2nd Quarter 2010 TPI Index Presentation

The TPI Index
An Informed View of the State of the Global Commercial Outsourcing MarketSecond Quarter 2010
July 20, 2010
Copyright © 2010, Technology Partners International, Inc. All Rights Reserved. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Technology Partners International, Inc.

WelcomePresenters on today’s call.
Partner & President, TPI Global Operations
Mark Mayo
Partner & Managing Director, Industry Verticals and CIO Services, TPI Americas
Tom Lang
Duncan Aitchison
Partner & President, TPI EMEA

An Informed View
Insights into the state of the global commercial outsourcing market.
Host
Deutsche Bank – Tim Fox
31stQuarterly TPI Index
Insights on commercial outsourcing contracts valued at >$25M
Focus is on both Q/Q and H/H trend comparisons
After a record first quarter, contract restructurings are back in line with historical trends.
Second quarter was soft, continuing a market recovery that is very slow, and uneven; outlook is cautious.
Highlights
TPI Index Format
Summary of the market indicators
Analysts invited to ask questions during the Q&A session
For More Information
Slides are available at www.tpi.net
Continue the discussion at www.considerthesourceblog.com

2Q10 and 1H10 HeadlinesUneven activity shows global market is not yet bouncing back.
At the halfway mark, our outlook remains cautious.
Expected rebuilding of industry pipeline has not materialized.

Industrywide Contract Award Trends 2Q10 TCV down both Q/Q and Y/Y; 1H10 TCV essentially flat Y/Y.
Industrywide Contracts with TCV > $25M:
Quarterly Comparison ($B)
Total Industrywide Contracts (#)
Industrywide TCV ($B)
Based on TCV, the second quarter was down 13.5% Q/Q, but was up almost 20% Q/Q based on number of contracts awarded.
TCV ($B)
# of contracts
1H Comparison ($B)
TCV ($B)
# of contracts
Year to date, the number of contracts awarded is down 24% Y/Y, reflecting larger average TCV.

Industrywide Regional Contract Award TrendsBoth the Americas and EMEA saw Q/Q decreases in TCV awarded.
Quarterly TCV ($B) of Contracts Awarded

Industrywide Regional Contract Award TrendsThe Americas saw its best 1H Performance since 2006, while EMEA pulled back slightly due to weakness in UK Market.
1H TCV ($B) of Contracts Awarded
1H10 Top 10 Asia-PacificService Providers by TCV
1H10 Top 10 EMEAService Providers by TCV
1H10 Top 10 AmericasService Providers by TCV
BT
CSC
HCL
HP
IBM
Indra
Integreon
Logica
T-Systems
Xchanging
Accenture
EDB Business Partner
Fujitsu
HP
IBM
HP
IBM
Infosys
TCS
Wipro
Accenture
Cognizant
CSC
Dell
Hewitt
Note: Service providers in alphabetical order; no rankings implied
Placements based on 1H10 TCV commercial contract awards sourced from TPI contracts database

Industrywide ITO Contract Award TrendsTCV in the Second Quarter declined both Q/Q and Y/Y.
Industrywide ITO Contracts with TCV > $25M:
TCV ($B)
# of contracts
2Q10 TCV declined both Q/Q and Y/Y, as not as many large-scale ITO contracts were awarded.
Industrywide ITO Contracts with TCV > $25M:
1H Comparison ($B)
TCV ($B)
# of contracts
1H10 ITO TCV is up almost 5% YTD; ITO performance since 2006 has remained steady.

Industrywide ITO Contract Award TrendsTCV awarded in the ADM with Infrastructure space has been robust thus far in 2010.
Industrywide ITO Contracts With TCV > $25M: Half/Half View - TCV Awarded Comparison ($B)
The uptick in ADM with Infrastructure has been equally split between the Americas and EMEA regions.

Industrywide BPO Contract Award TrendsBPO TCV in 2Q10 up both Y/Y and Q/Q; 1H10 TCV down almost 11% Y/Y.
Industrywide BPO Contracts with TCV > $25M:
TCV ($B)
# of contracts
Second-quarter performance was up 60% Q/Q off of an easy comparison.
1H Comparison ($B)
TCV ($B)
# of contracts
Half-year comparisons for broader market BPO indicate declines in number of contracts and TCV.

Industrywide BPO Market TrendsThe BPO market is showing growth at smaller contract sizes.
Number of Active Contracts
3 Year CAGR: 14.2%
The industry is seeing additional BPO contracting activity at smaller TCV levels without significant revenue growth.
Market Size - Industrywide BPO Contracts with TCV > $10M:Annualized Revenue ($B) of Active Contracts
3 Year CAGR: 3.4%
Data presented as of June 30 each year

Industrywide BPO Market TrendsGreatest growth has been in non-traditional BPO functions.
Annualized Revenue ($B) of Active Contracts
3 year CAGR
High (+20%)
Medium (10-20%)
Lower (<10%)
Data presented as of June 30 each year
“All Other BPO” consists of KPO/R&D/Engineering Services

Industrywide BPO Market TrendsEach functional area contains a mix of niche-specific providers and others that cross multiple areas.
Top 10 Service Providers Based on Number of Active Contracts
Procurement:
HRO:
F&A:
Contact Centers:
Accenture
ADP
Capita
Ceridian
Fidelity
Hewitt
IBM
NorthgateArinso
Xchanging
Xerox ACS
Accenture
Capgemini
EXLService
Genpact
HP
IBM
Infosys
TCS
Wipro
WNS
Xerox ACS
Accenture
Convergys
Genpact
HP
IBM
Sitel
Teletech
Vertex
Wipro
Xerox ACS
Accenture
Ariba
Capgemini
Genpact
HP
IBM
ICG Commerce
Infosys
TCS
Wipro
Xchanging
Note: Service providers in alphabetical order; no rankings implied
Placements based on 1H10 TCV commercial contract awards sourced from TPI contracts database
FAO and Procurement had a tie and 11 vendors are listed.

Industry Segment ComparisonTransportation, Retail and Business Services are helping support market growth in terms of TCV awarded.
Industrywide Contracts With TCV > $25M: H/H TCV Awarded Comparison ($B)

Spotlight on Research: TPI Quarterly Topic
Cloud Computing
Kevin Smilie
Partner, Cloud Computing

TPI Research Spotlight: Cloud Computing StudyWhile cloud is still in its early stages, clients are seriously investigating solutions.
TPI Research surveyed over 140 corporate IT decision-makers globally to learn about their plans for Cloud Computing in the immediate future.
Of the 27 solution areas clients were testing, they were most interested in the following:
Timeframe for Engaging
Service Providers
Clients
Considering
Of these...

TPI Research Spotlight: Cloud Computing Study
Clients are trying to separate hype from reality as many believe there is still a lot of noise in the cloud.
Clients are concerned with a number of risks of moving to the cloud, none more so than data security.
Companies are actively exploring cloud-based solutions and are ready to talk to cloud service providers.
Looking across all 27 cloud solution areas, TPI Research reveals that…
18% of clients are already engaging service providers in discussions regarding their cloud solutions.
An additional 45% of clients will engage service providers in discussions regarding cloud solutions over the next six months.

Summary
Broader Market
2Q10 TCV is down 14% Q/Q and 13% Y/Y; YTD Performance is flat Y/Y.
2Q10 ITO is down 29% Q/Q and 23% Y/Y; YTD performance is up 5%.
BPO continues to lag, but over the long run is growing with contracts of smaller sizes.
Regional
2Q10 performance in the Americas is down 9% Q/Q but up 21% Y/Y; YTD, TCV in the Americas is up 29%, led mainly by the U.S.
2Q10 performance in EMEA is down 21% Q/Q and 14% Y/Y; YTD, TCV in EMEA is down 6%, due to weakness in the UK Market.
Outlook
Third quarters are historically weak, and 3Q10 will likely follow that pattern.
Industry backlog appears light, thus visibility into a robust fourth quarter is unclear.
We anticipate a continuation of the slow and uneven recovery that began in Q3 2009.

Turn to TPI MomentumSM for your bespoke research needs
TPI MomentumVerticals Report Now Available!
For this and further information on obtaining a copy of the TPI Index Insider visit
www.tpi.net/TPIMomentum.html
For details about TPI Momentum Services and Information Products, as well as membership information, contact tpimomentum@tpi.netor:
Paul Reynolds
John Keppel
Director and Chief Research Officer
Partner & Managing Director
Americas
EMEA
TPI Momentum
TPI Momentum
paul.reynolds@tpi.net
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2nd Quarter 2010 TPI Index Presentation

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2nd Quarter 2010 TPI Index Presentation — Presentation Transcript