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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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At a Glance BROADER MARKET ACV COMES IS LIGHTER
DOWN 18% Y/Y AS MID-SIZE AND LARGER AWARDS FALL SHORT
WEAKNESS SPREAD BETWEEN NEW SCOPE AND RESTRUCTURING AWARDS
AMERICAS ACV UP 10% Y/Y WITH BPO, ENERGY, HEALTHCARE AND PHARMA SECTORS PARTICULARLY ACTIVE
EMEA ACV DOWN 26% Y/Y; DESPITE A STRONG SHOWING IN FINANCIAL SERVICES AND IN THE DACH MARKET; SLOWING IN THE UK AND FRANCE TURNED OVERALL RESULTS NEGATIVE
ASIA PACIFIC ACV DOWN 45% Y/Y; INDIA STEPS UP ITS CONTRACTING PACE WHILE ANZ REMAINED SLUGGISH
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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1Q15 Americas ACV are up 10% Y/Y with first quarter contract award counts up for the third straight year. BPO ACV, up 7% Y/Y, has its best quarter in two years.
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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Co. Revenues < $2 B Co. Revenues $2 -10 B
ISG Sourcing Market Standouts in the Americas Providers with substantial offshore profiles led in the Building tier. Several contact center firms are now positioned in the Breakthrough 10.
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
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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$1.7
$0.7
$1.8
$0.6
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
New Scope Restructuring ITO BPO
Range of 5 Prior 1Qs Avg of 5 Prior 1Qs1Q14 1Q15
EMEA ACV in 1Q15 fall 26% Y/Y as the region sees decreases in both Restructuring and New Scope awards. ITO ACV accentuates the decline, shrinking 36% Y/Y.
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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$0.75
$0.10
$0.65
$0.18
$0.50
$0.05 $0.16 $0.02
$0.0
$0.5
$1.0
$1.5
$2.0
U.K. & Ireland Nordics DACH France Benelux SouthernEurope
Africa & MiddleEast
E. Europe &Russia
Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15
$1.23
$0.32 $0.18 $0.15 $0.20
$0.04 $0.01 $0.17 $0.12
$0.0$0.2$0.4$0.6$0.8$1.0$1.2$1.4
FinancialServices
TravelTransport
Leisure
Manufacturing Telecom& Media
Energy BusinessServices
ConsumerProducts & Goods
Retail Healthcare& Pharma
Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15
Despite a strong showing in Financial Services and in the DACH market, slowing in the U.K. and a difficult comparison in France cause overall results to turn negative.
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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Co. Revenues < $2 B Co. Revenues $2 -10 B
ISG Sourcing Market Standouts in EMEA Large multinationals and providers with strong local “home market” profiles head up each of the service provider segments.
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
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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Co. Revenues < $2 B Co. Revenues $2 -10 B
ISG Sourcing Market Standouts in Asia Pacific Several Japanese providers joined the large multinationals in the Big 10 Sourcing Standouts list. Australian and India-based providers contributed greatly to the two smaller tiers.
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
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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Relative to the Commercial Sector, Public Sector ACV grows in the past five years. Most ACV is generated by ITO awards, with BPO ACV varying by geography.
Public Sector Trailing 12 Months Counts
Global Public Sector Award Trends
Public Sector Trailing 12 Months ACV ($B)*
Public Sector ITO vs. BPO TTM ACV ($B)* Public Sector Regional ITO vs. BPO % TTM ACV
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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North America, led by Defense and Healthcare spending, account for a large share of sourcing. Average ACV remains steady while durations fall.
Share of Public Sector ACV for Trailing 12 Months Top Public Sector Providers in Recent 12 Months*
Global Public Sector Award Trends Continued
67%
17% 7% 6% 2%
U.S. &Canada
U.K. ContinentalEurope
Australia Other
Global Average Deal Size and Duration Compare
3.81 4.15
3.12
4.36
$18.0 $19.2
$33.8 $31.5
2Q14 -1Q15
2Q13 -1Q14
2Q12 -1Q13
2Q11 -1Q12
2Q10 -1Q11
Commercial Sector Public Sector
*Service providers in alphabetical order; no rankings implied. Placements based on counts of public sector contract awards sourced from ISG Contracts Knowledgebase ®.
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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The ARC Effect Accelerates and Broadens Pricing Changes Automation, Robotics and Cloud (ARC) impact the managed service marketplace more rapidly and broadly than anticipated. Clients look to benchmarking to take advantage.
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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Providers Adjust – Talk of New Service Investments Abound Providers are trying to leverage what they have, protect existing revenues and invent their future businesses all at the same time – a significant challenge.
ARC leads to
supplant on-premises, fixed-pricing
models
Not just short-term contracts, but effectively pay-as-you-go models to ensure flexibility
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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As we forecast, Broader Market ACV fell short Y/Y even as smaller deal flow remained constant
Americas results stayed consistent as the U.S. and Canada and several industries (Energy and Healthcare/Pharmaceuticals) saw stepped-up activity
EMEA and Asia-Pacific fell back Y/Y as they struggled with difficult comparisons against a more robust quarter a year ago
Positive results in selected geographic markets like India and DACH and Financial Services in Europe were not enough to counterbalance declines in larger, more established sourcing markets like the U.K. and ANZ
We expect a difficult comparison in 2Q15 as markets such as France and Japan have tough targets to match
ACV should remain muted through the first half but we expect will turn more positive in 2H15 – especially with strength in verticals like Energy and Transportation, coupled with solid results in the larger sourcing markets like the U.S. and DACH
1Q15 ISG Outsourcing Index™ - Global Summary and Outlook
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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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.
First Quarter 2015 TCV Scorecard
*Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase®
*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®
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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 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 of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries.