The TPI EMEA IndexEMEA Outsourcing Market Data and Insights                      First Quarter 2012                       ...
2                       Welcome to the 37th Quarterly Outsourcing Index Call                       Covering the state of t...
3                       At A Glance                                            “                                          ...
4                       Global Broader Market Contract Award Trends                       1Q12 TCV declined a substantial ...
5                       EMEA Contract Award Trends                       1Q12 TCV was down 53% Q/Q and 32% Y/Y. The ‘hango...
6                       EMEA Country Details in Contract Award Trends                       With the exception of a steady...
7                       EMEA Mega Deals & Relationships Trends                       Only one was signed in 1Q, an ITO meg...
8                       EMEA ITO Contract Award Trends                       EMEA ITO experienced Q/Q decreases of 38% in ...
9                       EMEA BPO Contract Award Trends                       BPO saw a Q/Q increase of 26% in counts but a...
10                       EMEA Industry Details in Contract Award Trends                       With the exception of a reco...
11                       Asia Pacific Contract Award Trends                       AP contracting counts were flat Q/Q. How...
12                       Americas Contract Award Trends                       Americas TCV rose 8% Q/Q, making it one of t...
13                       Anticipating Increased Global Restructuring Volume                       Contract expirations are...
14                       Motivations Behind Pre-emptive Renegotiation Efforts                       Contract renegotiation...
15                       Who will win these restructurings?                       Applying the 80/80 rule: 80% of the time...
16                         1Q12 TPI Index Summary and Outlook                                                    Global Br...
17                       Learn More                       Please contact us with your questions and comments.             ...
www.isg-one.com
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1st Quarter 2012, EMEA TPI Index

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The global outsourcing industry is constantly evolving through new contracting award characteristics and an expanding universe of successful service providers. ISG's TPI Index helps industry participants, enterprises and organizations keep pace and capitalize from the latest data on outsourcing trends. It is the authoritative source for marketplace intelligence related to outsourcing: transaction structures and terms, industry adoption, geographic prevalence and service provider metrics.

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1st Quarter 2012, EMEA TPI Index

  1. 1. The TPI EMEA IndexEMEA Outsourcing Market Data and Insights First Quarter 2012 Hosted by: Marc Geall, Deutsche Bank Software and IT Services Team April 16, 2012
  2. 2. 2 Welcome to the 37th Quarterly Outsourcing Index Call Covering the state of the outsourcing industry for global, commercial contracts with total contract value greater than €20 million. Duncan Aitchison Partner & President North Europe, ISG Bernd Schaefer Partner & Managing Director, ISG Germany John Keppel Partner & President Research © 2012 & Managed Services InformationServices Group, Inc. and Chief Marketing Officer,All Rights Reserved ISGISG-one.com *Contracts with TCV > €20M
  3. 3. 3 At A Glance “ GLOBAL BROADER MARKET AWARDS AND TCV DROPPED ON THE HEELS OF RECORD 2011 RESULTS RESTRUCTURINGS NOTABLY ↑ Y/Y, WHILE NEW SCOPE TCV CONTINUES TO DECLINE EMEA TCV DECLINES ON DEARTH OF LARGE DEALS AMERICAS TCV ↑ Q/Q “ STRONG RESULTS INCLUDE THE LONE 1Q11 MEGA DEAL 1Q12 TCV Q/Q 1Q Y/Y 1Q12 Q/Q 1Q Y/Y Score Card (€B) Change Change Counts Change Change Global Market € 14.9 -35% -22% 184 -18% -31% Mega Deals € 1.2 -83% -93% 1 -80% -67% New Scope € 8.5 -45% -46% 137 -23% -35% Restructurings € 6.4 -13% 82% 47 2% -18% ITO € 10.0 -37% -20% 120 -22% -29% BPO € 4.9 -30% -20% 64 -11% -34% © 2012 EMEA € 6.9 -53% -32% 79 -23% -37% InformationServices Group, Inc. Asia Pacific € 1.4 -33% -36% 18 flat -55%All Rights Reserved Americas € 6.6 8% -3% 87 -16% -14%ISG-one.com *Contracts with TCV > €20M
  4. 4. 4 Global Broader Market Contract Award Trends 1Q12 TCV declined a substantial 35% Q/Q and 22% Y/Y, not unusual after a strong third and fourth quarter 2011. Quarterly TCV (€B)* Comparison ↓35% € 22.5 € 19.8 € 21.7 € 22.9 € 17.4 € 19.2 € 15.7 € 14.7 € 14.9 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 The TCV Hangover Effect - Previous Quarterly Precedence 2 Prior 2 Prior Qtrs Avg Qtrs Avg € 23.9 € 22.8 ↓27% ↓40% € 23.2 € 25.3 € 22.5 € 22.5 € 17.4 © 2012 € 13.8 InformationServices Group, Inc.All Rights Reserved 4Q05 1Q06 2Q06 4Q09 1Q10 2Q10ISG-one.com *Contracts with TCV > €20M
  5. 5. 5 EMEA Contract Award Trends 1Q12 TCV was down 53% Q/Q and 32% Y/Y. The ‘hangover’ effect and, potentially, Eurozone financial concerns impacted results. Quarterly TCV (€B)* Comparison € 14.6 € 9.8 € 10.1 € 7.3 € 6.9 1Q09 2Q 3Q 4Q 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q11 1Q12 New Scope Quarterly TCV (€B)* Comparison Comparison vs. Restructuring TTM TCV (€B)* New Scope TCV Restructuring TCV 2Q11-1Q12 € 25.4 € 17.0 2Q10-1Q11 € 26.1 € 9.5 2Q09-1Q10 € 30.8 € 7.0 © 2012 2Q08-1Q09 € 25.0 € 9.7 InformationServices Group, Inc.All Rights Reserved 2Q07-1Q08 € 31.3 € 3.8ISG-one.com *Contracts with TCV > €20M
  6. 6. 6 EMEA Country Details in Contract Award Trends With the exception of a steady performance in DACH, and some activity in E. Europe, EMEA sub-regions were down from their Prior Five-Like-Quarter averages. Sub-Regional Like-Quarter TCV (€B)* Comparison Prior 5 Period Range Average 1Q11 1Q12 € 5.0 € 4.5 € 4.0 € 3.5 € 3.0 € 2.5 € 2.5 € 2.0 € 1.5 € 1.3 € 1.4 € 1.0 € 1.0 € 0.5 € 0.2 € 0.2 € 0.1 €- € 0.1 UK & Scandinavia Benelux DACH France Southern Africa & E. Europe & © 2012 Ireland Europe Middle East Russia InformationServices Group, Inc.All Rights ReservedISG-one.com *Contracts with TCV > €20M
  7. 7. 7 EMEA Mega Deals & Relationships Trends Only one was signed in 1Q, an ITO mega deal in the Americas valued at €0.8B. EMEA 1Q12 Mega Relationship counts were the 3rd highest in three years. Mega Deal TCV (€B)* Comparison TCV (B) Counts 4 3 2 2 2 2 1 1 1 1 1 € 6.2 € 4.7 € 4.7 € 5.8 € 3.6 € 1.6 € 2.5 € 1.8 € 1.2 € 0.9 € 0.8 0 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Mega Relationship ACV (€B)* Comparison ACV (B) Counts 9 8 6 75% of 1Q Mega 3 4 3 3 3 4 1 1 2 2 Relationships are Restructurings € 1.1 € 0.9 € 1.4 € 0.7 € 1.0 € 1.1 © 2012 € 0.3 € 0.1 € 0.2 € 0.3 € 0.3 € 0.6 € 0.4 InformationServices Group, Inc.All Rights Reserved 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12ISG-one.com *Contracts with TCV > €20M
  8. 8. 8 EMEA ITO Contract Award Trends EMEA ITO experienced Q/Q decreases of 38% in counts and 58% in TCV. The lack of large deals meant that 1Q12 was the weakest ITO quarter for TCV since 3Q06. Quarterly TCV (€B)* Comparison Top ITO Providers by TTM TCV € 10.1 € 8.6 New Scope Restructuring € 6.7 Accenture Atos € 5.8 € 4.2 Atos BT BT Capgemini Capgemini CSC 1Q09 2Q 3Q 4Q 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q11 1Q12 Capita HCL CSC Hexaware TTM New Scope vs. Restructuring TCV (€B)* Dimension HP Data IBM New Scope TCV Restructuring TCV Fujitsu Infosys 2Q11-1Q12 € 16.9 € 12.9 HCL T-Systems HP 2Q10-1Q11 € 19.8 € 7.6 IBM 2Q09-1Q10 € 25.2 € 6.1 Infosys TCS 2Q08-1Q09 € 16.9 € 9.0 T-Systems © 2012 Information 2Q07-1Q08 € 20.1 € 2.9 WiproServices Group, Inc.All Rights Reserved Note: Service providers in alphabetical order; no rankings implied.ISG-one.com Placements based on 2011 TCV commercial contract awards sourced from ISG contracts database. *Contracts with TCV > €20M
  9. 9. 9 EMEA BPO Contract Award Trends BPO saw a Q/Q increase of 26% in counts but a decrease of 42% in TCV. Against two 4Q11 Mega Deals, the TCV compare is tough. Quarterly TCV (€B)* Comparison Top BPO Providers € 4.5 by TTM TCV € 3.5 € 2.6 TCS € 1.6 Accenture € 1.1 Capgemini Capita 1Q09 2Q 3Q 4Q 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q11 1Q12 Carillion plc Convergys TTM New Scope vs. Restructuring TCV (€B)* HCL HP New Scope TCV Restructuring TCV Infosys 2Q11-1Q12 € 8.5 € 4.1 Johnson Controls Logica 2Q10-1Q11 € 9.4 € 4.0 Sabre 2Q09-1Q10 € 6.8 € 3.3 Sodexho 2Q08-1Q09 € 6.5 € 3.4 Xchanging Xerox © 2012 2Q07-1Q08 € 6.3 € 1.9 InformationServices Group, Inc.All Rights Reserved Note: Service providers in alphabetical order; no rankings implied.ISG-one.com Placements based on 2011 TCV commercial contract awards sourced from ISG contracts database. *Contracts with TCV > €20M
  10. 10. 10 EMEA Industry Details in Contract Award Trends With the exception of a record high 1Q in Manufacturing, all EMEA industry sectors performed under their Prior Five-Like-Quarter TCV averages. Industry Like-Quarter TCV (€B)* Comparison Prior 5 Period Range Average 1Q11 1Q12 € 5.0 € 4.5 € 4.0 € 3.5 € 3.0 € 2.5 € 2.5 € 2.2 € 2.0 € 1.5 € 1.0 € 0.5 € 0.7 € 0.4 € 0.5 € 0.4 € 0.2 € 0.0 €- © 2012 InformationServices Group, Inc.All Rights ReservedISG-one.com *Contracts with TCV > €20M
  11. 11. 11 Asia Pacific Contract Award Trends AP contracting counts were flat Q/Q. However, TCV was down by one-third both Q/Q and Y/Y, ending up well below the recent first-quarter average. Quarterly TCV (€B)* Comparison € 2.2 € 2.1 € 1.3 € 1.4 € 1.1 1Q09 2Q 3Q 4Q 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 New Scope vs. Restructuring TTM TCV (€B)* Comparison New Scope TCV Restructuring TCV 2Q11-1Q12 € 4.5 € 2.1 2Q10-1Q11 € 7.0 € 2.0 2Q09-1Q10 € 7.2 € 2.5 © 2012 2Q08-1Q09 € 7.9 € 1.0 InformationServices Group, Inc. 2Q07-1Q08All Rights Reserved € 6.1 € 1.2ISG-one.com *Contracts with TCV > €20M
  12. 12. 12 Americas Contract Award Trends Americas TCV rose 8% Q/Q, making it one of the three highest quarters since the beginning of 2010. Americas posted the only 1Q12 Mega Deal. Quarterly TCV (€B)* Comparison € 11.7 € 7.5 € 6.8 € 6.2 € 6.6 1Q09 2Q 3Q 4Q 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 New Scope vs. Restructuring TTM TCV (€B)* Comparison New Scope TCV Restructuring TCV 2Q11-1Q12 € 16.6 € 9.6 2Q10-1Q11 € 18.8 € 7.7 2Q09-1Q10 € 21.2 € 12.4 © 2012 2Q08-1Q09 € 20.2 € 6.9 InformationServices Group, Inc.All Rights Reserved 2Q07-1Q08 € 19.2 € 6.2ISG-one.com *Contracts with TCV > €20M
  13. 13. 13 Anticipating Increased Global Restructuring Volume Contract expirations are occurring at a faster rate as the result of dramatically increased transaction counts and declining average contract durations. Trends Impacting Restructuring Volumes ↑ 250% 933 Contract Awards 6 5 Average Duration 377 ↓ 1 Yr. 2002 2011 Record Levels of Expiring Contracts ↑ 20% Y/Y 690 570 310 © 2012 InformationServices Group, Inc.All Rights Reserved 2007 2011 2012eISG-one.com *Contracts with TCV > €20M
  14. 14. 14 Motivations Behind Pre-emptive Renegotiation Efforts Contract renegotiations can be driven by either the client or the service provider, but the leverage is, more often than not, with the Client. Client Motivations Provider Motivations Increase Scope or Service Levels Chance for Sole Sourced Renewal Reduce Price for Existing Scope Retain Full Scope Add Emerging Services Introduce New Services © 2012 Information Restructuring creates the opportunity for Best-of-Breed providers to winServices Group, Inc.All Rights Reserved new clients looking for targeted solutionsISG-one.com *Contracts with TCV > €20M
  15. 15. 15 Who will win these restructurings? Applying the 80/80 rule: 80% of the time a deal is renegotiated with the incumbent provider, and they typically retain about 80% of the scope. 2012 Restructuring by Provider Share of ACV 37% 32% 18% 13% Americas Heritage Niche Providers India Heritage Major European © 2012 InformationServices Group, Inc.All Rights ReservedISG-one.com *Contracts with TCV > €20M
  16. 16. 16 1Q12 TPI Index Summary and Outlook Global Broader Market ↓1Q12 loses momentum aŌer two quarters of impressive growth Restructuring TCV ↑ Y/Y, not enough to make up for New market Scope declines summary Shortfall in previously robust EMEA TCV had the greatest impact on the global market EMEA ITO values at their lowest since 2Q06; BPO TCV ↓ while contract numbers ↑ Q/Q market Look for a soft first half 2012 and a reviving second half outlook Restructuring 2H12 activity may lead an upswing in the overall market © 2012 InformationServices Group, Inc.All Rights ReservedISG-one.com *Contracts with TCV > €20M
  17. 17. 17 Learn More Please contact us with your questions and comments. ► John Keppel ► Duncan Aitchison Partner & President Research & Partner & President Managed Services and Chief North Europe, ISG Marketing Officer +44 (0)1628 21702 +44 (0)7879 432 212 duncan.aitchison@isg-one.com john.keppel@isg-one.com ► Paul Reynolds Chief Research Officer, ISG Momentum +1 508 625 2194 paul.reynolds@isg-one.com --- Media Contacts --- ► Denise Colgan ► Louise Fernley Marketing Director, EMEA, ISG Cohn & Wolfe for ISG +44 1737 371523 +44 207 331 5365 denise.colgan@isg-one.com louise.fernley@cohnwolfe.com © 2012 InformationServices Group, Inc.All Rights ReservedISG-one.com www.considerthesourceblog.com *Contracts with TCV > €20M
  18. 18. www.isg-one.com
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