2Q15 ISG Outsourcing Index

1
The ISG Outsourcing Index

Global Market Data and Insights
Second Quarter and First Half 2015
Hosted by:
Joe Foresi,
Janney Capital Markets
2015
Information Services
Group, Inc.
All Rights Reserved
16 July 2015
isg-one.com
*Contracts with ACV $5M from the ISG Contracts Knowledgebase
Welcome to the 51th Quarterly ISG Outsourcing Index Review
Covering the state of the outsourcing industry for global, commercial contracts.*
John Keppel
Partner & President
Stanton Jones
Director & Emerging Technology Analyst
2015
Group, Inc.
All Rights Reserved
isg-one.com
Esteban Herrera
Partner
At a Glance
NUMBER OF AWARDS SET RECORDS DURING THE QUARTER
ACROSS A VARIETY OF BROADER MARKET AREAS
AN ABSENCE OF LARGE AWARDS HOLDS BACK 1H ACV ACROSS THE BROADER MARKET
AMERICAS ACV UP BOTH Y/Y AND
Q/Q WITH STRENGTH FROM U.S. MARKET AND SMALLER-INDUSTRY VERTICALS
EMEA ACV DOWN Y/Y BUT UP Q/Q WITH STEPPED-UP ACTIVITY IN THE U.K.,
FINANCIAL SERVICES AND ENERGY VERTICALS
ASIA PACIFIC ACV DOWN Y/Y BUT UP Q/Q ON THE STRENGTH OF
APPLICATION OUTSOURCING AND INDIAN MARKETS
2015
Group, Inc.
All Rights Reserved
Scorecard
2Q15
ACV ($B)*
Global Market
New Scope
Restructurings
Mega-relationships
ITO
BPO
Americas
EMEA
Asia Pacific
$
$
$
$
$
$
$
$
$
6.2
3.8
2.4
0.4
4.8
1.4
2.8
2.8
0.6
2Q Y/Y
Change
2Q Q/Q
Change
1H15
ACV (B)*
1H Y/Y
Change
-7%
-11%
-1%
-75%
-8%
-6%
11%
-12%
-39%
24%
18%
33%
-65%
43%
-15%
29%
23%
8%
$ 11.2
$ 7.0
$ 4.2
$ 1.6
$ 8.1
$ 3.1
$ 4.9
$ 5.2
$ 1.1
-14%
-16%
-11%
-55%
-19%
4%
9%
-21%
-42%
isg-one.com
Broader Market Contract Award Trends

2Q15 Broader Market ACV is up 24% Q/Q and down 7% Y/Y. The number of 2Q
awards set a record high. 1H15 ACV is down 14% from 1H14 in a smaller-deal market.
Broader Market Quarterly ACV ($B)* and Counts
ACV
376
Counts
339
363
$6.3
$6.7
1Q14
2Q14
311
$4.8
$4.0
2Q13
3Q13
4Q13
$17.6 $18.7
$8.1
2015
Group, Inc.
All Rights Reserved
isg-one.com
$9.6
$9.4
$9.1
2006
07
$21.5
$10.1
3Q14
$13.9 $11.6
$12.1 $10.5
08
09
$13.3
10
$10.8
11
$12.3
922
$11.1
$13.0
$10.0
13
14
$11.2
2015
2Q15
Half-Year Broader Market Counts
$25.3
$13.6
12
1Q15
1H Counts
$21.0
$6.2
$5.0
4Q14
2H ACV
$24.7 $25.2
$23.0 $23.8
$11.4 $10.9
$6.7
$5.6
Half-Year Broader Market ACV ($B)*

1H ACV
303
288
231
$6.3
451
388
741
738
369
363
372
375
2006
07
1,089 1,109
547
2H Counts
1,305 1,247
1,228
648
570
657
677
11
12
530
687
1,378
676
484
438
08
542
579
09
10
702
754
14
2015
541
13
Americas Contract Award Trends

2Q15 Americas ACV is up 29% Q/Q and 11% Y/Y with a record-high award count.
1H15 New Scope increases over 1H14 by 2% in ACV and 32% in contract counts.
Americas Quarterly ACV ($B)* and Counts
ACV
Americas Half-Year ACV ($B)*
Counts
1H ACV
2H ACV
236
150
171
126
124
121
78
$1.1
$1.9
$1.6
$2.5
$2.5
$2.0
159
$2.6
$8.6
144
$2.1
$2.8
$4.9
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Americas Half-Year Counts

1H Counts
328
2015
Group, Inc.
All Rights Reserved
isg-one.com
149
312
150
385
195
179
162
190
2006
07
08
445
466
$3.6
2006
516
226
214
196
261
231
270
267
290
09
10
11
12
$4.5
580
482
271
211
13
$3.8
$6.9
$9.0
$9.2
$4.6
$3.2
$3.4
$3.6
$3.4
07
08
$4.4
09
$8.4
$4.5
$6.0
$4.0
10
11
$9.2
$4.0
$9.6
$7.3
$5.1
$3.5
$5.2
12
$3.8
$4.5
$4.9
13
14
2015
Americas Half-Year Segment ACV ($B)*
2H Counts
528
$7.5
285
295
14
380
2015
Avg of Prior 4 Halves

1H15
$3.5
$2.5
380
Range of Prior 4 Halves

1H14
$3.3
$2.6
$2.3
$1.6
$1.5
$0.5
New Scope
Restructuring
ITO
BPO
Americas Contract Award Trends Detail

2Q15 ACV increases due to strength in the U.S. Traditionally smaller verticals such
as Transportation, Retailing and Healthcare help support market growth.
Americas Sub-regions Half-Year ACV ($B)*
$4.5
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$-
1H14
1H15
$4.2
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
$0.34
$0.16
$0.11
$0.02
Canada
1
U.S.
Brazil
Mexico
Other LatAm
Americas Industry Half-Year ACV ($B)*

2015
Group, Inc.
All Rights Reserved
$1.4
$1.2
$1.0
$0.8
$0.6
$0.4
$0.2
$-
$0.83
Financial
Services
$0.72
Manufacturing
$0.54
Telecom
& Media
1H14
1H15
$0.70
$0.40
Healthcare
& Pharma
Energy
isg-one.com
$0.41
Business
Services
$0.42
Consumer
Products
& Goods
$0.43
Travel
Transport
Leisure
$0.40
Retail
ISG Sourcing Market Standouts in the Americas

Cognizant moves into the Big 10 category. BPOs and service providers with
substantial offshore profiles lead in the Building tier. The Breakthrough 10
experiences a 40% turnover.
SOURCING
STANDOUTS GROUPED BY COMPANY SIZE
2015
Group, Inc.
All Rights Reserved
isg-one.com
1New
The Big 10
Sourcing Standouts
The Building 10
Sourcing Standouts
The Breakthrough 10
Sourcing Standouts
Accenture
Atos
BT
Capgemini
Cognizant1
Dell
HP1
IBM
TCS
Xerox
Aon Hewitt
CGI
CompuCom
Convergys1
Genpact
HCL
Infosys
Tech Mahindra1
Teleperformance
Wipro
APAC Customer Services

Firstsource Solutions
ICF International
IGATE
Luxoft
Minacs1
Mindtree1
Syntel
UST Global1
Virtusa1
Co. Revenues > $10B
Co. Revenues $2 -10 B
Co. Revenues < $2 B
to group as of the current quarter

Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase.
Service providers in alphabetical order; no rankings implied.
*Contracts
with
$5M
from the
ISG financial
Contracts
Knowledgebase
Revenues
sourced
from ACV
Hoovers
and individual
company
fillings
Asia Pacific Contract Award Trends

Asia Pacific 2Q15 ACV is up 8% Q/Q but down 39% Y/Y. Almost 70% of the IT ACV
awarded in the second quarter is in Applications.
Asia Pacific Quarterly ACV ($B)* and Counts
ACV
34
1H ACV
Counts
47
46
43
39
35
32
28
$1.7
$0.73
$1.1
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
2006
$0.46
Asia Pacific Half-Year Counts

1H Counts
147
isg-one.com
95
95
45
48
50
47
2006
07
119
80
150
79
69
168
81
71
70
49
08
67
09
71
10
85
11
139
87
12
68
13
$3.5
$2.6
$1.3
$1.7
$1.2
07
$1.5
$2.4
$2.3
$1.6
$1.2
$1.6
$0.8
08
$0.8
09
$1.9
$1.1
10
11
$3.2
$1.7
$2.1
$1.2
$1.0
$2.0
$1.1
$1.1
12
13
14
2015
Asia Pacific Half-Year Segment ACV ($B)*
2H Counts
154
$2.6
$0.6
$0.55 $0.59
$0.54 $0.50 $0.54
2H ACV
$3.1
46
$1.00 $0.98
2015
Group, Inc.
All Rights Reserved
Asia Pacific Half-Year ACV ($B)*
$2.0
164
$1.0
14

1H15
$1.5
79
85

1H14
81
2015
$0.92
$0.88
$0.5
$0.26
$0.22
$0.0
New Scope
Restructuring
ITO
BPO
Asia Pacific Contract Award Trends Detail

India steps up its contracting pace. However, ANZ remains sluggish, holding back
overall regional results. Financial Services, Manufacturing and Telecom results lag.
Asia Pacific Sub-regions Half-Year ACV ($B)*
1H14
1H15
$0.6
$0.5
$0.45
$0.4
$0.3
$0.23
$0.2
$0.19
$0.0
$0.15
$0.11
$0.1
$0.02
ANZ
India and South Asia
Japan
Greater China
Southeast Asia
South Korea
Asia Pacific Industry Half-Year ACV ($B)*
2015
Group, Inc.
All Rights Reserved
isg-one.com
$0.7
$0.6
$0.5
$0.4
$0.3
$0.2
$0.1
$-
$0.25
Financial
Services
$0.22
Manufacturing
1H14
1H15
$0.29
$0.16
Telecom
& Media
Travel
Transport
Leisure
$0.08
Energy
$0.06
Consumer
Products
& Goods
$0.01
Healthcare
& Pharma
$0.06
$0.02
Business
Services
Retail
10
ISG Sourcing Market Standouts in Asia Pacific

Several Japanese providers, along with Cognizant, join the large multinationals in
Big 10 Sourcing Standouts list. Australian and India-based providers contribute
greatly to middle tier, while smaller segment sees 30% turnover from last quarter.
SOURCING
2015
Group, Inc.
All Rights Reserved
1New
isg-one.com
The Big 10
Sourcing Standouts
The Building 10
Sourcing Standouts
The Breakthrough 10
Sourcing Standouts
Accenture
BT
Cognizant1
CSC1
Fujitsu
Hitachi
HP
IBM
Ricoh
TCS
Genpact1
HCL
Infosys
NEC
Optus1
Tech Mahindra
Transfield Services
Unisys
United Group Services
Wipro
Aegis
ChinaSoft
Hollysys Automation
Minacs1
NGA Human Resources
SITA
TeleTech1
UST Global1
Vertex
WNS
Co. Revenues > $10B
Co. Revenues < $2 B

Revenues
sourced
from ACV
Hoovers
and individual
company
fillings
*Contracts
with
$5M
from the
ISG financial
Contracts
Knowledgebase
11
EMEA Contract Award Trends

EMEA ACV in 2Q15 is up 23% Q/Q yet down 12% Y/Y. 1H Restructuring and New
Scope awards fall in nearly equal magnitudes, dropping more than 20%.
EMEA Quarterly ACV ($B)* and Counts
ACV
183
153
130
119
$3.9
$2.6
$2.3
1H ACV
Counts
182
169
162
$3.3
EMEA Half-Year ACV ($B)*
$3.2
$2.7
169
124
$3.4
$2.3
$12.1
$7.3
$2.8
$3.9
$3.5
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
2006
EMEA Half-Year Counts

1H Counts
2015
Group, Inc.
All Rights Reserved
isg-one.com
318
331
175
165
418
219
497
493
318
253
255
143
166
199
244
238
305
2006
07
08
09
10
11
563
607
$4.5
$5.0
$7.1
$4.9
$4.2
07
$6.1
08
09
$13.9
$8.3
$5.7
$6.4
10
$5.7
11
$12.5
$6.0
$6.5
12
$11.5
$6.5
$5.0
13
$12.6
$6.1
$6.5
$5.2
14
2015
EMEA Half-Year Segment ACV ($B)*
2H Counts
623
$8.6
$10.9
$12.1
2H ACV
634
$6.0

1H14

1H15
$5.0
312
$4.0
263
345
300
262
322
293
12
13
14
2015
$3.0
$4.0
$3.5
$2.0
$1.7
$1.0
$1.2
$-
New Scope
Restructuring
ITO
BPO
12
EMEA Contract Award Trends Detail

U.K. market sees increased activity, and 1H results turn positive. Financial Services
and Energy verticals show 1H growth but lag behind historical half-year results.
EMEA Sub-regions Half-Year ACV ($B)*
1H14
1H15
$3.00
$2.50
$2.00
$2.20
$1.50
$1.07
$1.00
$0.50
$0.00
$0.46
$0.37
U.K. & Ireland
DACH
Nordics
$0.33
$0.26
Benelux
France
Southern
Europe
$0.26
Africa & Middle
East
$0.20
E. Europe &
Russia
EMEA Industry Half-Year ACV ($B)*

$3.0
1H14
1H15
$2.5
$2.0
$1.5
$1.62
$1.0
2015
Group, Inc.
All Rights Reserved
isg-one.com
$0.65
$0.5
$-
$0.90
$0.81
$0.57
$0.14
Financial
Services
Manufacturing
Energy
Travel
Transport
Leisure
Telecom
& Media
Business
Services
$0.15
Consumer
Products
& Goods
$0.17
$0.13
Healthcare
& Pharma
Retail
13
ISG Sourcing Market Standouts in EMEA

Large multinationals and providers with strong local home market profiles head
up each of the company size segments. Each tier sees 20% turnover from last
quarter.
SOURCING
2015
Group, Inc.
All Rights Reserved
1New
isg-one.com
The Big 10
Sourcing Standouts
The Building 10
Sourcing Standouts
The Breakthrough 10
Sourcing Standouts
Accenture
Atos
BT
Capgemini
Cognizant1
Fujitsu
HP
IBM
TCS
Vodafone1
Capita
Carillion1
CGI
Computacenter1
HCL
Infosys
MITIE
Serco
Tieto
Wipro
HH Global
IGATE
InnerWorkings
Kuehne & Nagel
Luxoft
MAYKOR
Mindtree
Transcom1
WNS1
Xchanging
Co. Revenues > $10B
Co. Revenues < $2 B

Revenues
sourced
from ACV
Hoovers
and individual
company
fillings
*Contracts
with
$5M
from the
ISG financial
Contracts
Knowledgebase
14
CLOUD-BASED TRANSFORMATION
AS-A-SERVICE CREATES OPPORTUNITIES & CHALLENGES
Special Topic for Second Quarter 2015
Stanton Jones

2015
Group, Inc.
All Rights Reserved
isg-one.com
15
Cloud Adoption Defined

ISG-Advised
DEALS WITH A CLOUD COMPONENT DOUBLED since 2012

EVOLVE CURRENT DELIVERY MODEL to create a more cloud-like experience
RE-ENGINEER FINANCIALS MODELS so traditional services take on a cloud look and feel
COST REDUCTION is primary motivator
ADOPTION APPROACH CHANGED DRAMATICALLY about 18
months ago
FOCUS IS ON TRANSFORMATION using public cloud

CLIENTS EMBRACE THE STRATEGIC BENEFITS OF SHARING infrastructure and software
AGILITY is primary motivator
AS-A-SERVICE CHARACTERISTICS
Standard
Support
Automated
Tiers
Provider
Supplier
Currency
Weighted MSA
Operational
Expense
All-Inclusive
Limited
Unit Price
Commitment
Consumer
Consumption
Charge-backs
Based RUs
2015
Group, Inc.
All Rights Reserved
isg-one.com
Capital Long-term
Expense Commitment
Line
Asset/FTE Item IT Absorbs
Based RUs Pricing
Costs
Custom
Buyer Support
Currency Tiers
Traditional Service Characteristics
Elastic
Buyer
Provisioned
Weighted Labor for Maximum
MSA
Demand
Based
16
Emerging Solutions for Transformational Renewals

Traditional Providers
Next Generation Providers
Tower-centric solutions
Dedicated data centers
Traditional service
characteristics
Public
Cloud
IaaS
Managed
Services
Private
Cloud
IaaS
Technology
Supply
2015
Group, Inc.
All Rights Reserved
isg-one.com
Application-centric solutions
Expected
in Renewal TCV
over next 3 Years
Public
Cloud
SaaS
Existing
Data
Center
Cloud Service
Broker
Shared data centers

As-a-service characteristics
Sales &
Marketing
R&D
is
as
buyers mix and
match providers
HR
Internal IT or Managed
Services Provider
Cloud Brokerage
Platform
Operations Finance
Design, Source and Provision a Complete Solution

Centralizes Business Management and Analytics
Multi-sourced Provider Management
Unified Self-service Storefront
Enterprise
LOBs
17
2Q15 ISG Outsourcing Index - Global Summary and Outlook
2Q15 Broader Market sets a record for number of contract awards as the
market
summary
busiest quarter ever.

Structural industry change towards smaller deal values as first-half ACV
matches pre-Recession levels, but with double the number of awards.
The Americas logs strong, consistent quarter and half; smaller-sized verticals
compensate for weak Financial Services sector.
EMEA and AP post sequential ACV gains but lag Y/Y against tough compares.
Expect near double digit Y/Y growth in 3Q in 2015 as European markets and
market
outlook
2015
Group, Inc.
All Rights Reserved
smaller G-2000 companies step up contracting pace.

Long term, transformative work in industry will take priority over focus on cost
savings; new spend will be on revenue generation initiatives.
Providers that adapt rapidly to cloud platforms and digitization will flourish;
those focused on driving competitors from yesterdays business will not.
isg-one.com
18
Learn More
Please contact us with your questions and comments.

John Keppel
Partner and President
+44 (0)7879 432 212
john.keppel@isg-one.com
www.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
Stanton Jones

+1 281 795 2636
stanton.jones@isg-one.com
Paul Reynolds
2015
Group, Inc.
All Rights Reserved
Chief Research Officer

+1 508 625 2194
paul.reynolds@isg-one.com
ISG insights serving providers and market analysts
isg-one.com
19
APPENDIX: SCORE CARD FOR TCV
Second Quarter and First Half 2015
2015
Group, Inc.
All Rights Reserved
isg-one.com
20
Second Quarter and First Half 2015 TCV Scorecard

The ISG Outsourcing 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.
Scorecard
2015
Group, Inc.
All Rights Reserved
2Q15
TCV ($B)*
2Q Y/Y
Change
2Q Q/Q
Change
1H15
TCV ($B)*
Y/Y
Change
Global Market
19.6
-28%
-9%
41.2
-24%
New Scope
13.7
-24%
-13%
29.5
-17%
Restructurings
5.9
-36%
2%
11.7
-38%
Mega-deals
0.0 -100%
-100%
4.8
-53%
ITO
14.2
-32%
-11%
30.2
-25%
BPO
5.4
-16%
-2%
11.0
-21%
Americas
7.2
-21%
4%
14.2
-19%
EMEA
10.0
-27%
-16%
22.0
-21%
Asia Pacific
2.4
-45%
-9%
5.0
-44%
isg-one.com
*Contracts
with
$25M
from
ISG Contracts
Knowledgebase
*Contracts
with
ACVTCV
$5M
from the
ISGthe
Contracts
Knowledgebase
21
www.isg-one.com
knowledge powering results

Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more
than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector
organizations
2015
to transform and optimize their operational environments through research, benchmarking, consulting and
Information
Services services, with a focus on information technology, business process transformation, program management services and
managed
Group, Inc.
enterprise
All Rights
Reserved resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the
deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory
services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.
isg-one.com

2Q15 ISG Outsourcing Index

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2Q15 ISG Outsourcing Index

Uploaded by

Copyright:

Available Formats

1

The ISG Outsourcing Index

Welcome to the 51th Quarterly ISG Outsourcing Index Review

Broader Market Contract Award Trends

Half-Year Broader Market Counts

Half-Year Broader Market ACV ($B)*

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

Americas Contract Award Trends

Americas Half-Year ACV ($B)*

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Americas Half-Year Counts

Americas Half-Year Segment ACV ($B)*

Avg of Prior 4 Halves

Range of Prior 4 Halves

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

Americas Contract Award Trends Detail

Avg of Prior 4 Halves

Americas Industry Half-Year ACV ($B)*

Avg of Prior 4 Halves

ISG Sourcing Market Standouts in the Americas

APAC Customer Services

Co. Revenues > $10B

Co. Revenues $2 -10 B

Co. Revenues < $2 B

to group as of the current quarter

Asia Pacific Contract Award Trends

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Asia Pacific Half-Year Counts

Asia Pacific Half-Year Segment ACV ($B)*

$0.54 $0.50 $0.54

Asia Pacific Half-Year ACV ($B)*

Avg of Prior 4 Halves

Range of Prior 4 Halves

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

Asia Pacific Contract Award Trends Detail

Avg of Prior 4 Halves

India and South Asia

Asia Pacific Industry Half-Year ACV ($B)*

Range of Prior 4 Halves

Avg of Prior 4 Halves

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

ISG Sourcing Market Standouts in Asia Pacific

Co. Revenues > $10B

Co. Revenues $2 -10 B

Co. Revenues < $2 B

to group as of the current quarter

EMEA Contract Award Trends

EMEA Half-Year ACV ($B)*

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

EMEA Half-Year Counts

EMEA Half-Year Segment ACV ($B)*

Range of Prior 4 Halves

Avg of Prior 4 Halves

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

EMEA Contract Award Trends Detail

Avg of Prior 4 Halves

EMEA Industry Half-Year ACV ($B)*

Avg of Prior 4 Halves

*Contracts with ACV $5M from the ISG Contracts Knowledgebase

ISG Sourcing Market Standouts in EMEA

Co. Revenues > $10B

Co. Revenues $2 -10 B

Co. Revenues < $2 B

to group as of the current quarter