3Q22 Global ISG Index™

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Managed Services &
As-a-Service
Market Insights
Aditya Buddhavarapu, CFA
Vice President, European Software,
IT Services & Payments Research
Bank of America Global Research
October 13, 2022
3Q 2022
HOSTED BY

@ISG_News #ISGIndex #ISGIndexInsider
The ISG Experts
Covering the State of the
Managed Services & As-a-Service Industry
for the Global Commercial Market
Steve
Hall
Partner &
President
Kathy
Rudy
Chief Data &
Analytics Officer
Stanton
Jones
Distinguished
Analyst
Namratha
Dharshan
Director of
Research &
Principal Analyst
Welcome
to the Quarterly
80th

3Q22 3
© 2022 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider
3Q22: Three Big Thoughts
Limited pricing power is pressuring provider margins.
Macro concerns are delaying enterprise decision making.
Demand remains at all-time highs, yet headwinds persist.

3Q22 4
3Q22 4
ACV = Annual Contract Value
ACV $B
Quarterly Trends
Combined Market Y/Y growth
declined 3% as the market
technicals have rolled over and
comps become more difficult
Managed Services ACV awards
remained above $9B level, but
declined sequentially for second
straight quarter; new scope
award ACV fell 15% Y/Y
XaaS ACV fell back 4% Y/Y; only
the second time XaaS had a Y/Y
decline since 2015
Global
Broader Market Results
6.2%
2022
YTD
Managed Services
9.2 9.2 9.0
3Q
21
2Q
22
3Q
22
Combined Market
11.5%
2022
YTD
23.8 23.3 23.2
3Q
21
2Q
22
3Q
22
As-a-Service
15.1%
2022
YTD
14.6 14.1 14.1
3Q
21
2Q
22
3Q
22

3Q22 5
3Q22 5
Margins Grew During Pandemic, Then Dropped
Margin Trends
Margin growth slowed between
2-4% in 2019
Providers spend reduced
dramatically in 2020 while,
contrary to early expectations,
demand didn’t significantly
decrease
As business-as-usual returned,
margins begin dropping back to
2019 levels
-10.0%
0.0%
10.0%
20.0%
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
1Q
22
2Q
22
Y/Y Avg. Weighted Margin Growth
Source: ISG, 2022; Basket of 25 ITO and BPO providers
Height of provider’s cost
control measures

3Q22 6
3Q22 6
Revenue Growth Continues
Revenue Trends
After a dip in Y/Y growth in early
2020, provider revenues have
grown at rates faster than 2019
and to date have not slowed
Y/Y revenue growth in 2019
averaged 6% compared to the
Y/Y growth average of 17% over
the past four quarters -10.0%
0.0%
10.0%
20.0%
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
1Q
22
2Q
22
Y/Y Avg. Weighted
Margin Growth
Y/Y Avg. Weighted
Revenue Growth
Source: ISG, 2022; Basket of 25 ITO and BPO providers
Provider revenues have continued to grow

3Q22 7
Delivery Margin Pressures
Tailwinds Headwinds
Attrition is stabilizing However… it’s still at elevated levels
Large amounts of freshers are making
their way into the delivery workforce
However…
Renewed focus on training and more
intense training programs could
increase cost and time to onboard
Remote working has wider acceptance
helping companies tap into talent
However…
Talent costs are still high, key skills still
cost a premium, and replacement costs
are higher

3Q22 8
3Q22 8
ACV $B
2021 YTD 2022 YTD
Managed Services
ITO/BPO Results
Year-to-Date Trends
Second-best year ever for ITO,
down 2% YTD; EMEA drives upside
ADM ACV up slightly, 3% on high
sustained quarterly performance
Infrastructure ACV, weighed down
by weaker 2Q22, declined 8%
BPO Market having its best year
ever on sizable advances in both
ACV and number of awards
Industry-Specific BPO up 71% on
strength in the Americas; ER&D at
record pace, driven by strength in
EMEA and Manufacturing
19.4
8.3
ITO BPO
-2%
YTD
Decrease
32%
YTD
Growth
Contact Centers
/ Digital CX
ER&D
Industry
Specific BPO
Infrastructure
ADM +3%
+19%
-8%
+71%
+48%

3Q22 9
3Q22 9
ACV $B
XaaS
SaaS/IaaS Results
Year-to-Date Trends
Even with slowing global activity since
April, IaaS is up 18% YTD
The Americas and EMEA posted
excellent YTD IaaS growth of 40% and
31% respectively, but China weighs on
markets with sluggish results
Big 3 hyperscalers (AWS, Azure and
GCP) saw some deceleration but still
support market growth, up 40% YTD
SaaS segment up 7% YTD, but the
market segment fell 12% Y/Y in 3Q22
as macro headwinds create a
bifurcated market
32.7
11.5
IaaS SaaS
2021 YTD 2022 YTD
18%
YTD
Growth
7%
YTD
Growth
-33%
-29%
-18%
-1%
23%
32%
37%
39%
-40% -20% 0% 20% 40%
YTD App Category ACV
Growth
IT Service Mgmt.
Human Capital Mgmt.
Analytics & BI
ERP Fin. Mgmt.
CRM
PLM
Collaboration
eCommerce

3Q22
The Big 15
The Building 15
The Breakthrough 15
The Booming 15
THE
ISG15
Global Service & Technology
Provider Standouts
Our ISG Contract KnowledgeBase™ is used to determine
placements based on the annual value of commercial
contracts awarded in the past 12 months

3Q22 11
Service & Technology Provider
Standouts – Global
Our ISG Contract KnowledgeBase™ is used to determine placements based
on the annual value of commercial contracts awarded in the past 12 months.
* New or returning to leaderboard in 3Q22
†Provider moved tiers since previous quarter
Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.
The Big 15 The Building 15 The Breakthrough 15 The Booming 15
Revenues > $10B Revenues $3B-$10B Revenues $1B-$3B Revenues <$1B
Managed
Services
Market
Accenture
Capgemini
Cognizant
Deloitte*
DXC Technology
HCL
IBM
Infosys
Kyndryl
TCS
Wipro
Amadeus
Amdocs*
Concentrix
EPAM Systems
Genpact
Global Payments
OptumInsight
Sabre
Sitel
Tech Mahindra
Teleperformance
T-Systems
Alten*
EXL
Globant
LTI
Mindtree
Mphasis
Rackspace
TELUS International
Unisys
WNS
ChinaSoft*
Coforge*
ENDAVA
Ensono
KPIT Technologies*
L&T Technology
Services
NNIT A/S
Persistent Systems*
Softtek
Taiji Computer
Corp.*
As-a-
Service
Market
Amazon Web
Services
Google
Microsoft
Salesforce
Equinix
Palo Alto Networks
ServiceNow
Atlassian
CrowdStrike
DocuSign
Snowflake
Twilio
21Vianet
DigitalOcean
Kingsoft Cloud
MongoDB
Zscaler

3Q22 12
3Q22 12
ACV $B
Americas
Quarterly Trends
Americas Combined Market ACV
was up 1% Y/Y but has declined
sequentially in three of the last
four quarters
Managed Services remained
above $4.5B but was down 11%
Y/Y against a difficult comp from
3Q21 (second-best quarter ever)
XaaS ACV was up 9% Y/Y but fell
below $8B for the first time this
year; Y/Y growth was the best of
the three regions
5%
2022
YTD
Managed Services
5.1 4.5 4.5
3Q
21
2Q
22
3Q
22
Combined Market
19%
2022
YTD
12.3 12.7 12.5
3Q
21
2Q
22
3Q
22
As-a-Service
29%
2022
YTD
7.3 8.1 7.9
3Q
21
2Q
22
3Q
22

3Q22 13
3Q22 13
ACV $B
EMEA
Quarterly Trends
EMEA Combined Market up 7%
Y/Y and surpassed $7B for fifth
straight quarter
EMEA Managed Services
followed a stronger 2Q and was
up 9% Y/Y; most markets posted
gains led by DACH and U.K.
EMEA XaaS market exceeded
$3.5B for fifth straight quarter;
only region to post both growth
on a Y/Y and Q/Q basis Combined Market
7.1 7.7 7.6
3Q
21
2Q
22
3Q
22
16%
2022
YTD
As-a-Service
3.6 3.8 3.8
3Q
21
2Q
22
3Q
22
23%
2022
YTD
Managed Services
3.5 3.9 3.8
3Q
21
2Q
22
3Q
22
9%
2022
YTD

3Q22 14
3Q22 14
ACV $B
Asia Pacific
Quarterly Trends
Combined Market hovered just
above $3B for second straight
quarter while falling
precipitously from highs in 4Q21
Managed Services ACV were up
17% Y/Y as India and Southeast
Asia led region to the upside
XaaS ACV fell to 2020 levels,
weighed down by China
hyperscalers
-14%
2022
YTD
4.4
3.0 3.1
3Q
21
2Q
22
3Q
22
Combined Market
2%
2022
YTD
Managed Services
0.6 0.8 0.7
3Q
21
2Q
22
3Q
22
As-a-Service
-17%
2022
YTD
3.7
2.2
2.4
3Q
21
2Q
22
3Q
22

3Q22 15
3Q22 15
Global Technology Services
Industry Award Trends
2022 YTD
Growth
Financial
Services
Healthcare
& Pharma
Travel,
Transport
Leisure
Telecom
& Media
Energy
Business
Services
Retail &
Consumer
Packaged Goods Manufacturing
As-a-Service 18% 27% 23%
5%
26%
6% 13% 19%
Combined
Market 23% 16% 14%
6%
5%
8% -2% 14%
Managed
Services 29% -5% 1%
6%
-10%
14% -29% 8%

3Q22 16
Summary and Outlook
Summary Market Outlook
l Worsening macro in Europe with energy prices negatively
impacting customer demand as war in Ukraine rages
l Central banks further implement quantitative tightening
while increasing rates and borrowing costs
l Tech exposure to strong dollar increases potential for a
profits recession
l YTD in 2022, Managed Services is up 6%
l Even though ITO grew in 3Q22, it was still down 6% YTD as
Infrastructure weakness offset gains in ADM
l BPO is seeing its best year ever on strength from Industry-
Specific BPO in the U.S., ER&D in EMEA and Digital CX in the
BFSI and Telco segments
l Enterprise buyers remain
resilient; ongoing digital
transformation journey
l Potential for deteriorating
macro trickles down into
Managed Services
l Market technicals will make
for difficult comps Y/Y
l Big 3 Hyperscalers are showing signs of deceleration but
still continue supporting market growth in IaaS; China
hyperscalers are underweight since March, pulled lower by
government regulation, COVID policy and weakening
currency
l SaaS ACV is up 7% YTD even with a 3Q that fell by double-
digits; SaaS is a bifurcated market with some categories
advancing while others are affected by a worsening macro
3.5%
2022e
Managed
Services
10.5%
2022e
XaaS
Macro Risks
Managed Services
Forecast
XaaS

Thank you!
The Quarterly
80th

isg-one.com
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A
trusted business partner to more than 800 clients, including more than 75 of the top 100 enterprises in
the world, ISG is committed to helping corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster growth. The firm specializes in digital
transformation services, including automation, cloud and data analytics; sourcing advisory; managed
governance and risk services; network carrier services; strategy and operations design; change
management; market intelligence and technology research and analysis. Founded in 2006, and based in
Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20
countries—a global team known for its innovative thinking, market influence, deep industry and
technology expertise, and world-class research and analytical capabilities based on the industry’s most
comprehensive marketplace data.

3Q22 Global ISG Index™

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