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Asia Pacific TPI Index - Full Year and Second Half 2012

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Global ACV down slightly for the year. Number of mega relationship contracts up for 2012, lifting acv when overall contract numbers were down. BPO expanded on several large deals while ITO …

Global ACV down slightly for the year. Number of mega relationship contracts up for 2012, lifting acv when overall contract numbers were down. BPO expanded on several large deals while ITO performance was off for 2012. Asia Pacific surged in 2012 while EMEA struggled on a weak first half. Guarded optimism for 2013 with a possible slowdown in the second quarter.

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  • 1. The Asia Pacific TPI IndexFull Year and Second Half 2012 Hosted by: Nimish Joshi CLSA 30 January 2013
  • 2. 2 Welcome to the 13th Semi-Annual Asia Pacific TPI Index Call Covering the state of the outsourcing industry for global, commercial contracts.* Sid Pai Gerry Clark Partner and President, Partner, Asia Pacific Asia Dinesh Goel Tom McCormack Partner, Partner, India Australia & New Zealand © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 3. 3 Refocusing on ACV as the Primary Measure of the Market An ACV-based analysis of the market will avoid masking the effects of declining contract durations on TCV. TCV Change Over Time ACV Change Over Time 2003 - 2012 2003 - 2012 Growth since 2003 = 10% Growth since 2003 = 39% $99.1 $21.2 $89.8 $15.2 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012 © 2013 InformationServices Group, Inc. Typical Annual ACV* = $20 BAll Rights Reserved Contract duration has shifted from 6 years in 2003 to 4.9 years in 2012isg-one.com *Contracts with ACV ≥ $5M
  • 4. 4 “ At A Glance GLOBAL ACV DOWN SLIGHTLY FOR THE YEAR NUMBER OF MEGA RELATIONSHIP CONTRACTS UP FOR 2012, LIFTING ACV WHEN OVERALL CONTRACT NUMBERS WERE DOWN BPO EXPANDED ON SEVERAL LARGE DEALS WHILE ITO PERFORMANCE WAS OFF FOR 2012 ASIA PACIFIC SURGED IN 2012 WHILE EMEA STRUGGLED ON A WEAK FIRST HALF GUARDED OPTIMISM FOR 2013 WITH A POSSIBLE SLOWDOWN IN THE SECOND “ QUARTER 2012 2012 Y/Y 2012 2012 Y/Y 2H12 Scorecard ACV ($B)* Change Counts Change ACV ($B)* Global Market $ 21.2 -3% 1,006 -13% $ 10.1 New Scope $ 14.0 -1% 748 -15% $ 6.7 Restructurings $ 7.2 -5% 258 -8% $ 3.4 Mega-relationships $ 5.7 7% 34 36% $ 2.7 ITO $ 13.3 -11% 652 -11% $ 6.5 BPO $ 7.9 14% 354 -18% $ 3.6 © 2013 Americas $ 7.9 -3% 429 -16% $ 3.4 InformationServices Group, Inc. EMEA $ 10.2 -12% 443 -16% $ 5.4All Rights Reserved Asia Pacific $ 3.1 55% 134 6% $ 1.3isg-one.com *Contracts with ACV ≥ $5M
  • 5. 5 Global Market Contract Award Trends For the full year, ACV of $21.2 was down 3% from 2011 but ahead of the five year average. Broader Market ACV ($B)* 1H ACV 2H ACV _ Prior 55 Year Avg Avg Prior Yr Annual $20.9 $21.9 $21.8 $21.2 $16.9 $16.3 $18.0 $15.2 $15.7 $15.1 $19.8 $11.4 $10.1 $11.9 $10.1 $7.3 $8.7 $8.4 $8.5 $6.6 $8.8 $8.4 $8.4 $9.5 $9.6 $11.8 $9.9 $11.1 $6.7 $8.2 $7.5 2003 04 05 06 07 08 09 10 11 2012 Broader Market Counts Counts Prior 5 Yr Avg 1,163 972 977 1,006 744 506 539 524 593 890 596 © 2013 InformationServices Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV ≥ $5M
  • 6. 6 Regional Comparison of Full Year Contract Trends Asia Pacific was the only region to show market growth in 2012, while the Americas market was flat and EMEA struggled. Full Year ACV ($B)* Compare Full Year Contract Counts Compare Americas EMEA Asia Pacific Americas EMEA Asia Pacific $11.7 525 $10.2 512 429 443 $7.9 $7.4 $7.0 $8.1 246 $3.1 215 126 134 $2.0 $0.9 45 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 7. 7 Asia Pacific Contract Award Trends With ACV of more than $3B awarded, Asia Pacific had its best year ever in 2012 - 55% ahead of 2011 totals and comfortably ahead of the five year average. Full Year Asia Pacific ACV ($B)* 1H ACV 2H ACV Prior 5 5 Year Avg Avg Prior Yr Annual $3.13 $2.42 $2.53 $1.3 $2.12 $2.22 $2.02 $1.76 $2.3 $1.48 $1.49 $1.3 $1.2 $0.7 $1.4 $1.6 $1.0 $0.85 $0.5 $1.1 $1.83 $0.5 $1.08 $0.97 $1.16 $1.28 $1.04 $0.32 $0.43 $0.67 $0.67 2003 04 05 06 07 08 09 10 11 2012 Full Year Asia Pacific ACV ($B)* by Bands Full Year Asia Pacific Count $5 - 99M $100M + $5 - 99M $100M + 2 5 2 3 $1.0 $0.3 4 $0.7 $0.3 5 3 7 $1.2 $0.6 $0.7 3 122 124 129 1 114 $0.5 $0.3 $2.2 88 $2.1 $0.1 $1.5 $1.6 $1.7 71 69 71 © 2013 $1.1 $1.0 $1.1 $1.3 44 50 Information $0.8Services Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV ≥ $5M
  • 8. 8 Asia Pacific New Scope & Restructuring Trends New Scope awards made up 88% of the market in 2012 as the region saw the end of a three year cycle of restructurings. Full Year Asia Pacific New Scope ACV ($B)* 1H ACV 2H ACV Prior 5 5 Year Avg Avg Prior Yr Annual $2.75 $1.95 $1.90 $1.88 $1.61 $1.7 $1.73 $1.36 $1.33 $1.14 $1.0 $1.1 $0.5 $0.85 $1.3 $0.5 $0.70 $1.1 $0.8 $0.4 $0.4 $0.9 $0.9 $0.8 $0.8 $1.0 $0.3 $0.3 $0.4 $0.6 $0.6 2003 04 05 06 07 08 09 10 11 2012 Full Year Asia Pacific Restructuring ACV ($B)* 1H ACV 2H ACV Prior 5 Yr Annual Avg $0.65 $0.70 $0.64 $0.61 $0.5 $0.11 $0.48 $0.19 $0.40 $0.38 $0.34 $0.50 $0.24 $0.23 $0.49 $0.09 $0.15 $0.20 $0.52 $0.26 $0.46 © 2013 $0.24 $0.12 $0.30 Information $0.14 $0.20 $0.10 $0.12 $0.20 $0.02 $0.08Services Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV ≥ $5M
  • 9. 9 Asia Pacific Market Details in Contract Award Trends On the back of very large deals’ACV in India increased substantially making this the largest market in the region overtaking ANZ, the traditional market leader Full Year Asia Pacific ACV ($B)* by Market Prior 5 Period Range Prior 5 Year Avg 2011 2012 $1.6 $1.46 $1.4 $1.2 $1.13 $1.0 $1.06 $0.8 $0.69 $0.71 $0.6 $0.53 $0.4 $0.40 $0.21 $0.32 $0.2 $0.21 $0.16 $0.12 $0.10 $0.13 $0.04 $0.10 $0.05 $0.0 $0.01 © 2013 ANZ India and South Asia Japan ASEAN Greater China South Korea InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 10. 10 Asia Pacific Industry Segment Contract Trends – ACV ($B) Though traditionally the market leader, the Financial Services sector now ranked 3rd behind Telecom & Media and Manufacturing. Full Year Asia Pacific ACV ($B)* by Industry Prior 5 Year Range Prior 5 Year Avg 2011 2012 $1.2 $1.0 $0.99 $0.79 $0.8 $0.80 $0.67 $0.72 $0.6 $0.67 $0.69 $0.4 $0.35 $0.27 $0.25 $0.2 $0.22 $0.17 $0.15 $0.08 $0.17 $0.11 $0.03 $0.02 $0.04 $0.03 $0.12 $0.07 $- $0.01 $0.01 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 11. 11 Asia Pacific Industry Segment Contract Trends - Counts While the number of contract awards in Financial Services and Telecom & Media fell in 2012, all other sectors either increased or equalled 2011 levels. Full Year Asia Pacific Contract Counts by Industry Prior 5 Year Range Prior 5 Year Avg 2011 2012 50 47 45 40 35 37 30 33 24 28 25 25 23 20 19 20 15 14 15 13 14 10 11 8 7 5 9 3 5 6 2 2 0 2 1 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 12. 12 Asia Pacific ITO Contract Award Trends ITO ACV grew 21% in 2012 as the number of contract awards reached the highest level in the last three years. Full Year Asia Pacific ITO ACV ($B)* 1H ACV 2H ACV Priorof Prior Avg Avg 5 Year 5 Yrs Top Asia Pacific ITO Providers by 2012 Contract Awards $1.9 $2.0 $1.8 $1.7 $1.4 $1.3 $1.4 $1.7 ACV Leaders Counts Leaders $0.9 $1.3 $0.8 $1.0 $0.9 Accenture Accenture $0.8 $0.5 $0.4 $1.3 $0.7 $0.8 $0.6 $1.2 Capgemini Alcatel-Lucent $0.5 $0.9 $0.9 $1.0 $0.9 $0.3 $0.5 $0.4 $0.7 Chinasoft BT $0.3 CSC Chinasoft 2003 04 05 06 07 08 09 10 11 2012 HP Fujitsu IBM HCL Full Year Asia Pacific ITO Counts Infosys HP Counts Priorof Prior Avg Avg 5 Year 5 Yrs iSoftStone IBM 95 Mahindra Satyam Infosys 85 87 74 TCS TCS 54 53 58 62 75 Wipro 39 35 Note: Service providers in alphabetical order; no rankings implied. Placements sourced from ISG © 2013 Information Contracts Knowledgebase®.Services Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV ≥ $5M
  • 13. 13 Asia Pacific BPO Contract Award Trends 2012 was a stand-out year for BPO awards as the region awarded its highest ever number of contracts ever and ACV soared by 133%. Full Year Asia Pacific BPO ACV ($B)* 1H ACV 2H ACV Avg of Prior Avg Prior 5 Year 5 Yrs Top Asia Pacific BPO Providers $1.4 by 2012 Contract Awards $0.4 ACV Leaders Counts Leaders $0.8 $0.6 $0.6 Gen-i Fidelity $0.5 $0.5 $0.6 $0.4 $0.6 $0.4 $0.3 $1.0 Genpact Genpact $0.2 $0.4 $0.5 $0.2 IBM IBM $0.2 $0.5 $0.1 $0.1 $0.2 $0.3 $0.2 $0.1 $0.1 $0.2 $0.2 $0.1 iGATE Infosys 2003 04 05 06 07 08 09 10 11 2012 Infosys Korn/Ferry Jones Lang LaSalle Mahindra Satyam Full Year Asia Pacific BPO Counts Mahindra Satyam Transfield Services Sykes Enterprises Wipro Counts Priorof Prior Avg Avg 5 Year 5 Yrs Transfield Services 47 WNS 43 41 29 22 33 18 19 20 30 Note: Service providers in alphabetical order; no 6 rankings implied. Placements sourced from ISG © 2013 Contracts Knowledgebase®. InformationServices Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV ≥ $5M
  • 14. 14 Asia Pacific BPO Contract Award Trends by Function Contact Center and Industry-Specific BPO lifted BPO ACV in 2012. Asia Pacific BPO ACV ($B)* by Function 2011 vs. 2012 Prior 5 Period Range _Avg of5Prior 5Avg Prior Year Yrs 2011 2012 $0.77 $0.35 $0.30 $0.30 $0.25 $0.20 $0.19 $0.16 $0.12 $0.15 $0.13 $0.09 $0.11 $0.08 $0.10 $0.10 $0.06 $0.09 $0.02 $0.02 $0.06 $0.04 $0.05 $0.01 $0.04 $0.05 $0.04 $0.02 $0.03 $0.03 $0.02 $0.00 $0.00 $0.01 $0.00 $0.01 $0.01 $0.00 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 15. 15 Asia Pacific Outsourcing Revenue Trends With an active contracts CAGR of 12% and annualised revenue CAGR of 6%, Asia Pacific market shows robust performance. Annualized Revenue & Active Contract Trends Annualized Revenue ($B)* Active Contracts 636 592 356 $10.8 $11.3 $8.4 2007 2008 2009 2010 2011 2012 © 2013 2007 to 2012 Active Contracts CAGR: ↑ 12% Information 2007 to 2012 Annualized Revenue CAGR: ↑ 6%Services Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 16. 16 Asia Pacific Market Share Comparison by Provider Category While all Provider categories took a similar share of ITO ACV, India-heritage providers dominated BPO values – on the back of larger deal awards. 2012 Asia Pacific Market Share by Service Provider Category Contract Numbers and ACV of Awards India-heritage US-heritage Others 19% 36% 8% 43% 51% 32% 9% 27% 73% 40% 30% 32% © 2013 InformationServices Group, Inc.All Rights Reserved BPO Counts BPO ACV ITO Counts ITO ACVisg-one.com *Contracts with ACV ≥ $5M
  • 17. 17 Public vs. Private Sector Analysis for the Asia Pacific Public Sector ACV accounted for 30% of the regional market. Comparing Public and Private Sector Trends in ACV($B)* Private Sector ACV% Public Sector ACV% $3.13 $2.12 $2.02 $1.86 $1.57 $1.03 2008 2009 2010 2011 2012 Public Sector Percentage of All Contracts Public Sector ACV by AP Market India and South Asia ANZ Other AP 48% 51% 3% 47% 8% 5% 13% 15% 34% 33% 40% 70% 83% 78% 81% 46% © 2013 Information 16% 10% 17% 16%Services Group, Inc.All Rights Reserved 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012isg-one.com *Contracts with ACV ≥ $5M
  • 18. 18 Public Sector Top 10 Service Providers The Top 10 Service Providers List, based on ACV awarded in 2012, for contracts over $5 million in annual contract value, shown in alphabetical order. Top 10 Asia Pacific Public Sector Accenture Capgemini China Unicom CSC Cubic Corp Fujitsu Gen-i HCL Technologies HP IBM Service providers in alphabetical order; no rankings implied. © 2013 Placements sourced from ISG Contracts Knowledgebase®. InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 19. 19 Key Short-term Trends in Sourcing for 2013 and Beyond U.S. G201-500 Companies Recent Emerging Markets to Sourcing Adoption Rate Expands Continue their Increasing Large Deal Potential for Providers Impact on Sourcing ACV Adoption ACV Change from 2007 $$ Rate $ $$$ +150% $ $ +100% 2010 32% 2012 LatinAm China and Mexico and India BPO Expansion Continues with Industry Specific Solutions Leading the Way BPO ACV Change from 2010 +60% $ © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 20. 20 Disruptive Technologies Shape Long-term Industry Trends Four disruptive technology trends impact enterprises today and shape long-term industry trends Social Media Collaboration Mobility Cloud Computing & Storage © 2013 Big Data/Analytics InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV ≥ $5M
  • 21. 21 2H12 TPI Index Summary and Outlook  A sluggish 2H Global ACV pulled down results, yet 2012 performance nearly met 2011 levels  While fewer contracts were awarded globally for 2012, Mega-relationships supported the market value market  BPO ACV and Asia Pacific ACV helped lift the global market for summary 2012  Asia Pacific finished the year up 55% compared to 2011. Increases of 21% for ITO and 133% for BPO made this the region’s best ever year.  Contract push-out and lingering fiscal uncertainties in both the U.S. and Europe could make for a softer global first half in 2013  Outlook for 2013 ACV awards is one of cautious optimism market  Market growth, in terms of Annualised Revenue, is projected outlook to be 3 - 4% in 2013 © 2013  Asia Pacific outlook is hard to call. Increase in demand could InformationServices Group, Inc. be offset by the emergence of difficult economic factors inAll Rights Reserved India and Australiaisg-one.com *Contracts with ACV ≥ $5M
  • 22. 22 Learn More Please contact us with your questions and comments. ► Sid Pai ► Tom McCormack Partner & President, Asia Pacific Partner, Australia & New Zealand +91 9880033779 +61 4 1378 6424 sid.pai@isg-one.com tom.mcCormack@isg-one.com ► Gerry Clark ► Dinesh Goel Partner, Asia Partner, India +65 9634 5927 +91 98458 93787 gerry.clark@isg-one.com dinesh.goel@isg-one.com © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com www.considerthesourceblog.com *Contracts with ACV ≥ $5M
  • 23. Full Year and Second Half 2012
  • 24. 24 TCV At A Glance The Asia Pacific TPI Index has moved to ACV as the primary measure of the Broader Market. In transition, we will continue to provide a high-level TCV view of the market via a Scorecard analysis. 2012 2012 Y/Y 2H12 2H12 Y/Y Scorecard TCV ($B)* Change TCV ($B)* Change Global Market $ 99.1 -9% $ 49.3 -22% New Scope $ 66.2 -9% $ 32.6 -13% Restructurings $ 32.9 -10% $ 16.7 -34% Mega-deals $ 16.0 -34% $ 8.1 -55% ITO $ 62.5 -15% $ 31.0 -29% BPO $ 36.5 1% $ 18.3 -4% Americas $ 37.5 0% $ 17.1 -15% EMEA $ 48.6 -22% $ 26.1 -31% Asia Pacific $ 13.0 31% $ 6.1 15% © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV >$25M *Contracts with ACV ≥ $5M
  • 25. www.isg-one.com