Third Quarter 2012, Global TPI Index

1,044 views

Published on

The 3Q12 Global TPI Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of $5 million or more, totaled $4.8 billion, the second-highest third-quarter total on record but a decline of 6 percent from the third quarter of 2011 and 10 percent from the second quarter of 2012. Excluding the Atos-Siemens mega-deal awarded a year ago, third-quarter ACV would have been up 18 percent year-over-year.

Through the first three quarters of 2012, ACV has grown 3 percent to $14.8 billion, led by the ongoing surge of outsourcing activity and contract values in Asia Pacific, a continued climb in the value of contracts for business process outsourcing (BPO) globally, and an increase in large contract activity, especially in emerging markets. The number of mega-relationships, defined as contracts with an ACV of $100 million or more, is up 100 percent year-to-date and has already exceeding the full-year total from 2011.

Published in: Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,044
On SlideShare
0
From Embeds
0
Number of Embeds
60
Actions
Shares
0
Downloads
2
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Third Quarter 2012, Global TPI Index

  1. 1. The TPI IndexGlobal Sourcing Market Data and Insights Third Quarter 2012 Hosted by: Moshe Katri, Cowen and Company 15 October 2012
  2. 2. 2 Welcome to the 40th Quarterly Outsourcing Index Call Covering the state of the outsourcing industry for global, commercial contracts. John Keppel Partner Duncan Aitchison Partner Stanton Jones Emerging Technology Analyst © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > $5M
  3. 3. 3 Milestones 40th quarterly presentation represents a decade of TPI Index conference calls Spring Winter Summer Fall Spring Today 2003 2004 2005 2008 2011 Inaugural Recognized Identified the Led in calling Identified the Global and India-heritage growing influence out the growing shift of EMEA providers as an of restructurings, industry-wide sourcing growth Index Calls emerging entity and their impact on sourcing towards emerging that would affect service providers downturn markets how SPs compete The Index audience routinely includes 250 analysts, clients and service providers. © 2012 InformationServices Group, Inc. The ISG Contract KnowledgeBase®All Rights Reserved exceeds 24,000 contract records.isg-one.com *Contracts with ACV > $5M
  4. 4. 4 Refocusing on ACV as the Primary Measure of the Market Going forward, an ACV-based analysis of the market will avoid masking the effects of declining contract durations on TCV. TCV Change Over Time ACV Change Over Time Year-to-date at 3Q Year-to-date at 3Q Growth since 2003 = 9% Growth since 2003 = 40% $71 $15 $65 $11 2003 04 05 06 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012 © 2012 InformationServices Group, Inc. Typical Quarterly ACV = $5BAll Rights Reserved Typical Annual ACV = $20Bisg-one.com *Contracts with ACV > $5M
  5. 5. 5 At A Glance 3Q12 ACV 3Q Y/Y 3Q Q/Q YTD ACV YTD Y/Y Scorecard ($B)* Change Change ($B)* Change Global Market $ 4.8 -6% -10% $ 14.8 3% New Scope $ 3.2 16% -19% $ 9.8 2% Restructurings $ 1.6 -33% 17% $ 4.9 6% Mega-Relationships $ 1.5 1% -26% $ 4.5 51% ITO $ 3.2 -13% 8% $ 9.2 -3% BPO $ 1.6 12% -32% $ 5.6 17% © 2012 Americas $ 1.6 -11% -8% $ 5.4 2% InformationServices Group, Inc. EMEA $ 2.5 -12% 14% $ 6.9 -8%All Rights Reserved Asia Pacific $ 0.7 55% -51% $ 2.4 72%isg-one.com *See Appendix for TCV Score Card *Contracts with ACV > $5M
  6. 6. 6 Broader Market Contract Award Trends ACV was down 6% Y/Y and 10% Q/Q; YTD, ACV of $14.8B is up 3.5%. Broader Market YTD ACV ($B)* 1H ACV 3Q ACV $18 $15 $13 $4.1 $4.8 $3.8 $4.0 $5.1 $10 $3.4 $3.4 $2.5 $8 $4.0 $2.9 $5 $3 $0 2003 04 05 06 07 08 09 10 11 2012 Broader Market YTD Counts* 800 1H Counts 3Q Counts 700 600 243 500 196 189 187 400 179 112 129 147 300 115 80 200 © 2012 100 InformationServices Group, Inc. -All Rights Reserved 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  7. 7. 7 Broader Market Contract Trends for the Largest Deals 26 mega-relationships have been awarded YTD, surpassing total for all of 2011; greater percentage of large deal activity occurring in emerging markets. YTD Contracts Counts with ACV > $100M 1H Counts 3Q Counts 30 3 6 8 20 9 10 5 6 4 4 10 5 0 2003 04 05 06 07 08 09 10 11 2012 Emerging Markets Contract Counts with ACV > $50M Emerging markets 16 e defined as outside 8 8 North American, 7 Western Europe 4 and ANZ markets. © 2012 InformationServices Group, Inc.All Rights Reserved 2008 2009 2010 2011 2012eisg-one.com *Contracts with ACV > $5M
  8. 8. 8 ITO Contract Award Trends ITO ACV down 13% Y/Y but up 8% Q/Q; YTD, TCV is down slightly but performance in the Americas and Asia Pacific are both up over 20%. ITO YTD ACV ($B)* 1H ACV 3Q ACV $12 $10 $3.0 $8 $2.3 $2.5 $2.9 $3.7 $3.2 $1.5 $1.9 $6 $3.1 $2.5 $4 $2 $0 2003 04 05 06 07 08 09 10 11 2012 ITO YTD Counts* ITO Regional YTD ACV ($B)* 1H Counts 3Q Counts Americas Asia Pacific EMEA $500 $5.5 $400 138 $300 124 115 118 $4.1 $4.3 110 $3.1 $3.7 88 $3.3 $200 $100 $0.9 © 2012 $1.2 Information $0 $0.4Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  9. 9. 9 BPO Contract Award Trends BPO ACV up 12% Y/Y but down 32% Q/Q; YTD, TCV is up 17% because of several large contract awards; total number of contracts awarded has slowed. BPO YTD ACV ($B)* 1H ACV 3Q ACV $6 $5 $1.6 $4 $0.9 $1.3 $1.5 $3 $1.1 $1.1 $1.0 $1.0 $2 $1.0 $1.0 $1 $0 2003 04 05 06 07 08 09 10 11 2012 BPO YTD Counts* BPO Regional YTD ACV ($B)* 1H Counts 3Q Counts Americas Asia Pacific EMEA 350 300 250 105 $2.6 $2.3 200 74 69 69 72 $2.0 $1.7 150 59 $1.6 100 $1.1 $1.3 $0.5 © 2012 50 Information - $0.1Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  10. 10. 10 Top Service Providers Year-to-date The 15 top service providers based on YTD 2012 ACV* awarded globally. ITO Providers BPO Providers ACV ACV Accenture Accenture CGI CGI HCL HCL HP HP IBM IBM Infosys Infosys Mahindra Satyam Mahindra Satyam Atos Genpact BT ISS Capgemini Johnson Controls CSC Jones Lang Lasalle Dell Mitie Fujitsu Serco TCS Sodexho T-Systems Xchanging © 2012 InformationServices Group, Inc.All Rights Reserved Note: Service providers in alphabetical order; no rankings implied.isg-one.com Placements based on 2012 YTD commercial contract awards sourced from ISG contracts database. *Contracts with ACV > $5M
  11. 11. 11 Americas Contract Award Trends Americas ACV was down 11% Y/Y and 8% Q/Q; YTD, ACV is flat; the U.S. is becoming a predominantly restructuring-based market. Americas YTD ACV ($B)* 1H ACV 3Q ACV $8 $7 $6 $1.8 $5 $1.2 $1.8 $1.1 $1.9 $2.4 $1.8 $1.6 $4 $0.9 $1.2 $3 $2 $1 $0 2003 04 05 06 07 08 09 10 11 2012 Americas YTD Counts* Americas New Scope vs. Restructuring YTD ACV ($B)* 1H Counts 3Q Counts YTD New Scope YTD Restructured 350 $4.9 300 $4.2 106 $3.8 250 86 79 77 $3.0 200 67 150 63 100 $2.3 $2.4 50 $1.4 $1.5 © 2012 Information -Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  12. 12. 12 EMEA Contract Award Trends EMEA ACV was down 12% Y/Y but up 14% Q/Q; both restructuring and new scope activity is down year to date. EMEA YTD ACV ($B)* 1H ACV (B) 3Q ACV $8 $7 $6 $2.0 $2.8 $1.8 $2.5 $5 $1.4 $1.6 $4 $1.5 $1.9 $1.5 $3 $1.2 $2 $1 $0 2003 04 05 06 07 08 09 10 11 2012 EMEA YTD Counts* EMEA New Scope vs. Restructuring YTD ACV ($B)* 1H Counts 3Q Counts YTD New Scope YTD Restructured 400 300 $4.8 109 $4.1 $4.5 $4.5 93 80 200 87 85 60 100 $2.7 $0.4 $2.3 $2.4 © 2012 Information -Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  13. 13. 13 Asia Pacific Contract Award Trends Asia Pacific ACV was up Y/Y and Q/Q; YTD, ACV is up significantly; over 90% of YTD awards are new scope. Asia Pacific YTD ACV ($B)* 1H ACV 3Q ACV $3.0 $2.5 $2.0 $0.67 $1.5 $0.55 $0.36 $0.19 $0.44 $0.43 $1.0 $0.58 $0.14 $0.45 $0.5 $0.27 $0.0 2003 04 05 06 07 08 09 10 11 2012 Asia Pacific YTD Counts* Asia Pacific New Scope vs. Restructuring YTD ACV ($B)* 1H Counts 3Q Counts YTD New Scope YTD Restructured 100 80 28 30 $2.28 60 24 18 $1.00 24 25 $0.41 40 20 $0.41 $0.14 © 2012 $0.01 Information -Services Group, Inc.All Rights Reserved 07 08 09 10 11 2012 2003 04 05 06 07 08 09 10 11 2012isg-one.com *Contracts with ACV > $5M
  14. 14. Special Topic for Third Quarter 2012 Stanton JonesEmerging Technology Analyst
  15. 15. 15 Assessing the Level of Cloud Adoption 1 Percentage of ISG Advised Contracts with Cloud in Scope 27% 2 Number of Industrywide Contracts with Cloud in Scope* 20% ↑100% 300e 9% 220 110 2010 2011 2012 YTD 2010 2011 2012e 3 ISG Quarterly Provider Survey: Cloud Computing Provider Pipeline ► Half have cloud scope in 25% of their pipeline opportunities ► Cloud-based opportunities are up over previous periods ► All providers expect cloud services to grow faster than traditional ITO, predominantly in the U.S. market © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *ISG Contracts Knowledgebase® *Contracts with ACV > $5M
  16. 16. 16 Recognizing the Realities of Cloud Deployment Cloud Strategy Cloud Deployment Models Public Cloud Private Cloud Shared Infrastructure Dedicated Infrastructure Opportunity Perceived Risk Caution! • Economies Security & data Does not fully of Scale privacy concerns realize cloud’s • Standard promise • Modern Converged / Utility / Dynamic IaaS SaaS BPaaS Computing © 2012 InformationServices Group, Inc.All Rights Reserved Cloud Service Modelsisg-one.com *Contracts with ACV > $5M
  17. 17. 17 Opportunities and Challenges in the Provider Community Traditional Multinational Providers Expansion of existing ITO business India-heritage Pure-play SaaS and IaaS Providers Integrating acquisitions Providers Application Unbound by legacy 1 transformation and constraints modernization 2 5 Security and privacy Solution Reliance on infrastructure concerns Assessment partners 4 Mid-market Traditional Software 3 Hosting Providers Companies Innovative shared hosting Existing relationship with platforms IT and procurement Supporting large, complex © 2012 Cannibalization of license clients InformationServices Group, Inc. revenue streamsAll Rights Reservedisg-one.com *Contracts with ACV > $5M
  18. 18. 18 Cloud Trends Cloud’s disruptive effects on sourcing will accelerate, especially for the sourcing market’s traditional IT providers. Less Disruptive Trends IaaS will lag in favor of dedicated, standardized and virtualized infrastructure services Cloud growth will be choppy at the enterprise level with SaaS leading the way in HR, CRM and collaboration Traditional IT providers face significant pressure from well- known software vendors, nimble mid-market players and emerging pure-play infrastructure and SaaS providers Buyer type shifting from the IT department to the functional business units, especially SaaS-based HR and CRM Highly © 2012 Disruptive InformationServices Group, Inc. TrendsAll Rights Reservedisg-one.com *Contracts with ACV > $5M
  19. 19. 19 3Q12 TPI Index Summary and Outlook  Broader Market 3Q ACV down due to tough 3Q11 compare  YTD ACV strengthened slightly on large contracts, BPO market and Asia Pacific results summary  Contract counts fell Q/Q and year-to-date from 2011 but remain within broader historical norms  While TCV performance may lag, from an ACV perspective, market the end result will likely be in line with recent year’s outlook performance of approximately $20 billion © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > $5M
  20. 20. 20 Learn More Please contact us with your questions and comments. ► John Keppel ► Duncan Aitchison Partner, ISG Partner, ISG +44 (0)7879 432 212 +44 (0)7879 471 758 john.keppel@isg-one.com duncan.aitchison@isg-one.com --- Media Contacts --- ► Andrew Park ► Gwennie Poor Director, ISG Cohn & Wolfe for ISG +1 919 259 9252 +1 212 798 9842 andrew.park@isg-one.com gwennie.poor@cohnwolfe.com © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com blog.isg-one.com *Contracts with ACV > $5M
  21. 21. Third Quarter 2012
  22. 22. 22 3Q12 TCV Scorecard The TPI Index has moved to ACV as the primary measure of the Broader Market. In transition, we will continue to provide a high-level TCV view of the market via a Scorecard analysis. 3Q12 TCV 3Q Y/Y 3Q Q/Q 3Q12 3Q Y/Y 3Q Q/Q Scorecard ($B)* Change Change Counts Change Change Global Market $ 24.5 -12% flat 187 -23% -11% Mega Deals $ 5.6 -22% -11% 4 300% -20% New Scope $ 16.3 12% -13% 151 -21% -10% Restructurings $ 8.2 -38% 31% 36 -31% -16% ITO $ 15.8 -21% 7% 118 -14% -2% BPO $ 8.7 10% -15% 69 -34% -23% EMEA $ 12.6 -21% 18% 80 -27% -4% Asia Pacific $ 3.1 37% -37% 30 7% -30% Americas $ 8.9 -8% -6% 77 -27% -9% © 2012 InformationServices Group, Inc.All Rights Reservedisg-one.com *Contracts with ACV > $5M
  23. 23. www.isg-one.com

×