Ito   renewal intelligence report - preview deck - may 2013
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Ito renewal intelligence report - preview deck - may 2013

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This report investigates renewals coming up in the outsourcing market in the next 18 months starting April 2013. Analyses shared include average deal sizes, durations and numbers across industries, ...

This report investigates renewals coming up in the outsourcing market in the next 18 months starting April 2013. Analyses shared include average deal sizes, durations and numbers across industries, geographies, functions, and service provider categories. The report also covers renewal trends such as the increasing churn across large global services engagements

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Ito   renewal intelligence report - preview deck - may 2013 Ito renewal intelligence report - preview deck - may 2013 Presentation Transcript

  • Topic: Impending Contract Renewals: “A Futuristic View of the Renewals Market Place” Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 Information Technology Outsourcing (ITO) Market Report: May 2013 – Preview Deck
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 2 Our research offerings for global services Subscription information  The full report is included in the following subscription(s) – Information technology  In addition to published research, a subscription may include analyst inquiry, data cuts, and other services  If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: – info@everestgrp.com – +1-214-451-3110 Market Vista Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies Healthcare Information technology Finance & accounting Procurement Banking, financial services, insurance Global sourcing Cloud Vista Human resources Recruitment process Transaction Intelligence PricePoint Service provider Intelligence
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 3 Background and methodology of the research Background of the research  The sourced services is a large US$400 billion market with deals lasting for an average of two to three years. As a result, a large portion of the market scope comes back to the planning/negotiation table as contracts keep expiring. Most of the deals had originally been procured via a competitive process involving Request for Proposals (RFPs), capability assessment, and short-listing of service providers  Renewals and recompetes provide opportunity for non-incumbent players to expand their wallet shares amidst disruptive factors such as saturation, slowing growth rate, and newer and more agile competitors etc. It also allows buyers a chance to make course corrections based on lessons learned during the lifetime of the just-concluded engagement and adjust sourcing strategy to suit current business environment  End-of-term assessments on the part of buyers also bring newer solutions within contention. For example, a traditional infrastructure deal being serviced by a full-service MNC provider may now be open for pitch by offshore service providers. There may also be scope for next generation IT technology paradigms, such as, cloud computing, to play a significant role. This research provides an analysis on the impending renewals in the coming 12-18 month period, focusing on the assessment of one large ITO engagement coming up for renewal The scope of this report includes:  Analysis of the ITO and BPO markets with deals in scope that are to renew in the future  Key vertical, geographical, and scope-based trends  Observations on how future renewals might look  Implications for key stake holders
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 4 Removed deals that expired before April 1, 2013  This research only focuses on deals that will renew in the future, specifically after April 1, 2013 The analysis shared in this report is based on Everest Group’s “Transaction Intelligence Database”, the most comprehensive organized record of publicly announced outsourcing deals Removed defense and government deals  Such deals usually are different from the regular commercial outsourcing contracts with very different sales diligence, contract scope, and set of providers specially targeting this segment of buyers Filters Removed pure telecom and consulting deals  Telecom deals differ in key characteristics, specifically, they are, typically, voice network and equipment maintenance deals  Consulting deals are usually one-time contracts Removed deals that cannot be categorized  Certain deals cannot be categorized due to lack of sufficient information. This report ignores such deals 4,358 contracts 3,059 contracts 2,694 contracts 2,612 contracts The analysis was performed on 2,612 outsourcing deals that expire on or after April 1, 2013 Across nine industry buckets Four geographical regions Seven ITO towers and four BPO functions in scope TI database 1 2 3 4 Accounts for more than 30% of the entire sourcing market
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 5 Table of contents (page 1 of 2) Background and methodology 5 Summary of key messages 7 Section I: Overview of contracts nearing end of term 10  Summary 11  Trends by cumulative total contract value among deals up for renewal 12  Overall outsourcing renewal trend 17  ITO renewals (global) 18  BPO renewals (global) 19  Industry-wise renewal trends 20  Geography-wise renewal trends 21  Renewals in defense and government sectors 23  Renewals by telecom service providers 25 Section II: Deep-dive into upcoming renewals by scope 26  Summary (ITO trends) 29  ITO trends by industry 30  ITO trends by geography 34  ITO renewal opportunities by industry 39  ITO trends by service provider category 40 Topic Page no.
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 6 Table of contents (page 2 of 2) Section II: Deep-dive into upcoming renewals by scope (continued)  Summary (BPO trends) 45  BPO trends by industry 47  BPO trends by geography 51  BPO trends by service provider category 54 Section III: Future renewals – peek under the hood 56  Summary 57  IO deals – geographical trends 59  ADM deals – geographical trends 63  Offshore service providers replacing incumbent MNCs 66  Prominence of GICs 68 Section IV: Implications for key stakeholders 69 Appendix 73  Glossary of key terms 74  ITO research calendar 76  Recommendations 77 Topic Page no.
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 7 Summary of key messages (page 1 of 2)  IT contracts will witness a dip in average deal size during the "12-18 month" period  Telecom has large sized IO and ADM deals for renewal in the next 12 months while manufacturing has large sized bundled deals for renewal in the same period  Large multinational providers dominate renewal spending among IT contracts Deep-dive into upcoming renewals by scope – ITO Overview of contracts nearing end of term  During next 18 months, over US$90 billion worth of IT and BPO contracts will be up for renewal  BFSI, manufacturing and telecom will drive IT renewals in the next 18 months while BFSI dominates BPO renewals  Western Europe will have greater proportion of renewals, however, of smaller average size as compared to North America This report investigates the contracts that are going to come up for renewal during the next 18 months starting April 1, 2013. It provides analysis of IT and BPO deals along a number of silos e.g., industry, geography, and service provider category. Additionally the report offers a more detailed look into deeper level trends in IT contracts reaching end of term. Some of the findings in this report, among others, are:
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 8 Summary of key messages (page 2 of 2)  Contracts with datacenter or network in scope will have the highest frequency among IO renewals in the next 18 months while contracts with maintenance in scope among ADM renewals will witness a spurge in frequency in the "12-18 month" period  In the recent past, renewals with incumbents have been going down. Earlier, 95% of renewals used to stay with incumbents as opposed to 75 to 85% currently  Global In-House Centers (GICs) are slowly regaining prominence as service providers are losing parts of contracts to them Future renewals – peek under the hood  Among the single-tower BPO deals, HRO and contact center contracts will drive renewals in the next 18 months  BFSI and manufacturing will see most action on the BPO front  Unlike IT contracts, BPO contracts will witness a jump in average size during the “12-18 month” period Deep-dive into upcoming renewals by scope – BPO
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 9 This study offers four distinct chapters providing a deep dive into key aspects of the global sourcing market; below are four charts to illustrate the depth of the report Source: Everest Group (2013) IT renewals by scope of service IT renewals opportunity IT renewals by industry vertical Deep dive into impending ITO renewals Sum of TCV of deals for renewal US$ billion Deals currently running with said tower in scope Number of deals All impending renewals Datacenter Desktop Network Helpdesk Application… Application… Consulting 0-12 months 12-18 months Bundled ADM IO IT renewal opportunities by vertical and scope Deal renewal volume Dealrenewalopportunity Low High High Industry BB Industry AA Industry DD Industry CC Industry EE Industry FF Industry GG Industry HH Industry II Number of deals for renewal across industries Number of deals BFSI Energy & utilities Healthcare Manufacturing Retail Services Technology Telecom Travel & transport Others ADM IO Bundled
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 10 ITO research calendar Topic Release date Published Current November-2012Application Services – Crowdsourcing or Outsourcing December-2012IT Services Landscape – Market Size, Trends, and Buyer Insights Q2-2013Consumerization of IT – Enabling Enterprise Mobility Application Outsourcing Market Update 2013 Q2-2013 Infrastructure Outsourcing Market Update 2013 Q2-2013 Remote Infrastructure Management Market report Q3-2013 Verticalizing Infrastructure Services Q3-2013 IT Service Landscape with PEAK Matrix Assessment 2013 Q4-2013 December-2012Who is Moving Enterprise IT's Cheese? January-2012Application Services – Past, Present, and Future March-2012How to Overcome Roadblocks while Shifting to Output-based Pricing? May-2012Impending Contract Renewals: “A Futuristic View of the Renewals Market Place” Assessment of RIM Providers Q4-2013 Network Service Outsourcing Q4-2013
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 11 Additional ITO research recommendations The following documents are recommended for additional insight into the topic covered in this research report. The recommended documents either provide additional details on the topic or complementary content which may be of interest 1. IT Services Landscape – Market Size, Trends, and Buyer Insights (EGR-2012-4-R-0809); 2012: Everest Group’s research on IT services market estimates its size across different service segments, geographies, and industries. It also analyzes the adoption of next-generation services, buyer sourcing preferences, and deal trends 2. Enterprise Cloud Adoption: Year 2012 in Review (EGR-2013-4-R-0849); 2013: This research, focusing on the cloud adoption in 2012, is a part of the periodic Everest Group Cloud Vista enterprise cloud adoption report. It analyzes various deals signed by service providers in terms of buyer adoption trends by industry, geography, size, cloud opportunity, roles of the providers, insights on key deals, etc. For more information on this and other research published by the Everest Group, please contact us: Jimit Arora, VP Research: jimit.arora@everestgrp.com Chirajeet Sengupta, Practice Director: chirajeet.sengupta@everestgrp.com Yugal Joshi, Practice Director: yugal.joshi@everestgrp.com Sivaram S, Analyst: sivaram.s@everestgrp.com Phone: +1-214-451-3110 Email: info@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
  • Copyright © 2013, Everest Global, Inc. EGR-2013-4-PD-0868 12 Everest Group Leading clients from insight to action Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com. Dallas (Corporate Headquarters) info@everestgrp.com +1-214-451-3000 New York info@everestgrp.com +1-646-805-4000 Toronto canada@everestgrp.com +1-416-865-2033 London unitedkingdom@everestgrp.com +44-207-129-1318 India / Middle East india@everestgrp.com +91-124-496-1000 Stay connected Blogs www.sherpasinblueshirts.com www.gainingaltitudeinthecloud.com Websites www.everestgrp.com research.everestgrp.com Twitter @EverestGroup @Everest_Cloud