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3Q17 Global ISG Index

The ISG Index report for Q3 2017 indicates a 16% year-over-year increase in the global commercial market, propelled by a record high in as-a-service annual contract values (ACV) which reached $4.7 billion. The Americas saw particularly strong growth, with commercial ACV up 45%, while the EMEA region faced challenges with a 23% decline in traditional sourcing. Overall, the data points to a shift towards cloud-based solutions reflecting broader trends in the sourcing and as-a-service landscape.

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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: Moshe Katri, Wedbush Securities 11 October 2017 THIRD QUARTER 2017
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 2 GLOBAL 3Q17 Covering the state of the combined Traditional Sourcing and As-a-Service industry for the global commercial market. Welcome to the 60th 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 3Q17 ‘‘ *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase™ At a Glance Scorecard 3Q17 3Q Y/Y 3Q Q/Q YTD YTD ACV ($B)* Change Change ACV ($B)* Change Global Commercial Combined Market $ 10.7 16% 9% $ 31.3 14% By Type Traditional Sourcing $ 6.0 2% 2% $ 18.4 1% As-a-Service $ 4.7 43% 18% $ 12.9 41% By Region Americas Commercial $ 6.3 45% 31% $ 16.3 20% EMEA Commercial $ 2.9 -23% -22% $ 11.3 3% AP Commercial $ 1.5 43% 16% $ 3.7 25% Demand for cloud-based solutions spurs record As- a-Service ACV of $4.7 billion, up 43% Combined global market up 16%, including slight increase in Traditional Sourcing Americas ACV surges 45%, with both As-a-Service and Traditional Sourcing up over 40% Despite record As-a-Service sourcing, EMEA stumbles on drop-off in Traditional Sourcing Asia Pacific up 43%, with Traditional Sourcing slightly outpacing As-a-Service growth
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 4 GLOBAL 3Q17 Global Commercial Sector Contracting Trends 3Q17 Combined Market ACV up 16% Y/Y on record high As-a-Service ACV; YTD, Traditional Sourcing remains static but with record high contracting activity (based on number of awards). Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector YTD ACV ($B) Global Commercial Sector YTD ACV by Type ($B) Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector YTD ACV ($B) Global Commercial Sector YTD ACV by Type ($B) $6.0$5.9$6.5 $5.6$5.9$5.7$6.6$7.4 $5.9$6.5 $5.2 $6.8 $5.8 $7.1$6.8 $4.7$3.9$4.3 $4.0$3.3$2.9 $3.0$2.9 $2.8$2.2 $2.1 $2.0 $1.9 $2.1$1.8 $10.7$9.8 $10.8 $9.6$9.2$8.6 $9.6$10.3 $8.7$8.7 $7.3 $8.8 $7.7 $9.2$8.6 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $14.5 $3.8 $3.3 $9.7 $0 $5 $10 $15 ITO BPO SaaS IaaS Range of Prior 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $18.4$18.3$17.6$19.7 $12.9$9.2$7.1$5.9 $9.6$10.3$8.8 $31.3 $37.0$35.0$34.3 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 5 GLOBAL 3Q17 Americas Commercial Sector Contracting Trends Commercial Market ACV is up 45% Y/Y as both Traditional Sourcing and As-a-Service segments exceed 40+% growth; YTD, Combined Market up 20% on record highs in As-a-Service (37%) and Traditional Sourcing (9% Y/Y). Americas Commercial Sector Quarterly ACV ($B) Americas Commercial Sector YTD ACV ($B) Americas Commercial Sector YTD ACV by Type ($B) $3.5 $2.4$2.8$2.4$2.4$2.7$2.9$2.9 $2.4 $2.9 $2.2 $2.7$2.6$2.7$2.4 $2.8 $2.4$2.5$2.4$1.9$1.8$1.9$1.8 $1.7$1.3 $1.2 $1.2$1.2$1.3$1.1 $6.3 $4.8 $5.3 $4.8 $4.3$4.5$4.8$4.7 $4.1$4.2 $3.4 $3.9$3.8$4.0 $3.5 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $8.7$8.0$7.5$7.7 $7.6 $5.6$4.2$3.6 $4.8 $4.7$3.9 $16.3 $18.4 $16.4$15.2 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $7.0 $1.7 $2.1 $5.5 $0.5 $2.5 $4.5 $6.5 $8.5 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 6 GLOBAL 3Q17 Americas Commercial Sector Industry Award Trends Combined Market shows growth across all industries with the exception of Telecom; largest verticals, Financial Services and Manufacturing, lead the way in Y/Y growth in both Traditional Sourcing and As-a-Service. Traditional Sourcing YTD ACV ($B) Americas Commercial Industries As-a-Service YTD ACV ($B) Americas Commercial Industries $2.30 $1.98 $0.92 $1.06 $0.35 $0.46 $0.38 $0.54 $0.69 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Energy Retail Consumer Packaged Goods Travel, Transport & Leisure Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $1.37 $1.01 $0.67 $1.68 $0.82 $0.35 $0.60 $0.48 $0.64 $0.0 $0.5 $1.0 $1.5 $2.0 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Energy Retail Consumer Packaged Goods Travel, Transport & Leisure Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 7 GLOBAL 3Q17 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 C3/CustomerContactChannels Ensono EXL Hexaware HGS LTI Luxoft Mindtree StarTek Syntel Virtusa As-a-Service Market Coresite CyrusOne LogMeIn Mulesoft Traditional Sourcing Market Black Knight, Inc Diebold Nixdorf Genpact HCL Sutherland Global TeleTech Unisys Wipro As-a-Service Market Adobe Systems Digital Realty Equinix Iron Mountain Rackspace/Datapipe ServiceNow Workday Traditional Sourcing Market Accenture AT&T Atos Capgemini Cognizant DXC Technology IBM Infosys NTT DATA TCS As-a-Service Market Amazon Web Services Google Microsoft Oracle Salesforce The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts AMERICAS Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 8 GLOBAL 3Q17 Asia Pacific Commercial Sector Contracting Trends Combined Market ACV rises 43% Y/Y on record high As-a-Service awards and best Traditional Sourcing ACV since 2014; YTD, Asia Pacific ACV is up 25% as both IaaS and ITO ACV increase 30+%. AP Commercial Sector Quarterly ACV ($B) AP Commercial Sector YTD ACV ($B) AP Commercial Sector YTD ACV by Type ($B) $0.78 $0.66 $0.35 $0.47$0.52$0.60 $0.48$0.54$0.56$0.61$0.57 $0.73 $0.46 $1.00$1.02 $0.69 $0.61 $0.63$0.59$0.51$0.44 $0.45$0.41$0.38$0.28$0.28 $0.26 $0.25 $0.26$0.21 $1.47 $1.27 $0.98$1.06$1.03$1.04 $0.93$0.95$0.94$0.89$0.85 $0.99 $0.71 $1.26$1.23 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $1.8$1.6$1.7 $2.5 $1.9 $1.3$0.9 $0.7 $1.1 $0.9 $1.0 $3.7$4.0 $3.6 $4.2 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $1.4 $0.4 $0.3 $1.6 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 9 GLOBAL 3Q17 Asia Pacific Commercial Sector Industry Award Trends Most industry verticals grow Y/Y in Combined Market ACV; Financial Services and mid-sized markets such as Energy and CPG generate both strong Y/Y As-a-Service and Traditional Sourcing activity. Traditional Sourcing YTD ACV ($B) Asia Pacific Commercial Industries As-a-Service YTD ACV ($B) Asia Pacific Commercial Industries $0.33 $0.36 $0.50 $0.17 $0.23 $0.10 $0.06 $0.00 $0.04 $0.0 $0.2 $0.4 $0.6 $0.8 Telecom & Media Manufacturing Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Healthcare & Pharma Retail Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $0.19 $0.27 $0.30 $0.14 $0.09 $0.56 $0.11 $0.13 $0.13 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Telecom & Media Manufacturing Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Healthcare & Pharma Retail Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 10 GLOBAL 3Q17 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 Firstsource Solutions Hexaware Insurity Luxoft Ness Technologies Posco ICT SsangYong Information & Comm. Virtusa WNS As-a-Service Market Atlassian Kingdee LogMeIn Xero Zoho Traditional Sourcing Market Harman International HCL Orange Business Services Samsung SDS SingTel Optus SK C&C Co. Sutherland Global Tech Mahindra Telstra Wipro As-a-Service Market Adobe Systems Autodesk Equinix Iron Mountain PTC Traditional Sourcing Market Accenture BT Cognizant DXC Technology IBM Infosys NEC TCS As-a-Service Market Alibaba Amazon Web Services Google Microsoft Oracle Salesforce SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts Asia Pacific Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 11 GLOBAL 3Q17 EMEA Commercial Sector Contracting Trends Combined Market in EMEA declines 23% Y/Y; record ACV levels in As-a-Service (+48%) can’t offset decline in Traditional Sourcing (-43%); YTD, Combined Market increases 3% with strength in IaaS and a flurry of Traditional Sourcing activity from early in 2017. EMEA Commercial Sector Quarterly ACV ($B) EMEA Commercial Sector YTD ACV ($B) EMEA Commercial Sector YTD ACV by Type ($B) $7.9$8.7$8.3$9.5 $3.4$2.2$2.0$1.6 $3.7$4.7$3.9 $11.3 $14.6$15.0$15.0 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $6.2 $1.7 $0.8 $2.6 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $1.7 $2.8 $3.4 $2.7 $3.0 $2.4 $3.2 $4.0 $2.8$3.0 $2.4 $3.4 $2.7 $3.4$3.4 $1.2 $1.0 $1.2 $1.1$0.8 $0.7 $0.7 $0.7 $0.8$0.6 $0.6 $0.5 $0.5 $0.5$0.5 $2.9 $3.8 $4.5 $3.7$3.8 $3.1 $3.9 $4.7 $3.6$3.6 $3.0 $3.9 $3.2 $3.9$3.9 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 12 GLOBAL 3Q17 EMEA Commercial Sector Industry Award Trends YTD, mixed results in many industry sectors with Financial Services leading and Manufacturing and Telecom lagging; Financial Services and mid- sized verticals CPG and Business Services lead the way with double-digit gains in both Traditional Sourcing and As-a-Service. Manufacturing and Retail are the exceptions. Traditional Sourcing YTD ACV ($B) EMEA Commercial Industries As-a-Service YTD ACV ($B) EMEA Commercial Industries $2.57 $1.06 $1.36 $0.85 $0.84 $0.50 $0.24 $0.16 $0.31 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Financial Services Manufacturing Energy Telecom & Media Travel, Transport & Leisure Business Services Healthcare & Pharma Retail Consumer Packaged Goods Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $0.61 $0.55 $0.19 $0.35 $0.33 $0.58 $0.27 $0.27 $0.23 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 $0.7 Financial Services Manufacturing Energy Telecom & Media Travel, Transport & Leisure Business Services Healthcare & Pharma Retail Consumer Packaged Goods Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 13 GLOBAL 3Q17 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 Adare Group Coor Service Management Eulen Firstsource Solutions Hexaware Ibykus KMD Luxoft MAYKOR NNIT A/S Virtusa WNS As-a-Service Market Interxion LogMeIn OVH Traditional Sourcing Market Atento Capita Carillion Diebold Nixdorf EVRY HCL Interserve Orange Business Services Sopra Steria Tech Mahindra Tieto Wipro As-a-Service Market Adobe Systems Equinix United Internet Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys TCS T-Systems 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 3Q17 The Rapidly Transforming Digital Contact Center Stanton Jones Research Director and Principal Analyst 3Q17 Index Inside Track from
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 15 GLOBAL 3Q17 Digital Drivers of Call Center Transformations A Labor Intensive Cost Center A Brand and Customer Connection Point Demographic Change Millennials have significant buying power, and they expect a seamless, omni-channel experience. Switching Costs are Very Low A personalized brand experience – right products, right services, right time, right place – creates Customer stickiness. Dramatic Intelligent Tech Improvements Dramatic improvement in human-like “intelligent assistance“ technologies that can understand conversation. 321 Over the next 2 Years expect 2X Increase in adoption of virtual agents and chat bots. Rapid Transformation Drivers Change
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 16 GLOBAL 3Q17 Contact Center Market Outlook A $60B Contact Center Market is expected to grow 2-3% percent then flatten in 2 to 3 years. Sentiment +50% of IT and business leaders feel +50% of offshore work will be repatriated due to intelligent automation ISG Research 2017  Focus on improving call center customer experience drives repatriation of projects.  Labor shortage of higher skilled agents, especially in U.S.  Accelerated shift towards “intelligent assistance” operating models  Technology buying increases while services buying drops Higher skilled workforce What’s Driving the Flattening Market? Outlook Leverage new technology Successful Service Providers Increased customer retention and brand awareness Need More? Look the ISG Provider Lens™ Report on Contact Center Outsourcing, and a forthcoming Buyer’s Guide to Intelligent Assistance for insights.
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 17 GLOBAL 3Q17 3Q 2017 ISG Index - Global Summary and Outlook ● Substantial Y/Y growth for the quarter in both the Americas and Asia Pacific, but that was offset by a decline in EMEA. ● As-a-Service segment rebounded from slowing 2Q with record-setting ACV; YTD, As-a-Service rose 40% with strength in IaaS segment, notably the public cloud, and high single-digit growth in SaaS. ● Several Industries generated both Traditional Sourcing and As-a-Service YTD growth, including Financial Services and smaller sectors such as Energy and CPG. ● As-a-Service segment: forecast 20+% growth through next year, driven by further acceptance of public cloud and stepped-up activity occurring in both EMEA and Asia Pacific. ● Traditional Sourcing segment: forecast an increase of 2.5% next year Summary Outlook
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 18 GLOBAL 3Q17 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 3Q 17
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 19 GLOBAL 3Q17 isg-one.com Learn More Esteban Herrera Partner, Global Leader ISG Research +1 203 820 8987 bill.mcnee@isg-one.com 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
GLOBAL 4Q16 GLOBAL 3Q17 Appendix: Score Card for TCV THIRD QUARTER 2017
ISG Confidential. © 2017 Information Services Group, Inc. All Rights Reserved 21 GLOBAL 3Q17 3Q 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 ≥ $25M from the ISG Contracts Knowledgebase™ Scorecard 3Q17 3Q Y/Y YTD Y/Y TCV ($B)* Change TCV ($B)* Change Global Commercial Combined Market $ 32.4 27% $ 84.9 16% By Type Traditional Sourcing $ 25.4 25% $ 65.4 4% As-a-Service $ 7.0 39% $ 19.5 27% ITO $ 19.6 33% $ 49.8 12% BPO $ 5.8 2% $ 15.6 -15% IaaS $ 3.4 47% $ 9.7 58% SaaS $ 3.6 32% $ 9.8 7% By Region Americas Commercial $ 19.6 66% $ 41.2 33% EMEA Commercial $ 8.3 -23% $ 33.7 2% Asia Pacific Commercial $ 4.5 56% $ 10.0 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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3Q17 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: Moshe Katri, Wedbush Securities 11 October 2017 THIRD QUARTER 2017
  • 2.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 2 GLOBAL 3Q17 Covering the state of the combined Traditional Sourcing and As-a-Service industry for the global commercial market. Welcome to the 60th 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 3Q17 ‘‘ *Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase™ At a Glance Scorecard 3Q17 3Q Y/Y 3Q Q/Q YTD YTD ACV ($B)* Change Change ACV ($B)* Change Global Commercial Combined Market $ 10.7 16% 9% $ 31.3 14% By Type Traditional Sourcing $ 6.0 2% 2% $ 18.4 1% As-a-Service $ 4.7 43% 18% $ 12.9 41% By Region Americas Commercial $ 6.3 45% 31% $ 16.3 20% EMEA Commercial $ 2.9 -23% -22% $ 11.3 3% AP Commercial $ 1.5 43% 16% $ 3.7 25% Demand for cloud-based solutions spurs record As- a-Service ACV of $4.7 billion, up 43% Combined global market up 16%, including slight increase in Traditional Sourcing Americas ACV surges 45%, with both As-a-Service and Traditional Sourcing up over 40% Despite record As-a-Service sourcing, EMEA stumbles on drop-off in Traditional Sourcing Asia Pacific up 43%, with Traditional Sourcing slightly outpacing As-a-Service growth
  • 4.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 4 GLOBAL 3Q17 Global Commercial Sector Contracting Trends 3Q17 Combined Market ACV up 16% Y/Y on record high As-a-Service ACV; YTD, Traditional Sourcing remains static but with record high contracting activity (based on number of awards). Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector YTD ACV ($B) Global Commercial Sector YTD ACV by Type ($B) Global Commercial Sector Quarterly ACV ($B) Global Commercial Sector YTD ACV ($B) Global Commercial Sector YTD ACV by Type ($B) $6.0$5.9$6.5 $5.6$5.9$5.7$6.6$7.4 $5.9$6.5 $5.2 $6.8 $5.8 $7.1$6.8 $4.7$3.9$4.3 $4.0$3.3$2.9 $3.0$2.9 $2.8$2.2 $2.1 $2.0 $1.9 $2.1$1.8 $10.7$9.8 $10.8 $9.6$9.2$8.6 $9.6$10.3 $8.7$8.7 $7.3 $8.8 $7.7 $9.2$8.6 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $14.5 $3.8 $3.3 $9.7 $0 $5 $10 $15 ITO BPO SaaS IaaS Range of Prior 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $18.4$18.3$17.6$19.7 $12.9$9.2$7.1$5.9 $9.6$10.3$8.8 $31.3 $37.0$35.0$34.3 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q
  • 5.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 5 GLOBAL 3Q17 Americas Commercial Sector Contracting Trends Commercial Market ACV is up 45% Y/Y as both Traditional Sourcing and As-a-Service segments exceed 40+% growth; YTD, Combined Market up 20% on record highs in As-a-Service (37%) and Traditional Sourcing (9% Y/Y). Americas Commercial Sector Quarterly ACV ($B) Americas Commercial Sector YTD ACV ($B) Americas Commercial Sector YTD ACV by Type ($B) $3.5 $2.4$2.8$2.4$2.4$2.7$2.9$2.9 $2.4 $2.9 $2.2 $2.7$2.6$2.7$2.4 $2.8 $2.4$2.5$2.4$1.9$1.8$1.9$1.8 $1.7$1.3 $1.2 $1.2$1.2$1.3$1.1 $6.3 $4.8 $5.3 $4.8 $4.3$4.5$4.8$4.7 $4.1$4.2 $3.4 $3.9$3.8$4.0 $3.5 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $8.7$8.0$7.5$7.7 $7.6 $5.6$4.2$3.6 $4.8 $4.7$3.9 $16.3 $18.4 $16.4$15.2 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $7.0 $1.7 $2.1 $5.5 $0.5 $2.5 $4.5 $6.5 $8.5 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
  • 6.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 6 GLOBAL 3Q17 Americas Commercial Sector Industry Award Trends Combined Market shows growth across all industries with the exception of Telecom; largest verticals, Financial Services and Manufacturing, lead the way in Y/Y growth in both Traditional Sourcing and As-a-Service. Traditional Sourcing YTD ACV ($B) Americas Commercial Industries As-a-Service YTD ACV ($B) Americas Commercial Industries $2.30 $1.98 $0.92 $1.06 $0.35 $0.46 $0.38 $0.54 $0.69 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Energy Retail Consumer Packaged Goods Travel, Transport & Leisure Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $1.37 $1.01 $0.67 $1.68 $0.82 $0.35 $0.60 $0.48 $0.64 $0.0 $0.5 $1.0 $1.5 $2.0 Financial Services Manufacturing Healthcare & Pharma Business Services Telecom & Media Energy Retail Consumer Packaged Goods Travel, Transport & Leisure Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
  • 7.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 7 GLOBAL 3Q17 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 C3/CustomerContactChannels Ensono EXL Hexaware HGS LTI Luxoft Mindtree StarTek Syntel Virtusa As-a-Service Market Coresite CyrusOne LogMeIn Mulesoft Traditional Sourcing Market Black Knight, Inc Diebold Nixdorf Genpact HCL Sutherland Global TeleTech Unisys Wipro As-a-Service Market Adobe Systems Digital Realty Equinix Iron Mountain Rackspace/Datapipe ServiceNow Workday Traditional Sourcing Market Accenture AT&T Atos Capgemini Cognizant DXC Technology IBM Infosys NTT DATA TCS As-a-Service Market Amazon Web Services Google Microsoft Oracle Salesforce The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts AMERICAS Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
  • 8.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 8 GLOBAL 3Q17 Asia Pacific Commercial Sector Contracting Trends Combined Market ACV rises 43% Y/Y on record high As-a-Service awards and best Traditional Sourcing ACV since 2014; YTD, Asia Pacific ACV is up 25% as both IaaS and ITO ACV increase 30+%. AP Commercial Sector Quarterly ACV ($B) AP Commercial Sector YTD ACV ($B) AP Commercial Sector YTD ACV by Type ($B) $0.78 $0.66 $0.35 $0.47$0.52$0.60 $0.48$0.54$0.56$0.61$0.57 $0.73 $0.46 $1.00$1.02 $0.69 $0.61 $0.63$0.59$0.51$0.44 $0.45$0.41$0.38$0.28$0.28 $0.26 $0.25 $0.26$0.21 $1.47 $1.27 $0.98$1.06$1.03$1.04 $0.93$0.95$0.94$0.89$0.85 $0.99 $0.71 $1.26$1.23 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service $1.8$1.6$1.7 $2.5 $1.9 $1.3$0.9 $0.7 $1.1 $0.9 $1.0 $3.7$4.0 $3.6 $4.2 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $1.4 $0.4 $0.3 $1.6 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
  • 9.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 9 GLOBAL 3Q17 Asia Pacific Commercial Sector Industry Award Trends Most industry verticals grow Y/Y in Combined Market ACV; Financial Services and mid-sized markets such as Energy and CPG generate both strong Y/Y As-a-Service and Traditional Sourcing activity. Traditional Sourcing YTD ACV ($B) Asia Pacific Commercial Industries As-a-Service YTD ACV ($B) Asia Pacific Commercial Industries $0.33 $0.36 $0.50 $0.17 $0.23 $0.10 $0.06 $0.00 $0.04 $0.0 $0.2 $0.4 $0.6 $0.8 Telecom & Media Manufacturing Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Healthcare & Pharma Retail Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $0.19 $0.27 $0.30 $0.14 $0.09 $0.56 $0.11 $0.13 $0.13 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 Telecom & Media Manufacturing Financial Services Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Healthcare & Pharma Retail Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
  • 10.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 10 GLOBAL 3Q17 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 Firstsource Solutions Hexaware Insurity Luxoft Ness Technologies Posco ICT SsangYong Information & Comm. Virtusa WNS As-a-Service Market Atlassian Kingdee LogMeIn Xero Zoho Traditional Sourcing Market Harman International HCL Orange Business Services Samsung SDS SingTel Optus SK C&C Co. Sutherland Global Tech Mahindra Telstra Wipro As-a-Service Market Adobe Systems Autodesk Equinix Iron Mountain PTC Traditional Sourcing Market Accenture BT Cognizant DXC Technology IBM Infosys NEC TCS As-a-Service Market Alibaba Amazon Web Services Google Microsoft Oracle Salesforce SAP The Building 15 The Breakthrough 15The Big 15 Co. Revenues > $10 B Sourcing Standouts Asia Pacific Co. Revenues $1 -10 B Co. Revenues < $1 B Providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings. the ISG15
  • 11.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 11 GLOBAL 3Q17 EMEA Commercial Sector Contracting Trends Combined Market in EMEA declines 23% Y/Y; record ACV levels in As-a-Service (+48%) can’t offset decline in Traditional Sourcing (-43%); YTD, Combined Market increases 3% with strength in IaaS and a flurry of Traditional Sourcing activity from early in 2017. EMEA Commercial Sector Quarterly ACV ($B) EMEA Commercial Sector YTD ACV ($B) EMEA Commercial Sector YTD ACV by Type ($B) $7.9$8.7$8.3$9.5 $3.4$2.2$2.0$1.6 $3.7$4.7$3.9 $11.3 $14.6$15.0$15.0 2017201620152014 YTD Traditional Sourcing YTD As-a-Service Combined 4Q $6.2 $1.7 $0.8 $2.6 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 ITO BPO SaaS IaaS Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $1.7 $2.8 $3.4 $2.7 $3.0 $2.4 $3.2 $4.0 $2.8$3.0 $2.4 $3.4 $2.7 $3.4$3.4 $1.2 $1.0 $1.2 $1.1$0.8 $0.7 $0.7 $0.7 $0.8$0.6 $0.6 $0.5 $0.5 $0.5$0.5 $2.9 $3.8 $4.5 $3.7$3.8 $3.1 $3.9 $4.7 $3.6$3.6 $3.0 $3.9 $3.2 $3.9$3.9 3Q172Q1Q4Q3Q162Q1Q4Q3Q152Q1Q4Q3Q142Q1Q14 Traditional Sourcing As-a-Service
  • 12.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 12 GLOBAL 3Q17 EMEA Commercial Sector Industry Award Trends YTD, mixed results in many industry sectors with Financial Services leading and Manufacturing and Telecom lagging; Financial Services and mid- sized verticals CPG and Business Services lead the way with double-digit gains in both Traditional Sourcing and As-a-Service. Manufacturing and Retail are the exceptions. Traditional Sourcing YTD ACV ($B) EMEA Commercial Industries As-a-Service YTD ACV ($B) EMEA Commercial Industries $2.57 $1.06 $1.36 $0.85 $0.84 $0.50 $0.24 $0.16 $0.31 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 Financial Services Manufacturing Energy Telecom & Media Travel, Transport & Leisure Business Services Healthcare & Pharma Retail Consumer Packaged Goods Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17 $0.61 $0.55 $0.19 $0.35 $0.33 $0.58 $0.27 $0.27 $0.23 $0.0 $0.1 $0.2 $0.3 $0.4 $0.5 $0.6 $0.7 Financial Services Manufacturing Energy Telecom & Media Travel, Transport & Leisure Business Services Healthcare & Pharma Retail Consumer Packaged Goods Range of 3 YTDs Avg of Prior 3 YTDs YTD 3Q16 YTD 3Q17
  • 13.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 13 GLOBAL 3Q17 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 Adare Group Coor Service Management Eulen Firstsource Solutions Hexaware Ibykus KMD Luxoft MAYKOR NNIT A/S Virtusa WNS As-a-Service Market Interxion LogMeIn OVH Traditional Sourcing Market Atento Capita Carillion Diebold Nixdorf EVRY HCL Interserve Orange Business Services Sopra Steria Tech Mahindra Tieto Wipro As-a-Service Market Adobe Systems Equinix United Internet Traditional Sourcing Market Accenture Atos BT Capgemini Cognizant DXC Technology IBM Infosys TCS T-Systems 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 3Q17 The RapidlyTransforming Digital Contact Center Stanton Jones Research Director and Principal Analyst 3Q17 Index Inside Track from
  • 15.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 15 GLOBAL 3Q17 Digital Drivers of Call Center Transformations A Labor Intensive Cost Center A Brand and Customer Connection Point Demographic Change Millennials have significant buying power, and they expect a seamless, omni-channel experience. Switching Costs are Very Low A personalized brand experience – right products, right services, right time, right place – creates Customer stickiness. Dramatic Intelligent Tech Improvements Dramatic improvement in human-like “intelligent assistance“ technologies that can understand conversation. 321 Over the next 2 Years expect 2X Increase in adoption of virtual agents and chat bots. Rapid Transformation Drivers Change
  • 16.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 16 GLOBAL 3Q17 Contact Center Market Outlook A $60B Contact Center Market is expected to grow 2-3% percent then flatten in 2 to 3 years. Sentiment +50% of IT and business leaders feel +50% of offshore work will be repatriated due to intelligent automation ISG Research 2017  Focus on improving call center customer experience drives repatriation of projects.  Labor shortage of higher skilled agents, especially in U.S.  Accelerated shift towards “intelligent assistance” operating models  Technology buying increases while services buying drops Higher skilled workforce What’s Driving the Flattening Market? Outlook Leverage new technology Successful Service Providers Increased customer retention and brand awareness Need More? Look the ISG Provider Lens™ Report on Contact Center Outsourcing, and a forthcoming Buyer’s Guide to Intelligent Assistance for insights.
  • 17.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 17 GLOBAL 3Q17 3Q 2017 ISG Index - Global Summary and Outlook ● Substantial Y/Y growth for the quarter in both the Americas and Asia Pacific, but that was offset by a decline in EMEA. ● As-a-Service segment rebounded from slowing 2Q with record-setting ACV; YTD, As-a-Service rose 40% with strength in IaaS segment, notably the public cloud, and high single-digit growth in SaaS. ● Several Industries generated both Traditional Sourcing and As-a-Service YTD growth, including Financial Services and smaller sectors such as Energy and CPG. ● As-a-Service segment: forecast 20+% growth through next year, driven by further acceptance of public cloud and stepped-up activity occurring in both EMEA and Asia Pacific. ● Traditional Sourcing segment: forecast an increase of 2.5% next year Summary Outlook
  • 18.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 18 GLOBAL 3Q17 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 3Q 17
  • 19.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 19 GLOBAL 3Q17 isg-one.com Learn More Esteban Herrera Partner, Global Leader ISG Research +1 203 820 8987 bill.mcnee@isg-one.com 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
  • 20.
    GLOBAL 4Q16 GLOBAL 3Q17 Appendix:Score Card for TCV THIRD QUARTER 2017
  • 21.
    ISG Confidential. ©2017 Information Services Group, Inc. All Rights Reserved 21 GLOBAL 3Q17 3Q 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 ≥ $25M from the ISG Contracts Knowledgebase™ Scorecard 3Q17 3Q Y/Y YTD Y/Y TCV ($B)* Change TCV ($B)* Change Global Commercial Combined Market $ 32.4 27% $ 84.9 16% By Type Traditional Sourcing $ 25.4 25% $ 65.4 4% As-a-Service $ 7.0 39% $ 19.5 27% ITO $ 19.6 33% $ 49.8 12% BPO $ 5.8 2% $ 15.6 -15% IaaS $ 3.4 47% $ 9.7 58% SaaS $ 3.6 32% $ 9.8 7% By Region Americas Commercial $ 19.6 66% $ 41.2 33% EMEA Commercial $ 8.3 -23% $ 33.7 2% Asia Pacific Commercial $ 4.5 56% $ 10.0 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.