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ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.
EMEA Sourcing and As-a-Service Market Insights
Hosted by:Thomas Burlton, Bank of America Merrill LynchJanuary 15, 2018
FOURTH QUARTER AND FULL YEAR 2017
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 2EMEA Q4 2017
Covering the state of the combined Traditional Sourcing and As-a-Service industry for the global commercial market.
Welcome to the 61st Quarterly ISG Index
Barry MatthewsPartner, EMEA
Steven HallPresident, ISG EMEAand Partner, Digital Advisory Services
Keri SmithSenior Director & Head of Practice RPA
Friedrich LoeerPartner, Sourcing Advisory Services and Digital /IT Services
Stanton JonesResearch Director and Principal Analyst
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 3EMEA Q4 2017
‘‘
*Contracts with ACV ≥ € 4M from the ISG Contracts Knowledgebase™
At a Glance
Scorecard 4Q17 4Q Y/Y Full Year
Full Year
ACV (€B)*
Change ACV (€B)*
Change
Global Commercial Combined Market € 9.0 16% € 34.6 15%
By Type Traditional Sourcing € 4.8 8% € 19.7 3%
As-a-Service € 4.2 26% € 15.0 36%
By Region Americas Combined € 5.0 28% € 18.5 23%
EMEA Combined € 3.0 0% € 12.2 3%
Asia-Pacific Combined € 1.0 16% € 3.9 19%
4Q17 Combined Market up 16% Y/Y; Best-ever quarterly ACV in both IaaS and SaaS;
Traditional Sourcing up 8% Y/Y
For the full year, Combined Market up 15%, double from year ago
In 2017, Americas up 23% versus 2016 with Traditional Sourcing up moderately and
As-a-Service ACV up significantly
EMEA up against 2016 with strongAs-a-Service ACV growth but with the fourth
successive yearly decline in Traditional Sourcing ACV
Asia Pacific up 19% over 2016 with As-a-Service growth slightly outpacing Traditional Sourcing
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 4EMEA Q4 2017
€ 14.6
€ 5.4€ 3.0
€ 5.0
€ 13.8
€ 5.4€ 3.6
€ 7.4
€ 15.2
€ 4.4 € 3.7
€ 11.3
ITO BPO Saas IaaS
2015 2016 2017
€ 5.4 € 5.6 €4.6 € 5.5 € 4.2 € 5.2 € 4.7 € 5.9 € 5.3 € 4.6 € 4.7 € 4.4 € 5.4 € 4.6 € 4.9 € 4.8
€ 1.4 € 1.8€ 1.6
€ 1.6€ 1.8
€ 1.8 € 2.2€ 2.4 € 2.5
€ 2.5 € 2.7 € 3.4€ 3.6
€ 3.3 € 3.8 € 4.2€ 6.9
€ 7.4€ 6.2
€ 7.1€ 6.0
€ 7.0 € 7.0€ 8.3
€ 7.8€ 7.1 € 7.4 € 7.8
€ 9.0€ 7.9
€ 8.7 € 9.0
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Traditional Sourcing As-a-Service
Global Commercial Sector Contracting Trends4Q17 Combined Market ACV up 16% Y/Y as business spends more on technology to drive digital transformation;
for the full year, Traditional Sourcing remains in a very tight range as As-a-Service (specifically IaaS) continues to increase.
Global Commercial Sector Full Year ACV by Type (€B)
Global Commercial Sector Quarterly ACV (€B)
€ 21.2 € 20.1 € 19.0 € 19.7
€ 6.5 € 8.1 € 11.0€ 15.0
€ 27.7 € 28.2 € 30.1€ 34.6
2014 2015 2016 2017
Traditional Sourcing As-a-Service
Global Commercial Sector Full Year ACV (€B)
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 5EMEA Q4 2017
EMEA Commercial Sector Contracting Trends4Q17 Combined Market in EMEA is up 27% Q/Q and flat Y/Y; for the full year, ACV results rise slightly
compared to 2016 with As-a-Service highs offsetting declines in Traditional Sourcing.
EMEA Commercial Sector Full Year ACV (€B)
€ 2.7 € 2.7€ 2.2
€ 2.7€ 2.0
€ 2.4 € 2.2
€ 3.2€ 2.6
€ 1.9€ 2.4 € 2.2
€ 2.9€ 2.2
€ 1.4€ 1.9
€ 0.4 € 0.5€ 0.5
€ 0.4€ 0.5
€ 0.5 € 0.6
€ 0.6€ 0.6
€ 0.6€ 0.7 € 0.9
€ 1.0€ 0.8
€ 1.0€ 1.1
€ 3.1 € 3.2€ 2.6
€ 3.1€ 2.5
€ 2.9 € 2.9
€ 3.8€ 3.1
€ 2.6€ 3.1 € 3.0
€ 3.8
€ 3.0€ 2.4
€ 3.0
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Traditional Sourcing As-a-Service
EMEA Commercial Sector Quarterly ACV (€B)
€ 7.4
€ 2.4 € 0.8 € 1.4
€ 6.5
€ 2.6 € 0.9 € 1.9
€ 6.5
€ 1.8 € 0.9€ 3.0
ITO BPO SaaS IaaS
2015 2016 2017
EMEA Commercial Sector Full Year ACV by Type (€B)
€ 10.3 € 9.8 € 9.0 € 8.3
€ 1.7 € 2.2 € 2.8 € 3.9
€ 12.0 € 12.0 € 11.8 € 12.2
2014 2015 2016 2017
Traditional Sourcing As-a-Service
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 6EMEA Q4 2017
€ 0.5 € 0.5 € 0.5€ 0.2 € 0.2 € 0.3
€ 1.4 € 1.3 € 1.5
€ 2.5 € 2.3€ 2.7
€ 0.6€ 0.3 €1.3
€ 2.0 € 1.9
€ 1.1
€ 0.3 € 0.4 € 0.2
€ 0.9€ 1.4
€ 1.1€ 1.4
€ 0.8 € 0.8
€ 0.4 € 0.5 € 0.7
€ 0.1 € 0.2€ 0.3
€ 0.1 € 0.2€ 0.2
€ 0.4€ 0.5
€ 0.7
€ 0.2
€ 0.2 € 0.3
€ 0.4 € 0.4
€ 0.6
€ 0.2 € 0.2€ 0.3
€ 0.2
€ 0.3€ 0.4
€ 0.2
€ 0.3 € 0.4€ 0.9 € 1.0
€ 1.2
€ 0.3 € 0.4€ 0.6
€ 1.5 € 1.5€ 1.7
€ 2.9 € 2.8
€ 3.4
€ 0.8
€ 0.5 € 0.6
€ 2.4 € 2.3
€ 1.7
€ 0.5 € 0.6 € 0.5
€ 1.1
€ 1.7€ 1.5 € 1.6
€ 1.1 € 1.2
2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017
Traditional Sourcing As-a-Service
EMEA Commercial Sector Industry Award TrendsFinancial Services leads among industry verticals (along with Business Services, Energy and Transportation)
that generated ACV growth in both Traditional Sourcing and As-a-Service segments.
EMEA Commercial Industries Full Year ACV (€B)
Financial Services
Healthcare & Pharma
BusinessServices
Energy Telecom & MediaRetailConsumer Packaged Goods
Travel, Transport & Leisure
Manufacturing
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 7EMEA Q4 2017
EMEA Sub-Regions - Traditional Sourcing OnlyTraditional Sourcing ACV in the UK, France and Africa/Middle East grew year on year, while DACH and the Nordics struggled. Southern Europe
plummeted 70% compared to 2016’s strong results.
€ 3.1
€ 0.9€ 0.8
€ 0.4
€ 0.7
€ 3.0
€ 0.3
€ 2.7
€ 1.1
€ 0.4
€ 0.6
€ 1.2
€ 2.6
€ 0.1
€ 3.2
€ 0.9
€ 0.2
€ 0.6
€ 0.4
€ 2.2
€ 0.2
UK & Ireland Nordics Africa and Middle East France Southern Europe DACH Eastern Europe
2015 2016 2017
EMEA Commercial Sector Full Year ACV by Type (€B)
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 8EMEA Q4 2017
Our Contracts Knowledgebase™is used to determine placements
based on the annual value of commercial contracts
awarded in the past 12 months.
Traditional Sourcing MarketAdare Group
Avaloq *Coor Service Management
Firstsource SolutionsGFT Technologies *
HexawareIbykusKMDLTI *
LuxoftNNIT A/SVirtusa
As-a-Service MarketInterxionLogMeIn
OVH
Traditional Sourcing MarketCapita
CarillionDiebold Nixdorf
Emcor *EVRYHCL
InterserveSopra Steria
Tech MahindraTieto
UnisysWipro
As-a-Service MarketAdobe Systems
EquinixUnited Internet
Traditional Sourcing MarketAccenture
AT&T *AtosBT
CapgeminiCognizant
DXC TechnologyIBM
InfosysTCS
T-Systems
As-a-Service MarketAmazon Web Services
GoogleMicrosoft
Oracle
The Building 15 The Breakthrough 15The Big 15Co. Revenues > $10 BSourcing Standouts
EMEACo. Revenues $1 -10 B Co. Revenues < $1 B
Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings.
theISG15
* New to leaderboard
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 9EMEA Q4 2017
Americas Commercial Sector Contracting TrendsAmericas 4Q17 ACV is up 28% Y/Y with As-a-Service seeing continued growth and Traditional Sourcing reaching €2.5B for the third consecutive quarter; for the full year, Combined Market is up 23% on record highs in both Traditional Sourcing and As-a-Service.
€ 1.9 € 2.1 € 2.2 € 2.2€ 1.8
€ 2.3€ 1.9
€ 2.3 € 2.3 € 2.2€ 1.9 € 1.9 € 2.2 $2.5
€ 2.8€ 2.5
€ 0.9 € 1.1 € 1.0 € 1.0$1.3
€ 1.0 € 1.4$1.8 € 1.5 € 1.4 € 1.6 $2.5
€ 2.2 € 2.0
€ 2.4 € 2.6€ 2.8
€ 3.2 € 3.1 € 3.2€ 2.8
€ 3.4 € 3.3€ 3.8 € 3.8 € 3.7 € 3.5
€ 3.9$5.4
€ 4.0
€ 5.2 € 5.0
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Traditional Sourcing As-a-Service
Americas Commercial Sector Quarterly ACV (€B)
€ 5.8
€ 2.6 € 2.0€ 2.8
€ 6.2
€ 2.2 € 2.4
€ 4.2
€ 7.2
€ 2.2 € 2.4
€ 6.6
ITO BPO SaaS IaaS
2015 2016 2017
Americas Commercial Sector Full Year ACV by Type (€B)
€ 8.3 € 8.4 €8.3 € 9.4
€ 3.9 € 4.8 € 6.6€ 9.0€ 12.2
€ 13.2€ 15.0
€ 18.5
2014 2015 2016 2017
Traditional Sourcing As-a-Service
Americas Commercial Sector Full Year ACV (€B)
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 10EMEA Q4 2017
Our Contracts Knowledgebase™is used to determine placements
based on the annual value of commercial contracts
awarded in the past 12 months.
Traditional Sourcing MarketC3/CustomerContactChannels
CSG Systems *Ensono
HexawareLTI
LuxoftMindtree
SyntelVirtusa
As-a-Service MarketCoresite
CyrusOneCyxtera * LogMeInMulesoft
Ultimate Software *
Traditional Sourcing MarketBlack Knight Inc.
Genpact HCL
Sutherland GlobalTeleTech
Total System Services *UnisysWipro
As-a-Service MarketAdobe SystemsDigital Realty
EquinixIron Mountain
RackspaceServiceNow
Workday
Traditional Sourcing MarketAtosBT *
CapgeminiCognizant
DXC TechnologyIBM
InfosysNTT DATA
TCST-Systems/Deutsche Telekom *
As-a-Service MarketAmazon Web Services
GoogleMicrosoft
OracleSalesforce
The Building 15 The Breakthrough 15The Big 15Co. Revenues > $10 BSourcing Standouts
AMERICASCo. Revenues $1 -10 B Co. Revenues < $1 B
Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings.
theISG15
* New to leaderboard
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 11EMEA Q4 2017
Asia Pacific Commercial Sector Contracting TrendsCombined Market 4Q17 ACV up 16% Y/Y on best quarter ever for As-a-Service awards and moderately good quarter for Traditional Sourcing;
for the full year, Asia Pacific ACV increases 19% on continued growth in As-a-Service ACV and best Traditional Sourcing results since 2014.
AP Commercial Sector Full Year ACV (€B)
€ 0.82 € 0.80
€ 0.37€ 0.59 € 0.53 € 0.49 € 0.46 € 0.43 € 0.38 € 0.48 € 0.42 € 0.38 € 0.28
€ 0.54 € 0.62€ 0.49
€ 0.18 € 0.22
€ 0.20€ 0.21 € 0.22 € 0.22 € 0.30 € 0.34 € 0.36
€ 0.37 € 0.42 € 0.48 € 0.51€ 0.46 € 0.49
€ 0.51
€ 0.99 € 1.02
€ 0.57€ 0.80 € 0.75 € 0.71 € 0.76 € 0.77 € 0.74
€ 0.85 € 0.83 € 0.86 € 0.79€ 0.99 € 1.11
€ 1.00
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Traditional Sourcing As-a-Service
AP Commercial Sector Quarterly ACV (€B)
€ 1.41
€ 0.48€ 0.30
€ 0.79
€ 1.16
€ 0.49€ 0.34
€ 1.28€ 1.55
€ 0.38 € 0.38
€ 1.58
ITO BPO SaaS IaaS
2015 2016 2017
AP Commercial Sector Full Year ACV by Type (€B)
€ 2.58€ 1.89 € 1.66 € 1.94
€ 0.79€ 1.10 € 1.62
€ 1.97
€ 3.37€ 2.98 € 3.28
€ 3.90
2014 2015 2016 2017
Traditional Sourcing As-a-Service
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 12EMEA Q4 2017
Our Contracts Knowledgebase™is used to determine placements
based on the annual value of commercial contracts
awarded in the past 12 months.
Traditional Sourcing MarketFirstsource Solutions
HexawareLuxoft
Ness TechnologiesPosco ICT
SsangYong Information & Comm.VirtusaWNS
As-a-Service MarketAtlassianKingdeeLogMeIn
Mulesoft *Veeva Systems *
XeroZoho
Traditional Sourcing MarketAmdocs *
Harman InternationalHCL
Samsung SDSSingTel Optus
SK C&C Co.Sutherland Global
Tech MahindraTelstraUnisysWipro
As-a-Service MarketAdobe Systems
EquinixIron Mountain
PTC
Traditional Sourcing MarketAccenture
Atos *Cognizant
DXC TechnologyIBM
InfosysNokia *
TCS
As-a-Service MarketAlibaba
Amazon Web ServicesGoogle
MicrosoftOracle
SalesforceSAP
The Building 15 The Breakthrough 15The Big 15Co. Revenues > $10 BSourcing Standouts
Asia PacificCo. Revenues $1 -10 B Co. Revenues < $1 B
Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings.
theISG15
* New to leaderboard
EMEA Q4 2017
Intelligent Automation Software Market
Stanton JonesResearch Director and Principal Analyst
4Q17 Index Inside Track from
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 14EMEA Q4 2017
Intelligent Automation Taxonomy
Cognitive TechnologiesRobotic Technologies Autonomic Technologies
Executes actions as if it were a human, based
on pre-configured instructions.
Analyzes unstructured input (e.g., voice, text) and answers
questions, provides recommendations and/or
makes decisions.
Analyzes semi-structured input (events, tickets)
and orchestrates entire processes or environments.
Example Firms
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 15EMEA Q4 2017
RPA – A Growth Story
Positives
100% + 2018 Projected Growth
Opportunity to sell to new clients and to expand
with existing clients is significant
Desire to replace BPO with Automation will continue to expand
What could slow growth?”
After initial fast start, growth will eventually slow to 60%+ over the next
3–5 years
Some companies getting stalled on implementations
Sales and marketing costs are likely to be high to accommodate hyper-growth
as deal sizes are already smaller in
RPA JourneyMarket LeadersIn RPA Software
Annual licensing between $75K and $100K
Project high growth
in coming years
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 16EMEA Q4 2017
RPA Vendors Will Attempt to Move Up the Enterprise Value Chain
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 17EMEA Q4 2017
Full Year 2017 ISG Index - Global Summary and Outlook
● Combined Market saw double-digit Y/Y growth for the quarter led by the Americas and Asia-Pacific
● For 2017, As-a-Service segment continued to surge ahead with Public Cloud leading the market; SaaS and Traditional Sourcing segments still showed slow but positive growth
● Financial Services grew both its Traditional Sourcing and As-a-Service profile; other industries such as Business Services, Travel and Healthcare also featured similar gains
● Changes in U.S. tax laws should free up money to be invested in projects and digital transformation, ensuring that both IaaS and SaaS will flourish
● Expect to see As-a-Service growth of 20%+ in 2018 with 4% growth in Traditional Sourcing
Summary
Outlook
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 18EMEA Q4 2017
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Learn More
Esteban HerreraPartner, Global Leader
ISG Research+1 972 730 1749
Paul ReynoldsPartner, Chief Research Officer
ISG Momentum+1 508 488 6361
Steven HallPresident, ISG EMEA
and Partner, ISG Digital Services+1 303 748 6599
Will ThoretzAmericas Media Contact
+1 203 517 3119 [email protected]
Denise Colgan EMEA and AP Media Contact
+44 1737 [email protected]
GLOBAL 4Q16
EMEA Q4 2017
Appendix: Score Card for TCVFOURTH QUARTER 2017
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved 20EMEA Q4 2017
4Q 2017 TCV ScorecardThe ISG Index has moved to ACV as the primary measure of the Broader Market.
We will continue to provide a high-level TCV view of the market via a Scorecard analysis.
*Contracts with TCV ≥ €20M from the ISG Contracts Knowledgebase™
Scorecard4Q17 4Q Y/Y Full Year Y/Y
TCV (€B)* Change TCV (€B)* Change
Global Commercial Combined Market € 24.9 30% € 93.4 12%
By Type Traditional Sourcing € 18.7 33% € 71.1 9%
As-a-Service € 6.2 21% € 22.3 23%
ITO € 12.8 38% € 51.4 13%BPO € 5.9 22% € 19.7 1%IaaS € 3.2 30% € 11.3 51%SaaS € 3.0 12% € 11.0 3%
By Region Americas Commercial € 12.0 46% € 44.5 17%
EMEA Commercial € 10.2 16% € 38.2 8%
Asia Pacific Commercial € 2.8 24% € 10.7 12%
ISG Confidential. © 2018 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.
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