First Half 2012, Asia Pacific TPI Index
 

First Half 2012, Asia Pacific 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 ...

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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First Half 2012, Asia Pacific TPI Index First Half 2012, Asia Pacific TPI Index Presentation Transcript

  • The Asia Pacific TPI Index First Half 2012 Hosted by: Mitali B GhoshBank of America Merrill Lynch 30 July 2012
  • 2 Welcome to the 12th Semi-Annual Asia Pacific TPI Index Call Covering the state of the outsourcing industry for global and regional commercial contracts. Arno Franz Partner & President, Asia Pacific Gerry Clark Partner, South & East Asia Dinesh Goel Partner, India © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 3 “ At A Glance GLOBAL BROADER MARKET TCV DOWN 8% Y/Y NUMBER OF CONTRACT AWARDS RETURNS TO HISTORICAL LEVELS MEGA DEAL TCV ROSE 22%, STRENGTHENING THE GLOBAL MARKET RESTRUCTURING TCV UP ALMOST 40% “ ASIA PACIFIC RETURNS AN IMPRESSIVE HALF YEAR PERFORMANCE YEAR TO DATE, STRONG MEGA DEAL AND ASIA PACIFIC RESULTS WERE NOT ENOUGH TO OFFSET BROADER MARKET DECLINE 1H12 TCV 1H Y/Y 1H12 1H Y/Y Score Card ($B)* Change Counts Change Global Market $ 41.4 -8% 373 -28% Mega Deals $ 7.8 23% 6 50% New Scope $ 27.0 -22% 286 -30% Restructurings $ 14.4 39% 87 -19% ITO $ 26.8 - 6% 234 -24% BPO $ 14.6 -13% 139 -33% © 2012 Asia Pacific $ 6.5 44% 59 -11% InformationServices Group, Inc. EMEA $ 17.8 -24% 153 -32%All Rights Reserved Americas $ 17.1 flat 161 -28%isg-one.com *Contracts with TCV > $25M
  • 4 Global Broader Market Contract Award Trends 1H12 TCV was down 8%, contract numbers dropped 28% overall and were a little short of the five-year averages. Half-year TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs $42.9 $52.9 $43.8 $57.2 $45.4 $45.7 $40.7 $49.0 $42.5 $51.1 $45.1 $41.4 2007 2008 2009 2010 2011 2012 Half-year Counts by TCV Bands $25-99M TCV Band $100M+ TCV Band 1H 2H Avg of 5 Prior 1Hs 1H 2H Avg of 5 Prior 1Hs 366 327 308 250 193 404 282 291 286 277 111 130 99 113 199 231 95 112 © 2012 116 124 93 115 111 96 InformationServices Group, Inc.All Rights Reserved 07 08 09 10 11 2012 07 08 09 10 11 2012isg-one.com *Contracts with TCV > $25M
  • 5 Regional Comparison of First Half Contract Trends The effect of the continuing economic uncertainty impacting the Americas’ and EMEA outsourcing markets is less pronounced in Asia Pacific. Half-year TCV ($B)* Compare Half-year Contract Counts Compare Americas EMEA Asia Pacific Americas EMEA Asia Pacific 225 224 $26.3 $23.5 161 $15.3 $17.8 153 $18.4 134 $19.6 $15.6 $17.13 123 $17.1 66 59 $5.8 $6.5 $4.5 35 1H07 1H08 1H09 1H10 1H11 1H12 1H07 1H08 1H09 1H10 1H11 1H12 © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 6 Asia Pacific Contract Award Trends Asia-Pacific TCV was up 44% Y/Y leading to the strongest first half performance in almost a decade. Contract awards counts fell slightly but remained ahead of recent halves. Half-year Asia Pacific TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs Includes a $1.2B Mega $6.6 Deal in India $5.8 $8.0 $4.9 $7.1 $4.6 $5.8 $6.4 $6.5 $3.5 $2.8 $4.5 2007 2008 2009 2010 2011 2012 Half-year Asia Pacific Counts by TCV Bands $25-99M TCV Band $100M+ TCV Band 1H 2H Avg of 5 Prior 1Hs 1H 2H Avg of 5 Prior 1Hs 36 36 42 41 30 53 40 43 33 18 © 2012 28 11 13 9 25 19 11 13 Information 20 15 11 8 13 16Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 07 08 09 10 11 2012isg-one.com *Contracts with TCV > $25M
  • 7 Asia Pacific New Scope & Restructuring Trends With three years of consecutive first-half growth, new scope awards dominate in the region, accounting for 94% of TCV – the highest percentage ever. Half-year Asia Pacific New Scope TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs $2.6 $4.8 $5.6 $7.5 $2.4 $5.1 $5.0 $2.6 $6.1 $4.1 $3.7 $2.3 $6.2 $2.9 $3.0 $4.3 $3.7 $1.7 $1.9 $2.3 2003 04 05 06 07 08 09 10 11 2012 Half-year Asia Pacific Restructuring TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs $0.55 $0.98 $2.57 $2.24 $2.08 $2.10 $0.81 $1.01 $0.90 © 2012 $0.35 $0.65 $0.56 $0.94 $0.65 $0.50 $0.78 Information $0.05 $0.24 $0.49 $0.42Services Group, Inc.All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with TCV > $25M
  • 8 Asia Pacific Country Details in Contract Award Trends India TCV rebounds in the first half of 2012. Even discounting the mega deal award signed, India TCV grew significantly. Like-half Asia Pacific TCV ($B)* by Country Prior 5 Period Range Average 1H11 1H12 $3.5 $3.23 $3.0 $2.5 $2.0 $1.5 $1.44 $1.0 $0.76 $0.68 $0.5 $0.35 $0.0 $0.03 © 2012 ANZ India Japan Greater China ASEAN South Korea InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 9 Asia Pacific Industry Segment Contract Trends Telecom & Media and Financial Services sectors together accounted for 65% of all TCV signed in the region. Like-half Asia Pacific TCV ($B)* by Industry Prior 5 Period Range Average 1H11 1H12 $4.0 $3.5 $3.0 $2.5 $2.33 $2.0 $1.88 $1.5 $1.0 $0.85 $0.5 $0.49 $0.58 $0.18 $0.12 $0.0 $0.05 Telecom & Financial Travel, Energy Healthcare & Business Retail © 2012 Media Services Manufacturing Transport, Pharma Services InformationServices Group, Inc. LeisureAll Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 10 Asia Pacific Industry Segment Contract Trends Despite the drop in number of contracts awards in 1H12 all sectors, except for Manufacturing, met or exceeded their five year averages. Like-half Asia Pacific Contract Counts by Industry Prior 5 Period Range Average 1H11 1H12 20 18 18 16 14 12 12 10 8 8 7 6 5 5 4 3 2 1 0 Telecom & Financial Travel, Energy Healthcare & Business Retail © 2012 Media Services Manufacturing Transport, Pharma Services InformationServices Group, Inc. LeisureAll Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 11 Asia Pacific ITO Contract Award Trends ITO TCV rose 10% Y/Y. The number of smaller contracts dropped, while the number of larger contracts increased slightly. Half-year Asia Pacific ITO TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs Top Asia Pacific ITO Providers by 1H12 Contracts $3.5 TCV Leaders $4.3 Capgemini $3.4 $6.4 $3.7 $3.7 $6.0 CSC $4.9 $3.3 $2.8 $1.8 $3.0 HP 2007 2008 2009 2010 2011 2012 IBM TCS Half-year Asia Pacific ITO Counts by TCV Bands $25-99M TCV Band $100M+ TCV Band Counts Leaders 2H 1H Avg of 5 Prior 1Hs 2H 1H Avg of 5 Prior 1Hs HCL HP 22 29 31 25 IBM Infosys 20 33 30 21 10 TCS 20 22 8 11 18 7 8 14 19 8 © 2012 12 9 6 9 10 Note: Service providers in alphabetical order; no Information rankings implied. Placements based on ISGServices Group, Inc.All Rights Reserved 07 08 09 10 11 2012 07 08 09 10 11 2012 contracts database.isg-one.com *Contracts with TCV > $25M
  • 12 Asia Pacific BPO Contract Award Trends BPO accounted for almost half of the regional market in 1H12 as TCV, driven by a rise in larger contract awards, more than doubled Y/Y Half-year Asia Pacific BPO TCV ($B)* 1H TCV 2H TCV Avg of 5 Prior 1Hs Top Asia Pacific BPO Providers by 1H12 Contracts $4.6 $3.2 $3.0 $1.2 TCV Leaders $1.5 $0.7 $1.5 $0.9 Genpact $0.9 $0.7 $1.0 $0.3 IBM 2007 2008 2009 2010 2011 2012 Mahindra^ Sykes Half-year Asia Pacific BPO Counts by TCV Bands WNS $100M+ TCV Band $25-99M TCV Band 2H 1H Avg of 5 Prior 1Hs 2H 1H Avg of 5 Prior 1Hs Counts Leaders Genpact 14 11 Mahindra^ 13 20 ^Includes both Mahindra Satyam and Tech 10 18 10 12 Mahindra 13 6 3 1 © 2012 7 8 3 8 6 3 Note: Service providers in alphabetical order; no 6 3 2 2 4 Information rankings implied. Placements based on ISGServices Group, Inc. 0All Rights Reserved 07 08 09 10 11 2012 07 08 09 10 11 2012 contracts database.isg-one.com *Contracts with TCV > $25M
  • 13 Asia Pacific Market Share Comparison by Provider Category India-heritage companies outperformed US-heritage firms in every category. 1H12 Asia Pacific Market Share by Service Provider Category Contract Numbers and TCV ($B)* of Awards US-heritage India-heritage Other ITO TCV 27% 42% 31% ITO Counts 28% 35% 38% BPO TCV 14% 77% 8% BPO Counts 11% 58% 32% © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 14 Asia Pacific Outsourcing Revenue Trends With an active contracts CAGR of 12% and annualised revenue CAGR of 6%, Asia Pacific market shows robust performance. Annualized Revenue & Active Contract Trends Annualized Revenue ($B) * Active Contracts 551 521 316 $10.5 $10.8 $8.1 2007 2008 2009 2010 2011 2012 © 2012 Information 2007 to 2012 Active Contracts CAGR: ↑ 12%Services Group, Inc. 2007 to 2012 Annualized Revenue CAGR: ↑ 6%All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • Special Topic for First Half 2012
  • 16 Duration Trend Impact on the Global Market Declines in duration may appear small, but even a slight decline can have large impact on TCV levels. What if all 1H12 contracts* had 1999 average durations of 6.4? 1H12 Actual TCV $41 B 38% Hypothetical 1H12 TCV with 1999-2000 Durations $57 B Average Contract Durations Over Time Avg Duration Duration Plateau 6.4 6.0 5.5 6.48 5.1 6.35 6.14 6.10 6.07 5.95 5.88 5.72 5.48 5.31 5.10 4.98 5.05 4.85 © 2012 InformationServices Group, Inc. 1999 00 01 02 03 04 05 06 07 08 09 10 2011 1H12All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 17 Does the 1H12 duration-dip signal the start of a step down? Durations decreased across a range of contract types. Distribution of Contracts* Average Durations Fall Moves Towards Lower Durations for All Contract Sizes* TCV < $200M TCV > $200M Durations Durations Durations < 5 Years 5 - 6.9 Years 7+ Years 6.6 6.1 6.2 6.0 51% 46% 4.9 4.8 4.9 4.6 34% 32% 22% 15% 2009 1H12 2009 1H12 2009 1H12 2009 2010 2011 1H12 2009 2010 2011 1H12 © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 18 Factors Influencing Downward Trend in Contract Durations Average Duration for Stepped Up Market Competition New Adopters Amidst increased provider competition, companies ↓14% – particularly New Sourcing Adopters – push for 5.1 4.4 shorter contract commitments, leveraging the 2009 1H12 providers’ desire to seal the deal. Outsourcing Savvy Clients and Providers Solution improvements enable more efficient and effective delivery of innovations, making the best solutions at the best prices available via more frequent contract negotiations. Disposability of Cloud Solutions © 2012 Service Providers note that contracts with Cloud in scope are shorter InformationServices Group, Inc. in duration than Managed Services deals.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 19 Asia Pacific 1H12 TPI Index Summary and Outlook  Global Broader Market TCV down 8% Y/Y  Asia Pacific growth of 44% propped up the global broader market, Americas remained flat and EMEA struggled  New scope awards in Asia Pacific accounted for 94% of TCV market summary  BPO accounted for almost half of Asia Pacific TCV  India TCV rebounded strongly  India-heritage service providers outperformed their US- heritage counterparts across all categories  Anticipate a soft 3Q globally though 4Q TCV may pick up because of larger deals in the pipeline  Unprecedented levels of TCV in 2H12 are required for the market global market to meet the record-high 2011 TCV result outlook  Asia Pacific on track to have it’s best year yet for BPO awards  Asia Pacific need only deliver its five year average © 2012 performance to result in a banner year for outsourcing InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with TCV > $25M
  • 20 Learn More Please contact us with your questions and comments. ► Arno Franz Partner & President, Asia Pacific +61 (0) 2 9006 1610 arno.franz@isg-one.com ► Gerry Clark ► Dinesh Goel Partner, South & East Asia Partner, India +65 (0) 9634 5927 +91 98458 93787 gerry.clark@isg-one.com dinesh.goel@isg-one.com © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com www.considerthesourceblog.com *Contracts with TCV > $25M
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