The Global ISG Outsourcing Index             Market Data and Insights                   First Quarter 2013                ...
2                         Welcome to the 42st Quarterly Outsourcing Index Review                         Covering the stat...
3                                        “                       At A Glance                                              ...
4                       Broader Market Contract Award Trends                       ACV of almost $4B was down 27% Y/Y and ...
5                       Broader Market Contract Trends for the Largest Deals                       Mega-relationships, dea...
6                       ITO Contract Award Trends                       ITO ACV of almost $2.5B was down 35% Y/Y and 27% Q...
7                       BPO Contract Award Trends                       BPO ACV of 1.5B was down 12% Y/Y and 21% Q/Q, yet ...
8                       Americas Contract Award Trends                       Americas ACV of $1.6B was down 39% Y/Y and 15...
9                       Americas Contract Award Trends Detail                       The U.S .contributed most to the drop ...
10                       EMEA Contract Award Trends                       EMEA ACV of almost $2B was down 20% Y/Y and 30% ...
11                       EMEA Contract Award Trends Detail                       EMEA market leaders UK and DACH had weak ...
12                       Asia Pacific Contract Award Trends                       Asia Pacific ACV of almost $450M was up ...
13                       Asia Pacific Contract Award Trends Detail                       Australia-New Zealand and Japan p...
14                       Top Service Providers Across the Globe                       The top service providers in each se...
Special Topic for First Quarter 2013Esteban Herrera         Partner
16                       Leading Providers Experience Shift in Market Share                                 Market Share S...
17                       Opportunities and Challenges for Short-term Growth                       1     Continue Winning i...
18                       Staying Ahead: What got you here will not get you there.                       Long-term, the bes...
19                        1Q13 ISG Outsourcing Index Summary and Outlook                                                  ...
20                       Learn More                       Please contact us with your questions and comments.             ...
First Quarter 2013
22                       1Q13 TCV Scorecard                       The ISG Outsourcing Index has moved to ACV as the primar...
www.isg-one.comknowledge powering results®Information Services Group is a leading technology insights, market intelligence...
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1Q13 ISG Outsourcing Index

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The ISG Outsourcing Index (formerly the TPI Index) provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media. For more than a decade, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance.

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1Q13 ISG Outsourcing Index

  1. 1. The Global ISG Outsourcing Index Market Data and Insights First Quarter 2013 Hosted by: Joe Foresi, Janney 11 April 2013
  2. 2. 2 Welcome to the 42st Quarterly Outsourcing Index Review Covering the state of the outsourcing industry for global, commercial contracts.* John Keppel Dr. David Howie President & Chief Partner Marketing Officer Esteban Herrera Partner © 2013Information Services Group, Inc. All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  3. 3. 3 “ At A Glance BROADER MARKET SAGGED IN 1Q13, BOTH Y/Y AND Q/Q MEGA-RELATIONSHIPS WERE UP OVER 50% Y/Y, BUT SMALL AWARDS SHOWED CONSIDERABLE WEAKNESS BPO MAINTAINED RECENT STRENGTH, WITH ACTIVITY UP Q/Q, BUT ITO RESULTS FELL SIGNIFICANTLY Y/Y MATURE MARKETS IN AMERICAS AND EMEA DECLINED SHARPLY Y/Y HEALTHY INCREASE IN ASIA PACIFIC PERFORMANCE, WITH POSITIVE RESULTS IN AUSTRALIA-NEW ZEALAND “ 1Q13 1Q Y/Y 1Q Q/Q 1Q13 1Q Y/Y 1Q Q/Q Scorecard ACV ($B)* Change Change Counts Change Change Global Market $ 3.9 -27% -24% 223 -24% -16% New Scope $ 2.1 -31% -37% 166 -22% -9% Restructurings $ 1.8 -22% 1% 57 -28% -30% Mega-relationships $ 1.2 54% 4% 7 -13% -79% ITO $ 2.4 -35% -28% 127 -34% -30% BPO $ 1.5 -10% -18% 96 -3% 16% © 2013Information Services Americas $ 1.6 -39% -15% 90 -38% -16% Group, Inc. All Rights Reserved EMEA $ 1.9 -20% -30% 105 -15% -17% Asia Pacific $ 0.4 8% -23% 28 22% -7%isg-one.com *Contracts with ACV ≥ $5M
  4. 4. 4 Broader Market Contract Award Trends ACV of almost $4B was down 27% Y/Y and 24% Q/Q. However, the trailing 12- month ACV was on par with the pervious 12 month period, tempering results. Broader Market ACV ($B)* Avg of Prior 1Qs $5.7 $6.2 $5.6 $5.7 $5.4 $5.6 $6.5 $5.4 $5.7 $5.4 $5.2 $4.5 $4.4 $3.9 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 Broader Market Counts New Scope vs. Restructuring ACV(B)* Avg of Prior New Scope Restructuring 349 1Qs 300 $4.0 $3.1 $3.4 292 264 $2.1 259 223 $2.3 © 2013 $1.8 $1.8Information Services $1.4 Group, Inc. All Rights Reserved 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13isg-one.com *Contracts with ACV ≥ $5M
  5. 5. 5 Broader Market Contract Trends for the Largest Deals Mega-relationships, deals with ACV awards 100M+, were up 54% Y/Y and 4% Q/Q. Mid to small sized awards dipped , but the trailing 12-month compare was stable. ACV(B)* by Bands $5 - 49M $50-99M $100M + Mega-relationships in 8 Quarter Increments New Scope vs. Restructuring Counts New Scope Restructuring $2.3 $2.1 $1.7 $1.5 $0.9 $0.8 $1.2 $1.2 $0.6 $1.0 $1.0 $0.8 $1.1 $0.8 $1.1 $0.9 $0.3 2Q11 - 1Q13 31 31 $0.5 2Q09 - 1Q11 37 22 $4.8 $4.6 $3.9 $4.1 $3.8 $4.0 $3.5 $3.6 2Q07 - 1Q09 48 13 $2.4 © 2013Information Services Group, Inc. 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  6. 6. 6 ITO Contract Award Trends ITO ACV of almost $2.5B was down 35% Y/Y and 27% Q/Q. Virtually every industry dropped with the exception of Energy, driven by large deal activity. ITO Annual ACV ($B)* ITO Industry ACV ($B)* Avg of Prior 1Qs Prior 5 Like-Qtr Avg 1Q13 $4.0 Manufacturing $1.02 $0.54 $4.7 $4.3 $4.8 $4.6 $0.76 $3.5 $3.9 $3.7 $3.2 $3.6 $3.3 Financial Services $3.2 $2.8 $0.59 $2.4 Travel, Transport, $0.43 Leisure $0.27 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 Energy $0.43 $0.57 ITO Counts Telecom & Media $0.37 $0.09 223 193 Avg of Prior 1Qs 190 Business Services $0.26 $0.13 Healthcare & $0.23 Pharma $0.14 155 © 2013 127Information Services Retail $0.15 Group, Inc. 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 $0.04 All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  7. 7. 7 BPO Contract Award Trends BPO ACV of 1.5B was down 12% Y/Y and 21% Q/Q, yet Telecom and Travel & Transportation industries significantly outperformed their historical averages. BPO Annual ACV ($B)* BPO Industry ACV ($B)* Prior 5 Like-Qtr Avg 1Q13 Avg of Prior 1Qs $1.7 Manufacturing $0.42 $0.21 $2.5 $1.9 $1.9 $1.9 Financial Services $0.35 $1.6 $1.7 $1.7 $1.8 $1.5 $0.29 $1.5 $1.2 $1.2 $0.9 Telecom & Media $0.31 $0.54 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 Business Services $0.14 $0.10 BPO Counts Healthcare & $0.14 Pharma $0.13 126 Avg of Prior 1Qs 99 110 Energy $0.12 $0.08 104 96 83 Travel, Transport, $0.09 Leisure $0.14 © 2013Information Services Retail $0.05 Group, Inc. $0.06 All Rights Reserved 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13isg-one.com *Contracts with ACV ≥ $5M
  8. 8. 8 Americas Contract Award Trends Americas ACV of $1.6B was down 39% Y/Y and 15% Q/Q. Americas BPO is up 17% Y/Y and 50% Q/Q, outperforming the ITO sector for the first time. Americas ACV ($B)* Avg of Prior 1Qs $2.5 $2.9 $2.8 $2.6 $2.0 $2.0 $2.0 $2.3 $1.8 $1.9 $1.8 $1.9 $1.6 $1.1 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 Americas Counts by ACV Bands Americas New vs. Restructuring ACV(B)* ITO ACV BPO ACV New Scope Restructuring $1.8 $1.54 $1.39 $1.3 $1.2 $1.19 $1.1 $1.2 $1.2 $1.1 $1.1 $0.9 $0.84 $1.05 $0.9 $0.9 $0.8 $0.8 $0.7 $0.73 $0.7 $0.6 $0.62 $0.67 © 2013 $0.6 $0.6Information Services Group, Inc. All Rights Reserved 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13isg-one.com *Contracts with ACV ≥ $5M
  9. 9. 9 Americas Contract Award Trends Detail The U.S .contributed most to the drop in the Americas ACV, down 43% Y/Y and 24% Q/Q. Mexico continues to enjoy large-deal activity, keeping the ACV numbers high. Americas Sub-region ACV ($B)* Americas Industry ACV ($B)* Prior 5 Like-Qtr Range Prior 5 Like-Qtr Avg 1Q12 1Q13 Prior 5 Like-Qtr Avg 1Q13 $0.25 $0.66 $3.0 Manufacturing $0.24 $0.21 Financial Services $0.37 $2.5 $0.20 $0.35 $2.31 Telecom & Media $0.27 $2.0 $0.54 $0.15 Business Services $0.25 $0.11 $1.5 $1.35 Healthcare & $0.31 $0.10 $0.10 $0.09 Pharma $0.19 $1.0 Retail $0.13 $0.02 $0.05 $0.5 $0.03 Energy $0.11 $0.03 $0.07 $0.01 © 2013 $0.01Information Services $0.0 $- $0.00 Travel, Transport, $0.11 Group, Inc. US Canada Brazil Other Mexico Leisure $0.09 All Rights Reserved LatAmisg-one.com *Contracts with ACV ≥ $5M
  10. 10. 10 EMEA Contract Award Trends EMEA ACV of almost $2B was down 20% Y/Y and 30% Q/Q. Restructuring ACV was up 12% Y/Y and 29% Q/Q in EMEA. EMEA ACV ($B)* Avg of Prior 1Qs $2.7 $3.5 $3.7 $3.0 $3.1 $2.9 $2.4 $2.7 $2.4 $2.4 $2.7 $2.0 $2.3 $1.9 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 EMEA Counts by ACV Bands EMEA New vs. Restructuring ACV(B)* ITO ACV BPO ACV New Scope Restructuring $2.9 $2.5 $2.06 $2.0 $2.0 $1.88 $1.63 $1.5 $1.6 $1.6 $1.4 $1.4 $0.94 $1.2 $0.97 © 2013 $0.8 $0.8 $1.0 $0.8 $0.75 $0.87Information Services $0.7 $0.8 $0.7 $0.5 $0.69 Group, Inc. All Rights Reserved 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13isg-one.com *Contracts with ACV ≥ $5M
  11. 11. 11 EMEA Contract Award Trends Detail EMEA market leaders UK and DACH had weak 1Q13 results. However, Nordics and Benelux, a bit off their like-quarter averages, had significant growth from 4Q12. EMEA Sub-region ACV ($B)* EMEA Industry ACV ($B)* Prior 5 Like-Qtr Range Prior 5 Like-Qtr Avg 1Q12 1Q13 Prior 5 Like-Qtr Avg 1Q13 $1.2 $0.67 Manufacturing 0.46 $1.0 Financial Services $0.64 0.48 $0.90 Energy $0.42 $0.8 0.42 Travel, Transport, $0.35 $0.6 $0.63 Leisure 0.22 $0.43 Telecom & Media $0.30 $0.4 $0.41 0.08 $0.39 $0.37 $0.36 $0.27 Business Services $0.12 0.11 $0.2 $0.11 $0.10 $0.08 $0.07 $0.04 $0.07 Retail $0.06 0.08 $0.04 $0.03 $- © 2013Information Services UK & DACH Nordics Benelux France Southern Africa & E. Europe Healthcare & $0.06 Group, Inc. Ireland Europe Middle & Russia Pharma 0.08 All Rights Reserved Eastisg-one.com *Contracts with ACV ≥ $5M
  12. 12. 12 Asia Pacific Contract Award Trends Asia Pacific ACV of almost $450M was up 8% Y/Y but down 23% Q/Q. However, the trailing 12-month ACV is up over 80% from the prior 12 month period. Asia Pacific ACV ($B)* Avg of Prior 1Qs $0.5 $1.07 $1.41 $0.65 $0.72 $0.58 $0.48 $0.46 $0.52 $0.41 $0.44 $0.33 $0.34 $0.35 1Q10 2Q 3Q 4Q 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 AP Counts by ACV Bands AP New vs. Restructuring ACV(B)* ITO ACV BPO ACV New Scope Restructuring $0.86 $1.32 $0.56 $0.47 $0.43 $0.43 $0.38 $0.56 $0.29 $0.27 $0.30 $0.31 $0.22 $0.41 $0.34 $0.36 $0.34 $0.06 $0.11 $0.13 © 2013Information Services $0.19 $0.09 $0.11 $0.09 $0.00 $0.24 $0.08 Group, Inc. All Rights Reserved 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13 1Q11 2Q 3Q 4Q 1Q12 2Q 3Q 4Q 1Q13isg-one.com *Contracts with ACV ≥ $5M
  13. 13. 13 Asia Pacific Contract Award Trends Detail Australia-New Zealand and Japan posted positive results due to several large awards. Energy and Travel & Transport were up over historical averages. Asia Pacific Sub-region ACV ($B)* AP Industry ACV ($B)* Prior 5 Like-Qtr Range Prior 5 Like-Qtr Avg 1Q12 1Q13 Prior 5 Like-Qtr Avg 1Q13 $0.30 Telecom & Media $0.11 $0.01 $0.25 $0.11 Manufacturing $0.09 $0.20 Financial Services $0.09 $0.06 $0.18 $0.15 Travel, Transport, $0.05 $0.15 $0.14 Leisure $0.10 Energy $0.02 $0.10 $0.10 $0.17 $0.08 $0.07 $0.02 $0.06 Business Services $0.05 $0.01 $0.03 Retail $0.01 $0.01 $0.02 $0.01 $0.00 $0.00 © 2013 ANZ India and Japan ASEAN Greater South Korea Healthcare &Information Services $0.001 South Asia China Pharma $0.00 Group, Inc. All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  14. 14. 14 Top Service Providers Across the Globe The top service providers in each sector based on 1Q13 or TTM ACV awarded 1Q13 Trailing 12 Months Global Top 20 Global Top 20 Accenture Accenture AT&T AT&T Capgemini Atos CGI BT Dell Capgemini Evry CGI Fidelity CSC Genpact Dell HCL HCL HP HP IBM IBM Infosys Infosys Nihon Unisys ISS Global A/S StarTek Jones Lang LaSalle TCS Mahindra Satyam Tieto MITIE Virtusa T-Systems Wipro TCS © 2013 Xchanging WiproInformation Services Xerox Group, Inc. Xerox All Rights Reservedisg-one.com Note: Service providers in alphabetical order; no rankings implied. *Contracts with ACV ≥ $5M Placements based on ACV from commercial contract awards sourced from ISG Contracts Knowledgebase ®.
  15. 15. Special Topic for First Quarter 2013Esteban Herrera Partner
  16. 16. 16 Leading Providers Experience Shift in Market Share Market Share Shifts 2009 - 2012 CAGR Disparity 2005 - 2012 ACV 2005 2009 2012 13% Awards 12% India-heritage 16% 32% India-heritage Providers Western-heritage Providers 7% 0.4% 7% 9% ACV Awards Western-heritage © 2013Information Services Group, Inc. All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  17. 17. 17 Opportunities and Challenges for Short-term Growth 1 Continue Winning in the Mature UK and US Restructuring Markets India-heritage Restructuring ACV 2 Capitalize on BPO Growth via Investment in Vertical Solutions India-heritage BPO ACV Market Share Market Share 36% 20% 16% 4% $ $ 2005 2009 2012 Investment 2005 2009 2012 Investment 3 Make New Inroads into the Global Public Sector Markets 4 Increase European Market Share via Enhanced Offshore Value Prop India-heritage European $ $ $$ ACV Market Share 7% 13% © 2013Information Services Group, Inc. All Rights Reserved 2005-08 2009-12isg-one.com *Contracts with ACV ≥ $5M
  18. 18. 18 Staying Ahead: What got you here will not get you there. Long-term, the best defense may be a good offense, a challenge for western providers with high overhead. India-heritage providers need long-term growth engines to stay on trajectory. Capturing the Expected Growth in the Mid-Market  India-heritage Providers have proven offshoring credentials  Western providers have started to create dedicated mid-market organizations Lower Cost of Switching Puts Everybody on Notice  Equal threat to all providers, no matter their heritage  Incumbency advantage disappearing as transitions become less painful ITO Challenge Get familiar with the new buyers of emerging technologies, who sit outside the CIO’s organization. © 2013Information Services BPO Challenge Pay for performance, rather than for bodies, is becoming the norm. Pricing Group, Inc. All Rights Reserved $ based on labor mark-up is becoming less attractive.isg-one.com *Contracts with ACV ≥ $5M
  19. 19. 19 1Q13 ISG Outsourcing Index Summary and Outlook  Market continues to struggle to regain traction with soft spots in ACV smaller deal space and in New Scope  ITO performance is weak and BPO remains the bright spot  Trailing 12 months is encouraging and the Large Deal market was strong market  Americas Manufacturing was weak and also had a low number of ITO summary contracts. BPO gains rise above ITO in the region.  EMEA New Scope activity fell unexpectedly but restructurings rose. Financial Services was off and BPO ACV fell but contract awards remained strong  Asia Pacific held steady, with ACV and activity increasing Y/Y, and positive results in Australia-New Zealand.  Keep expectations in check for 2Q13 with softness in the overall market  Positive signs point to a healthier outlook for the full year market outlook  Strength in BPO  Positivity in the emerging markets in the last 12 months © 2013  Impact of timing on deal flow should eventually reboundInformation Services Group, Inc. All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  20. 20. 20 Learn More Please contact us with your questions and comments. ► John Keppel President & Chief Marketing Officer +44 (0)7879 432 212 john.keppel@isg-one.com --- Media Contacts --- ► Andrew Park ► Gwennie Poor Director, ISG Cohn & Wolfe for ISG +1 919 259 9252 +1 212 798 9842 andrew.park@isg-one.com gwennie.poor@cohnwolfe.com © 2013Information Services Group, Inc. All Rights Reservedisg-one.com blog.isg-one.com *Contracts with ACV ≥ $5M
  21. 21. First Quarter 2013
  22. 22. 22 1Q13 TCV Scorecard The ISG Outsourcing Index has moved to ACV as the primary measure of the Broader Market. In transition, we will continue to provide a high-level TCV view of the market via a Scorecard analysis. 1Q13 1Q Y/Y 1Q Q/Q 1Q13 1Q Y/Y 1Q Q/Q Scorecard TCV ($B)* Change Change Counts Change Change Global Market $ 18.6 -20% -23% 189 -21% -19% New Scope $ 9.8 -30% -42% 141 -18% -17% Restructurings $ 8.8 -4% 18% 48 -26% -26% Mega-deals $ 5.0 213% 111% 3 200% 50% ITO $ 10.8 -33% -28% 104 -34% -33% BPO $ 7.8 8% -16% 85 5% 9% Americas $ 7.9 -25% -7% 77 -31% -21% EMEA $ 8.7 -21% -32% 87 -19% -21% Asia Pacific $ 2.1 11% -33% 25 32% -7% © 2013Information Services Group, Inc. All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M$25M *Contracts with TCV ≥
  23. 23. www.isg-one.comknowledge powering results®Information Services Group is a leading technology insights, market intelligence and advisory services company, serving morethan 450 clients around the world to help them achieve operational excellence. ISG supports private and public sectororganizations to transform and optimize their operational environments through research, benchmarking, consulting andmanaged services, with a focus on information technology, business process transformation, program management services andenterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, thedeepest data source in the industry, and more than five decades of experience of global leadership in information and advisoryservices. Based in Stamford, Conn., the company has more than 800 employees and operates in 21 countries.

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