EMEA Sourcing and As-A-Service Market Insights FOURTH QUARTER and FULL YEAR 2018

EMEA Sourcing and As-a-Service Market Insights FOURTH QUARTER AND FULL YEAR 2018

Hosted by: John King, Bank of America, Merrill Lynch January 16, 2019

ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc. Steve Hall Partner and President Welcome ISG to the 65th Barry Matthews Quarterly Partner North Europe ISG ISG Index Phil Scone Covering the state of the Director combined Traditional Sourcing ISG and As-a-Service industry for the global commercial market.

ITO/BPO Services Projected As-a-Service Projected 3-Year CAGR: 4.5% 3-Year CAGR: 25%

Labor Market Tightness: European Tribulations: US 3Q GDP Advanced Trade/Tariff Turbulence: EU Rate of 6.7% France’s Anti-Macron Riots, an Annualized 3.4% US Trade Deficit Is Lowest Since 2000; Italian Debt & UK Delaying While Emerging With China Approaches US Unemployment Parliamentary Vote Markets Suffer From € 320 Billion Rate of 3.7%, on Brexit Deal China Slowdown for 2018 Lowest Since 1960

Volatile Equity Central Banks Foreign Exchange Markets: Tightening: US Fed Volatility: Strengthening Nasdaq Declines Benchmark Funds Rate Dollar Versus British 15%-20% Off Up to 2.5% With Pound and All-Time High 2 More Hikes Other Currencies Expected in 2019

3 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved 4Q18 ACV up 18% Y/Y with As-a-Service establishing new highs; Traditional Sourcing ACV up slightly At a Glance on record number of contract awards. EMEA ACV up slightly Y/Y; As-a-Service exceeds € 1.2B for the third straight quarter; Traditional Sourcing Scorecard 4Q18 4Q Y/Y Full Year Full Year declines Y/Y on weakness in UK and DACH. ACV (€ B)* Change ACV (€ B)* Change Americas ACV produced best quarter ever; Global Commercial Combined Market € 9.8 18% € 38.2 18% As-a-Service continues quarterly record-setting pace; By Type Traditional Sourcing € 5.1 2% € 20.8 2% Traditional Sourcing up 9% Y/Y with strong results As-a-Service € 4.7 44% € 17.4 43% in Applications and several BPO functions. By Region EMEA Combined € 3.0 5% € 12.9 9% Americas Combined € 5.4 23% € 20.0 21% Asia Pacific up significantly Y/Y; As-a-Service ACV remains above $1B, accounting for over Asia-Pacific Combined € 1.4 35% € 5.4 30% 60% of market; Traditional Sourcing rebounds, up 20% on strong results in ANZ and Japan. *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase™ By total contracts awarded, 2018 was the most bullish year in outsourcing history; ITO and BPO also reached all-time highs.

4 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Global Commercial Sector Contracting Trends 4Q18 Combined Market ACV up 18% Y/Y with As-a-Service sector reaching new heights and Traditional Sourcing up 2% Y/Y; full-year 2018 Combined Market at record levels driven by 40% As-a-Service growth, while Traditional Sourcing remains in a tight range.

Global Combined Market Quarterly ACV (€ B)

Traditional Sourcing As-a-Service

10.0 9.8 9.0 9.4 8.2 8.5 7.7 7.9 8.3 7.0 6.7 7.4 6.9 7.4 7.4 6.2 4.4 2.1 2.9 3.8 4.6 4.7 1.7 2.2 2.9 3.1 3.3 1.8 1.9 2.2 2.6 2.8 6.1 4.5 5.4 4.8 5.3 4.6 4.8 4.6 5.6 4.8 4.8 5.0 5.3 5.6 4.8 5.1

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Global Commercial Sector Full Year ACV (€ B) Global Commercial Sector Full Year ACV by Type (€ B)

Traditional Sourcing As-a-Service 38.2 2016 2017 2018 32.4 29.1 17.4 12.2 9.8 15.4 16.0 5.5 13.8 4.9 4.8 4.8 12.6 3.6 3.6 19.4 20.2 20.8 8.6 6.2

2016 2017 2018 ITO BPO Saas IaaS

5 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved EMEA Commercial Sector Contracting Trends 4Q18 Combined Market ACV up 5% Y/Y as strength in As-a-Service was weighed down by 12% Y/Y decline in Traditional Sourcing. Full-year 2018 Combined Market ACV driven by 40%+ growth in SaaS and IaaS; Traditional Sourcing down 7% on weakness in BPO.

EMEA Commercial Sector Quarterly ACV (€ B)

Traditional Sourcing As-a-Service

3.8 3.8 3.7 3.0 3.1 3.0 3.3 2.8 2.8 0.6 3.0 0.8 2.8 2.9 3.0 2.5 2.6 1.3 0.5 0.5 0.5 0.6 0.7 0.8 2.2 1.3 0.5 0.6 0.9 1.0 1.3 3.2 3.0 0.9 2.6 2.5 2.4 2.0 2.3 2.3 2.0 2.2 2.2 1.9 1.8 2.0 1.3 1.7

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

EMEA Commercial Sector Full Year ACV (€ B) EMEA Commercial Sector Full Year ACV by Type (€ B)

Traditional Sourcing As-a-Service 2016 2017 2018

11.7 11.8 12.9 6.6 6.3 6.4 2.4 3.3 4.9 1.2 3.7 9.3 8.5 8.0 2.6 0.8 0.9 2.5 2.2 1.5 1.7 2016 2017 2018 ITO BPO SaaS IaaS

6 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved EMEA Commercial Sector Industry Award Trends As-a-Service ACV grows across all sectors. Financial Services leads among industry verticals with growth in Traditional Sourcing and As-a- Service. Manufacturing , Retail and Healthcare & Pharma also post growth in both measures.

EMEA Commercial Industries YTD ACV (€ B)

Traditional Sourcing As-a-Service

3.48

2.98 2.80 0.78

0.34 0.51 2.20 2.04 0.35 1.57 1.71 1.61 1.66 1.41 0.18 0.74 1.42 1.37 1.40 1.21 1.20 0.25 1.06 0.13 2.70 0.51 0.31 1.03 1.08 2.46 2.47 0.34 0.49 1.12 0.24 0.75 0.77 1.85 0.60 0.26 0.59 0.74 0.53 0.59 1.53 0.53 0.57 0.48 0.38 0.45 1.42 1.28 0.40 1.10 1.30 0.34 1.11 0.31 0.96 0.28 0.19 1.03 0.91 0.22 0.23 0.26 0.82 0.47 0.47 0.45 0.17 0.41 0.43 0.55 0.21 0.31 0.28 0.30 0.29 0.35 0.19 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018

Business Consumer Financial Healthcare Telecom Travel, Transport Manufacturing Services Packaged Goods Energy Services & Pharma Retail & Media & Leisure

7 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved EMEA Sub-Regions - Traditional Sourcing Only Macro-economic factors dragged Traditional Sourcing ACV in the UK, DACH and France in 2018. The Nordics and the smaller sub-regional markets posted gains on the back of robust contracting activity.

EMEA Commercial Sector Full Year ACV by Type (€ B)

2016 2017 2018

€ 3.46

€ 2.77 € 2.61 € 2.53

€ 2.06 € 1.97

€ 1.18 € 1.19 € 1.05 € 0.72 € 0.87 € 0.45 € 0.36 € 0.66 € 0.38 € 0.39 € 0.62 € 0.64 € 0.57 € 0.35 € 0.19 € 0.16 € 0.39 € 0.11

UK & Ireland DACH Nordics Africa & Middle East France Southern Europe Benelux Eastern Europe

8 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the EMEA contracts awarded in the past 12 months. Providers in alphabetical order; no rankings implied. Revenues ISG15 Sourcing Standouts sourced from Hoovers and individual company financial fillings. * New to leaderboard since 3Q18.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > $10 BCo. Revenues $3 - $10 B Co. Revenues $1 - $3 B Co. Revenues < $1 B

Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Accenture Amdocs * Alten SA Allgeier SE Atos Bechtle Altran Bouvet ASA BT CGI Asseco * Comarch Capgemini Computacenter Axians Comparex AG CBRE Econocom Cancom Datagroup * Cognizant HCL Technologies Diebold Nixdorf Ibermatica SA DXC Technology Indra Sistemas EVRY ASA Luxoft IBM Orange Business Services GFI Informatique Mindtree Infosys Serco Group Giesecke & Devrient NNIT A/S ISS A/S * SopraSteria JLL QIWI * TCS Tech Mahindra Mitie * Reply SpA Wipro Tieto SVA System Vertrieb Alexander * As-a-Service Market Unisys Virtusa Amazon Web Services As-a-Service Market Webhelp Google Adobe Systems As-a-Service Market Microsoft Equinix As-a-Service Market Interxion SAP United Internet Autodesk * OVH

9 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Americas Commercial Sector Contracting Trends 4Q18 Combined Market ACV up 23% Y/Y supported by 45%+ growth in As-a-Service and nearly 10% growth in Traditional Sourcing; full-year 2018, Combined Market ACV up 21% on record highs in Traditional Sourcing and As-a-Service ACV.

Americas Commercial Sector Quarterly ACV (€ B)

Traditional Sourcing As-a-Service 5.4 5.0 4.9 4.6 4.4 4.7 3.7 3.7 3.9 3.4 3.6 3.6 3.3 3.6 2.0 2.6 3.2 1.7 2.4 2.8 1.8 2.2 1.0 1.3 1.3 1.4 1.6 1.7 1.2 1.4 1.6 1.0 2.9 3.0 2.9 2.4 2.4 2.6 2.5 2.5 2.3 2.2 2.1 2.2 1.8 2.0 1.9 2.0

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Americas Commercial Sector Full Year ACV (€ B) Americas Commercial Sector Full Year ACV by Type (€ B)

Traditional Sourcing As-a-Service 2016 2017 2018

7.9 7.4 20.0 16.5 6.1 6.2 14.2 9.2 4.3 5.7 6.7 2.9 3.0 3.3 2.42.3 2.4 2.4 8.5 9.8 10.8

2016 2017 2018 ITO BPO SaaS IaaS

10 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Asia Pacific Commercial Sector Contracting Trends 4Q18 Combined Market ACV rebounds, up 35%; both Traditional Sourcing and As-a-Service segments up 35%+; full-year 2018, Combined Market ACV up 30% with As-a-Service ACV doubling in past two years; Traditional Sourcing ACV up 3%, remaining in a tight range.

Asia Pacific Commercial Sector Quarterly ACV (€ B)

1.54 Traditional Sourcing As-a-Service 1.48 1.20 1.22 1.07 1.09 1.11 0.87 0.88 0.81 0.83 0.83 0.90 0.72 0.75 0.72 0.81 0.73 0.56 0.52 0.61 0.84 0.22 0.22 0.73 0.26 0.29 0.34 0.39 0.45 0.66 0.34 0.46 0.64 0.67 0.59 0.55 0.58 0.46 0.46 0.49 0.48 0.38 0.42 0.38 0.38 0.38 0.27

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

Asia Pacific Commercial Sector Full Year ACV (€ B) Asia Pacific Commercial Sector Full Year ACV by Type (€ B)

Traditional Sourcing As-a-Service 2016 2017 2018

5.36 2.83 4.10 3.18 3.35 1.79 2.15 1.49 1.62 1.52 1.16 0.50 0.46 0.52 1.16 0.39 0.36 0.36 1.66 1.95 2.01

2016 2017 2018 ITO BPO SaaS IaaS

Life Sciences

Barry Matthews Partner, North Europe ISG

EMEA 4Q18 Life Sciences: Industry Trends Life Sciences has tended to lag behind other regulated industries in taking advantage of efficiencies available through automation, but that is now changing.

Pre-clinical and Clinical Trials Leading biopharma innovators are exploring AI to manage and evaluate data and increase Regulatory Considerations operational efficiency Recent track and trace regulations are leading pharma companies to invest Research and Development in serialization solutions and investigate AI being used to automate and improve opportunities to use blockchain throughput and accuracy of Discovery and Development

Healthcare Providers Major institutions using blockchain Manufacturing and Distribution for managing and sharing electronic Blockchain for securing payments, inventory health records management; adoption still early among Manufacturers and Distributors Consumer Interactions Growing adoption of wearables to keep track of patient health

13 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Life Sciences: Technology Drivers Clients are investing heavily in improving the efficiency of drug development through the use of several digital enablers.

Going Virtual a Reality Digital Supply Blockchain Technology and Life in Clinical Trials Networks (DSN) Sciences Innovation Level Very Low Low Medium High Very High Very Low Low Medium High Very High Very Low Low Medium High Very High Adoption

AI in Drug Discovery Regulations Driving Other Emerging and Drug Track and Trace Technologies Development Serialization Market Level Very Low Low Medium High Very High Very Low Low Medium High Very High Very Low Low Medium High Very High Adoption

Historical Adoption (24-36 months) Source: ISG Research Current Adoption

14 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Life Sciences: Service Provider Opportunities Clients aren’t totally moving away from traditional areas, but are looking for more efficient solutions with Pharmacovigilance being an early focus.

MORE SPENDING ON R&D Life Sciences enterprises look IS RESULTING IN GROWING OPPORTUNITIES to Service Providers for system TO AUTOMATE WITH AI AND RPA integrations, best practices, technology skills and strategic relationships. R&D 70 spending $B Providers with System Integration and increased Automation and Robotics Solutions 45 coupled with Cloud Expertise are set $B to capture significant new revenue +55% in the digital-enabled world. 2010 2017

Agile and DevOps

Phil Scone Director, ISG

EMEA 4Q18 Agile and DevOps: What’s Changing? Requires cultural and organizational transformation, but changes are occurring rapidly.

Agile Agree that Agile is part of their • Interaction over process 49% of companies company culture • Working software over comprehensive documentation • Collaboration over contracts • Responds to change Agree their technology platform 52% supports their of companies business needs DevOps • Combines functions of software development and IT operations to create better Agree that they applications and systems 59% can create new • Automation can make things of companies products faster faster and more consistent

Source: ISG Insights 2018 Agile and DevOps in Enterprise Study, n=322 17 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Agile and DevOps: Adoption Trends Enterprise adoption varies by region and industry vertical.

AGILE ENABLES PROVIDERS ›› TO DEPLOY SOFTWARE FASTER

BFSI companies value Enterprise Agility. The BFSI sector is not replacing legacy systems but is instead launching new platforms along side them.

American companies have European companies are lagging higher levels of automation in automation adoption and in their software have exhibited organizational development lifecycle. resistance to change.

Source: ISG Insights 2018 Agile and DevOps in Enterprise Study, n=322 18 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Agile and DevOps: Service Provider Impact More enterprises are wanting to incorporate Agile and DevOps but are Service Providers ready to meet those needs?

ENTERPRISE SERVICE NEED FOR PROVIDER AGILE AND CAPABILITIES DEVOPS

Resources don’t have to be co-located. Globally distributed Agile, which is using Agile principles but doing it with resources across different time incorporated story zones, is growing rapidly, and based on our pods points in contracts experience with clients, it works.

Source: ISG Insights 2018 Agile and DevOps in Enterprise Study, n=322 19 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved 4Q 2018 ISG Index – Global Summary and Outlook

● Macro forces are more volatile than a year ago but the demand environment remains quite strong. ● Each region generated highs in Combined Market ACV; path to achieve growth was different for each. Summary ● As-a-Service segment saw record highs in each region for 2018; growth led by Asia Pacific and EMEA. ● In Traditional Sourcing, the Americas saw record-setting highs in 2018 on strength in Applications and BPO; Asia Pacific saw marginal gains with strength in the South Korea/Japan corridor; EMEA fell back with pockets of weakness in the UK, Telco and Energy and the BPO market.

● For the overall As-a-Service market, we forecast a 25% blended growth rate with Public Cloud Infrastructure growing at 42% and SaaS projected up 17%. Outlook ● Even with ongoing macro-economic challenges in 2019, digital tailwinds will continue to push the Traditional Sourcing market forward at a 4.5% growth rate.

Steven Hall Will Thoretz Denise Colgan President, ISG EMEA Americas Media Contact EMEA and AP Media Contact and Partner, ISG Digital Services +1 203 517 3119 +44 1737 371523 +44 7384 259676 [email protected] [email protected] [email protected] isg-one.com

Esteban Herrera Stanton Jones Paul Reynolds Partner, Global Leader Director, Principal Analyst Partner, Chief Research Officer ISG Research ISG Research ISG Momentum +1 972 730 1749 +1 281 795 2636 +1 508 488 6361 [email protected] [email protected] [email protected]

FOURTH QUARTER 2018

GLOBAL 4Q16

EMEA 4Q18 4Q 2018 TCV Scorecard The ISG 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.

4Q18 4Q Y/Y Full Year Y/Y Scorecard TCV (€ B)* Change TCV (€ B)* Change

Global Commercial Combined Market € 24.2 -6% € 95.4 1%

By Type Traditional Sourcing € 17.0 -18% € 68.5 -9% As-a-Service € 7.3 42% € 27.0 40% ITO €10.2-29% €49.6 -6% BPO €6.7 5% €18.9-17% IaaS €3.4 45% €12.6 47% SaaS €3.8 40% €14.3 34% By Region EMEA Commercial € 7.8 -22% € 35.8 -8% Americas Commercial € 13.4 2% € 49.0 10% Asia Pacific Commercial € 3.0 8% € 10.6 -3%

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

23 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the AMERICAS contracts awarded in the past 12 months. Providers in alphabetical order; no rankings implied. Revenues ISG15 Sourcing Standouts sourced from Hoovers and individual company financial fillings. * New to leaderboard since 3Q18.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > $10 BCo. Revenues $3 - $10 B Co. Revenues $1 - $3 B Co. Revenues < $1 B

Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Accenture Alliance Data Systems ASGN Incorporated Birlasoft/KPIT BNY Mellon Alorica * Diebold Nixdorf EXL Capgemini Cerner Corporation Genpact FirstSource Solutions CBRE Conduent Groupe Acticall * Hexaware Cognizant First Data InnerWorkings * Luxoft DXC Technology FIS Global * LTI Mindtree IBM HCL Technologies Mphasis StarTek Infosys OptumInsight Pitney Bowes Virtusa NTT DATA Tech Mahindra TTEC TCS Total System Services Unisys As-a-Service Market Wipro WEX Blackbaud As-a-Service Market Worldpay CyrusOne Amazon Web Services As-a-Service Market IPSoft Google As-a-Service Market Autodesk * LogMeIn Microsoft Adobe Systems Digital Realty Proofpoint * Oracle Equinix ServiceNow RealPage Salesforce Iron Mountain Workday RingCentral *

24 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the Asia Pacific contracts awarded in the past 12 months. Providers in alphabetical order; no rankings implied. Revenues ISG15 Sourcing Standouts sourced from Hoovers and individual company financial fillings. * New to leaderboard since 3Q18.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > $10 BCo. Revenues $3 - $10 B Co. Revenues $1 - $3 B Co. Revenues < $1 B

Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Traditional Sourcing Market Accenture Amdocs Chinasoft Aspen Technology CBRE CGI Diebold Nixdorf * Beyondsoft Cognizant First Data Digital China Chinasoft DXC Technology HCL Technologies Genpact CSG Systems Hitachi * IT Holdings (TIS) JLL Datacom IBM ITOCHU Techno-Solutions Konica Minolta Fuji Soft Infosys JLL * Nihon Unisys HGS * NTT Data Nomura Research Institute Sumitomo SCSK Luxoft TCS * Sabre Sutherland Global Services Neusoft Samsung SDS transcosmos PLDT As-a-Service Market Tech Mahindra Unisys Relia Alibaba Telstra Shinsegae I&C * Amazon Web Services Wipro As-a-Service Market Sichuan Troy Information Tech China Telecom * Autodesk As-a-Service Market Google PTC As-a-Service Market Adobe Systems Microsoft Sage * Atlassian * Equinix Tencent ServiceNow Kingdee

25 EMEA 4Q18 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including 75 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data.