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2Q17 Global ISG Index

The ISG Index report for Q2 2017 reveals that the global commercial market saw a combined ACV of $9.3 billion, marking a 9% increase year-over-year, driven largely by a 32% growth in as-a-service contracts. Traditional sourcing, however, faced a decline of 3% during the same period. The report highlights significant growth within the Americas and Asia Pacific regions, while the EMEA shows a 13% increase overall, indicating varied trends across different sectors.

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ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. 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 Information Services Group, Inc. Global Sourcing and As-a-Service Market Insights Hosted by: Joe Foresi, Cantor Fitzgerald & Co. 12 July 2017 SECOND QUARTER AND FIRST HALF 2017
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 2 GLOBAL 2Q17 Covering the state of the combined traditional sourcing and as-a-service industry for the global, commercial market. Welcome to the 59th Quarterly ISG Index Steven Hall Partner and Global Leader ISG Index Esteban Herrera Partner and Global Leader ISG Research Stanton Jones Research Director and Principal Analyst
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 3 GLOBAL 2Q17 *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase™ At a Glance Global As-a-Service Approaching Parity with Traditional Sourcing As-as-Service now 41% of global market and growing 2Q17 combined ACV reaches $9.3 billion, up 9%, fueled by As-a-Service growth of 32% Americas ACV edges up as strong growth in As-a-Service offsets drop in traditional sourcing EMEA and Asia Pacific both turn in double-digit ACV growth Scorecard 2Q17 2Q Y/Y 1H17 1H Y/Y ACV ($B)* Change ACV (B)* Change Global Commercial Combined Market $ 9.3 9% $ 19.8 10% By Type Traditional Sourcing $ 5.5 -3% $ 11.7 -2% As-a-Service $ 3.8 32% $ 8.1 36% By Region Americas Commercial $ 4.5 2% $ 9.5 6% EMEA Commercial $ 3.5 13% $ 7.9 13% AP Commercial $ 1.3 24% $ 2.4 20% ‘‘
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 4 GLOBAL 2Q17 Global Commercial Sector Contracting Trends 2Q17 Combined Market ACV up 9% Y/Y on strength in As-a-service; second-highest ever quarterly number of awards in Traditional Sourcing; YTD, Combined Market ACV up 10% with As-a-Service increasing 36%, offsetting 2% decline in Traditional Sourcing. Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector Half-Year ACV ($B) Global Commercial Sector Half-Year ACV by Type ($B) $5.5$6.2$5.4$5.8$5.6$6.3 $7.3 $5.8$6.5 $5.2 $6.8 $5.8 $7.0$6.6 $3.8 $4.3 $3.9$3.2$2.9$3.1$2.8 $2.7$2.1 $2.0 $2.0 $1.9 $1.8$1.7 $9.3 $10.5 $9.3$9.0$8.5$9.4$10.1 $8.5$8.6 $7.2 $8.8 $7.7 $8.8$8.3 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $11.7$11.1$12.0$13.2$11.8$12.6$13.6 $8.1$7.2$6.0$5.5 $4.0$3.9$3.5 $19.8$18.3$18.0$18.7 $15.8$16.5$17.1 1H172H161H162H151H152H141H14 Tranditional Sourcing As-a-Service $9.3 $2.4 $2.0 $6.1 $0 $2 $4 $6 $8 $10 $12 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 5 GLOBAL 2Q17 Americas Commercial Sector Contracting Trends Commercial Market ACV is up 2% Y/Y; As-a-Service markets’ 27% increase is unable to offset the 13% Y/Y drop in Traditional Sourcing due to lack of large contract awards. Americas Commercial Sector Quarterly ACV ($B) Americas Commercial Sector Half-Year ACV ($B) Americas Commercial Sector Half-Year ACV by Type ($B) $2.3 $2.6$2.3$2.2 $2.6$2.7$2.9 $2.4 $2.9 $2.2 $2.7$2.6$2,7 $2.2 $2.2 $2.4 $2.2$1.9$1.7$1.8$1.7 $1.6$1.3 $1.1 $1.1$1.1$1.0 $1.0 $4.5 $5.0 $4.5 $4.1$4.3$4.5$4.6 $4.0$4.2 $3.3 $3.8$3.7$3.7 $3.2 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $5.0$4.5 $5.3$5.3$5.1$5.3$4.8 $4.5 $4.1$3.5$3.3 $2.4$2.2$2.1 $9.5 $8.6$8.8$8.6 $7.5$7.5 $6.9 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $4.0 $0.9 $1.3 $3.2 $0.5 $1.5 $2.5 $3.5 $4.5 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 6 GLOBAL 2Q17 Americas Commercial Sector Industry Award Trends Telecom, Healthcare and CPG mar good performance of Financial Services and smaller industries; all industries in As-a-Service register double-digit growth. Traditional Sourcing TTM ACV ($B) Americas Commercial Industries As-a-Service TTM ACV ($B) Americas Commercial Industries $1.28 $1.15 $0.58 $0.57 $0.19 $0.45 $0.27 $0.30 $0.16 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Travel, Transport & Leisure Retail Energy Consumer Packaged Goods Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.80 $0.59 $0.41 $1.03 $0.51 $0.35 $0.34 $0.21 $0.27 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Travel, Transport & Leisure Retail Energy Consumer Packaged Goods Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 7 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Atento Ensono Hexaware HGS LTI Luxoft Mindtree Softtek StarTek VirtusaPolaris As-a-Service Market Coresite CyrusOne Datapipe Synchronoss Ultimate Software Traditional Sourcing Market Concentrix Genpact HCL Sutherland Global TeleTech Unisys WEX Wipro As-a-Service Market Adobe Systems Digital Realty/Dupont Fabros1 Equinix Iron Mountain Salesforce.com ServiceNow Workday Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys NTT DATA TCS As-a-Service Market Amazon Web Services Deutsche Telekom Google Microsoft Oracle The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts AMERICAS Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15 1June 2017 announcement: Digital Realty to merge with DuPont Fabros
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 8 GLOBAL 2Q17 Asia Pacific Commercial Sector Contracting Trends Combined Market ACV up 24% Y/Y; Traditional Sourcing ACV sees its best quarter since 2014 and sets all-time high in contract count. AP Commercial Sector Quarterly ACV ($B) AP Commercial Sector Half-Year ACV ($B) AP Commercial Sector Half-Year ACV by Type ($B) $0.66 $0.35$0.42 $0.52$0.60 $0.48$0.52$0.56$0.61$0.56 $0.73 $0.46 $1.00$1.02 $0.68 $0.72$0.67$0.54$0.48 $0.47$0.43$0.41$0.29$0.30 $0.29 $0.27 $0.24$0.22 $1.34 $1.07$1.09$1.06$1.08 $0.95$0.95$0.97$0.90$0.86 $1.02 $0.73 $1.24$1.24 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $1.01$0.94$1.07$1.07$1.16$1.19 $2.02 $1.40$1.21$0.95$0.85$0.60$0.56 $0.46 $2.41 $2.15$2.02$1.92$1.76$1.75 $2.49 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $0.87 $0.14 $0.21 $1.19 $0.0 $0.5 $1.0 $1.5 $2.0 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 9 GLOBAL 2Q17 Asia Pacific Commercial Sector Industry Award Trends Strong ITO and IaaS drive growth in the larger verticals of Financial Services and Energy; drop in Traditional Sourcing impacts Telecom and Manufacturing. Traditional Sourcing TTM ACV ($B) Asia Pacific Commercial Industries As-a-Service TTM ACV ($B) Asia Pacific Commercial Industries $0.22 $0.13 $0.22 $0.11 $0.19 $0.06 $0.06 $0.03 $0.00 $0.0 $0.1 $0.1 $0.2 $0.2 $0.3 $0.3 $0.4 Manufacturing Telecom & Media Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Retail Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.20 $0.14 $0.23 $0.11 $0.07 $0.37 $0.09 $0.10 $0.10 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Manufacturing Telecom & Media Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Retail Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 10 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Datacom Ebix Firstsource Solutions Hexaware Insurity Luxoft Posco ICT VirtusaPolaris WNS As-a-Service Market Aconex Atlassian Kingdee Veeva Systems Xero Zoho Traditional Sourcing Market Harman International HCL Samsung SDS SingTel Optus SK C&C Co. Sutherland Global Tech Mahindra WEX Wipro As-a-Service Market Adobe Systems Digital Realty Equinix FIS Global Iron Mountain Salesforce.com Traditional Sourcing Market Accenture BT Capgemini Cognizant DXC Technology Fujitsu IBM NEC TCS As-a-Service Market Alibaba Amazon Web Services Google Microsoft Oracle SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts Asia Pacific Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 11 GLOBAL 2Q17 EMEA Commercial Sector Contracting Trends Combined Market in EMEA rises 13% Y/Y with As-a-Service increase of 40% Y/Y; Traditional Sourcing’s 5% growth Y/Y is boosted by a surge in ITO activity. EMEA Commercial Sector Quarterly ACV ($B) EMEA Commercial Sector Half-Year ACV ($B) EMEA Commercial Sector Half-Year ACV by Type ($B) Traditional Sourcing As-a-Service $2.5 $3.2 $2.7 $3.0 $2.4 $3.1 $4.0 $2.8$3.0 $2.4 $3.4 $2.7 $3.4$3.4 $1.0 $1.2 $1.1$0.8 $0.7 $0.8 $0.7 $0.7$0.5 $0.6 $0.5 $0.6 $0.5$0.4 $3.5 $4.4 $3.8$3.8 $3.1 $3.9 $4.7 $3.5$3.5 $3.0 $3.9 $3.3 $3.9$3.8 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $5.7$5.7$5.5 $6.8 $5.4 $6.1 $6.8 $2.2$1.9$1.5 $1.4 $1.1 $1.1 $0.9 $7.9$7.6$7.0 $8.2 $6.5 $7.2$7.7 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $4.4 $1.4 $0.5 $1.7 $0.0 $2.0 $4.0 $6.0 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 12 GLOBAL 2Q17 EMEA Commercial Sector Industry Award Trends YTD, most major sectors generate ACV growth in Traditional Sourcing and As-a-Service; Manufacturing and Retail are the exceptions. Traditional Sourcing TTM ACV ($B) EMEA Commercial Industries As-a-Service TTM ACV ($B) EMEA Commercial Industries $1.84 $0.76 $0.96 $0.60 $0.77 $0.23 $0.14 $0.23 $0.22 $0.0 $0.5 $1.0 $1.5 $2.0 Financial Services Manufacturing Energy Travel, Transport & Leisure Telecom & Media Business Services Retail Consumer Packaged Goods Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.39 $0.34 $0.12 $0.21 $0.22 $0.37 $0.18 $0.16 $0.19 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Financial Services Manufacturing Energy Travel, Transport & Leisure Telecom & Media Business Services Retail Consumer Packaged Goods Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 13 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Atento DATAGROUP SE EPAM Systems Grupo EULEN Firstsource Solutions Hexaware Luxoft MAYKOR NNIT A/S SIA S.p.A. VirtusaPolaris Webhelp WNS As-a-Service Market Interxion iomart Group Traditional Sourcing Market Capita Carillion Emcor Group EVRY A/S HCL Interserve Orange Business Services Sopra Steria Group SA Tech Mahindra Tieto Wipro As-a-Service Market Adobe Systems Equinix Iron Mountain Salesforce.com Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys TCS T-Systems/Deutsche Telekom As-a-Service Market Amazon Web Services Google Microsoft Oracle SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts EMEA Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
GLOBAL 2Q17 The Next Wave of Digitization and Automation Stanton Jones Research Director and Principal Analyst 2Q17 Index Inside Track from
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 15 GLOBAL 2Q17 Automation Effect is Kicking In Provider are Employing Big LeversDigitization Impacts Providers  Revenue growth slowing  Average revenue per employee down  Net income percentage declining AutomationStaff Needs to Skill-up Buyers Demand Increased Productivity and Cost Avoidance 2X 1ISG surveyed 500+ global business and IT leaders Double investments in Automation and AI over next 2 years on mission-critical business processes1 May reduce demand for outsourcing/offshoring With an Automation Solution, Productivity Soars Over 2 Years2 2Click here for ISG Automation Index TraditionalAutomation 5-10% 24-80%
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 16 GLOBAL 2Q17 Build or Partner? Services providers need automation capabilities. Do they build it, find a partner or do both? Business Process Automation Capability  Replicate every human action  RPA Technology Partnerships with vendors like Blue Prism, Automation Anywhere and UI Path Move from operating model where people follow a tech supported process, to one where technology follows a process supported by people. IT Ops Automation Capability  Replicate service desk agents, DBAs and systems administrators.  Autonomics Technology Partnerships with vendors like IPSoft, Arago, and Ayehu. Cognitive Automation Capability  Natural Language Processing vendors like Artificial Solutions and Celaton  Cognitive agents like Nuance and Cognicor  Image Recognition vendors like Abbyy and Anyline. A wholistic automation competency is critical to the long-term success of every provider.
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 17 GLOBAL 2Q17 2Q and 1H 2017 ISG Index - Global Summary and Outlook ● Y/Y, 2Q Commercial EMEA and Asia Pacific growth in double-digits, with marginal Americas growth ● YTD, IaaS grows by mid-double digits across all regions, while ITO had moderate gains in both EMEA and Asia Pacific. ● Several industries are driving YTD growth including Financial Services and smaller verticals of Transportation and CPG; Energy produces positive results after several soft years. ● Looking ahead, we continue to see double-digit growth in As-a-Service in the Americas and Asia Pacific. We expect Infrastructure-as-a-Service will continue to outpace Software-as-a-Service. We forecast growth of 24% and 12%, respectively, in those markets. Firms such as AWS and Microsoft will continue to invest in new economies. We expect Traditional Sourcing will remain flat through the end of the year. ● In EMEA, we forecast Infrastructure-as-a-Service and Software-as-a-Service to remain fairly flat. And we expect to see mid-single-digit growth in Traditional Outsourcing for the year, based on current deal flow in the market that should support a strong second half in Europe. Summary Outlook
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 18 GLOBAL 2Q17 Your Webcast Screen 1 Click the "Listen by phone“ button. 2 The phone number and passcode will appear, and the web streaming to your computer will be automatically muted. 3 After you dial in, the operator will ask your name and company. 4 Now press *1 to be added to the queue. Ask a Question
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 19 GLOBAL 2Q17 isg-one.com Learn More Paul Reynolds Partner, Chief Research Officer ISG Momentum +1 508 625 2194 paul.reynolds@isg-one.com Steven Hall Partner & Global Leader ISG Index +1 303 748 6599 steven.hall@isg-one.com Will Thoretz Americas Media Contact +1 203 517 3119 will.thoretz@isg-one.com Denise Colgan EMEA and AP Media Contact +44 1737 371523 denise.colgan@isg-one.com Bill McNee Partner, ISG Insights +1 203 820 8987 bill.mcnee@isg-one.com
GLOBAL 4Q16 GLOBAL 2Q17 Appendix: Score Card for TCV SECOND QUARTER AND HALF YEAR 2017
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 21 GLOBAL 2Q17 2Q and 1H 2017 TCV Scorecard The ISG Index has moved to ACV as the primary measure of the Broader Market. We will continue to provide a high-level TCV view of the market via a Scorecard analysis. *Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase™ Scorecard 2Q17 2Q Y/Y 1H17 Y/Y TCV ($B)* Change TCV ($B)* Change Global Commercial Combined Market $ 23.2 -10% $ 51.3 1% By Type Outsourcing $ 17.3 -18% $ 39.1 -3% As-a-Service $ 5.9 24% $ 12.2 17% ITO $ 13.9 -14% $ 29.6 6% BPO $ 3.4 -31% $ 9.5 -24% IaaS $ 2.8 43% $ 6.1 62% SaaS $ 3.1 10% $ 6.1 -9% By Region Americas Commercial $ 9.4 -22% $ 21.0 -6% EMEA Commercial $ 10.2 -7% $ 24.6 11% Asia Pacific Commercial $ 3.6 31% $ 5.7 -10%
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. 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 Information Services Group, Inc. 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 700 clients, including 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; technology 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 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.

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2Q17 Global ISG Index

  • 1.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. 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 Information Services Group, Inc. Global Sourcing and As-a-Service Market Insights Hosted by: Joe Foresi, Cantor Fitzgerald & Co. 12 July 2017 SECOND QUARTER AND FIRST HALF 2017
  • 2.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 2 GLOBAL 2Q17 Covering the state of the combined traditional sourcing and as-a-service industry for the global, commercial market. Welcome to the 59th Quarterly ISG Index Steven Hall Partner and Global Leader ISG Index Esteban Herrera Partner and Global Leader ISG Research Stanton Jones Research Director and Principal Analyst
  • 3.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 3 GLOBAL 2Q17 *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase™ At a Glance Global As-a-Service Approaching Parity with Traditional Sourcing As-as-Service now 41% of global market and growing 2Q17 combined ACV reaches $9.3 billion, up 9%, fueled by As-a-Service growth of 32% Americas ACV edges up as strong growth in As-a-Service offsets drop in traditional sourcing EMEA and Asia Pacific both turn in double-digit ACV growth Scorecard 2Q17 2Q Y/Y 1H17 1H Y/Y ACV ($B)* Change ACV (B)* Change Global Commercial Combined Market $ 9.3 9% $ 19.8 10% By Type Traditional Sourcing $ 5.5 -3% $ 11.7 -2% As-a-Service $ 3.8 32% $ 8.1 36% By Region Americas Commercial $ 4.5 2% $ 9.5 6% EMEA Commercial $ 3.5 13% $ 7.9 13% AP Commercial $ 1.3 24% $ 2.4 20% ‘‘
  • 4.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 4 GLOBAL 2Q17 Global Commercial Sector Contracting Trends 2Q17 Combined Market ACV up 9% Y/Y on strength in As-a-service; second-highest ever quarterly number of awards in Traditional Sourcing; YTD, Combined Market ACV up 10% with As-a-Service increasing 36%, offsetting 2% decline in Traditional Sourcing. Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector Half-Year ACV ($B) Global Commercial Sector Half-Year ACV by Type ($B) $5.5$6.2$5.4$5.8$5.6$6.3 $7.3 $5.8$6.5 $5.2 $6.8 $5.8 $7.0$6.6 $3.8 $4.3 $3.9$3.2$2.9$3.1$2.8 $2.7$2.1 $2.0 $2.0 $1.9 $1.8$1.7 $9.3 $10.5 $9.3$9.0$8.5$9.4$10.1 $8.5$8.6 $7.2 $8.8 $7.7 $8.8$8.3 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $11.7$11.1$12.0$13.2$11.8$12.6$13.6 $8.1$7.2$6.0$5.5 $4.0$3.9$3.5 $19.8$18.3$18.0$18.7 $15.8$16.5$17.1 1H172H161H162H151H152H141H14 Tranditional Sourcing As-a-Service $9.3 $2.4 $2.0 $6.1 $0 $2 $4 $6 $8 $10 $12 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 5.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 5 GLOBAL 2Q17 Americas Commercial Sector Contracting Trends Commercial Market ACV is up 2% Y/Y; As-a-Service markets’ 27% increase is unable to offset the 13% Y/Y drop in Traditional Sourcing due to lack of large contract awards. Americas Commercial Sector Quarterly ACV ($B) Americas Commercial Sector Half-Year ACV ($B) Americas Commercial Sector Half-Year ACV by Type ($B) $2.3 $2.6$2.3$2.2 $2.6$2.7$2.9 $2.4 $2.9 $2.2 $2.7$2.6$2,7 $2.2 $2.2 $2.4 $2.2$1.9$1.7$1.8$1.7 $1.6$1.3 $1.1 $1.1$1.1$1.0 $1.0 $4.5 $5.0 $4.5 $4.1$4.3$4.5$4.6 $4.0$4.2 $3.3 $3.8$3.7$3.7 $3.2 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $5.0$4.5 $5.3$5.3$5.1$5.3$4.8 $4.5 $4.1$3.5$3.3 $2.4$2.2$2.1 $9.5 $8.6$8.8$8.6 $7.5$7.5 $6.9 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $4.0 $0.9 $1.3 $3.2 $0.5 $1.5 $2.5 $3.5 $4.5 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 6.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 6 GLOBAL 2Q17 Americas Commercial Sector Industry Award Trends Telecom, Healthcare and CPG mar good performance of Financial Services and smaller industries; all industries in As-a-Service register double-digit growth. Traditional Sourcing TTM ACV ($B) Americas Commercial Industries As-a-Service TTM ACV ($B) Americas Commercial Industries $1.28 $1.15 $0.58 $0.57 $0.19 $0.45 $0.27 $0.30 $0.16 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Travel, Transport & Leisure Retail Energy Consumer Packaged Goods Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.80 $0.59 $0.41 $1.03 $0.51 $0.35 $0.34 $0.21 $0.27 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Travel, Transport & Leisure Retail Energy Consumer Packaged Goods Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 7.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 7 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Atento Ensono Hexaware HGS LTI Luxoft Mindtree Softtek StarTek VirtusaPolaris As-a-Service Market Coresite CyrusOne Datapipe Synchronoss Ultimate Software Traditional Sourcing Market Concentrix Genpact HCL Sutherland Global TeleTech Unisys WEX Wipro As-a-Service Market Adobe Systems Digital Realty/Dupont Fabros1 Equinix Iron Mountain Salesforce.com ServiceNow Workday Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys NTT DATA TCS As-a-Service Market Amazon Web Services Deutsche Telekom Google Microsoft Oracle The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts AMERICAS Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15 1June 2017 announcement: Digital Realty to merge with DuPont Fabros
  • 8.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 8 GLOBAL 2Q17 Asia Pacific Commercial Sector Contracting Trends Combined Market ACV up 24% Y/Y; Traditional Sourcing ACV sees its best quarter since 2014 and sets all-time high in contract count. AP Commercial Sector Quarterly ACV ($B) AP Commercial Sector Half-Year ACV ($B) AP Commercial Sector Half-Year ACV by Type ($B) $0.66 $0.35$0.42 $0.52$0.60 $0.48$0.52$0.56$0.61$0.56 $0.73 $0.46 $1.00$1.02 $0.68 $0.72$0.67$0.54$0.48 $0.47$0.43$0.41$0.29$0.30 $0.29 $0.27 $0.24$0.22 $1.34 $1.07$1.09$1.06$1.08 $0.95$0.95$0.97$0.90$0.86 $1.02 $0.73 $1.24$1.24 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $1.01$0.94$1.07$1.07$1.16$1.19 $2.02 $1.40$1.21$0.95$0.85$0.60$0.56 $0.46 $2.41 $2.15$2.02$1.92$1.76$1.75 $2.49 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $0.87 $0.14 $0.21 $1.19 $0.0 $0.5 $1.0 $1.5 $2.0 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 9.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 9 GLOBAL 2Q17 Asia Pacific Commercial Sector Industry Award Trends Strong ITO and IaaS drive growth in the larger verticals of Financial Services and Energy; drop in Traditional Sourcing impacts Telecom and Manufacturing. Traditional Sourcing TTM ACV ($B) Asia Pacific Commercial Industries As-a-Service TTM ACV ($B) Asia Pacific Commercial Industries $0.22 $0.13 $0.22 $0.11 $0.19 $0.06 $0.06 $0.03 $0.00 $0.0 $0.1 $0.1 $0.2 $0.2 $0.3 $0.3 $0.4 Manufacturing Telecom & Media Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Retail Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.20 $0.14 $0.23 $0.11 $0.07 $0.37 $0.09 $0.10 $0.10 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Manufacturing Telecom & Media Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Retail Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 10.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 10 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Datacom Ebix Firstsource Solutions Hexaware Insurity Luxoft Posco ICT VirtusaPolaris WNS As-a-Service Market Aconex Atlassian Kingdee Veeva Systems Xero Zoho Traditional Sourcing Market Harman International HCL Samsung SDS SingTel Optus SK C&C Co. Sutherland Global Tech Mahindra WEX Wipro As-a-Service Market Adobe Systems Digital Realty Equinix FIS Global Iron Mountain Salesforce.com Traditional Sourcing Market Accenture BT Capgemini Cognizant DXC Technology Fujitsu IBM NEC TCS As-a-Service Market Alibaba Amazon Web Services Google Microsoft Oracle SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts Asia Pacific Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
  • 11.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 11 GLOBAL 2Q17 EMEA Commercial Sector Contracting Trends Combined Market in EMEA rises 13% Y/Y with As-a-Service increase of 40% Y/Y; Traditional Sourcing’s 5% growth Y/Y is boosted by a surge in ITO activity. EMEA Commercial Sector Quarterly ACV ($B) EMEA Commercial Sector Half-Year ACV ($B) EMEA Commercial Sector Half-Year ACV by Type ($B) Traditional Sourcing As-a-Service $2.5 $3.2 $2.7 $3.0 $2.4 $3.1 $4.0 $2.8$3.0 $2.4 $3.4 $2.7 $3.4$3.4 $1.0 $1.2 $1.1$0.8 $0.7 $0.8 $0.7 $0.7$0.5 $0.6 $0.5 $0.6 $0.5$0.4 $3.5 $4.4 $3.8$3.8 $3.1 $3.9 $4.7 $3.5$3.5 $3.0 $3.9 $3.3 $3.9$3.8 2Q171Q4Q3Q2Q161Q4Q3Q2Q151Q4Q3Q2Q141Q14 Traditional Sourcing As-a-Service $5.7$5.7$5.5 $6.8 $5.4 $6.1 $6.8 $2.2$1.9$1.5 $1.4 $1.1 $1.1 $0.9 $7.9$7.6$7.0 $8.2 $6.5 $7.2$7.7 1H172H161H162H151H152H141H14 Traditional Sourcing As-a-Service $4.4 $1.4 $0.5 $1.7 $0.0 $2.0 $4.0 $6.0 ITO BPO SaaS IaaS Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 12.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 12 GLOBAL 2Q17 EMEA Commercial Sector Industry Award Trends YTD, most major sectors generate ACV growth in Traditional Sourcing and As-a-Service; Manufacturing and Retail are the exceptions. Traditional Sourcing TTM ACV ($B) EMEA Commercial Industries As-a-Service TTM ACV ($B) EMEA Commercial Industries $1.84 $0.76 $0.96 $0.60 $0.77 $0.23 $0.14 $0.23 $0.22 $0.0 $0.5 $1.0 $1.5 $2.0 Financial Services Manufacturing Energy Travel, Transport & Leisure Telecom & Media Business Services Retail Consumer Packaged Goods Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17 $0.39 $0.34 $0.12 $0.21 $0.22 $0.37 $0.18 $0.16 $0.19 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Financial Services Manufacturing Energy Travel, Transport & Leisure Telecom & Media Business Services Retail Consumer Packaged Goods Healthcare & Pharma Range of 3 Prior 1Hs Avg of 3 Prior 1Hs 1H16 1H17
  • 13.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 13 GLOBAL 2Q17 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months. Traditional Sourcing Market Atento DATAGROUP SE EPAM Systems Grupo EULEN Firstsource Solutions Hexaware Luxoft MAYKOR NNIT A/S SIA S.p.A. VirtusaPolaris Webhelp WNS As-a-Service Market Interxion iomart Group Traditional Sourcing Market Capita Carillion Emcor Group EVRY A/S HCL Interserve Orange Business Services Sopra Steria Group SA Tech Mahindra Tieto Wipro As-a-Service Market Adobe Systems Equinix Iron Mountain Salesforce.com Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys TCS T-Systems/Deutsche Telekom As-a-Service Market Amazon Web Services Google Microsoft Oracle SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts EMEA Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
  • 14.
    GLOBAL 2Q17 The NextWave of Digitization and Automation Stanton Jones Research Director and Principal Analyst 2Q17 Index Inside Track from
  • 15.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 15 GLOBAL 2Q17 Automation Effect is Kicking In Provider are Employing Big LeversDigitization Impacts Providers  Revenue growth slowing  Average revenue per employee down  Net income percentage declining AutomationStaff Needs to Skill-up Buyers Demand Increased Productivity and Cost Avoidance 2X 1ISG surveyed 500+ global business and IT leaders Double investments in Automation and AI over next 2 years on mission-critical business processes1 May reduce demand for outsourcing/offshoring With an Automation Solution, Productivity Soars Over 2 Years2 2Click here for ISG Automation Index TraditionalAutomation 5-10% 24-80%
  • 16.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 16 GLOBAL 2Q17 Build or Partner? Services providers need automation capabilities. Do they build it, find a partner or do both? Business Process Automation Capability  Replicate every human action  RPA Technology Partnerships with vendors like Blue Prism, Automation Anywhere and UI Path Move from operating model where people follow a tech supported process, to one where technology follows a process supported by people. IT Ops Automation Capability  Replicate service desk agents, DBAs and systems administrators.  Autonomics Technology Partnerships with vendors like IPSoft, Arago, and Ayehu. Cognitive Automation Capability  Natural Language Processing vendors like Artificial Solutions and Celaton  Cognitive agents like Nuance and Cognicor  Image Recognition vendors like Abbyy and Anyline. A wholistic automation competency is critical to the long-term success of every provider.
  • 17.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 17 GLOBAL 2Q17 2Q and 1H 2017 ISG Index - Global Summary and Outlook ● Y/Y, 2Q Commercial EMEA and Asia Pacific growth in double-digits, with marginal Americas growth ● YTD, IaaS grows by mid-double digits across all regions, while ITO had moderate gains in both EMEA and Asia Pacific. ● Several industries are driving YTD growth including Financial Services and smaller verticals of Transportation and CPG; Energy produces positive results after several soft years. ● Looking ahead, we continue to see double-digit growth in As-a-Service in the Americas and Asia Pacific. We expect Infrastructure-as-a-Service will continue to outpace Software-as-a-Service. We forecast growth of 24% and 12%, respectively, in those markets. Firms such as AWS and Microsoft will continue to invest in new economies. We expect Traditional Sourcing will remain flat through the end of the year. ● In EMEA, we forecast Infrastructure-as-a-Service and Software-as-a-Service to remain fairly flat. And we expect to see mid-single-digit growth in Traditional Outsourcing for the year, based on current deal flow in the market that should support a strong second half in Europe. Summary Outlook
  • 18.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 18 GLOBAL 2Q17 Your Webcast Screen 1 Click the "Listen by phone“ button. 2 The phone number and passcode will appear, and the web streaming to your computer will be automatically muted. 3 After you dial in, the operator will ask your name and company. 4 Now press *1 to be added to the queue. Ask a Question
  • 19.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 19 GLOBAL 2Q17 isg-one.com Learn More Paul Reynolds Partner, Chief Research Officer ISG Momentum +1 508 625 2194 paul.reynolds@isg-one.com Steven Hall Partner & Global Leader ISG Index +1 303 748 6599 steven.hall@isg-one.com Will Thoretz Americas Media Contact +1 203 517 3119 will.thoretz@isg-one.com Denise Colgan EMEA and AP Media Contact +44 1737 371523 denise.colgan@isg-one.com Bill McNee Partner, ISG Insights +1 203 820 8987 bill.mcnee@isg-one.com
  • 20.
    GLOBAL 4Q16 GLOBAL 2Q17 Appendix:Score Card for TCV SECOND QUARTER AND HALF YEAR 2017
  • 21.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 21 GLOBAL 2Q17 2Q and 1H 2017 TCV Scorecard The ISG Index has moved to ACV as the primary measure of the Broader Market. We will continue to provide a high-level TCV view of the market via a Scorecard analysis. *Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase™ Scorecard 2Q17 2Q Y/Y 1H17 Y/Y TCV ($B)* Change TCV ($B)* Change Global Commercial Combined Market $ 23.2 -10% $ 51.3 1% By Type Outsourcing $ 17.3 -18% $ 39.1 -3% As-a-Service $ 5.9 24% $ 12.2 17% ITO $ 13.9 -14% $ 29.6 6% BPO $ 3.4 -31% $ 9.5 -24% IaaS $ 2.8 43% $ 6.1 62% SaaS $ 3.1 10% $ 6.1 -9% By Region Americas Commercial $ 9.4 -22% $ 21.0 -6% EMEA Commercial $ 10.2 -7% $ 24.6 11% Asia Pacific Commercial $ 3.6 31% $ 5.7 -10%
  • 22.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. 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 Information Services Group, Inc. 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 700 clients, including 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; technology 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 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.