM rules and accordingly, Haresh Kanabar, "the Independent Director", considers that having consulted with its nominated adviser the Placing is fair and reasonable insofar as Shareholders are concerned. In advising the Independent Director, Daniel Stewart has relied on his commercial assessments. Accordingly the Independent Director recommends that you vote in favour of the Resolutions to be proposed at the EGM. Daniel Stewart & Company plc acts as nominated adviser and broker to the Company. This information is provided by RNS The company news service from the London Stock Exchange