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© 2016 Information Services
Group, Inc. All Rights Reserved
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*Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase®
1
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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*Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase®
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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
*Contracts with ACV ≥ €5M from the ISG Contracts Knowledgebase®
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
201514131211100908072006
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
1Q to 3Q Countd 4Q Counts
€ 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
201514131211100908072006
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
Range of Prior 4 Years Avg of Prior 4 Years 2014 2015
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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
201514131211100908072006
1Q to 3Q ACV 4Q ACV
€ 42.4 € 40.9
2,899
1,587
201514131211100908072006
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
1Q to 3Q Countd 4Q Counts
€ 4.3 € 3.6
€ 5.4
€ 2.5
€ 1
€ 2
€ 3
€ 4
€ 5
€ 6
New Scope Restructuring ITO BPO
Range of Prior 4 Years Avg of Prior 4 Years2014 2015
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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
Range of Prior 4 Years Avg of Prior 4 Years 2014 2015
€ 0.59
€ 0.19 € 0.07 € 0.12
€ 0.0
€ 0.2
€ 0.4
€ 0.6
€ 0.8
Canada Brazil Mexico Other LatAm
Range of Prior 4 Years Avg of Prior 4 Years 2014 2015
€ 6.9
€ 0 € 1 € 2 € 3 € 4 € 5 € 6 € 7 € 8
U.S.
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Co. Revenues < $2 B Co. Revenues $2 -10 B
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.
*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
The Building 10 Sourcing Standouts
The Breakthrough 10 Sourcing Standouts
The Big 10 Sourcing Standouts
Co. Revenues > $10 B
SOURCING STANDOUTS GROUPED BY COMPANY SIZE
Accenture AT&T*
BT Capgemini Cognizant
Dell HPE IBM TCS
Xerox*
Aon Hewitt CGI
CompuCom Convergys Genpact
HCL Infosys
Tech Mahindra Teleperformance
Wipro
EXL Hinduja Global Solutions*
Luxoft Minacs
Mindtree SITEL*
Sutherland Global Syntel
UST Global Virtusa
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4Q15 ACV down 34% Y/Y with the continued absence of large awards. Annual results remain uneven Y/Y as ACV declines 33%, the lowest performance since 2006.
Asia Pacific 4Q/Full-Year Counts
Asia Pacific Contract Award Trends
Asia Pacific 4Q/Full-Year ACV (€B)*
Asia Pacific Market Size Asia Pacific 4Q/Full-Year Segment ACV (€B)*
119 122 112 128 126 107 103 82 73 67
38 48 31
40 27 44 46 40
22 28
157 170
143 168
153 151 149 122
95 95
201514131211100908072006
1Q to 3Q Countd 4Q Counts
€ 1.35
€ 0.39
€ 1.29
€ 0.45
€ 0.0
€ 0.5
€ 1.0
€ 1.5
€ 2.0
€ 2.5
New Scope Restructuring ITO BPO
Range of Prior 4 Years Avg of Prior 4 Years2014 2015
€ 1.3 € 2.0
€ 1.3 € 2.3
€ 1.4 € 1.1 € 1.8
€ 1.3 € 1.4 € 1.0
€ 0.4
€ 0.6
€ 0.5
€ 0.6
€ 0.5 € 0.9
€ 0.7 € 0.8 € 0.7
€ 0.3
€ 1.7
€ 2.6
€ 1.8
€ 2.8
€ 1.8 € 2.0
€ 2.5 € 2.1 € 2.0
€ 1.3
201514131211100908072006
1Q to 3Q ACV 4Q ACV
€ 14.4
€ 8.4
868
384
201514131211100908072006
Commercial Sector Market Size ($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
Range of Prior 4 Years Avg of Prior 4 Years 2014 2015
€ 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
Range of Prior 4 Years Avg of Prior 4 Years 2014 2015
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Co. Revenues < $2 B Co. Revenues $2 -10 B
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.
*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 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
John Keppel Partner and President +44 (0)7879 432 212
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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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