Second Quarter and First Half 2014 Global ISG Outsourcing Index

29
Hosted by: Keith Bachman, BMO Capital Markets 15 July 2014 The Global ISG Outsourcing Index Second Quarter and First Half 2014 Market Data and Insights

Transcript of Second Quarter and First Half 2014 Global ISG Outsourcing Index

Page 1: Second Quarter and First Half 2014 Global ISG Outsourcing Index

Hosted by:

Keith Bachman, BMO Capital Markets

15 July 2014

The Global ISG Outsourcing Index

Second Quarter and First Half 2014

Market Data and Insights

Page 2: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®

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Covering the state of the outsourcing industry for global, commercial contracts.*

Welcome to the 47th Quarterly Outsourcing Index Review

Esteban Herrera Partner

John Keppel Partner & President

Dr. David Howie Partner

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At a Glance

BEST SECOND QUARTER EVER IN BROADER MARKET ACV, UP Y/Y AND Q/Q

MANUFACTURING REBOUNDS IN ALL SEGMENTS WITH HIGHEST SECOND QUARTER EVER FOR BOTH ACV AND NUMBER OF AWARDS

RECORD SECOND QUARTER FOR ITO ACV WITH STRENGTH IN BOTH NEW AND RESTRUCTURED CONTRACTING

BPO ACV UP SLIGHTLY Y/Y AND Q/Q EVEN AS CONTRACT ACTIVITY TRENDS LAG BEHIND THE BROADER MARKET PACE

YEAR-ON-YEAR SECOND QUARTER AND HALF-YEAR ACV UP ACROSS ALL REGIONS

Scorecard 2Q14 2Q Y/Y 2Q Q/Q 1H14 1H Y/Y

ACV ($B)* Change Change ACV ($B)* Change

Global Market $ 6.4 72% 6% $ 12.4 34%

New Scope $ 4.1 49% 7% $ 7.9 41%

Restructurings $ 2.3 139% 4% $ 4.5 23%

Mega-relationships $ 1.6 83% -9% $ 3.4 43%

ITO $ 4.9 100% 7% $ 9.5 52%

BPO $ 1.5 17% 2% $ 2.9 -4%

Americas $ 2.3 118% 22% $ 4.2 21%

EMEA $ 3.1 45% -2% $ 6.3 32%

Asia Pacific $ 1.0 94% 0% $ 1.9 99%

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Second quarter ACV is up 72% Y/Y against a weak 2Q13 and up 6% Q/Q against a strong 1Q14. YTD, Broader Market ACV is up 34%.

Quarterly Broader Market ACV ($B)* and Counts

Broader Market Contract Award Trends

Half-Year Broader Market ACV ($B)* Half-Year Broader Market Counts

$6.4 $6.0 $4.6

$5.9

$3.7

$5.5 $5.4 $5.6 $6.3

340 323 299 352

211

299 278 251

292

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

$12.4

$9.2

$12.4 $10.2

$12.6 $10.3 $11.0

$8.4 $8.9 $9.1

$10.4

$11.0 $13.2 $10.2 $11.3

$9.3 $9.1

$7.4 $9.4

$19.7

$23.5

$18.6

201413121110090807062005

1H ACV 2H ACV

663 510

628 627 534 518

411 340 330 329

651 529 617

501 516

432

329 331 314

1,161 1,157

643

201413121110090807062005

1H Counts 2H Counts

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2Q14 award activity is the highest ever for a second quarter. Contracting activity is up Y/Y and Q/Q in all ACV bands except for the Mega-relationship category.

Broader Market Contract Trends by Deal Size

ACV($B)*

$10-39M $40-99M $100M+ $5-9M

Comparing Broader Market Contracting Awards ($B)* Grouping in ACV Contract Size Bands

Contract Counts

$1.6

$0.9

$2.2

$1.5

$0.9

$1.4

$2.2

$1.3 $1.8

$1.1 $0.7

$0.9

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

7 11 2 9 7 9 8 8 12

24 22 19 21 16 17 23 19 23

133 118 117

137

79

125 113 119 105

176 172

161

185

109

148 134

105

152

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

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2Q14 New Scope and Restructuring ACV are up significantly Y/Y and up slightly Q/Q. YTD results are up over 1H13 but in line with prior years.

New Scope and Restructuring Contract Award Trends

$4.5 $3.6 $4.4

$2.7 $3.5 $2.3 $2.2 $1.6 $3.5 $2.2

$4.1 $3.6 $5.3 $3.6 $2.4 $2.5

$1.7 $1.7 $2.7

$7.7 $8.0

$5.0

201413121110090807062005

1H ACV 2H ACV

Half-Year New Scope ACV ($B)*

Half-Year Restructuring Contract Counts

220 151 163 156

118 114 80 58 66 67

213 147 142

122 92 81 48 54 66

364 310

133

201413121110090807062005

1H Counts 2H Counts

Half-Year New Scope Contract Counts

Half-Year Restructuring ACV ($B)*

$7.9 $5.6

$8.1 $7.4 $9.0

$8.0 $8.8 $6.8

$5.4 $6.9

$6.3

$7.4 $7.8 $6.6 $8.8

$6.7 $7.5

$5.7

$6.7

$11.9

$15.5 $13.6

201413121110090807062005

1H ACV 2H ACV

443 359

465 471 416 404

331 282 264 262

438 382

475

379 424

351

281 277 248

797 847

510

201413121110090807062005

1H Counts 2H Counts

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2Q14 ITO ACV is up 100% Y/Y and 7% Q/Q with record high number of ITO contracts awarded in 2Q. Half-year ITO ACV is the second highest ever.

ITO Half-Year ACV ($B)*

ITO Contract Award Trends

ITO Quarterly ACV ($B)* and Contract Counts

ITO Half-Year Domain Details ACV ($B)*

ITO Half-Year New vs. Restructuring ACV ($B)*

$4.9 $4.6 $3.6

$4.5

$2.5

$3.8 $3.6 $3.7 $3.6

250 235 224 248

131

197 197 163

181

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

$9.5

$6.3 $7.8

$6.6

$9.7 $7.4 $7.8

$6.3 $6.6 $6.8

$8.1 $7.3 $9.7

$8.0 $8.2

$6.4 $6.3 $5.2

$6.3

$14.3 $15.1 $13.1

201413121110090807062005

1H ACV 2H ACV

$2.69

$1.97

$1.41

$1.26

$1.03

$0.52

$0.31

$0.35

$- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0

Manufacturing

Financial Services

Telecom & Media

Travel, Transport, Leisure

Energy

Business Services

Healthcare & Pharma

Retail

Avg of Prior 4 Halves 1H14

$6.15

$3.37

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

New Scope Restructuring

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

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2Q14 BPO ACV is up 17% Y/Y and 2% Q/Q. YTD BPO ACV is down slightly from 1H13. First half Manufacturing ACV outperformed its prior four-half average.

BPO Half-Year ACV ($B)*

BPO Contract Award Trends

$2.9 $3.0

$4.6 $3.6

$2.9 $2.8 $3.2 $2.1 $2.3 $2.4

$2.3

$3.8

$3.5

$2.2 $3.0 $2.9

$2.8 $2.2 $3.1

$5.3

$8.4

$5.5

201413121110090807062005

1H ACV 2H ACV

BPO Quarterly ACV ($B)* and Contract Counts

$1.5 $1.4

$0.9

$1.4 $1.2 $1.7 $1.9 $1.9

$2.7

90 88 75

104

80

102

81 88

111

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

BPO Half-Year Industry Details ACV ($B)*

$0.81

$0.66

$0.47

$0.24

$0.24

$0.18

$0.16

$0.12

$- $0.50 $1.00 $1.50

Manufacturing

Financial Services

Telecom & Media

Energy

Business Services

Travel, Transport, Leisure

Healthcare & Pharma

Retail

Avg of Prior 4 Halves 1H14

BPO Half-Year New vs. Restructuring ACV ($B)*

$1.55 $1.44

$1.80

$1.09

$0.0

$1.0

$2.0

$3.0

$4.0

New Scope Restructuring

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

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Share of BPO

Active Contract Numbers

ACV Band 5 yrs. ago Today 5-year CAGR

>$2 to $5M 35% 37% 8.8%

> $5M 65% 63% 7.5%

Share of BPO Annualized Revenue

ACV Band 5 yrs. ago Today 5-year CAGR

>$2 to $5M 7% 9% 6.1%

> $5M 93% 91% 2.6%

Active Contract Counts

Annualized Revenue ($B)

Annualized Revenue Growth is slowing for larger contracts awards but remains robust in the smaller segment ($>2M-$5M.) Contracting activity, as measured by number of active contracts, remains high in both large and small deal categories.

An Expanded Look: BPO Active Contracts With ACV > $2M

$31.1 $26.3

$3.0 $2.1

Today5 Years Ago

ACV >$2M to $5M ACV > $5M

1,933 1,276

1,150

694

Today5 Years Ago

ACV >$2M to $5M ACV > $5M

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Note: Service providers in alphabetical order; no rankings implied. Placements based on ACV from commercial contract awards sourced from ISG Contracts Knowledgebase ®.

Accenture Aditya Birla Minacs Accenture Accenture Accenture

Aon Hewitt Convergys Alliance Data Systems Capgemini Capgemini

ADP EXL Capita EXL EXL

Ceridian Genpact CSC Genpact Genpact

Fidelity Infosys Dell GEP IBM

Genpact SITEL First Data Corporation IBM Infosys

IBM SYNNEX FIS Infosys TCS

Northgate TCS HCL TCS Wipro

Workday TeleTech TCS Xchanging WNS

Xerox Xerox Xerox Xerox Xerox

Top Service Providers in the BPO Market: ACV > $2M Contracting Numbers and Change % by Service Segment From June 2013 to 2014

Percentage of Market Share by Provider Types

India-heritage Western-heritage Function-specific

66% 50% 38% 24%

4% 27% 24%

26% 54%

30% 23% 38% 50% 46%

HRO Contact Center Industry-specific Procurement F&A

447 438

1,112

214

619

↓6% ↓7%

↑ 4%

↓2%

↓1%

HRO Contact Center Industry-specific Procurement F&A

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Second quarter ACV is up 118% Y/Y and 22% Q/Q, even as large deals remain mostly absent from a mature market. YTD, Broader Market ACV is up 21%.

Americas Quarterly ACV ($B)* in Size Bands

Americas Contract Award Trends

$0.3 $1.0 $0.8

$0.7 $0.5 $0.3

$1.1 $0.3 $0.7

$0.5 $0.2 $0.3

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

$100M + $40-99M $10-39M $5 - 9M

Americas Quarterly ACV ($B)* and Counts

$2.3 $1.9

$1.5 $1.7

$1.1

$2.4 $1.9 $1.9 $2.1

155

111 113

137

70

127 111 104 111

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

Americas Half-Year Segment Details ACV ($B)* Americas Half-Year ACV ($B)*

$4.2 $3.5

$5.0

$3.8

$5.7

$4.2

$3.1 $3.2

$4.6 $3.7

$3.2

$3.8 $4.3

$3.1 $4.2

$3.1 $3.7

$3.0 $3.8

$6.7

$8.8

$7.5

201413121110090807062005

1H ACV 2H ACV

$2.33

$1.90

$2.55

$1.67

$0.0

$1.0

$2.0

$3.0

$4.0

New Scope Restructuring ITO BPO

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

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$0.24

$0.06 $0.04

$0.03 $-

$0.1

$0.1

$0.2

$0.2

$0.3

$0.3

$0.4

Canada Brazil Other LatAm Mexico

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

YTD, U.S.-based ACV is up significantly Y/Y and Q/Q. YTD, gains in the Americas are led by the Financial Services and Manufacturing industries.

Americas Contract Award Trends Detail

Americas Half-Year Sub-regions ACV ($B)* Americas Industries ACV ($B)*

$3.86

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

U.S.

$0.49

$0.42

$0.24

$0.18

$0.14

$0.12

$0.07

$0.01

$- $0.50 $1.00

Financial Services

Manufacturing

Telecom & Media

Business Services

Energy

Healthcare &Pharma

Retail

Travel, Transport,Leisure

1H13 1H14

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

ISG Sourcing Market Standouts in the Americas For ACV awards in the past 12 months*, Americas-based providers dominate the largest tier, while India-heritage providers lead in both the mid-size and smaller segments.

1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings

The Building 10

Sourcing Standouts

The Breakthrough 10

Sourcing Standouts

Aon Hewitt CB Richard Ellis Group

CGI Cognizant1

Genpact HCL1

Infosys1

SAIC

Tech Mahindra

Wipro

Accenture1

AT&T BT

Capgemini1

CSC1

Dell IBM1

ISS Global TCS1

Xerox1

Aditya Birla Minacs Allscripts

EXL GardaWorld

iGATE1

KPIT Technologies Neoris

NIIT Technologies Syntel

WNS Global Services

SOURCING STANDOUTS BY COMPANY SIZE

The Big 10

Sourcing Standouts

Co. Revenues > $10B

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Asia Pacific generates second consecutive strong quarterly performance with significant Y/Y gains led by several large contract awards.

Asia Pacific Quarterly ACV ($B)* in Size Bands

Asia Pacific Contract Award Trends

$0.5 $0.2 $0.6

$0.2 $0.3

$0.2 $0.2 $0.3

$0.1 $0.1 $0.2

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

$100M + $40-99M $10-39M $5 - 9M

Asia Pacific Quarterly ACV ($B)* and Counts

AP Half-Year Segment Details ACV ($B)* Asia Pacific Half-Year ACV ($B)*

$1.9

$0.9

$1.9

$1.0 $0.8

$1.4

$0.7

$1.3 $1.0

$0.4

$1.0

$1.4

$1.0 $1.5

$1.3

$1.6 $1.3

$0.5 $1.1

$1.9

$3.3

$1.5

201413121110090807062005

1H ACV 2H ACV

$1.39

$0.48

$1.81

$0.06 $0.0

$0.5

$1.0

$1.5

$2.0

New Scope Restructuring ITO BPO

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

$1.0 $0.9

$0.5 $0.5 $0.5 $0.5 $0.6

$0.8

$1.4

37 44

26

39

31 29 32 38

51

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

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$0.40

$0.49

$0.25

$0.52

$0.19

$0.01 $-

$0.1

$0.2

$0.3

$0.4

$0.5

$0.6

$0.7

$0.8

$0.9

$1.0

India andSouth Asia

ANZ GreaterChina

Japan SoutheastAsia

South Korea

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

YTD, ANZ and Japan step up contracting award activity. Gains in Manufacturing and Telecom lead the YTD regional improvement.

Asia Pacific Contract Award Trends Detail

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

$0.74

$0.44

$0.22

$0.21

$0.12

$0.08

$0.03

$0.03

$- $0.5 $1.0

Manufacturing

Telecom & Media

Financial Services

Travel, Transport,Leisure

Energy

Healthcare & Pharma

Business Services

Retail

1H13 1H14

Asia Pacific Industries ACV ($B)*

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

ISG Sourcing Market Standouts in Asia Pacific For ACV awards in the past 12 months*, Asia Pacific features diversity in the large tier with providers from all regions. The middle tier is led by India-heritage providers.

1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings

SOURCING STANDOUTS BY COMPANY SIZE

Co. Revenues > $10B

Amdocs Cognizant1

Dimension Data HCL

Infosys1

Orange Business Services SingTel Optus1

Tech Mahindra Unisys Wipro1

Accenture1

Alcatel-Lucent Capgemini

CSC1

Fujitsu1

HP IBM1

NTT Data TCS1

Telstra1

ASG Chinasoft

Hollysys Automation Itron

Kratos Defense & Security Lufthansa Systems

Pactera Ramco

REDKNEE UXC

The Building 10

Sourcing Standouts

The Breakthrough 10

Sourcing Standouts

The Big 10

Sourcing Standouts

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Second Quarter ACV is up 45% Y/Y but down slightly 2% Q/Q. YTD ACV is up 32% with 1H14 being the second best 1H performance ever.

EMEA Quarterly ACV ($B)* in Size Bands

EMEA Contract Award Trends

$1.1 $0.7 $0.8

$0.6 $0.3 $0.8

$0.9 $0.8 $0.7

$0.5 $0.3

$0.4

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

$100M + $40-99M $10-39M $5 - 9M

EMEA Quarterly ACV ($B)* and Counts

$3.1 $3.2 $2.6

$3.7

$2.2 $2.6 $2.9 $2.9 $2.8

148 168 160

176

110

143 135

109 130

2Q141Q4Q3Q2Q131Q4Q3Q2Q12

ACV Counts

EMEA Half-Year Segment Details ACV ($B)*

$4.23

$2.09

$5.17

$1.15

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

New Scope Restructuring ITO BPO

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

EMEA Half-Year ACV ($B)*

$6.3

$4.8 $5.5 $5.4

$6.1

$4.6

$7.2

$4.0 $3.3

$5.0

$6.2 $5.8

$7.9

$5.6 $5.8

$4.6

$4.2 $3.9

$4.6

$11.0 $11.3

$9.5

201413121110090807062005

1H ACV 2H ACV

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DACH, Southern Europe and France rise significantly over 1H13. Almost all industries are up over last year’s first half, with Manufacturing leading the charge.

EMEA Contract Award Trends Detail

EMEA Sub-regions Half-Year ACV ($B)* EMEA Industries

Half Year ACV ($B)*

$1.79

$0.92

$1.08

$0.30

$0.75

$1.16

$0.27

$0.05 $-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

U.K. &Ireland

DACH Nordics Benelux SouthernEurope

France Africa &Middle

East

E. Europe& Russia

Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14

$1.76

$1.25

$1.09

$0.83

$0.63

$0.39

$0.20

$0.17

$- $0.5 $1.0 $1.5 $2.0

Manufacturing

Financial Services

Travel, Transport,Leisure

Telecom & Media

Energy

Business Services

Retail

Healthcare & Pharma

1H13 1H14

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

ISG Sourcing Market Standouts in EMEA For ACV awards in the past 12 months*, EMEA and local based providers lead in all segments. For lower two tiers, India-heritage providers are making inroads.

1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings

SOURCING STANDOUTS BY COMPANY SIZE

Co. Revenues > $10B

Capita Carillion

Cognizant EVRY HCL1

Infosys1

MITIE Orange Business Services

Tech Mahindra Tieto

Accenture1

Atos1

Balfour Beatty BT1

Capgemini1

CSC1

T-Systems1

HP IBM1

TCS1

Asseco Communisis GP Strategies

iGATE Innovation Group

Kelway NNIT A/S

NorthgateArinso Quindell

WEX

The Building 10

Sourcing Standouts

The Breakthrough 10

Sourcing Standouts

The Big 10

Sourcing Standouts

Page 20: Second Quarter and First Half 2014 Global ISG Outsourcing Index

Special Topic for Second Quarter and First Half 2014

David Howie Partner

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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®

21

EMEA Is the Largest Outsourcing Market With 55% of the global ACV awarded in the last 3 years, a 70% increase since 2008, EMEA is clearly a high-priority target for service providers.

$42 billion

$9 billion $25 billion

Sourcing Market Activity by Major Region Recent 3-year Totals

Page 22: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®

22

$20.5

$7.5 $8.1

$13.8

$4.7

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

0% 10% 20% 30% 40% 50% 60%

Variations in Sourcing Profiles Across Europe Targeting the diverse markets of Europe requires a multifaceted approach. Market growth rates and size, recent award levels and buyer penetration rates factor in.

Sourcing Profiles of Select European Markets

Sou

rcin

g G

row

th O

ver

10

Ye

ars

An

nu

aliz

ed R

even

ues

in U

.S. b

illio

ns

S. Europe U.K. & Ireland

Nordics

DACH

Benelux

Market Potential* Based on Percentage Forbes G-2000 Companies Not Sourcing as of 2013

*Sourced from ISG Momentum™ Geography Report

Current Market Size in U.S. billions

Germany's GDP is largest in Europe, and combined with relatively low sourcing penetration, potential for sourcing growth is heightened.

France is the largest market in this sub-region. Growth is up considerably and the market is under-penetrated with scope to grow.

Page 23: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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Market Share Changes in Europe by Provider Peer Groups Americas-based providers lost share in all regions as India-based providers gained. S. Europe, the least mature market, remains a stronghold for EMEA-based providers.

U.K. & Ireland

Benelux

2005 - 07

17%

58%

25%

Since 2011

2005 - 07

25%

38%

37%

Since 2011 2005 - 07

23%

22% 54%

Since 2011

2005 - 07

20%

38%

42%

Since 2011

Nordics

DACH

India/AP-based Provider Americas-based Provider EMEA-based Provider

37%

48%

14% 26%

69%

5%

55% 42%

4%

54% 31%

14%

Share Shifts by Provider Peer Group in Select EMEA Markets

Southern Europe

2005 - 07

3%

50% 47%

Since 2011

36%

61%

2%

Page 24: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®

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Five Factors That Drive Sourcing Success Recognizing the best practices of the successful souring provider

Value Proposition

Address customer demand for new and better-integrated products, platforms and business solutions.

Work to present a local face and understanding of the local culture through the sales and consulting process.

Sales Culture

Delivery Culture

Play to clients’ appetite for global delivery models, married to more flexible, output-based commercial structures.

Technology Leadership

Leverage cloud computing and smart analytics to focus on strategic projects that drive growth.

Demonstrate deep domain expertise, as the impetus for sourcing moves from the CIO organization towards the business users.

Solution Verticalization

Page 25: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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Broader Market ACV is up significantly Y/Y and slightly Q/Q

ITO 2Q activity is at record highs for ACV and number of contracts awarded

All three regions have strong quarterly performances Y/Y and YTD

Americas 2Q results continue the upward trend despite a lack of large deals

YTD, Europe continues to account for the majority of the ACV with 51% of the broader market activity

Asia Pacific has its second best half-year performance ever supported by an uptick in large deal activity

We expect 3Q14 ACV to be flat or lower Y/Y on a difficult comparison against a robust 3Q13

We see lots of transaction activity in the market that should come to award in the second half of 2014

Expect full-year ACV to exceed 2013 ACV levels by more than 25%, more in line with full-year 2012 results.

2Q and 1H 2014 ISG Outsourcing Index Summary and Outlook

summary market

outlook market

Page 26: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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Please contact us with your questions and comments.

Learn More

--- Media Contacts ---

► John Keppel Partner and President, ISG +44 (0)7879 432 212 [email protected]

► Will Thoretz Leader, Marketing & Communications, ISG +1 203 517 3119 [email protected]

► Jim Baptiste Matter Communications for ISG +1 978 518 4527 [email protected]

www.isg-one.com

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Second Quarter and First Half 2014

Page 28: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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28

The ISG Outsourcing Index has moved to ACV as the primary measure of the Broader Market. In transition, we will continue to provide a high-level TCV view of the market via a Scorecard analysis.

Second Quarter and First Half TCV Scorecard

*Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase®

Scorecard 2Q14 2Q Y/Y 2Q Q/Q 1H14 1H14 Y/Y

TCV ($B)* Change Change TCV ($B)* Change

Global Market $ 27.0 43% 2% $ 53.3 28%

New Scope $ 18.5 27% 8% $ 35.5 36%

Restructurings $ 8.5 97% -9% $ 17.8 15%

Mega-deals $ 7.0 144% 122% $ 10.2 29%

ITO $ 20.4 76% 7% $ 39.4 54%

BPO $ 6.6 -10% -10% $ 13.9 -13%

Americas $ 9.0 79% 9% $ 17.2 17%

EMEA $ 13.9 23% 1% $ 27.5 24%

Asia Pacific $ 4.1 62% -6% $ 8.6 87%

Page 29: Second Quarter and First Half 2014 Global ISG Outsourcing Index

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