EMEA TPI Index - 4Q12 and FY12

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ACV down slightly for the year on weaker than typical 4Q results. 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 second quarter.

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EMEA TPI Index - 4Q12 and FY12

  1. 1. The TPI EMEA IndexEMEA Outsourcing Market Data and Insights Fourth Quarter and Full Year 2012 Hosted by: John King Barclays Capital 17 January 2013
  2. 2. 2 Welcome to the 41st Quarterly Outsourcing Index Review Covering the state of the outsourcing industry for EMEA and global, commercial contracts. John Keppel Dr. David Howie President & Chief Partner Marketing Officer Bernd Schaefer Partner © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  3. 3. 3 “ At A Glance ACV DOWN SLIGHTLY FOR THE YEAR ON WEAKER THAN TYPICAL 4Q RESULTS 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 EMEA STRUGGLED ON A WEAK FIRST HALF WHILE ASIA PACIFIC SURGED IN 2012 GUARDED OPTIMISM FOR 2013 WITH A POSSIBLE SLOWDOWN SECOND QUARTER “ 4Q12 4Q Y/Y 4Q Q/Q 2012 2012 Y/Y Scorecard ACV (€B)* Change Change ACV (€B)* Change Global Market € 3.8 -27% -11% € 16.9 -3% New Scope € 2.5 -24% -12% € 11.2 -1% Restructurings € 1.3 -31% -8% € 5.8 -5% Mega-relationships € 0.9 -50% -24% € 4.6 7% ITO € 2.3 -37% -18% € 10.6 -11% BPO € 1.5 -1% 5% € 6.3 14% Americas € 1.3 -28% -9% € 6.2 -3% © 2013 Information EMEA € 2.1 -29% -6% € 8.2 -12%Services Group, Inc.All Rights Reserved Asia Pacific € 0.4 0% -34% € 2.5 55%isg-one.com *See Appendix for TCV Scorecard *Contracts with ACV > €4M
  4. 4. 4 Global Market Contract Award Trends ACV was down 27% Y/Y and 11% Q/Q on a strong 3Q and as the industry paused due to the US Election. For the full year, ACV of €16.9B was down 3% from 2011. Global Market ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 16.8 € 17.5 € 17.4 € 16.9 € 12.2 € 12.6 € 13.6 € 12.1 € 13.0 € 14.4 € 5.8 € 4.5 € 3.8 € 3.6 € 5.2 € 3.6 € 3.0 € 4.2 € 3.2 € 4.7 € 10.7 € 11.0 € 13.0 € 12.2 € 13.1 € 8.6 € 9.5 € 9.3 € 8.8 € 8.4 2003 04 05 06 07 08 09 10 11 2012 Global Market Counts* Counts Prior 5 Yr Avg 1,163 972 977 1,006 506 539 524 593 596 744 © 2013 InformationServices Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > €4M
  5. 5. 5 Global Market Contract Trends for the Largest Deals 34 Mega-relationships were awarded in 2012, up 36%. Restructuring activity is prevalent in large deals for the third straight year. Mega-relationship Contracts - ACV > € 80M 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 5.7 € 5.6 € 5.2 € 5.1 € 4.8 € 4.6 € 4.6 € 4.6 € 4.1 € 4.2 € 1.1 € 2.1 € 1.4 € 1.2 € 1.0 € 1.8 € 0.9 € 2.7 € 2.0 € 1.9 € 3.4 € 4.1 € 3.6 € 3.4 € 3.6 € 3.8 € 3.6 € 2.4 € 2.1 € 2.4 2003 04 05 06 07 08 09 10 11 2012 Mega-relationship Counts Mega-relationship New/Restructured ACV 1Q to 3Q 4Q New Scope Restructuring 36 37 36 33 34 30 31 29 31 10 11 € 3.0 € 3.2 15 5 8 7 15 8 25 14 € 2.4 € 2.5 12 26 25 26 26 € 2.4 23 22 23 € 1.8 € 2.0 18 15 € 1.8 13 © 2013 InformationServices 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 > €4M
  6. 6. 6 EMEA Contract Award Trends EMEA ACV was down 29% Y/Y and 6% Q/Q. For the full Year, ACV was down 12% on lighter contracting activity. EMEA ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 9.3 € 8.1 € 8.6 € 8.2 € 7.8 € 6.3 € 5.6 € 1.5 € 2.8 € 3.0 € 2.1 € 5.6 € 5.5 € 3.6 € 4.8 € 2.0 € 1.8 € 1.6 € 1.8 € 1.5 € 6.3 € 5.9 € 6.4 € 6.1 € 3.8 € 3.9 € 4.3 € 3.9 € 4.5 € 3.3 2003 04 05 06 07 08 09 10 11 2012 EMEA Counts EMEA New and Restructured ACV ($B)* Counts Prior 5 Yr Avg New Scope Restructured 525 € 6.8 431 432 443 € 5.8 € 5.8 € 5.8 € 5.4 € 4.6 € 4.7 231 226 256 337 € 3.6 215 247 € 2.9 € 2.8 € 2.0 € 1.0 € 0.9 € 1.3 © 2013 InformationServices Group, Inc. 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012All Rights Reservedisg-one.com *Contracts with ACV > €4M
  7. 7. 7 EMEA ITO Contract Award Trends ITO ACV was down 48% Y/Y and 20% Q/Q. Full Year ITO ACV was at its lowest level since 2007 EMEA ITO ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 7.3 € 7.0 € 6.5 € 6.0 € 5.0 € 2.5 € 5.1 € 4.4 € 4.1 € 1.3 € 2.7 € 2.3 € 4.0 € 1.2 € 1.3 € 3.3 € 1.5 € 1.2 € 0.9 € 1.2 € 4.7 € 4.8 € 4.7 € 3.0 € 3.7 € 3.1 € 3.8 € 3.9 € 2.9 € 2.1 2003 04 05 06 07 08 09 10 11 2012 EMEA ITO Counts* Top 15 EMEA ITO Providers by 2012 ACV Awarded* Counts Prior 5 Yr Avg Accenture HP 377 Atos IBM 328 314 302 BT Infosys 166 162 244 Capgemini Mahindra Satyam 154 155 169 CSC Tata France Telecom T-Systems © 2013 Information Fujitsu WiproServices Group, Inc. 2003 04 05 06 07 08 09 10 11 2012 HCLAll Rights Reservedisg-one.com *Contracts with ACV > €4M
  8. 8. 8 EMEA BPO Contract Award Trends BPO ACV was grew 28% Y/Y and Q/Q. For the full year, ACV was up 35% because of several large contract awards EMEA BPO ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 3.1 € 2.3 € 0.9 € 1.7 € 1.8 € 1.5 € 1.6 € 0.7 € 1.2 € 1.3 € 1.3 € 0.2 € 1.3 € 0.3 € 0.9 € 0.8 € 0.3 € 0.3 € 0.4 € 0.7 € 2.2 € 1.6 € 1.6 € 0.9 € 0.9 € 1.2 € 1.0 € 0.7 € 0.8 € 0.8 2003 04 05 06 07 08 09 10 11 2012 EMEA BPO Counts* Top 16 EMEA BPO Providers by 2012 ACV Awarded* Counts Prior 5 Yr Avg 148 Accenture Jones Lang LaSalle 141 118 Capgemini Mahindra Satyam 103 CGI MITIE 101 93 Genpact Mouchel Group 69 72 78 HP Serco 49 Interserve Sodexho Alliance © 2013 Information ISS Global TataServices Group, Inc. 2003 04 05 06 07 08 09 10 11 2012 Johnson Controls XchangingAll Rights Reservedisg-one.com *Contracts with ACV > €4M
  9. 9. 9 EMEA Country Details in Contract Award Trends Large deal awards in the UK fuelled growth in the UK while DACH failed to reach its 5-year average. Sub-regions for EMEA - ACV (€B)* Prior 5 Year Range Prior 5 Year Avg 2011 2012 € 4.0 € 3.66 € 3.5 € 3.0 € 3.08 € 2.5 € 2.09 € 2.0 € 1.61 € 1.5 € 1.02 € 1.0 € 1.04 € 1.05 € 0.86 € 0.78 € 0.62 € 0.59 € 0.5 € 0.38 € 0.26 € 0.27 € 0.14 € 0.08 © 2013 € 0.0 Information UK & Ireland DACH Scandinavia Benelux France Southern Africa & Middle E. Europe &Services Group, Inc. Europe East RussiaAll Rights Reservedisg-one.com *Contracts with ACV > €4M
  10. 10. 10 EMEA Industry Details in Contract Award Trends The Financial Services Sector recovery continued in 2012, aided by some large BPO contract awards Industry Details for EMEA - ACV (€B)* Prior 5 Year Range Prior 5 Year Avg 2011 2012 € 3.5 € 3.0 € 2.92 € 2.88 € 2.68 € 2.5 € 2.0 € 1.78 € 1.5 € 1.15 € 1.0 € 0.99 € 0.91 € 0.80 € 0.67 € 0.60 € 0.5 € 0.51 € 0.42 € 0.34 € 0.34 € 0.28 € 0.26 €- © 2013 Financial Manufacturing Energy Telecom & Travel, Business Retail Healthcare & Information Services Media Transport, Services PharmaServices Group, Inc.All Rights Reserved Leisureisg-one.com *Contracts with ACV > €4M
  11. 11. 11 EMEA Public Sector Analysis The UK Public Sector accounted for 85% of the EMEA Public Sector values and remains the largest single outsourcing market outside of the U.S.A. UK Public Sector Share of the UK Public Sector vs. EMEA Public Sector Market Commercial Sector Market Share 2012 ACV (€ B)* 2012 ACV (€ B)* UK Public Sector UK Public Sector Other EMEA Public Sector UK Commercial Sector € 0.9 16% € 3.7 € 4.4 45% 55% € 4.4 84% © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  12. 12. 12 Public Sector Top 10 Service Providers The Top 10 Service Providers List, based on ACV awarded in 2012, for contracts over €4 million in annual contract value, shown in alphabetical order. Top 10 Top 10 UK Public Sector Other EMEA Public Sector Atos Accenture BT Asseco Poland Capgemini Atkins (WS) Capita BT Carillion CGI CGI Group Evry CSC Getronics HP IBM Serco Sygnity Virgin Media Business T-Systems Note: Service providers in alphabetical order; no rankings implied © 2013 Placements based on UK Public Sector contract awards sourced from ISG contracts database InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  13. 13. 13 Americas Contract Award Trends Americas ACV was down 28% Y/Y and 9% Q/Q. Full year ACV was down 3%. Americas ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 7.1 € 6.6 € 6.5 € 6.3 € 5.9 € 5.7 € 6.0 € 6.0 € 0.9 € 5.4 € 4.9 € 1.7 € 1.8 € 1.4 € 1.4 € 1.2 € 1.6 € 1.5 € 2.2 € 1.4 € 6.2 € 4.5 € 4.5 € 4.4 € 4.6 € 4.9 € 4.7 € 4.9 € 3.2 € 3.4 2003 04 05 06 07 08 09 10 11 2012 Americas Counts* Americas New/Restructuring ACV (€B)* Counts Prior 5 Yr Avg New Scope Restructured 512 € 4.7 € 4.9 € 4.5 417 428 429 € 4.1 € 4.3 € 4.0 € 3.9 € 4.3 € 3.4 € 3.5 265 271 315 246 245 € 2.8 232 € 1.8 € 2.0 € 2.1 € 1.9 € 2.2 € 2.0 € 1.4 € 1.5 € 1.1 © 2013 InformationServices Group, Inc. 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012All Rights Reservedisg-one.com *Contracts with ACV > €4M
  14. 14. 14 Asia Pacific Contract Award Trends Although Asia Pacific ACV was flat Y/Y and down 34% Q/Q, 2012 ACV grew 55% to signal the region’s best ever year Asia Pacific ACV (€B)* 1Q to 3Q 4Q Prior 5 Yr Annual Avg € 2.5 € 1.9 € 2.0 € 0.4 € 1.4 € 1.7 € 1.8 € 1.6 € 1.2 € 1.2 € 0.5 € 0.7 € 0.3 € 0.7 € 0.9 € 0.4 € 0.7 € 0.6 € 0.3 € 2.1 € 0.3 € 1.3 € 1.5 € 1.2 € 1.2 € 0.9 € 1.0 € 0.9 € 0.4 € 0.6 2003 04 05 06 07 08 09 10 11 2012 Asia Pacific Counts* Asia Pacific New/Restructuring ACV (€B)* Counts Prior 5 Yr Avg New Scope Restructured € 2.2 126 134 124 117 € 1.6 € 1.5 € 1.5 € 1.3 € 1.1 € 1.1 92 € 0.9 78 € 0.7 76 72 € 0.6 € 0.5 € 0.5 € 0.6 45 53 € 0.3 € 0.3 € 0.5 € 0.4 € 0.3 € 0.1 € 0.2 © 2013 InformationServices Group, Inc. 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012All Rights Reservedisg-one.com *Contracts with ACV > €4M
  15. 15. 15 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 ACV Change from 2007 $ $$$ Adoption $ $$ Rate $ +150% 2010 32% 2012 +100% 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 > €4M
  16. 16. 16 Disruptive Technologies Shape Long-term Industry Trends Four disruptive technology trends impact enterprises today and shape long-term industry trends: Mobility, Social Media, Cloud Computing, and Big Data. Social Media Collaboration Mobility Cloud Computing & Storage © 2013 Big Data/Analytics InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  17. 17. 17 4Q12 TPI Index Summary and Outlook  4Q Global ACV underperformed that of 3Q, yet 2012 performance nearly met 2011 levels  Fewer contracts were awarded globally for 2012, but Mega-relationships supported the market value market summary  BPO ACV and Asia Pacific ACV helped lift the global market for 2012  EMEA ACV fell Q/Q and finished the year down almost 30% compared to 2011, pulled down by the lowest ITO annual values in five years and an overall decline in contract numbers  Contract push-out and lingering fiscal uncertainties in both the U.S. and Europe could make for a softer first half in 2013 market  Outlook for 2013 ACV awards is one of cautious optimism outlook  Market growth, in terms of Annualised Revenue, is projected to be 3 - 4% in 2013 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  18. 18. 18 Learn More Please contact us with your questions and comments. ► John Keppel President & Chief Marketing Officer +44 7879 432 212 john.keppel@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 © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com blog.isg-one.com *Contracts with ACV > €4M
  19. 19. Fourth Quarter and Full Year 2012
  20. 20. 20 4Q12 TCV Scorecard The 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. 4Q12 4Q Y/Y 4Q Q/Q 2012 2012 Y/Y Scorecard TCV (€B)* Change Change TCV (€B)* Change Global Market € 18.7 -33% -10% € 79.2 -9% New Scope € 12.6 -31% -6% € 53.0 -9% Restructurings € 6.1 -35% -16% € 26.3 -10% Mega-deals € 2.4 -78% -59% € 16.0 -34% ITO € 11.2 -40% -16% € 50.1 -15% BPO € 7.4 -17% 3% € 29.2 1% Americas € 6.2 -24% -16% € 30.0 0% EMEA € 10.2 -40% -4% € 38.9 -22% Asia Pacific € 2.3 -7% -13% € 10.4 31% © 2013 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > €4M
  21. 21. www.isg-one.com

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