2 Q 2015 EMEA ISG Outsourcing Index

© 2015

Information Services

Group, Inc.

All Rights Reserved

isg-one.com

*Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase®

1

Hosted by:

John King

Bank of America Merrill Lynch

20th July 2015

The ISG Outsourcing Index™

Second Quarter and First Half 2015

EMEA Market Data and Insights

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


2

Covering the state of the outsourcing industry for EMEA commercial contracts.*

Welcome to the 51th Quarterly ISG Outsourcing Index™ Review

Bernd SchaeferPartner

John KeppelPartner & President


© 2015


Group, Inc.

All Rights Reserved

isg-one.com


3

At a Glance

Scorecard 2Q15 2Q Y/Y 2Q Q/Q

ACV (€B)* Change Change

Global Market € 4.9 -7% 24%

New Scope € 3.0 -11% 18%

Restructurings € 1.9 -1% 33%

Mega-relationships € 0.3 -75% -65%

ITO € 3.8 -8% 43%

BPO € 1.1 -6% -15%

Americas € 2.2 11% 29%

EMEA € 2.2 -12% 23%

Asia Pacific € 0.5 -39% 8%

1H15 1H Y/Y

ACV (€B)* Change

€ 8.9 -14%

€ 5.5 -16%

€ 3.4 -11%

€ 1.2 -55%

€ 6.5 -19%

€ 2.4 4%

€ 3.9 9%

€ 4.1 -21%

€ 0.9 -42%

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


4

2Q15 Global Market ACV is up 24% Q/Q and down 7% Y/Y. The number of 2Q awards

set a record high. 1H15 ACV is down 14% from 1H14 in a smaller-deal market.

Broader Market Quarterly ACV (€B)* and Counts

Half-Year Broader Market Counts

Global Market Contract Award Trends

Half-Year Broader Market ACV (€B)*

€ 4.9 € 4.0

€ 5.4 € 4.5

€ 5.3 € 5.1 € 3.8

€ 5.0

€ 3.2

451

303

388

288

363 339 311

376

231

2Q151Q154Q143Q142Q141Q144Q133Q132Q13

ACV Counts

€ 8.9 € 10.4

€ 8.0

€ 10.9 € 8.6

€ 10.7 € 8.7 € 9.1

€ 7.2 € 7.6

€ 9.9

€ 8.8

€ 9.3 € 11.1 € 8.4 € 9.7 € 8.1

€ 7.7 € 6.5

€ 20.2

€ 16.8

€ 20.2 € 19.7 € 19.0 € 18.4 € 17.2

€ 15.0 € 14.1

201514131211100908072006

1H ACV 2H ACV

754 702

541 677 657

579 542 438

375 372

676

687 570 648

530 547

484

363 369

1,378 1,228 1,247 1,305

1,109 1,089

922

738 741

201514131211100908072006

1H Counts 2H Counts

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


5

EMEA ACV in 2Q15 is up 23% Q/Q yet down 12% Y/Y. 1H Restructuring and New

Scope awards fall in nearly equal magnitudes, dropping more than 20%.

EMEA Half-Year ACV (€B)*

EMEA Contract Award Trends

EMEA Quarterly ACV (€B)* and Counts

EMEA Half-Year Segment ACV (€B)* EMEA Half-Year Counts

€ 2.8

€ 1.3

€ 3.2

€ 0.9

€ 0

€ 1

€ 2

€ 3

€ 4

€ 5

New Scope Restructuring ITO BPO

Range of Prior 4 Halves Avg of Prior 4 Halves

1H14 1H15

€ 2.2 € 1.9

€ 2.7 € 2.1

€ 2.6 € 2.6 € 2.1

€ 3.1

€ 1.9

169

124

182

130

153 169 162

183

119

2Q151Q154Q143Q142Q141Q144Q133Q132Q13

ACV Counts

€ 4.1 € 5.2

€ 4.0 € 5.2

€ 4.5 € 5.2

€ 3.9

€ 5.7

€ 3.3 € 2.8

€ 4.8 € 5.2

€ 4.8 € 6.6

€ 4.5 € 4.9

€ 4.0

€ 3.6 € 3.1

€ 10.1 € 9.2

€ 10.0 € 11.1

€ 9.7 € 8.8

€ 9.7

€ 6.9 € 5.9

201514131211100908072006

1H ACV 2H ACV

293 322 262 300 305 238 244 199 166 143

312 345 263 318

255 253 219

165 175

634 607 563

623

493 497 418

331 318

201514131211100908072006

1H Counts 2H Counts

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


6

U.K. market sees increased activity, and 1H results turn positive. Financial Services

and Energy verticals show 1H growth but lag behind historical half-year results.

EMEA Sub-regions Half-Year ACV (€B)*

EMEA Industry Half-Year ACV (€B)*

EMEA Contract Award Trends Detail

€ 1.30

€ 0.52 € 0.72 € 0.65

€ 0.46

€ 0.11 € 0.12 € 0.10 € 0.14 € 0.0

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5

Financial

Services

Manufacturing Energy Travel

Transport

Leisure

Telecom

& Media

Business

Services

Consumer

Products

& Goods

Healthcare

& Pharma

Retail

Range of Prior 4 Halves Avg of Prior 4 Halves 1H14 1H15

€ 1.76

€ 0.85

€ 0.30 € 0.37 € 0.21 € 0.26 € 0.21 € 0.16

€ 0.0

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5

U.K. & Ireland DACH Nordics Benelux France Southern

Europe

Africa & Middle

East

E. Europe &

Russia


© 2015


Group, Inc.

All Rights Reserved

isg-one.com


7

Co. Revenues < $2 BCo. Revenues $2 -10 B

ISG Sourcing Market Standouts in EMEA

Cognizant moves into the Big 10 category. Large multinationals and providers with

strong local “home market” profiles head up each of the company size segments.

1New to group as of the current quarter

Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase®.

Service providers in alphabetical order; no rankings implied.

Revenues sourced from Hoovers and individual company financial fillings

Co. Revenues > $10B

SOURCING

STANDOUTS GROUPED BY COMPANY SIZE

The Building 10Sourcing Standouts

The Breakthrough 10Sourcing Standouts

The Big 10Sourcing Standouts

Accenture

Atos

BT

Capgemini

Cognizant1

Fujitsu

HP

IBM

TCS

Vodafone1

Capita

Carillion1

CGI

Computacenter1

HCL

Infosys

MITIE

Serco

Tieto

Wipro

HH Global

IGATE

InnerWorkings

Kuehne & Nagel

Luxoft

MAYKOR

Mindtree

Transcom1

WNS1

Xchanging

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


8

2Q15 Americas ACV is up 29% Q/Q and 11% Y/Y with a record-high award count.

1H15 New Scope increases over 1H14 by 2% in ACV and 32% in contract counts.

Americas Half-Year ACV (€B)*

Americas Contract Award Trends

Americas Quarterly ACV (€B)* and Counts

Americas Half-Year Segment ACV (€B)* Americas Half-Year Counts

€ 2.0 € 1.9

€ 2.6

€ 1.3

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5

€ 3.0



1H14 1H15

€ 2.2 € 1.7

€ 2.1 € 2.0 € 2.0 € 1.6

€ 1.3 € 1.5 € 0.9

236

144 159

126

171

124 121 150

78

2Q151Q154Q143Q142Q141Q144Q133Q132Q13

ACV Counts

€ 3.9 € 3.6 € 3.1

€ 4.2 € 3.2

€ 4.8

€ 3.5 € 2.8 € 2.9

€ 3.9

€ 4.1

€ 2.8

€ 3.2 € 3.6

€ 2.6 € 3.7

€ 2.7 € 3.1

€ 2.9

€ 7.7

€ 5.9

€ 7.3 € 6.8

€ 7.4 € 7.2

€ 5.5 € 6.0

€ 6.8

201514131211100908072006

1H ACV 2H ACV

380 295

211 290 267 270 231 190 162 179

285

271 226 261 196 214

195 150 149

380

580

482 516 528 466 445

385 312 328

201514131211100908072006

1H Counts 2H Counts

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


9

2Q15 ACV increases due to strength in the U.S. Traditionally smaller verticals such

as Transportation, Retailing and Healthcare help support market growth.

Americas Sub-regions Half-Year ACV (€B)*

Americas Industry Half-Year ACV (€B)*

Americas Contract Award Trends Detail

€ 0.67 € 0.58

€ 0.43 € 0.56

€ 0.32 € 0.33 € 0.34 € 0.35 € 0.32

€ -

€ 0.2

€ 0.4

€ 0.6

€ 0.8

€ 1.0

€ 1.2

Financial

Services

Manufacturing Telecom

& Media

Healthcare

& Pharma

Energy Business

Services

Consumer

Products

& Goods

Travel

Transport

Leisure

Retail


€ 0.27

€ 0.13

€ 0.02

€ 0.09

€ -

€ 0.1

€ 0.2

€ 0.3

€ 0.4

€ 0.5

Canada Brazil Mexico Other LatAm


€ 3.39

€ -

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5

€ 3.0

€ 3.5

€ 4.0

U.S.

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


10


ISG Sourcing Market Standouts in the Americas

BPOs and service providers with substantial offshore profiles lead in the Building

tier. The Breakthrough 10 experiences a 40% turnover.








Co. Revenues > $10B

SOURCING


Accenture

Atos

BT

Capgemini

Cognizant1

Dell

HP1

IBM

TCS

Xerox

Aon Hewitt

CGI

CompuCom

Convergys1

Genpact

HCL

Infosys

Tech Mahindra1

Teleperformance

Wipro

APAC Customer Services

Firstsource Solutions

ICF International

IGATE

Luxoft

Minacs1

Mindtree1

Syntel

UST Global1

Virtusa1

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


11

€ 0.74

€ 0.18

€ 0.70

€ 0.21 $0.0

$0.5

$1.0

$1.5

$2.0



1H14 1H15

Asia Pacific 2Q15 ACV is up 8% Q/Q but down 39% Y/Y. Almost 70% of the IT ACV

awarded in the second quarter is in Applications.

Asia Pacific Half-Year ACV (€B)*

Asia Pacific Contract Award Trends

Asia Pacific Quarterly ACV (€B)* and Counts

Asia Pacific Half-Year Segment ACV (€B)* Asia Pacific Half-Year Counts

€ 0.5 € 0.4 € 0.6

€ 0.4

€ 0.8 € 0.8

€ 0.4 € 0.4 € 0.4

46

35

47

32

39

46

28

43

34

2Q151Q154Q143Q142Q141Q144Q133Q132Q13

ACV Counts

€ 0.9

€ 1.6

€ 0.9

€ 1.5

€ 0.9 € 0.7

€ 1.3

€ 0.7

€ 1.0 € 0.9

€ 0.9

€ 0.8

€ 1.3

€ 0.9 € 1.3

€ 1.2

€ 1.4 € 1.1

€ 0.5

€ 2.5

€ 1.7

€ 2.8

€ 1.8 € 2.0

€ 2.5

€ 2.1 € 2.0

€ 1.3

201514131211100908072006

1H ACV 2H ACV

81 85 68

87 85 71 67

49 47 50

79

71

81 69 79 80

70 48 45

164

139

168 154 150 147

119 95 95

201514131211100908072006

1H Counts 2H Counts

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


12

€ 0.18

€ 0.36

€ 0.15

€ 0.09€ 0.12

€ 0.02€ 0.0

€ 0.1

€ 0.2

€ 0.3

€ 0.4

€ 0.5

ANZ India and South

Asia

Japan Greater China Southeast Asia South Korea


€ 0.20 € 0.17 € 0.23

€ 0.13 € 0.07 € 0.05

€ 0.01 € 0.02 € 0.04 € 0.0

€ 0.1

€ 0.2

€ 0.3

€ 0.4

€ 0.5

€ 0.6

Financial

Services

Manufacturing Telecom

& Media

Travel

Transport

Leisure

Energy Consumer

Products

& Goods

Healthcare

& Pharma

Business

Services

Retail


India steps up its contracting pace. However, ANZ remains sluggish, holding back

overall regional results. Financial Services, Manufacturing and Telecom results lag.

Asia Pacific Sub-regions Half-Year ACV (€B)*

Asia Pacific Industry Half-Year ACV (€B)*

Asia Pacific Contract Award Trends Detail

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


13


ISG Sourcing Market Standouts in Asia Pacific

Several Japanese providers, along with Cognizant, join the large multinationals in

Big 10 Sourcing Standouts list. Australian and India-based providers contribute

greatly to middle tier, while smaller segment sees 30% turnover from last quarter.





Co. Revenues > $10B

SOURCING





Accenture

BT

Cognizant1

CSC1

Fujitsu

Hitachi

HP

IBM

Ricoh

TCS

Genpact1

HCL

Infosys

NEC

Optus1

Tech Mahindra

Transfield Services

Unisys

United Group Services

Wipro

Aegis

ChinaSoft

Hollysys Automation

Minacs1

NGA Human Resources

SITA

TeleTech1

UST Global1

Vertex

WNS

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


14

Special Topic for Second Quarter 2015

CLOUD-BASED TRANSFORMATION –

AS-A-SERVICE CREATES OPPORTUNITIES & CHALLENGES

John Keppel

Partner and President

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


15

Provider

Currency

StandardStandard

Support

Tiers

Supplier

Weighted MSA

Cloud Adoption Defined

All-Inclusive

Unit Price Elastic

Operational

Expense

Capital

Expense

Limited

Commitment

Long-term

Commitment

Asset/FTE

Based RUs

Consumption Consumption

Based RUs

Line

Item

Pricing

IT Absorbs

Costs

Buyer

Currency

Custom

Support

Tiers

Provisioned

for Maximum

Demand

Buyer

Weighted

MSA

Labor

Based

Consumer

Charge-backs

AS-A-SERVICE CHARACTERISTICS

Traditional Service Characteristics

Automated

ADOPTION APPROACH CHANGED DRAMATICALLY about 18 months ago

� EVOLVE CURRENT DELIVERY MODEL to create a more cloud-like experience

� RE-ENGINEER FINANCIALS MODELS so traditional services take on a cloud feel

� COST REDUCTION is primary motivator

� FOCUS IS ON TRANSFORMATION using public cloud

� CLIENTS EMBRACE STRATEGIC BENEFITS OF SHARING infrastructure and software

� AGILITY is primary motivator

ISG-Advised DEALS WITH A CLOUD COMPONENT DOUBLED since 2012

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


16

Emerging Solutions for Transformational Renewals

� Design, Source and Provision a Complete Solution

� Centralizes Business Management and Analytics

� Multi-sourced Provider Management

� Unified Self-service Storefront

PublicCloudIaaS

PrivatePrivateCloudIaaS

ManagedServices

ExistingExistingData

CenterCloud Brokerage

Platform

PublicCloudSaaS

Traditional Providers

� Tower-centric solutions

� Dedicated data centers

� Traditional service

characteristics

Next Generation Providers

� Application-centric solutions

� Shared data centers

� As-a-service characteristics

MarketingSales &

Marketing

R&D

OperationsOperations Finance

HR

Cloud Service Broker

Internal IT or Managed Services Provider

is as

Technology

Supply

Enterprise

LOBs

buyers mix and match providers

Expected

in Renewal TCV

over next 3 Years

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


17

� 2Q15 Global Market sets a record for number of contract awards as the

busiest quarter ever.

� Structural industry change towards smaller deal values as first-half ACV

matches pre-Recession levels, but with double the number of awards.

� The Americas logs strong, consistent quarter and half;

� EMEA and AP post sequential ACV gains but lag Y/Y against tough compares.

� Expect near double digit Y/Y growth in 3Q in 2015 as European markets and

smaller G-2000 companies step up contracting pace.

� Long term, transformative work in industry will take priority over focus on cost

savings; new spend will be on revenue generation initiatives.

� Providers that adapt rapidly to cloud platforms and digitization will flourish;

those focused on driving competitors from yesterday’s business will not.

2Q15 ISG Outsourcing Index™ - Global Summary and Outlook

summarymarket

outlookmarket

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


18

Please contact us with your questions and comments.

Learn More

Paul ReynoldsPartner

+1 508 625 2194

[email protected] insights serving providers and market analysts

www.isg-one.com

Denise Colgan

EMEA and AP Media Contact

+44 1737 371523

[email protected]

Rob Arnott

Cohn & Wolfe for ISG

+44 (0) 20 7331 5363

[email protected]

John Keppel

Partner and President

+44 (0)7879 432 212

[email protected]

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


19

Second Quarter and First Half 2015

APPENDIX: SCORE CARD FOR TCV

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


20

The ISG Outsourcing 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.

Second Quarter and First Half 2015 TCV Scorecard

*Contracts with TCV ≥ €20M from the ISG Contracts Knowledgebase®

Scorecard 2Q15 2Q Y/Y 2Q Q/Q 1H15 Y/Y

TCV (€B)* Change Change TCV (€B)* Change

Global Market € 15.7 -28% -9% € 33.0 -24%

New Scope € 11.0 -24% -13% € 23.6 -17%

Restructurings € 4.7 -36% 2% € 9.4 -38%

Mega-deals € 0.0 -100% -100% € 3.9 -53%

ITO € 11.4 -32% -11% € 24.2 -25%

BPO € 4.3 -16% -2% € 8.8 -21%

Americas € 5.8 -21% 4% € 11.3 -19%

EMEA € 8.0 -27% -16% € 17.6 -21%

Asia Pacific € 1.9 -45% -9% € 4.0 -44%

© 2015


Group, Inc.

All Rights Reserved

isg-one.com


21

Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more

than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector

organizations to transform and optimize their operational environments through research, benchmarking, consulting and

managed services, with a focus on information technology, business process transformation, program management services and

enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the

deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory

services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.

knowledge powering results®

www.isg-one.com

Leadership & Management

2 Q 2015 EMEA ISG Outsourcing Index