Second Quarter and First Half 2014 Global ISG Outsourcing Index

1,121 views

Published on

The ISG Outsourcing Index (formerly the TPI Index) provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media. For more than a decade, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance.

The global outsourcing market is constantly evolving. Keep pace with the change and capitalize on the latest trends with the ISG Outsourcing Index.

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,121
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
50
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Second Quarter and First Half 2014 Global ISG Outsourcing Index

  1. 1. Hosted by: Keith Bachman, BMO Capital Markets 15 July 2014 The Global ISG Outsourcing Index Second Quarter and First Half 2014 Market Data and Insights
  2. 2. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 2 Covering the state of the outsourcing industry for global, commercial contracts.* Welcome to the 47th Quarterly Outsourcing Index Review Esteban Herrera Partner John Keppel Partner & President Dr. David Howie Partner
  3. 3. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 3 At a Glance BEST SECOND QUARTER EVER IN BROADER MARKET ACV, UP Y/Y AND Q/Q MANUFACTURING REBOUNDS IN ALL SEGMENTS WITH HIGHEST SECOND QUARTER EVER FOR BOTH ACV AND NUMBER OF AWARDS RECORD SECOND QUARTER FOR ITO ACV WITH STRENGTH IN BOTH NEW AND RESTRUCTURED CONTRACTING BPO ACV UP SLIGHTLY Y/Y AND Q/Q EVEN AS CONTRACT ACTIVITY TRENDS LAG BEHIND THE BROADER MARKET PACE YEAR-ON-YEAR SECOND QUARTER AND HALF-YEAR ACV UP ACROSS ALL REGIONS Scorecard 2Q14 2Q Y/Y 2Q Q/Q 1H14 1H Y/Y ACV ($B)* Change Change ACV ($B)* Change Global Market $ 6.4 72% 6% $ 12.4 34% New Scope $ 4.1 49% 7% $ 7.9 41% Restructurings $ 2.3 139% 4% $ 4.5 23% Mega-relationships $ 1.6 83% -9% $ 3.4 43% ITO $ 4.9 100% 7% $ 9.5 52% BPO $ 1.5 17% 2% $ 2.9 -4% Americas $ 2.3 118% 22% $ 4.2 21% EMEA $ 3.1 45% -2% $ 6.3 32% Asia Pacific $ 1.0 94% 0% $ 1.9 99%
  4. 4. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 4 Second quarter ACV is up 72% Y/Y against a weak 2Q13 and up 6% Q/Q against a strong 1Q14. YTD, Broader Market ACV is up 34%. Quarterly Broader Market ACV ($B)* and Counts Broader Market Contract Award Trends Half-Year Broader Market ACV ($B)* Half-Year Broader Market Counts $6.4$6.0 $4.6 $5.9 $3.7 $5.5$5.4$5.6 $6.3 340323299 352 211 299278 251 292 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts $12.4 $9.2 $12.4 $10.2 $12.6 $10.3$11.0 $8.4$8.9$9.1 $10.4 $11.0$13.2$10.2 $11.3 $9.3 $9.1 $7.4 $9.4 $19.7 $23.5 $18.6 201413121110090807062005 1H ACV 2H ACV 663 510 628627 534518 411 340330329 651529 617 501516 432 329331314 1,1611,157 643 201413121110090807062005 1H Counts 2H Counts
  5. 5. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 5 2Q14 award activity is the highest ever for a second quarter. Contracting activity is up Y/Y and Q/Q in all ACV bands except for the Mega-relationship category. Broader Market Contract Trends by Deal Size ACV($B)* $10-39M $40-99M $100M+$5-9M Comparing Broader Market Contracting Awards ($B)* Grouping in ACV Contract Size Bands Contract Counts $1.6 $0.9 $2.2 $1.5 $0.9 $1.4 $2.2 $1.3 $1.8 $1.1 $0.7 $0.9 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 71129798812 242219211617231923 133 118117 137 79 125113119105 176 172 161 185 109 148 134 105 152 2Q141Q4Q3Q2Q131Q4Q3Q2Q12
  6. 6. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 6 2Q14 New Scope and Restructuring ACV are up significantly Y/Y and up slightly Q/Q. YTD results are up over 1H13 but in line with prior years. New Scope and Restructuring Contract Award Trends $4.5 $3.6$4.4 $2.7$3.5$2.3$2.2$1.6 $3.5$2.2 $4.1$3.6$5.3$3.6 $2.4$2.5 $1.7 $1.7$2.7 $7.7$8.0 $5.0 201413121110090807062005 1H ACV 2H ACV Half-Year New Scope ACV ($B)* Half-Year Restructuring Contract Counts 220 151163156 11811480586667 213 147142 12292 81485466 364 310 133 201413121110090807062005 1H Counts 2H Counts Half-Year New Scope Contract Counts Half-Year Restructuring ACV ($B)* $7.9 $5.6 $8.1$7.4 $9.0 $8.0$8.8 $6.8 $5.4 $6.9 $6.3 $7.4$7.8$6.6 $8.8 $6.7 $7.5 $5.7 $6.7 $11.9 $15.5 $13.6 201413121110090807062005 1H ACV 2H ACV 443 359 465471 416404 331 282264262 438 382 475 379424 351 281277248 797 847 510 201413121110090807062005 1H Counts 2H Counts
  7. 7. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 7 2Q14 ITO ACV is up 100% Y/Y and 7% Q/Q with record high number of ITO contracts awarded in 2Q. Half-year ITO ACV is the second highest ever. ITO Half-Year ACV ($B)* ITO Contract Award Trends ITO Quarterly ACV ($B)* and Contract Counts ITO Half-Year Domain Details ACV ($B)*ITO Half-Year New vs. Restructuring ACV ($B)* $4.9$4.6 $3.6 $4.5 $2.5 $3.8$3.6$3.7$3.6 250235224 248 131 197197 163 181 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts $9.5 $6.3 $7.8 $6.6 $9.7 $7.4$7.8 $6.3$6.6$6.8 $8.1$7.3 $9.7 $8.0 $8.2 $6.4 $6.3$5.2 $6.3 $14.3$15.1 $13.1 201413121110090807062005 1H ACV 2H ACV $2.69 $1.97 $1.41 $1.26 $1.03 $0.52 $0.31 $0.35 $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Manufacturing Financial Services Telecom & Media Travel, Transport, Leisure Energy Business Services Healthcare & Pharma Retail Avg of Prior 4 Halves 1H14 $6.15 $3.37 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 New Scope Restructuring Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14
  8. 8. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 8 2Q14 BPO ACV is up 17% Y/Y and 2% Q/Q. YTD BPO ACV is down slightly from 1H13. First half Manufacturing ACV outperformed its prior four-half average. BPO Half-Year ACV ($B)* BPO Contract Award Trends $2.9$3.0 $4.6 $3.6 $2.9$2.8$3.2 $2.1$2.3$2.4 $2.3 $3.8 $3.5 $2.2 $3.0$2.9 $2.8$2.2 $3.1 $5.3 $8.4 $5.5 201413121110090807062005 1H ACV 2H ACV BPO Quarterly ACV ($B)* and Contract Counts $1.5$1.4 $0.9 $1.4$1.2 $1.7$1.9$1.9 $2.7 908875 104 80 102 8188 111 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts BPO Half-Year Industry Details ACV ($B)* $0.81 $0.66 $0.47 $0.24 $0.24 $0.18 $0.16 $0.12 $- $0.50 $1.00 $1.50 Manufacturing Financial Services Telecom & Media Energy Business Services Travel, Transport, Leisure Healthcare & Pharma Retail Avg of Prior 4 Halves 1H14 BPO Half-Year New vs. Restructuring ACV ($B)* $1.55 $1.44 $1.80 $1.09 $0.0 $1.0 $2.0 $3.0 $4.0 New Scope Restructuring Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14
  9. 9. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 9 Share of BPO Active Contract Numbers ACV Band 5 yrs. ago Today 5-year CAGR >$2 to $5M 35% 37% 8.8% > $5M 65% 63% 7.5% Share of BPO Annualized Revenue ACV Band 5 yrs. ago Today 5-year CAGR >$2 to $5M 7% 9% 6.1% > $5M 93% 91% 2.6% Active Contract Counts Annualized Revenue ($B) Annualized Revenue Growth is slowing for larger contracts awards but remains robust in the smaller segment ($>2M-$5M.) Contracting activity, as measured by number of active contracts, remains high in both large and small deal categories. An Expanded Look: BPO Active Contracts With ACV > $2M $31.1 $26.3 $3.0 $2.1 Today5 Years Ago ACV >$2M to $5M ACV > $5M 1,933 1,276 1,150 694 Today5 Years Ago ACV >$2M to $5M ACV > $5M
  10. 10. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 10 Note: Service providers in alphabetical order; no rankings implied. Placements based on ACV from commercial contract awards sourced from ISG Contracts Knowledgebase ®. Accenture Aditya Birla Minacs Accenture Accenture Accenture Aon Hewitt Convergys Alliance Data Systems Capgemini Capgemini ADP EXL Capita EXL EXL Ceridian Genpact CSC Genpact Genpact Fidelity Infosys Dell GEP IBM Genpact SITEL First Data Corporation IBM Infosys IBM SYNNEX FIS Infosys TCS Northgate TCS HCL TCS Wipro Workday TeleTech TCS Xchanging WNS Xerox Xerox Xerox Xerox Xerox Top Service Providers in the BPO Market: ACV > $2M Contracting Numbers and Change % by Service Segment From June 2013 to 2014 Percentage of Market Share by Provider Types India-heritageWestern-heritage Function-specific 66% 50% 38% 24% 4% 27% 24% 26% 54% 30% 23% 38% 50% 46% HRO Contact Center Industry-specific Procurement F&A 447 438 1,112 214 619 ↓6% ↓7% ↑ 4% ↓2% ↓1% HRO Contact Center Industry-specific Procurement F&A
  11. 11. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 11 Second quarter ACV is up 118% Y/Y and 22% Q/Q, even as large deals remain mostly absent from a mature market. YTD, Broader Market ACV is up 21%. Americas Quarterly ACV ($B)* in Size Bands Americas Contract Award Trends $0.3 $1.0$0.8 $0.7$0.5$0.3 $1.1 $0.3$0.7 $0.5$0.2$0.3 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 $100M + $40-99M $10-39M $5 - 9M Americas Quarterly ACV ($B)* and Counts $2.3 $1.9 $1.5 $1.7 $1.1 $2.4 $1.9$1.9$2.1 155 111113 137 70 127 111104111 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts Americas Half-Year Segment Details ACV ($B)*Americas Half-Year ACV ($B)* $4.2 $3.5 $5.0 $3.8 $5.7 $4.2 $3.1$3.2 $4.6 $3.7 $3.2 $3.8 $4.3 $3.1$4.2 $3.1 $3.7 $3.0$3.8 $6.7 $8.8 $7.5 201413121110090807062005 1H ACV 2H ACV $2.33 $1.90 $2.55 $1.67 $0.0 $1.0 $2.0 $3.0 $4.0 New Scope Restructuring ITO BPO Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14
  12. 12. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 12 $0.24 $0.06 $0.04 $0.03 $- $0.1 $0.1 $0.2 $0.2 $0.3 $0.3 $0.4 Canada Brazil Other LatAm Mexico Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14 YTD, U.S.-based ACV is up significantly Y/Y and Q/Q. YTD, gains in the Americas are led by the Financial Services and Manufacturing industries. Americas Contract Award Trends Detail Americas Half-Year Sub-regions ACV ($B)* Americas Industries ACV ($B)* $3.86 $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 U.S. $0.49 $0.42 $0.24 $0.18 $0.14 $0.12 $0.07 $0.01 $- $0.50 $1.00 Financial Services Manufacturing Telecom & Media Business Services Energy Healthcare & Pharma Retail Travel, Transport, Leisure 1H13 1H14
  13. 13. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 13 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in the Americas For ACV awards in the past 12 months*, Americas-based providers dominate the largest tier, while India-heritage providers lead in both the mid-size and smaller segments. 1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts Aon Hewitt CB Richard Ellis Group CGI Cognizant1 Genpact HCL1 Infosys1 SAIC Tech Mahindra Wipro Accenture1 AT&T BT Capgemini1 CSC1 Dell IBM1 ISS Global TCS1 Xerox1 Aditya Birla Minacs Allscripts EXL GardaWorld iGATE1 KPIT Technologies Neoris NIIT Technologies Syntel WNS Global Services SOURCING STANDOUTS BY COMPANY SIZE The Big 10 Sourcing Standouts Co. Revenues > $10B
  14. 14. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 14 Asia Pacific generates second consecutive strong quarterly performance with significant Y/Y gains led by several large contract awards. Asia Pacific Quarterly ACV ($B)* in Size Bands Asia Pacific Contract Award Trends $0.5$0.2$0.6 $0.2 $0.3 $0.2$0.2$0.3 $0.1$0.1$0.2 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 $100M + $40-99M $10-39M $5 - 9M Asia Pacific Quarterly ACV ($B)* and Counts AP Half-Year Segment Details ACV ($B)*Asia Pacific Half-Year ACV ($B)* $1.9 $0.9 $1.9 $1.0 $0.8 $1.4 $0.7 $1.3 $1.0 $0.4 $1.0 $1.4 $1.0 $1.5 $1.3 $1.6 $1.3 $0.5$1.1 $1.9 $3.3 $1.5 201413121110090807062005 1H ACV 2H ACV $1.39 $0.48 $1.81 $0.06$0.0 $0.5 $1.0 $1.5 $2.0 New Scope Restructuring ITO BPO Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14 $1.0 $0.9 $0.5$0.5$0.5$0.5 $0.6 $0.8 $1.4 37 44 26 39 312932 38 51 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts
  15. 15. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 15 $0.40 $0.49 $0.25 $0.52 $0.19 $0.01$- $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 $0.7 $0.8 $0.9 $1.0 India and South Asia ANZ Greater China Japan Southeast Asia South Korea Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14 YTD, ANZ and Japan step up contracting award activity. Gains in Manufacturing and Telecom lead the YTD regional improvement. Asia Pacific Contract Award Trends Detail Asia Pacific Half-Year Sub-regions ACV ($B)* $0.74 $0.44 $0.22 $0.21 $0.12 $0.08 $0.03 $0.03 $- $0.5 $1.0 Manufacturing Telecom & Media Financial Services Travel, Transport, Leisure Energy Healthcare & Pharma Business Services Retail 1H13 1H14 Asia Pacific Industries ACV ($B)*
  16. 16. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 16 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in Asia Pacific For ACV awards in the past 12 months*, Asia Pacific features diversity in the large tier with providers from all regions. The middle tier is led by India-heritage providers. 1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings SOURCING STANDOUTS BY COMPANY SIZE Co. Revenues > $10B Amdocs Cognizant1 Dimension Data HCL Infosys1 Orange Business Services SingTel Optus1 Tech Mahindra Unisys Wipro1 Accenture1 Alcatel-Lucent Capgemini CSC1 Fujitsu1 HP IBM1 NTT Data TCS1 Telstra1 ASG Chinasoft Hollysys Automation Itron Kratos Defense & Security Lufthansa Systems Pactera Ramco REDKNEE UXC The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts
  17. 17. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 17 Second Quarter ACV is up 45% Y/Y but down slightly 2% Q/Q. YTD ACV is up 32% with 1H14 being the second best 1H performance ever. EMEA Quarterly ACV ($B)* in Size Bands EMEA Contract Award Trends $1.1 $0.7$0.8 $0.6$0.3$0.8 $0.9$0.8$0.7 $0.5 $0.3 $0.4 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 $100M + $40-99M $10-39M $5 - 9M EMEA Quarterly ACV ($B)* and Counts $3.1$3.2 $2.6 $3.7 $2.2 $2.6$2.9$2.9$2.8 148 168160 176 110 143135 109 130 2Q141Q4Q3Q2Q131Q4Q3Q2Q12 ACV Counts EMEA Half-Year Segment Details ACV ($B)* $4.23 $2.09 $5.17 $1.15 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 New Scope Restructuring ITO BPO Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14 EMEA Half-Year ACV ($B)* $6.3 $4.8 $5.5$5.4 $6.1 $4.6 $7.2 $4.0 $3.3 $5.0 $6.2$5.8 $7.9 $5.6 $5.8 $4.6 $4.2 $3.9 $4.6 $11.0$11.3 $9.5 201413121110090807062005 1H ACV 2H ACV
  18. 18. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 18 DACH, Southern Europe and France rise significantly over 1H13. Almost all industries are up over last year’s first half, with Manufacturing leading the charge. EMEA Contract Award Trends Detail EMEA Sub-regions Half-Year ACV ($B)* EMEA Industries Half Year ACV ($B)* $1.79 $0.92 $1.08 $0.30 $0.75 $1.16 $0.27 $0.05$- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 U.K. & Ireland DACH Nordics Benelux Southern Europe France Africa & Middle East E. Europe & Russia Range of Prior 4 Halves Avg of Prior 4 Halves 1H13 1H14 $1.76 $1.25 $1.09 $0.83 $0.63 $0.39 $0.20 $0.17 $- $0.5 $1.0 $1.5 $2.0 Manufacturing Financial Services Travel, Transport, Leisure Telecom & Media Energy Business Services Retail Healthcare & Pharma 1H13 1H14
  19. 19. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 19 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in EMEA For ACV awards in the past 12 months*, EMEA and local based providers lead in all segments. For lower two tiers, India-heritage providers are making inroads. 1Top 10 in Region across all company sizes *Placements based on ACV of commercial contract awards sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings SOURCING STANDOUTS BY COMPANY SIZE Co. Revenues > $10B Capita Carillion Cognizant EVRY HCL1 Infosys1 MITIE Orange Business Services Tech Mahindra Tieto Accenture1 Atos1 Balfour Beatty BT1 Capgemini1 CSC1 T-Systems1 HP IBM1 TCS1 Asseco Communisis GP Strategies iGATE Innovation Group Kelway NNIT A/S NorthgateArinso Quindell WEX The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts
  20. 20. Special Topic for Second Quarter and First Half 2014 David Howie Partner
  21. 21. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 21 EMEA Is the Largest Outsourcing Market With 55% of the global ACV awarded in the last 3 years, a 70% increase since 2008, EMEA is clearly a high-priority target for service providers. $42 billion $9 billion $25 billion Sourcing Market Activity by Major Region Recent 3-year Totals
  22. 22. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 22 $20.5 $7.5 $8.1 $13.8 $4.7 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 0% 10% 20% 30% 40% 50% 60% Variations in Sourcing Profiles Across Europe Targeting the diverse markets of Europe requires a multifaceted approach. Market growth rates and size, recent award levels and buyer penetration rates factor in. Sourcing Profiles of Select European Markets SourcingGrowthOver10Years AnnualizedRevenuesinU.S.billions S. Europe U.K. & Ireland Nordics DACH Benelux Market Potential* Based on Percentage Forbes G-2000 Companies Not Sourcing as of 2013 *Sourced from ISG Momentum™ Geography Report Current Market Size in U.S. billions Germany's GDP is largest in Europe, and combined with relatively low sourcing penetration, potential for sourcing growth is heightened. France is the largest market in this sub- region. Growth is up considerably and the market is under- penetrated with scope to grow.
  23. 23. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 23 Market Share Changes in Europe by Provider Peer Groups Americas-based providers lost share in all regions as India-based providers gained. S. Europe, the least mature market, remains a stronghold for EMEA-based providers. U.K. & Ireland Benelux 2005 - 07 17% 58% 25% Since 2011 2005 - 07 25% 38% 37% Since 20112005 - 07 23% 22% 54% Since 2011 2005 - 07 20% 38% 42% Since 2011 Nordics DACH India/AP-based Provider Americas-based Provider EMEA-based Provider 37% 48% 14% 26% 69% 5% 55% 42% 4% 54% 31% 14% Share Shifts by Provider Peer Group in Select EMEA Markets Southern Europe 2005 - 07 3% 50% 47% Since 2011 36% 61% 2%
  24. 24. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 24 Five Factors That Drive Sourcing Success Recognizing the best practices of the successful souring provider Value Proposition Address customer demand for new and better-integrated products, platforms and business solutions. Work to present a local face and understanding of the local culture through the sales and consulting process. Sales Culture Delivery Culture Play to clients’ appetite for global delivery models, married to more flexible, output-based commercial structures. Technology Leadership Leverage cloud computing and smart analytics to focus on strategic projects that drive growth. Demonstrate deep domain expertise, as the impetus for sourcing moves from the CIO organization towards the business users. Solution Verticalization
  25. 25. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 25  Broader Market ACV is up significantly Y/Y and slightly Q/Q  ITO 2Q activity is at record highs for ACV and number of contracts awarded  All three regions have strong quarterly performances Y/Y and YTD  Americas 2Q results continue the upward trend despite a lack of large deals  YTD, Europe continues to account for the majority of the ACV with 51% of the broader market activity  Asia Pacific has its second best half-year performance ever supported by an uptick in large deal activity  We expect 3Q14 ACV to be flat or lower Y/Y on a difficult comparison against a robust 3Q13  We see lots of transaction activity in the market that should come to award in the second half of 2014  Expect full-year ACV to exceed 2013 ACV levels by more than 25%, more in line with full-year 2012 results. 2Q and 1H 2014 ISG Outsourcing Index Summary and Outlook summary market outlook market
  26. 26. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 26 Please contact us with your questions and comments. Learn More --- Media Contacts --- ► John Keppel Partner and President, ISG +44 (0)7879 432 212 john.keppel@isg-one.com ► Will Thoretz Leader, Marketing & Communications, ISG +1 203 517 3119 will.thoretz@isg-one.com ► Jim Baptiste Matter Communications for ISG +1 978 518 4527 jbaptiste@matternow.com www.isg-one.com
  27. 27. Second Quarter and First Half 2014
  28. 28. © 2014 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase® 28 The ISG Outsourcing 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. Second Quarter and First Half TCV Scorecard *Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase® Scorecard 2Q14 2Q Y/Y 2Q Q/Q 1H14 1H14 Y/Y TCV ($B)* Change Change TCV ($B)* Change Global Market $ 27.0 43% 2% $ 53.3 28% New Scope $ 18.5 27% 8% $ 35.5 36% Restructurings $ 8.5 97% -9% $ 17.8 15% Mega-deals $ 7.0 144% 122% $ 10.2 29% ITO $ 20.4 76% 7% $ 39.4 54% BPO $ 6.6 -10% -10% $ 13.9 -13% Americas $ 9.0 79% 9% $ 17.2 17% EMEA $ 13.9 23% 1% $ 27.5 24% Asia Pacific $ 4.1 62% -6% $ 8.6 87%
  29. 29. Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 850 employees and operates in 21 countries. knowledge powering results® www.isg-one.com

×