Q1 2015 ISG Outsourcing Index EMEA
1 like•517 views
The document discusses quarterly outsourcing market data for EMEA from the ISG Outsourcing Index for the first quarter of 2015. Global ACV was down 18% year-over-year as mid-size and large contracts fell short. EMEA ACV declined 26% year-over-year due to decreases in both new scope and restructuring awards, with the UK, Nordics, and France slowing. Strength was seen in financial services and the DACH market.
Q1 2015 ISG Outsourcing Index EMEA
- 1. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 1 Hosted by: James Goodman Barclays Capital 20th April 2015 The ISG Outsourcing Index™ First Quarter 2015 EMEA Market Data and Insights
- 2. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 2 Covering the state of the outsourcing industry for EMEA commercial contracts.* Welcome to the 50th Quarterly ISG Outsourcing Index™ Review Bernd Schaefer Partner John Keppel Partner & President Dr. David Howie Partner *Contracts with ACV ≥ €5M from the ISG Contracts Knowledgebase®
- 3. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 3 At a Glance GLOBAL MARKET ACV COMES IN 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, NORDICS AND FRANCE TURNED OVERALL RESULTS NEGATIVE ASIA PACIFIC ACV DOWN 45% Y/Y; INDIA STEPS UP ITS CONTRACTING PACE WHILE ANZ REMAINED SLUGGISH Scorecard 1Q15 1Q Y/Y 1Q Q/Q 1Q15 1Q Y/Y 1Q Q/Q ACV (€B)* Change Change Counts Change Change Global Market € 4.1 -18% -22% 305 -7% -16% New Scope € 2.5 -19% -7% 213 0% -11% Restructurings € 1.6 -16% -39% 92 -20% -26% Mega-relationships € 1.0 -32% -34% 8 -27% -11% ITO € 2.8 -27% -26% 201 -16% -21% BPO € 1.3 13% -12% 104 18% -4% Americas € 1.8 10% -13% 143 27% -8% EMEA € 1.9 -26% -29% 128 -24% -23% Asia Pacific € 0.4 -45% -19% 34 -24% -15%
- 4. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 4 As we forecast last quarter, 1Q15 Global ACV declines, down 18% Y/Y, as midsize and larger awards fall short. Global Market Quarterly ACV (€B)* Global Market Quarterly Contract Counts Global Market Contract Award Trends $4.1 $5.2$4.9$4.8 $5.6 $4.8 1Q151Q141Q131Q121Q11 305 363 327308 360379 1Q151Q141Q131Q121Q11 - 50 100 150 200 250 300 350 400
- 5. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 5 EMEA ACV in 1Q15 falls 26% Y/Y as the region sees decreases in both Restructuring and New Scope awards. ITO ACV accentuates the decline, shrinking 36% Y/Y. EMEA Quarterly Counts EMEA Contract Award Trends EMEA Quarterly ACV (€B)* Like-Quarter Segment Details ACV (€B)*EMEA Trailing 12 Months ACV (€B)* 128 169 143 153 181 1Q151Q141Q131Q121Q11 - 40 80 120 160 200 € 1.9 € 2.6 € 2.2 € 2.7 € 2.5 1Q151Q141Q131Q121Q11 € 0.0 € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 € 3.0 € 3.5 € 4.0 € 9.3€ 9.7€ 9.3 € 11.4 € 9.3 569 629 541 593 553 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 ACV Counts € 1.4 € 0.5 € 1.4 € 0.5 € - € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 New Scope Restructuring ITO BPO Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15
- 6. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 6 € 0.60 € 0.08 € 0.52 € 0.15 € 0.40 € 0.04 € 0.13 € 0.02€ 0.00 € 0.20 € 0.40 € 0.60 € 0.80 € 1.00 € 1.20 € 1.40 U.K. & Ireland Nordics DACH France Benelux Southern Europe Africa & Middle East E. Europe & Russia Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15 € 0.99 € 0.25 € 0.15 € 0.12 € 0.16 € 0.03 € 0.01 € 0.13 € 0.10 € 0.0 € 0.2 € 0.4 € 0.6 € 0.8 € 1.0 € 1.2 Financial Services Travel Transport Leisure Manufacturing Telecom & Media Energy Business Services Consumer Products & 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. & Nordics plus a difficult compare in France pull down the market. EMEA Sub-regions Like-Quarter ACV (€B)* EMEA Industry Like-Quarter ACV (€B)* EMEA Contract Award Trends Detail
- 7. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 7 Co. Revenues < $2 BCo. 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 Co. Revenues > $10B SOURCING STANDOUTS GROUPED BY COMPANY SIZE Cognizant Capita CGI EVRY HCL Infosys MITIE Serco Tieto Wipro Accenture Atos Balfour Beatty BT Capgemini Fujitsu HP IBM TCS T-Systems Endava HH Global IGATE InnerWorkings Kuehne & Nagel Luxoft MAYKOR Mindtree NNIT A/S Xchanging The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts
- 8. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 8 1Q15 Americas ACV is up 10% Y/Y with first quarter counts up 27% Y/Y. BPO ACV, up 7% Y/Y, has its best quarter in two years. Americas Quarterly Counts Americas Contract Award Trends Americas Quarterly ACV (€B)* Like-Quarter Segment Details ACV (€B)*Americas Trailing 12 Months ACV (€B)* 143 113131 174 146 1Q151Q141Q131Q121Q11 - 50 100 150 200 € 1.8 € 1.5 € 2.1 € 2.4 € 1.7 1Q151Q141Q131Q121Q11 € 0.0 € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 € 3.0 € 7.3 € 5.2 € 7.0€ 7.5 € 6.6 585 454470 555 457 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 ACV Counts € 0.8 € 1.0 € 1.0 € 0.8 € 0.5 € 0.7 € 0.9 € 1.1 € 1.3 € 1.5 € 1.7 € 1.9 New Scope Restructuring ITO BPO Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15
- 9. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 9 1Q15 ACV increases due to strength in the major markets of U.S. and Canada. Healthcare & Pharmaceutical and Energy sectors are particularly active. Americas Sub-regions Like-Quarter ACV (€B)* Americas Industry Like-Quarter ACV (€B)* Americas Contract Award Trends Detail € 0.27 € 0.30 € 0.19 € 0.32 € 0.11 € 0.09 € 0.25 € 0.05 € 0.10 € 0.0 € 0.2 € 0.4 € 0.6 € 0.8 Manufacturing Financial Services Telecom & Media Healthcare & Pharma Business Services Retail Energy Consumer Products & Goods Travel Transport Leisure Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15 € 0.18 € 0.01 € 0.00 € 0.02 € 0.00 € 0.05 € 0.10 € 0.15 € 0.20 € 0.25 Canada Brazil Mexico Other LatAm Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15 € 1.47 € - € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 U.S.
- 10. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 10 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in the Americas Providers with substantial offshore profiles led in the Building tier. Several contact centre 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 The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts Aon Hewitt CBRE CGI Cognizant CompuCom Genpact HCL Infosys Teleperformance Wipro Accenture Atos BT Capgemini Dell IBM RR Donnelley State Street TCS Xerox Alorica APAC Customer Services EXL Firstsource Solutions ICF International IGATE KPIT Technologies Luxoft Syntel TeleTech The Big 10 Sourcing Standouts Co. Revenues > $10B SOURCING STANDOUTS GROUPED BY COMPANY SIZE
- 11. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 11 € 0.33 € 0.10 € 0.40 € 0.03€ 0.0 € 0.2 € 0.4 € 0.6 € 0.8 New Scope Restructuring ITO BPO Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15 Asia Pacific 1Q15 ACV is down 45% Y/Y versus a robust quarter a year ago. Contract counts are down 24% Y/Y yet are in line with 1Q12 and 1Q13. Asia Pacific Quarterly Counts Asia Pacific Contract Award Trends Asia Pacific Quarterly ACV (€B)* Like-Quarter Segment Details ACV (€B)*Asia Pacific Trailing 12 Months ACV (€B)* 34 45 34 33 52 1Q151Q141Q131Q121Q11 - 10 20 30 40 50 60 € 0.43 € 0.78 € 0.44€ 0.43 € 0.58 1Q151Q141Q131Q121Q11 € 0.0 € 0.2 € 0.4 € 0.6 € 0.8 € 1.0 € 1.2 € 2.1€ 2.0 € 2.8 € 1.7 € 2.2 139141 169 135 166 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 ACV Counts
- 12. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 12 € 0.14 € 0.02 € 0.08 € 0.10 € 0.05 € 0.00 € 0.02 € 0.03 € 0.00€ 0.00 € 0.05 € 0.10 € 0.15 € 0.20 € 0.25 € 0.30 Financial Services Manufacturing Telecom & Media Travel Transport Leisure Energy Business Services Consumer Products & Goods Retail Healthcare & Pharma Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15 India steps up its contracting pace. However, ANZ remains sluggish, holding back overall regional results. Asia Pacific Sub-regions Like-Quarter ACV (€B)* Asia Pacific Industry Like-Quarter ACV (€B)* Asia Pacific Contract Award Trends Detail € 0.02 € 0.24 € 0.08 € 0.06 € 0.01 € 0.02€ 0.00 € 0.05 € 0.10 € 0.15 € 0.20 € 0.25 € 0.30 ANZ India and South Asia Japan Greater China Southeast Asia South Korea Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q14 1Q15
- 13. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 13 Co. Revenues < $2 BCo. 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 Co. Revenues > $10B SOURCING STANDOUTS GROUPED BY COMPANY SIZE Cognizant HCL Infosys NEC Orange Business Services Tech Mahindra Transfield Services Unisys United Group Services Wipro Accenture BT Fujitsu HP Hitachi IBM NTT Data Ricoh TCS Ericsson Aegis Limited ChinaSoft Hollysys Automation Itron Kratos Defense & Security NGA Human Resources Ramco SITA Vertex Group WNS The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts
- 14. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 14 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 1,293 1,224 1,1801,2831,176 1,400 1,188 978891876 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 Commercial Sector Public Sector 88% 36% 91% 38% 12% 64% 9% 62% U.S. & Canada U.K. Continental Europe Australia ITO BPO € 28.7 € 24.0 € 16.7 € 14.4 € 16.5 € 9.1€ 7.1€ 5.5€ 5.7€ 5.5 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 Public Sector ITO ACV Public Sector BPO ACV $18.7 $37.8 $31.1 $22.1$20.1$22.1 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 Commercial Sector Public Sector
- 15. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 15 North America, led by Defence 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. Continental Europe Australia Other Global Average Deal Size and Duration Compare 3.814.15 3.12 4.36 *Service providers in alphabetical order; no rankings implied. Placements based on counts of public sector contract awards sourced from ISG Contracts Knowledgebase ®. Accenture BT Capita Carillion CGI CSC HP Accenture Atea Atos Capgemini CGI HP IBM Indra Sistemas Serco Accenture Boeing Fujitsu Harris Corp. IBM NEC Corp. Serco Avg. Duration in Yrs. Avg. Contract Value (€K) U.S. & Canada Asia Pacific U.K. Continental Europe General Dynamics L-3 Communications Leidos Holdings Lockheed Martin Northrop Grumman Raytheon Science Applications € 14.4€ 15.4 € 27.0€ 25.2 2Q14 - 1Q15 2Q13 - 1Q14 2Q12 - 1Q13 2Q11 - 1Q12 2Q10 - 1Q11 Commercial Sector Public Sector
- 16. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 16 Special Topic for First Quarter 2015 THE COMPOUNDED IMPACT OF AUTOMATION, ROBOTICS AND CLOUD – THE ARC HEIGHTENS SOURCING PRICE WARS John Keppel Partner & President
- 17. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 17 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. obotics utomation Most Recent loud ? SaaSPaaS IaaS A Buyer’s Market reveals price declines more than 20% in some cases Stirring Up the Status Quo
- 18. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 18 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 $4 $1 revenue is replaced with only $1 of cloud-based revenue ? $3 to $4 dollars in hardware/software Significant Provider Challenge
- 19. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 19 As we forecast, Global 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 summary market outlook market
- 20. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 20 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 Dr. David Howie Partner +44 7789 771 665 [email protected] Denise Colgan EMEA and AP Media Contact +44 1737 371523 [email protected] Rob Arnott Cohn & Wolfe for ISG +44 (0) 20 7331 5363 [email protected]
- 21. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 21 First Quarter 2015 APPENDIX: SCORE CARD FOR TCV
- 22. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 22 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® Scorecard 1Q15 1Q Y/Y 1Q Q/Q 1Q15 1Q Y/Y 1Q Q/Q TCV (€B)* Change Change Counts Change Change Global Market € 17.9 -17% -25% 305 -7% -16% New Scope € 12.8 -8% 13% 213 0% -11% Restructurings € 5.1 -32% -60% 92 -20% -26% Mega-deals € 3.5 40% -61% 8 -27% -11% ITO € 13.4 -14% -23% 201 -16% -21% BPO € 4.5 -23% -32% 104 18% -4% Americas € 5.6 -14% -29% 143 27% -8% EMEA € 10.1 -10% -26% 128 -24% -23% Asia Pacific € 2.2 -42% -11% 34 -24% -15%
- 23. © 2015 Information Services Group, Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 23 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. knowledge powering results® www.isg-one.com