Q4 2015 EMEA ISG Outsourcing Index

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Group, Inc. All Rights Reserved

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*Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase®

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Hosted by: John King

Bank of America Merrill Lynch

18 January 2016

The ISG Outsourcing Index®

Fourth Quarter and Full Year 2015

EMEA Market Data and Insights



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Covering the state of the outsourcing industry for EMEA commercial contracts.*

Welcome to the 53rd Quarterly ISG Outsourcing Index® Review

John Keppel Partner & President


Bernd Schaefer Partner



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At a Glance BEST QUARTERLY BROADER MARKET ACV RESULT IN THE LAST FOUR YEARS.

EMEA QUARTERLY ACV UP ON FIVE MEGA-RELATIONSHIP AWARDS.

AMERICAS 4Q VALUES EQUAL 2014’S STRONG FINISH. 4Q AND FULL-YEAR ASIA PACIFIC ACV DOWN SHARPLY ACROSS MOST MAJOR INDUSTRIES.

2015 NUMBER OF AWARDS AT AN ALL-TIME HIGH.

CLOUD, DIGITAL AND AUTOMATION CONTINUE TO DRIVE DOWN AVERAGE ACV AND DURATIONS.

EMEA ANNUAL ACV DOWN SLIGHTLY AS ACTIVITY SLOWS ACROSS MOST MAJOR GEOGRAPHIES. AMERICAS FULL-YEAR ACV TIED 2014 FOR THE BEST YEAR EVER, DRIVEN BY RESTRUCTURINGS.

2015 SAW A LACK OF LARGE DEALS IN ASIA PACIFIC.

Scorecard 4Q15 4Q Y/Y 4Q Q/Q ACV (€B)* Change Change

Global Market € 5.6 5% 27% New Scope € 2.7 -1% -10% Restructurings € 2.9 10% 110% Mega-relationships € 1.9 43% 162% ITO € 4.4 15% 55% BPO € 1.2 -20% -23% Americas € 2.1 0% 15% EMEA € 3.1 17% 44% Asia Pacific € 0.4 -34% -10%

2015 Y/Y ACV (€B)* Change

€ 19.0 -8% € 11.3 -9% € 7.7 -6% € 3.9 -23% € 13.7 -12% € 5.2 4% € 7.9 0% € 9.4 -8% € 1.7 -33%



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4Q15 Global Market ACV up 5% Y/Y, helped by larger awards. Cloud, digital and automation drive the average contract values and durations to all-time lows.

4Q/Full-Year Broader Market ACV (€B)*

Average ACV (€M) and Durations

Global Market Contract Award Trends

4Q/Full-Year Broader Market Contract Counts

1,090 1,023 926 953 975 847 786 694 555 529

355 388 324 312 334 272 312 233

190 212

1,445 1,411 1,250 1,265 1,309

1,119 1,098 927

745 741

201514131211100908072006

1Q to 3Q Countd 4Q Counts

€ 13.4 € 15.3 € 13.1 € 15.9 € 13.9 € 14.5 € 12.6 € 12.4 € 9.9 € 10.3

€ 5.6 € 5.3 € 3.9

€ 4.6 € 6.0 € 4.7 € 6.0 € 4.3 € 5.1 € 3.8

€ 19.0 € 20.6 € 17.1

€ 20.5 € 19.9 € 19.2 € 18.6 € 16.7 € 15.0 € 14.1

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1Q to 3Q ACV 4Q ACV

€ 13.1

€ 16.2 € 16.9 € 19.0

3.5 4.1

4.5 5.0

2015201220092006

Average ACV ($M) Avg Durations (Yrs.)



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4Q15 ACV is up 44% Q/Q driven by mega-relationship awards. Annual ACV down 8% due to the weaker ITO market. Full-year results are down after a slow first half.

EMEA 4Q/Full-Year Counts

EMEA Contract Award Trends

EMEA 4Q/Full-Year ACV (€B)*

EMEA Market Size EMEA 4Q/Full-Year Segment ACV (€B)*

433 463 454 426 460 357 353 321 249 219

168 180 167 149 166 140 146

98 85 99

601 643 621 575 626 497 499

419 334 318

201514131211100908072006


€ 57.9

€ 35.8

3,114

1,442

201514131211100908072006

Commercial Sector Market Size (€B) Active Contracts

€ 6.3 € 7.5 € 7.2 € 7.8 € 7.7 € 6.9 € 5.4 € 7.1

€ 4.8 € 4.0

€ 3.1 € 2.7 € 2.2 € 2.3 € 3.5

€ 2.9 € 3.4

€ 1.9

€ 2.1 € 1.8

€ 9.4 € 10.1 € 9.4 € 10.1 € 11.2

€ 9.8 € 8.8 € 9.0

€ 7.0 € 5.9

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1Q to 3Q ACV 4Q ACV

€ 5.67

€ 3.70

€ 7.07

€ 2.30 € 1

€ 3

€ 5

€ 7

€ 9

€ 11

New Scope Restructuring ITO BPO

Range of Prior 4 Years Avg of Prior 4 Years2014 2015



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Most geographic markets decline from 2014 with the exception of DACH, which benefits from a few large awards. Financial Services declines relative to recent years.

EMEA Sub-Regions Full-Year ACV (€B)*

EMEA Industry Full-Year ACV (€B)*

EMEA Contract Award Trends Detail

€ 2.34 € 2.06

€ 1.32 € 1.30 € 0.89

€ 0.38 € 0.21 € 0.31 € 0.54 € 0.0 € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 € 3.0 € 3.5

FinancialServices

Manufacturing Energy Travel,Transport &

Leisure

Telecom &Media

BusinessServices

ConsumerPackaged

Goods

Retail Healthcare &Pharma

Range of Prior 4 Years Avg of Prior 4 Years 2014 2015

€ 2.85 € 2.83

€ 1.05 € 0.56 € 0.39 € 0.63 € 0.81

€ 0.26 € 0.0

€ 1.0

€ 2.0

€ 3.0

€ 4.0

€ 5.0

U.K. & Ireland DACH Nordics Benelux France SouthernEurope

Africa &Middle East

E. Europe &Russia




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Co. Revenues < $2 B Co. Revenues $2 -10 B

ISG Sourcing Market Standouts in EMEA All segment experience some turnover. Indra Sistemas joins the Building 10 group in both EMEA and Asia Pacific.

*New 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. Revenues sourced from Hoovers and individual company financial fillings

Co. Revenues > $10 B

SOURCING STANDOUTS GROUPED BY COMPANY SIZE

The Building 10 Sourcing Standouts

The Breakthrough 10 Sourcing Standouts

The Big 10 Sourcing Standouts

Accenture Atos BT

Capgemini Cognizant Ericsson*

HPE IBM TCS

T-Systems

Capita Ceva Logistics*

CGI Computacenter

HCL Indra Sistemas*

Infosys MITIE Serco Wipro

Firstsource Solutions* FleetCor*

InnerWorkings ISON Group

Luxoft MAYKOR Mindtree Transcom

Virtusa WNS



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Americas 4Q/Full-Year Counts

Americas Contract Award Trends

Americas 4Q/Full-Year ACV (€B)*

Americas Market Size Americas 4Q/Full-Year Segment ACV (€B)*

4Q15 ACV is flat Y/Y. 2015 ACV tied 2014 for the best year, driven by the stepped-up pace of restructurings.

€ 5.8 € 5.8 € 4.6 € 5.9 € 4.9

€ 6.5 € 5.4 € 3.9 € 3.7

€ 5.3

€ 2.1 € 2.1 € 1.3

€ 1.7 € 2.0

€ 0.9 € 1.9

€ 1.6 € 2.3 € 1.6

€ 7.9 € 7.9

€ 5.9

€ 7.6 € 6.9 € 7.5 € 7.3

€ 5.5 € 6.0 € 6.9

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1Q to 3Q ACV 4Q ACV

€ 42.4 € 40.9

2,899

1,587

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Commercial Sector Market Size (€B) Active Contracts

538 438 360 399 389 383 330 291 233 243

149 160

126 123 141 88 120 95 83 85

687 598

486 522 530 471 450 386

316 328

201514131211100908072006


€ 4.3 € 3.6

€ 5.4

€ 2.5

€ 1

€ 2

€ 3

€ 4

€ 5

€ 6





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For the second straight year the U.S. value and number of contract awards set all- time highs. Smaller industries, like Transportation and Retail, are standouts.

Americas Sub-Regions Full-Year ACV (€B)*

Americas Industry Full-Year ACV (€B)*

Americas Contract Award Trends Detail

€ 1.61 € 1.33

€ 0.78 € 0.91 € 0.83 € 0.64

€ 0.44 € 0.59 € 0.75

€ 0.0

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5

FinancialServices

Manufacturing Telecom &Media

Healthcare &Pharma

BusinessServices

Energy ConsumerPackaged

Goods

Retail Travel,Transport &

Leisure


€ 0.59

€ 0.19 € 0.07 € 0.12

€ 0.0

€ 0.2

€ 0.4

€ 0.6

€ 0.8

Canada Brazil Mexico Other LatAm


€ 6.9

€ 0 € 1 € 2 € 3 € 4 € 5 € 6 € 7 € 8

U.S.



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ISG Sourcing Market Standouts in the Americas The Building 10 Sourcing Standouts has no turnover for the second straight quarter. Sitel and Hinduja Global Solutions achieve Top 10 status in the Breakthrough group.







Accenture AT&T*

BT Capgemini Cognizant

Dell HPE IBM TCS

Xerox*

Aon Hewitt CGI

CompuCom Convergys Genpact

HCL Infosys

Tech Mahindra Teleperformance

Wipro

EXL Hinduja Global Solutions*

Luxoft Minacs

Mindtree SITEL*

Sutherland Global Syntel

UST Global Virtusa



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4Q15 ACV down 34% Y/Y with the continued absence of large awards. Annual results remain uneven Y/Y as ACV declines 33%, the lowest performance since 2006.

Asia Pacific 4Q/Full-Year Counts

Asia Pacific Contract Award Trends

Asia Pacific 4Q/Full-Year ACV (€B)*

Asia Pacific Market Size Asia Pacific 4Q/Full-Year Segment ACV (€B)*

119 122 112 128 126 107 103 82 73 67

38 48 31

40 27 44 46 40

22 28

157 170

143 168

153 151 149 122

95 95

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€ 1.35

€ 0.39

€ 1.29

€ 0.45

€ 0.0

€ 0.5

€ 1.0

€ 1.5

€ 2.0

€ 2.5



€ 1.3 € 2.0

€ 1.3 € 2.3

€ 1.4 € 1.1 € 1.8

€ 1.3 € 1.4 € 1.0

€ 0.4

€ 0.6

€ 0.5

€ 0.6

€ 0.5 € 0.9

€ 0.7 € 0.8 € 0.7

€ 0.3

€ 1.7

€ 2.6

€ 1.8

€ 2.8

€ 1.8 € 2.0

€ 2.5 € 2.1 € 2.0

€ 1.3

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1Q to 3Q ACV 4Q ACV

€ 14.4

€ 8.4

868

384

201514131211100908072006

Commercial Sector Market Size ($B)

Active Contracts



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The majority of sub-regions fell since 2014, with notable weakness in ANZ and India. Energy vertical activity is increasing, whereas most industries fell short.

Asia Pacific Sub-Regions Full-Year ACV (€B)*

Asia Pacific Industry Full-Year ACV (€B)*

Asia Pacific Contract Award Trends Detail

€ 0.56 € 0.49

€ 0.26 € 0.23 € 0.17 € 0.04 € 0.0

€ 0.3

€ 0.5

€ 0.8

€ 1.0

€ 1.3

ANZ India and South Asia Japan Greater China Southeast Asia South Korea


€ 0.37 € 0.40 € 0.25 € 0.28

€ 0.20 € 0.10 € 0.06 € 0.01 € 0.06 € 0.0

€ 0.2

€ 0.4

€ 0.6

€ 0.8

€ 1.0

FinancialServices

Telecom &Media

Manufacturing Travel,Transport &

Leisure

Energy BusinessServices

ConsumerPackaged

Goods

Healthcare &Pharma

Retail




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ISG Sourcing Market Standouts in Asia Pacific All Asia Pacific Top 10 segments experience turnover. For the second straight quarter, CSC plans to acquire a service provider from the Breakthrough 10 segment.







Accenture Canon*

Capgemini* Cognizant

Fujitsu Hitachi

HPE IBM TCS

Telstra*

CGI* Genpact

HCL Indra Sistemas*

Infosys NEC

Optus Orange Business Services*

Tech Mahindra Wipro

Aegis ChinaSoft

Hollysys Automation Minacs

Neusoft* Sutherland Global

TeleTech UXC

Vertex Xchanging*



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Special Topic for Fourth Quarter and Full-Year 2015

THE OUTCOME ECONOMY: 5 PRINCIPLES CHANGING SOURCING BUYING AND SELLING BEHAVIOUR

John Keppel Partner & President



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5 Principles to Embrace to Succeed in the Outcome Economy

Capture the cloud savings. $1 spent on cloud retires $4 of traditional spend. Custom is out. Fulfill the original

promise of outsourcing.

As technology and business process converge, look to automate accounting, HR, and IT. Systems managers make way for

solution integrators, ethicists, marketers and consumer advocates.

Focus on front office needs. Know your company’s core

products and services. Stay relevant by driving

competitive technology into the business.

Embrace a cannibalistic business model, moving away from employee assets towards automated solutions.

Know your client’s industry and core business needs. Excel at embedding tech into

your client’s products and services.

Sell multi-tenant solutions by repackage existing shared assets. Invest in shared specialist

resources across clients.

Software Replaces Labour

Multi-tenancy Delivers

Embedded Tech is the Goal



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Service Integration is Key

5 Principles to Embrace to Succeed in the Outcome Economy

Manage multiple internal and external providers across countless platforms. Focus on seamless, agile

delivery across all platforms, service models and providers.

Support your non-IT organizations who buy solutions without you. Their need for both speed and self-contained options make these solutions irresistible. Plan for the eventual need for

centralization to solve integration and interoperability problems.

Be an outstanding collaborator, not only with your clients, but with your competitors.

Change who you sell to, considering non-IT buyers in your plans.

Shadow IT Returns

TBM CM

SIAM



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Global Market has its best quarterly ACV in the past four years. EMEA 4Q results finish up, helped by several large mega-relationship

awards. Americas has a flat 4Q, and Asia Pacific was down markedly. For the year, the number of Broader Market awards sets an all-time

record, while Broader Market ACV finishes down slightly from 2014. Cloud, digital and automation drive down average award values and

contract durations, resulting in the lowest annual mega-relationship activity in 10 years.

Americas annual awards tied 2014 values for an all-time high, but EMEA and Asia Pacific suffer a weak start and never recovered.

Expect positive but modest 1H 2016 ACV growth on an easier 1H15 compare. Longer term, expect increased activity in the second half of 2016 across all

three regions. Award values will continue to trend down as companies demand more

technology at lower price points with shorter-term commitments.

4Q15 ISG Outsourcing Index® - Global Summary and Outlook

summary market

outlook market



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Please contact us with your questions and comments. Learn More

Paul Reynolds Partner

+1 508 625 2194 [email protected]

ISG insights serving providers and market analysts

www.isg-one.com

Denise Colgan EMEA and AP Media Contact

+44 1737 371523 [email protected]

Laura Mountain Cohn & Wolfe for ISG +44 (0) 20 7331 5372

[email protected]

John Keppel Partner and President +44 (0)7879 432 212

[email protected]

http://www.isg-one.com/

http://www.isg-one.com/connect/



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Fourth Quarter and Full-Year 2015 APPENDIX: SCORE CARD FOR TCV



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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.

Fourth Quarter and Full-Year 2015 TCV Scorecard

*Contracts with TCV ≥ €20 M from the ISG Contracts Knowledgebase®

Scorecard 4Q15 4Q Y/Y 4Q Q/Q 2015 Y/Y

TCV (€B)* Change Change TCV (€B)* Change

Global Market € 20.8 -14% 24% € 71.1 -21%

New Scope € 11.9 9% -3% € 48.3 -11%

Restructurings € 8.9 -34% 102% € 22.8 -36%

Mega-deals € 4.6 -49% 0% € 8.4 -60%

ITO € 15.9 -9% 56% € 50.8 -23%

BPO € 4.8 -28% -26% € 20.3 -15%

Americas € 7.4 -16% 20% € 25.5 -23%

EMEA € 12.3 -5% 41% € 38.7 -14%

Asia Pacific € 1.1 -57% -41% € 6.9 -41%



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Information Services Group (ISG) (NASDAQ: III) 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 to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise 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 and global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.

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Q4 2015 EMEA ISG Outsourcing Index

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