4th Quarter 2010 TPI Index Presentation

The TPI Index
An Informed View of the State of the Global Commercial Outsourcing MarketFourth Quarter and Full Year 2010
January 20, 2011
Copyright © 2011, 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.
John
Keppel
Partner & President, Information Services & Chief Marketing Officer
Partner & President, Global Business Process Services, TPI
Mark Mayo
Duncan Aitchison
Partner & President, TPI EMEA
TPI Partner & Managing Director, Strategy & Assessments
Paul Schmidt

An Informed View
Insights into the state of the global commercial outsourcing market
Host
Citi Investment Research – AshwinShirvaikar
33rd Quarterly TPI Index
Insights on commercial outsourcing contracts valued at >$25M
Focus on both 4Q10 and Full Year trends and comparisons
4Q10 TCV was up 30% Q/Q but was down 30% Y/Y
4Q10 TCV in the Americas was down significantly
Full Year 2010 TCV fell by 11% from 2009
Full Year 2010 BPO TCV is down almost 31% from 2009
Multi-Sourcing strategies are now the norm
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

4Q10 and Full Year HeadlinesA second consecutive weak Quarter has dampened Broader Market momentum.
* 4Q09 was the strongest fourth quarter in the last decade by some margin
Restructurings include renegotiations, renewals, extensions

Global Market SizeCompanies have spent more for outsourcing services year after year during the past decade.
Annualized Revenue ($B) Based on Active Industrywide Contracts with TCV > $25M:
Annualized revenues count the revenues available to service providers in any given year. It combines the active awards from current and previous years.

Industrywide Contract Award Trends2010 Broader Market TCV was down 11%.
Industrywide Contracts with TCV > $25M: Quarterly Comparison ($B)
Total Industrywide Contracts (#)
Industrywide TCV ($B)
TCV ($B)
# of contracts
First and fourth quarters provided “bookends” to the weaker second and third quarters of 2010.
Industrywide Contracts with TCV > $25M: Annual Comparison ($B)
2010 TCV finished lower than 2009 as we had anticipated in our last Index Call.
TCV ($B)
# of contracts

Industrywide Contract Award TrendsRestructuring activity in the 4th Quarter was high, with TCV of $6.3B awarded.
Industrywide Restructuring Contracts with TCV > $25M: Quarterly Comparison ($B)
TCV ($B)
# of contracts
For 2010, one-third of the market was restructuring-related, an all-time-high for any year in the decade.
Industrywide Restructuring Contracts with TCV > $25M: YTD Comparison ($B)
We expect 2011 to again be a year with significant restructuring activity.
TCV ($B)
# of contracts
Mega Deal: a contract with TCV of $1B+

Industrywide Contract Award Trends – EMEA EMEA had a good 4Q10, nearly doubling its TCV measures Q/Q.
Industrywide EMEA Contracts with TCV > $25M: Quarterly Comparison ($B)
The Top 15 Service Providers by TCV Awarded
TCV ($B)
# of contracts
Accenture
Atos Origin
BT
Capgemini
CSC
EDB Business Partner
Fujitsu
IBM
Indra
Integreon
HP
Infosys
Siemens
T-Systems
TCS
Industrywide EMEA Contracts with TCV > $25M: Annual Comparison ($B)
TCV ($B)
# of contracts
Note: Service providers in alphabetical order; no rankings implied. Placements based on 2010 TCV commercial contract awards > $25M sourced from TPI contracts database.

Industrywide Contract Award Trends – AmericasAmericas had its weakest quarter since 3Q07.
Industrywide Americas Contracts with TCV > $25M: Quarterly Comparison ($B)
TCV ($B)
# of contracts
Accenture
Capgemini
CGI
Cognizant
CSC
Dell Services
HCL
Hewitt
HP
Infosys
IBM
RR Donnelly
TCS
Verizon
Wipro
Industrywide Americas Contracts with TCV > $25M: Annual Comparison ($B)
TCV ($B)
# of contracts

Industrywide Contract Award Trends – Asia Pacific4Q10 finished strong after lackluster values in three previous quarters.
Industrywide Asia Pacific Contracts with TCV > $25M: Quarterly Comparison ($B)
TCV ($B)
# of contracts
Accenture
CSC
Fujitsu
HCL
HP
IBM
Wipro
Industrywide Asia Pacific Contracts with TCV > $25M: Annual Comparison ($B)
TCV ($B)
# of contracts

Industrywide Contract Award Trends – ITO Almost $19B awarded in 4Q10, up 59% Q/Q but down 19% Y/Y.
Industrywide ITO Contracts with TCV > $25M: Quarterly Comparison ($B)
TCV ($B)
# of contracts
A strong first quarter was followed by two weaker quarters and then closed out in a substantial fourth quarter.
Industrywide ITO Contracts with TCV > $25M: Annual Comparison ($B)
ITO TCV has remained consistent year after year since 2006.
TCV ($B)
# of contracts

Industrywide Award Trends – ITORestructurings led to increased bundling of ADM and Infrastructure contracts.
Industrywide ITO Contracts With TCV > $25M: TCV Awarded Comparison ($B)
2010 Top 10 ADMService Providers by TCV
2010 Top 10 InfrastructureService Providers by TCV
2010 Top NetworkService Providers by TCV
Accenture
Atos Origin
CSC
Dell Services
Fujitsu
HP
IBM
Siemens
T-Systems
TCS
AT&T
BT
CSC
Ericsson
Siemens
T-Systems
Verizon
Accenture
Capgemini
Cognizant
HP
IBM
Infosys
Logica
Siemens
TCS
Wipro
Note: Service providers in alphabetical order; no rankings implied. Placements based on 2010 TCV commercial contract awards sourced from TPI contracts database.

Industrywide Contract Award Trends – BPO2010 BPO TCV declined by 31% from 2009.
Industrywide BPO Contracts with TCV > $25M: Quarterly Comparison ($B)
TCV ($B)
# of contracts
Most of the BPO activity remains in the Americas. Human Resources Outsourcing TCV levels were the best in three years.
Industrywide BPO Contracts with TCV > $25M: Annual Comparison ($B)
TCV ($B)
# of contracts
The number of BPO contracts signed in 2010 dipped 13% from 2009 levels.

Industry Segment ComparisonRecovery of Financial Services was encouraging but Manufacturing and Telecom continued to drag market lower.
Industrywide Contracts With TCV > $25M: Annual TCV Awarded Comparison ($B)

Industrywide Contract Award TrendsWhile a substantial number of very large contracts underpinned this year’s TCV performance, there was also a larger number of smaller contracts.
Industrywide Contracts with TCV > $25M:
Number of Contracts Awarded by TCV Band
Industrywide Contracts with TCV > $25M:
TCV ($B) of Contracts Awarded by TCV Band

Special Topic: Multi-SourcingIn 2010, over half of those G-2000 Companies that source ITO on a significant scale, do so with multi-sourcing strategies.
ITO Sourcing Strategies for G-20001
2
n = 123 companies
n = 202 companies
n = 228 companies
1 Includes companies with - 1+ ITO contract - TCV >$25M in 2010, 2005 and 2000 - ITO annual contract spend > $50M
2One Service Providers wins 80% of spend within a client

Special Topic: Multi-SourcingFor G-2000 companies headquartered in Western Europe, multi-sourcing has accelerated by distinct leaps and bounds.
Regional Detail - ITO Sourcing Strategies for G-20001
2
United States
Western Europe
1 Includes companies with: 1+ ITO contract - TCV >$25M in 2010, 2005 and 2000 - ITO annual contract spend > $50M
2One Service Providers wins 80% of spend within a client

Special Topic: Multi-SourcingIn 2010, almost half of G-2000 companies that source ITO significantly are doing so with 3+ Service Providers.
Provider Structure Detail - ITO Sourcing Strategies for G-20001
n = 123 companies
n = 202 companies
n = 228 companies
1 Includes companies with: 1+ ITO contract - TCV >$25M in 2010, 2005 and 2000 - ITO annual contract spend > $50M

Special Topic: Multi-SourcingMulti-sourcing has opened up the field to more competitors.1
Multi-Source
Primary Providers2
Single SourceEnvironments2
Multi-SourceEnvironments2
Year
AT&T
Infosys
Mahindra Satyam
TCS
Capgemini
Wipro
Cognizant
Atos Origin
Siemens
1 Environment includes companies with: 1+ ITO contract - TCV >$25M in 2010, 2005 and 2000 - ITO annual contract spend > $50M
2 Service providers are ranked in order of occurrences of each individual environment

Special Topic: Multi-Sourcing Service Provider Consolidation and Outlook going forward.
Looking Back
Multi-sourcing becomes more prevalent over the past decade
Large service provider contingents become burdensome for companies
Companies starting to recast sourcing strategies, reducing number of providers
Going Forward
Multi-sourcing will continue as relevant strategy
More intense competition among service providers to increase wallet share within existing clients

Summary
2010 Highlights
TCV declined Y/Y from 2009
Each of the regions declined Y/Y
ITO has held fairly steady since 2006
More restructuring TCV was signed than in any other year
Outlook
Signs are mixed for 2011
Analysts project middle single-digit aggregate 2011 growth for service providers
Service provider pipelines are up by quantity, but with fewer large deals ($200M+ TCV)
Transaction push-out from 4Q10 to 1Q11 could bolster 2011 results
Limited pipeline visibility beyond 1Q11

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4th Quarter 2010 TPI Index Presentation

by TPI on Jan 20, 2011

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