This document provides a summary of the impact of the 2008 recession on the global outsourcing industry and introduces the GS100 study. 1) The recession changed rules for global sourcing as clients focused on cost cutting and vendors had to adapt by delivering business outcomes at lower costs. 2) While the industry hit a low point in the first half of 2009, it showed impressive growth in the last quarter of 2009 as clients consolidated vendors and engaged more specialized providers through multisourcing. 3) The GS100 study recognizes 100 leading service providers that demonstrated resilience during the recession and have the maturity to deliver high standard IT and BPO services using the global delivery model.

1. Special Report
Shaping the Battleground for
GS100
Service providers
The recession changed several rules in global sourcing. The GS100 is a study
in how service providers withstood the shocks and adapted.
by Ed Nair
GS100-2010 www. globalservicesmedia.com GlobalServices 5

2. W
Hen the economy buckled down into half of 2009. In fact, the industry put up an impres-
a recession in 2008, the global out- sive performance in the last quarter (Q409) with
sourcing industry still seemed very market’s total contract value (TCV) reaching $24.7
robust. Slowly, but surely, the im- billion, an increase of 47 percent sequentially and
pact of the recession was felt by the industry dur- 8 percent year-over-year and the best quarterly
ing 2009. Companies clammed up on ambitious performance since the second quarter of 2008, ac-
technology projects that required huge outlays cording to figures from TPI. However, TPI’s report
in investment and CIOs were forced to operate stated: “Full-year 2009 results could not overcome
on constrained IT budgets which largely focused the market’s weak showing during first two quar-
on squeezing more bang from the ters. TCV for the year declined 13
bucks that were spent in the earlier percent to $74.5 billion, its lowest
years. Spending was guided by dis- The industry put point since 2001.”
cretion into areas that were neces-
sary to ‘keep the lights on’ and sav- up an impressive Fruits of a Crisis
ing costs became the driving factor A monumental crisis like a historic re-
in decisions. performance in the cession has a monumental impact on
Outsourcing’s potential to save the dynamics of the industry. So did
costs actually helped. Service provid-
last quarter (Q409) the recession change several rules
ers (vendors) were forced to operate
in a new environment in which they
with market’s total in global sourcing which led to new
behaviors both on the clients and on
got paid for business outcomes rath- contract value (TCV) the service providers end. In 2010,
er than effort. On the BPO side, a few we see the permanence of these be-
of the processes related to industries reaching $24.7 haviors, which in effect is about set-
directly affected by the recession or ting the ‘new agenda’ or realizing the
industries directly responsible for billion, an increase ‘new normal’, whatever you call it.
recession (like mortgage process- From an efficiency point of view,
ing, title management, etc.) almost of 47 percent buyers have been looking at consoli-
vanished. In other areas, where dating the number of vendors they
BPO partnerships were already un-
sequentially have to deal with. At the same time,
der way, the service providers were buyers have also started splitting
tasked with delivering business outcomes at lower their scope and engaging with broader set of special-
cost. There were very bright spots if at all in both IT ist vendors. This trend known as multisourcing has
services and BPO. given access and opportunity to many mid-tier ven-
The market reached a bottom in the first half dors but it has also led to reduction in value and du-
of 2009 and then started recovering in the second ration of outsourcing contracts. This has led to more
The Global Services 100 Survey
Significant Sample
Participants Spread
Revenue Range % Number of Companies
$1M to $10M 12
Global Coverage $10M to $100 M 30
$100M to $1B 45
Country % Number of Companies $1B + 13
US and Canada 37
Industry Size Coverage
India 33
Category Aggregate Revenue 2009 (in $M)
China 6 $1M to $10M 55
Europe 9 $10M to $100 M 1,393
$100M to $1B 12,917
Latin America 9
$1B + 58,999
Asia 5 Total 73,364
6 GlobalServices www. globalservicesmedia.com GS100-2010

3. competition amongst vendors. GS100: Recognizing and Celebrating
The recession also brought into focus many is- Service Provider Excellence
sues related to contracts, SLAs, performance man- The Global Services 100 is an effort to recognize and
agement, and pricing. Price renegotiations were celebrate service provider excellence. It enlists ser-
all too common. More importantly, most vendors vice providers who possess the maturity to deliver
had to deliver under outcome-based pricing. Along high standard services in IT and BPO using the glob-
with pricing, practices about risk management and al delivery model. The GS100 service providers pos-
governance were topics of interest. sess many other attributes that lead
These areas moved from being con- to market leadership and the study
cepts to practices. Other factors not The storms they is intended to take a closer look at
related to recession like the poten- these.
tial of cloud computing and its im- braved were far more This year we had over 150 com-
pact on delivery of services, integra- panies that participated in the study
tion or convergence of IT and BPO, severe than the ones and voluntarily shared lot of quan-
M&As between service providers,
maturing of service providers from
faced by the buyers. titative and qualitative information
about their companies. The absence
Central and eastern europe, Latin These are the of a few Tier1 companies like Ac-
America and China, threatened to centure, IBM, H-P and Cognizant
,
change the landscape of the servic- Global Services 100 amongst others is explained either
es industry. by their unwillingness to share data
companies, the list
During this entire episode, the ser- due to policy or by their unwilling-
vice provider community was both ness to put in the effort required to
resilient and adaptive. The storms of 100 companies participate. From a statistical signifi-
they braved were far more severe cance point of view, the study rep-
than the ones faced by the buyers. that will released resents relevant samples across all
These are the Global Services 100
companies, the list of 100 companies
in the last phase of categories (revenue bands) of com-
panies. Therefore, the observations
that will released in the last phase of this study remain statistically significant and
this study. conclusive. GS
8 GlobalServices www. globalservicesmedia.com GS100-2010