Market Vista™: Q2 2016

April-June 2016

Copyright © 2016 Everest Global, Inc. We encourage you to share these materials internally within your company and its affiliates. In accordance with the license granted, however, sharing these materials outside of your organization in any form—electronic, written, or verbal—is prohibited unless you obtain the express, prior, and written consent of Everest Global, Inc. It is your organization’s responsibility to maintain the confidentiality of these materials in accordance with your license of them.

EGR-2016-8-R-1857 Our research offerings for global services

 Market Vista™ Global services tracking across functions, sourcing models, locations, and service Custom research capabilities providers – industry tracking reports also available  Benchmarking | Pricing, delivery model, skill portfolio  BFSI1 Information Technology  PricePoint™  Peer analysis | Scope, sourcing models,  BFSI1 Business Process  Finance & Accounting locations

 Healthcare & Life Sciences ITS  Procurement  Locations | Cost, skills, sustainability, portfolio – plus a tracking tool  Healthcare & Life Sciences BPS  Human Resources

 Tracking services | Service providers,  Application & Digital  Recruitment & Talent Acquisition locations, risk  Cloud & Infrastructure  Contact Center  Other | Market intelligence, service  Global Sourcing  Service Optimization Technologies provider capabilities, technologies, contract assessment  Locations Insider™  Transaction Intelligence

Subscription information

 This report is included in the following subscription(s) – Market Vista™ Corporate Headquarters Office: +1-214-451-3000  In addition to published research, a subscription may include analyst inquiry, data cuts, [email protected] and other services European Headquarters Office: +44-207-129-1318  If you want to learn whether your organization has a subscription agreement or [email protected] request information on pricing and subscription options, please contact us

1 Banking, financial services, and insurance

Market Vista quarterly report to come out as two separate reports – Quarterly Report (covering analysis) and Service Provider Profiles Market Vista Index service providers (covering details for Market Vista Index service providers, as indicated on the right) 4

Single report covering all analysis and service Old format provider profiles  Market Vista Quarterly Report included: – Market overview – Location trends – Service providers developments1 (both 2 analysis and profiles)

3 Two separate reports – first covering analysis and New format second covering service provider profiles 5  Market Vista Quarterly Report to include: – Market overview – Location trends – Service providers developments (only analysis)  Market Vista Service Provider Profile to include: – Service provider profiles1

1 Analysis and profiles included for Market Vista Index service providers as indicated on this page 2 Perot was acquired by Dell in September 2009, and was rebranded as Dell Services 3 EDS was integrated into HP, and the segment is called HP Enterprise Services (HP ES), which is now a part of Hewlett Packard Enterprise (HPE) 4 Aon acquired Hewitt in October 2010. The combined entity is now called Aon Hewitt 5 The services division of IBM is referred to as IBM Global Services (IBM GS)

Topic Page no.

Service provider developments – summary 5  Accenture 7  Aon Hewitt 15  Atos 18  Capgemini 21  Cognizant 26  Computer Sciences Corporation (CSC) 30  Convergys 33  Dell Services 36  EXL 40  Genpact 42  HCL 45  HP Enterprise 48  IBM 52  Infosys 61  TCS 68  Tech Mahindra 72  Unisys 76  Wipro 80  WNS 85  Xerox Services 87  Speculation around potential acquisitions 93

Some company-specific highlights during the quarter

 Traditional global service providers – Hewlett Packard Enterprise (HPE) announced the spin off of its Enterprise Services business and its merger with CSC for US$8.5 billion, to form a new entity by 2017. The Board of the company will be constituted by Directors, 50% of whom will be nominated by CSC and the equivalent number by HPE – Accenture enhanced its digital capability by acquiring dgroup as well as a majority stake in IMJ Corporation to expand its digital capabilities in Germany and Japan, respectively. The company also acquired OPS Rules to provide machine learning and optimization techniques in analytics to clients. During the quarter, Accenture collaborated with Apax Partners, to form a joint venture to develop claims, billing, and policy administration software for the insurance industry – In an effort to expand its traditional hardware businesses, Dell has undergone the following restructuring:  Acquired EMC to focus on the data-storage hardware and data-center software from VMware, Inc.  Sold off Dell Services, its IT services subsidiary, to NTT Data for US$3.06 billion  Divested Dell Software, its software division, to Francisco Partners, for US$2 billion

Some company-specific highlights during the quarter (continued)

 Offshore-centric service providers – As a result of automation, cloud, and analytics, IT firms reported a decline in net additions during Q1 2016 (quarter ending March 2016). The hiring forecast for 2016-2017 is anticipated to be lower due to better employee retention and improvement in utilization and productivity, attributed to the automation initiatives of the firms  In Q1 2016, Wipro’s total workforce was 172,912, with a net addition of 2,248 employees  In Q1 2016, HCL Technologies’ workforce was 104,896 employees, with a net increase of 1,200 people  Tech Mahindra reported a decline of 1,705 from its total headcount, with the total workforce reaching 105,432 at the end of Q1 2016  Infosys’ total workforce stood at 194,044 employees at the end of Q1 2016, with a net addition of 661 employees – Nasscom lowered its growth estimates for the Indian IT industry to 10-12% (in constant currency terms) in 2016- 2017, compared to 12.3% in 2015-2016. The slow down in the industry can be attributed to the tough economic conditions in the global markets resulting in reduced discretionary spending from the clients – Following United Kingdom’s decision to exit from the European Union, companies such as TCS, Infosys, Wipro, HCL, and Tech Mahindra lost a combined market value of US$7.33 billion  TCS lost ~US$4.5 billion, followed by Infosys (US$1.8 billion), HCL Technologies (US$750 million), Wipro (~US$500 million), and Tech Mahindra (~US$500 million)  Europe accounts for ~23-29% of the revenue of the Indian IT firms. In United Kingdom, TCS has an exposure of 15.8%, Infosys 6.6%, Wipro 11%, and Tech Mahindra 10.8%

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services 1 RCS MediaGroup April 2016 N/A N/A IO and AO The Hong Kong and China Gas Company May 2016 N/A N/A AO State of Wisconsin May 2016 N/A 1 AO EFG Eurobank Ergasias June 2016 N/A 10 AO Selective Insurance June 2016 N/A N/A AO Stryker Corporation June 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments France Paris June N/A ITO – ADM Accenture launched an innovation center in Paris, France, to help the organizations in exploring innovative digital strategies, and create new products and services. The center will offer clients personalized services according to their business objectives Israel Herzliya June N/A R&D / Accenture launched a cybersecurity Research & Development (R&D) lab in engineering Herzliya, Israel. The center will focus on advanced threat intelligence, active defense, and industrial Internet of Thing (IoT) security using Artificial Intelligence (AI), blockchain, and advanced analytics

1 Not available Source: Everest Group (2016); company websites

Location footprint (continued) Country City Month Headcount Function Other comments Spain Málaga June Plans to hire N/A Accenture opened a center in Málaga, Spain, to help its European clients 150 FTEs by develop digital marketing content in different formats and languages. The 2018 facility will provide digital marketing content such as banner advertisements, social media posts, and videos for marketing firms United States Nashville June 25; plans to ITO – ADM Accenture launched a technology delivery center in Nashville, United hire 225 FTEs States. The new facility will expand delivery capabilities for clients in public sector, including state and local government, as well as financial services, hospitality, and healthcare United States New York June N/A ITO – ADM Accenture launched a Content Studio in New York, United States, to create and R&D / and deliver content and explore innovations in this emerging content space. engineering The facility will focus on innovation, research, creative strategy, product development, and industry best practices Poland Warsaw May N/A N/A Accenture relocated to Grzybowska Park, a new building in Warsaw, Poland. The firm will occupy a total of 2,616 square meter space on two floors of the building

India Bengaluru April N/A ITO – ADM Accenture launched a cyber center in Bengaluru, India, to bring together innovation, incubation, development of new solutions, strategic consulting, and managed delivery of cyber defense services

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition dgroup Accenture entered into an agreement to acquire dgroup, a provider of end-to-end management consulting (Germany) services in digital space. The acquisition will increase Accenture’s digital consulting capabilities in Germany and strengthen its services for retail and consumer goods companies Acquisition IMJ Corporation Accenture acquired a majority stake in IMJ Corporation, a full-service digital agency, to expand its interactive (Japan) capabilities in Japan and provide end-to-end digital marketing services to clients Acquisition Maglan Accenture acquired Maglan, a provider of cyber forensics and simulation services, malware defense, and (Israel) research on intelligence threats. The acquisition will strengthen Accenture’s portfolio of cyber defense services for clients Acquisition OPS Rules Accenture acquired OPS Rules, an analytics consulting firm that specializes in creating supply chain and (United States) operations analytics solutions. The acquisition will help Accenture in providing machine learning and optimization techniques for analytics to its clients across industries Joint venture Apax Partners Accenture collaborated with Apax Partners, a private equity firm, to form a joint venture in order to develop (United Kingdom) claims, billing, and policy administration software for the insurance industry. The joint venture will help in the development of Duck Creek’s products and technologies and to extend its market reach by leveraging advanced digital and cloud technology. Apax will acquire 60% stake in Accenture’s Duck Creek Technologies, with Accenture retaining the remaining 40% stake Alliance Alibaba Accenture collaborated with Aliyun, Alibaba’s cloud computing and data management services company, to (China) provide as-a-service technology and business solutions to customers in China and South East Asia. The firms will jointly deliver third-party cloud-based solutions through Alibaba Cloud platform Alliance Automation Anywhere Accenture partnered with Automation Anywhere, a Robotic Process Automation (RPA) firm, to deliver (United States) enterprise-grade RPA solutions to clients. As part of the collaboration, Accenture will integrate Automation Anywhere’s BotFarm, a cloud-based RPA solution into its business process services

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Avanade Accenture along with Avanade, a joint venture between Accenture and Microsoft, launched an innovative (United States) customer analytics and insight solution for the financial services industry. The new solution for Microsoft Dynamics Customer Relationship Management (CRM) will help financial firms in digital transformation Alliance Dassault Systèmes Accenture partnered with Dassault Systèmes, a provider of 3D design software and product lifecycle (France) management solutions. Together, the companies will build Proof-of-Concept (PoC) to demonstrate the utility of digital technologies in improving the efficiency and agility in industries such as heavy industrial equipment and aerospace Alliance General Electric Accenture expanded its partnership with GE Healthcare to launch a new platform that will help in improving (United States) medical claims processing and related cash flow for healthcare providers. The firms will combine their expertise in consulting and analytics to help the healthcare firms save ~25-50% of their costs spent on reprocessing denied claims Alliance IPsoft Accenture extended its partnership with IPsoft, a provider of autonomic and cognitive solutions, to implement (United States) AI technologies. As part of the collaboration, Accenture will launch Amelia Practice, a new consulting arm, to develop go-to-market strategies using IPsoft’s offerings to build virtual agent technology for customers in the banking, insurance, and travel industry Alliance Nokia Corporation Accenture partnered with Nokia Corporation, a communications and Information Technology (IT) company, to (Finland) establish Nokia Accenture Business Group. Through this alliance, the companies will help Communication Service Providers (CSPs) in transitioning to modern digital networks and capitalize on operational benefits Alliance Salesforce.com Accenture expanded its partnership with Salesforce, a cloud computing company, to integrate the capabilities (United States) of Salesforce Health Cloud with Accenture Intelligent Patient Platform. The partnership will help life sciences and healthcare providers in increasing patient engagement across their caregiver networks and efficient patient data management

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance SoftBank Robotics Accenture expanded its collaboration with Softbank Robotics, a provider of robot-related products and (Japan) services and a subsidiary of SoftBank Group. Under the terms of the partnership, the companies developed a PoC for business applications and demonstrated SoftBank Robotics’ humanoid robot “Pepper”, with customer-service and commerce capabilities Alliance Splunk Accenture entered into an alliance with Splunk, a provider of software platform for machine data, to integrate (United States) Splunk cloud services into Accenture’s application services, security, and digital offerings. Per the agreement, Accenture will help clients to identify application and operational data by using Splunk solutions

Key takeaways from Q1 20161 earnings call Category Description

Financials  Revenue declined marginally by 0.8% sequentially to reach US$7,946 million in Q1 2016  Operating margin decreased by 155 bps over Q4 2015 to reach 13.7%

Segments  Geographies: In Q1 2016, revenue from North America increased by 0.7%, while growth markets witnessed an increase of 0.4%. On the other hand, revenue from Europe declined by 3.5%  Services: Total new bookings for the quarter were US$9.5 billion, compared to US$7.7 billion in Q4 2015 – Consulting bookings were US$5.0 billion. Revenue from this service line declined by 1.2% over the last quarter, and reached US$4.3 billion – Outsourcing bookings were US$4.5 billion. Revenue from outsourcing declined marginally by 0.4% to reach US$3.7 billion  Verticals: During the quarter, health & public services witnessed the maximum sequential growth of 4.1%, primarily driven by double-digit growth in North America and the growth markets. Products grew marginally by 0.2%, followed by media, communication, & technology, which increased by 0.1%. On the other hand, resources and financial services declined by 5.7% and 3.5% respectively

1 For the quarter ended February 29, 2016 Source: Everest Group (2016); company websites

Key takeaways from Q1 20161 earnings call (continued) Category Description

Talent  Headcount stood at about 372,579, including 272,745 employees in Global Delivery Network (GDN)  Attrition (excluding involuntary terminations) was 13%, similar to Q4 2015  Utilization rate was 90% in Q1 2016, consistent with the previous quarter

Future growth  For Q2 2016 (quarter ending May), Accenture expects net revenue to be in the range of US$8.10-8.35 billion, assuming a negative impact of 2.5% due to foreign exchange fluctuations, compared to Q2 2015  For FY 2016 (year ending November 2016), the firm raised their revenue forecast and expects growth to be in the range of 8-10% in local currency over FY 2015, and operating margin to be in the range of 14.6-14.7%

Other significant developments Type of announcement Description

Capability  Accenture launched Accenture myWizard, an intelligent automation platform, for application services consisting of systems integration and application development & management. The platform will employ a team of virtual agents, powered by AI, to analyze data, identify patterns, and guide employees to make informed decisions  Accenture launched seven advanced analytics applications to help organizations detect and remediate fraud in order to reduce losses. Designed specifically for banks, telecommunications companies, government agencies, and manufacturers, the applications will provide customized analytics insights to the users  Accenture launched the upgraded version of Accenture Ocean Cargo Software, to improve billing accuracy and consistency through automated pricing process for ocean cargo carriers. The release includes a new Detention and Demurrage (DnD) module to help ocean cargo carriers maintain and manage DnD tariffs, negotiations, and calculations  Accenture launched the High Velocity Customer Experience solution, a ready-to-use preconfigured solution built on SAP Hybris. The solution will help in reducing cost and providing flexibility to clients as they transition to cloud

Management  Accenture announced the following appointments during the quarter: changes – Jill Standish as Senior Managing Director, Retail. She most recently served as the Senior Vice President and General Manager for the Retail Business in Oracle 1 For the quarter ended February 29, 2016 Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description Management – Greg Kaplan as Lead Creative Director of Accenture. Previously, he served as the Senior Vice President of Creative Business in changes Digitas (continued) – Jill Kramer as Managing Director of Advertising. Prior to this, she served as the Executive Vice President and Senior Director in BBDO – Kelly Bissell as Global Managing Director, Accenture Security. Earlier, he served as Head of Cyber Risk Services, Europe, Middle East, & Africa (EMEA) in Deloitte  Accenture announced the following promotions during the quarter: – Debra A. Polishook, Group Operating Officer, Accenture Operations to the position of Group Chief Executive, Accenture Operations – Manish Sharma, Senior Managing Director, Global Delivery & Solution Development for Accenture Operations to the position of Group Operating Officer, Accenture Operations  Trish Walker, Senior Managing Director, Retail Business, left Accenture to join Best Buy as President of Services  Christine Eberle, a Partner in Accenture, left the organization to join TalentSky as Chief Customer Officer

Others  In order to encourage employees to come up with new ideas, Accenture launched IdeaHarvester, a proprietary platform for the submission and curation of ideas. The tool has had more than 9,000 ideas submitted by employees, of which nearly one-third were implemented for clients  In order to diversify its workforce, Accenture announced plans to increase the percentage of new women hires to at least 40% by 2017. At present, women account for 33% of the company’s workforce. Accenture’s Protege Sponsorship Initiative aims to create development opportunities for senior technical women employees  Accenture joined The Floor, a hub of financial technology startups based in Tel Aviv, Israel. As a supporter, Accenture will evaluate innovations for its clients and its strategic investments, while mentoring startups and strengthening its collaboration with the firms. The Floor includes firms such as Banco Santander, HSBC, Intesa Sanpaolo, Royal Bank of Scotland, and Intel Corporation  Accenture, along with firms such as Cisco and Dell, is creating specialized content to supplement the education of younger population to help them become more employable. These companies use the cloud model as that of a repository of content, which can be accessed across electronic devices by schools or skilling centers

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  Accenture partnered with Dr. Reddy’s Foundation, the non-profit arm of Dr. Reddy’s Laboratories, to run skills programs in retail, IT / (continued) BPO, hospitality, and construction space for the youth  Accenture collaborated with City Colleges of Chicago to help enhance the IT curriculum as part of the community college system’s College to Careers initiative  Accenture expanded its collaboration with Code.org to launch a joint campaign with other businesses, elected officials, and educators, to increase funding for computer science education for K-12 students. As a part of its commitment, Accenture will donate US$500,000 to support Code.org activities along with additional pro bono services  Accenture launched a Digital Acceleration Center in Dubai, United Arab Emirates, to host seminars, workshops, and demonstrations for students, professionals, and Accenture clients. The facility will showcase software and hardware technologies related to analytics, wearable technology, network systems, robotics, and IoT

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Diodes Zetex May 2016 N/A N/A BPO – HR

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition Univers Aon Hewitt acquired Univers, a benefits enrolment and communications organization, to offer end- (United States) to-end elective benefits solution and strengthen its portfolio of analytic tools Alliance J3Personica Aon Hewitt partnered with J3Personica, a healthcare consulting firm, to help firms better assess and (United States) engage talent. The partnership will enable Aon Hewitt to administer personality assessments and help healthcare organizations take better hiring decisions and predict the success of the workforce

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined significantly by 27.9% compared to the last quarter to reach US$930 million in Q1 2016, mainly due to the seasonal nature of business, Q1 being the weakest quarter after Q4 (the strongest quarter)  Operating margin declined by 1504 bps to reach 7.2% in Q1 2016

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Services: During the quarter, revenue from both consulting and outsourcing segments witnessed a significant decline: – Consulting declined by 19.4%, compared to the previous quarter to reach US$374 million. The service line represented 40% share of the total revenue – Outsourcing segment declined by 33.3% over the previous quarter to reach US$560 million. The segment’s share in the total revenue declined from 64% to 60% in Q1 2016

Future growth  The firm expects operational improvement to continue in FY 2016 and achieve the long-term target of 22% operating margin. Operating income is anticipated to be similar to FY 2015, i.e., down in the first half and up in the second half, particularly in Q4 2016 (quarter ending December 2016)

Other significant developments Type of announcement Description

Management changes  Aon Hewitt announced the following appointments during the quarter: – Matthew Fletcher as Senior Consultant in Risk Settlement Group. Previously, he served as a Technical Consultant in Club Vita, the longevity company of Hymans Robertson – Vincent Cornet as Head of Compensation Practice in Europe, Middle East, and Africa (EMEA). Prior to this, he served as Deputy General Manager, Global Compensation, HR Efficiency, and HR Communication Practices at Altedia – Ed Tomlinson as Head of Defined Benefit (DB) sales team in United Kingdom. Earlier, he served as the Regional Director in SEI Investments Europe – Michael Ferguson as Senior Public Sector Governance Consultant. Prior to this, he served as the Head of Business Development for Local Government Pension Scheme in Hymans Robertson – Alison Trusty as Hedge Fund Researcher in Liquid Alternatives Manager Research team. Previously, she served as the Head of Hedge Fund Research at Hymans Robertson

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Management changes  Aon Hewitt promoted Raymond Everett, Senior Partner of its Asia Pacific (APAC), Middle East and Africa business to the (continued) position of Chief Executive Officer of Aon Hewitt Middle East  Beat Zaugg, Head of the Investment Consulting business for German-speaking clients in Switzerland left Aon Hewitt

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Australia Post May 2016 N/A N/A AO Subsea 7 May 2016 N/A 5 AO ATU June 2016 N/A N/A ITO SPIE GmbH June 2016 N/A 3 AO

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance ClickFox Atos partnered with ClickFox, a big data platform provider, to improve its managed services. The (United States) alliance will help Atos to further automate its data analytics service portfolio by the use of automation and robotics. The integration of ClickFox will enable Atos to collect and analyze data across its entire global operations Alliance Gemalto Worldline, a payment and transactional services subsidiary of Atos, partnered with Gemalto, a (Netherlands) provider of digital security, to help banks and card issuers in deploying mobile payment wallets. As per the agreement, the two firms will offer banks end-to-end, ready-to-use, and customizable service to help them control customer data Alliance NetClean Atos collaborated with NetClean, a developer of technology solutions, to assist with the issues of (Sweden) compliance in the workplace. The cyber security offering will help enterprises in Europe to mitigate the risk of reputational damage by detecting and tracking child sexual abuse material

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Siemens Atos partnered with Siemens to launch the Sinalytics platform, a combined data analytics platform. (Germany) The alliance will help customers from various sectors in digital transformation by offering advanced data analytics solutions

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 8.6% over the last quarter to reach US$3,041 million in Q1 2016 (decline by 9.2% in terms of reported currency EUR)

Segments  Geographies: All geographies except Germany, which increased by 8.0% sequentially due to an improvement in consulting and system integration, reported a decline in revenue. France accounted for 15% of total revenue and witnessed the maximum sequential decline of 15%. This was followed by Benelux & the Nordics (13.7%), Worldline (7.1%), and United Kingdom & Ireland (5.6%), and North America (5.4%)  Services: Big data & cyber security, the smallest service line with 5% share in the total revenue, witnessed the maximum sequential decline of 35.5%, followed by consulting & systems integration (9.8%), Worldline (7.1%), and managed services (4.7%)

Talent  Headcount increased from 91,322 in Q4 2015 to 96,298 in Q1 2016. The increase can be attributed to nearly 5,200 employees joining Atos from Unify

Future growth  Atos reaffirmed its target to continue improving organic growth rate compared to 2015, and keep constant currency revenue growth rate more than 8% for FY 2016 (year ending December 2016)  The firm plans to achieve operating margin in the range of 9.0-9.5% in FY 2016  Atos anticipates free cash flow generation of US$606 million, excluding the proceeds from equity-based compensation, which represents ~US$55 million in 2016

Source: Everest Group (2016); company websites

Other significant developments Type of announcement Description

Capability  Atos launched Atos Codex, an end-to-end business-driven analytics solution, to enable organizations to maximize the value of their data quickly. The new solution will help customers with digital transformation strategy & consulting, use case business modeling, data science expertise, agile analytics deployment, and ongoing evolution management  Atos launched following solutions through its technology brand Bull: – alien4cloud, a software suite to accelerate customer digital transformation. The new solution will automate the application lifecycle, from development to deployment and production allowing customers to abstract applications from the infrastructure – Bull Battle Management System (BMS), a digital battle management solution. The offering optimizes real-time information sharing for land and air-land combat, throughout battalions, and for all mission types – Data Lake & Analytics Factory, a big data appliance, as part of the Atos Codex offering. The solution is integrated with the bullion server and it automates data collection, storage, and analytics, allowing big data applications to be deployed easily  Atos’ subsidiary, Unify, launched new programs and offerings to accelerate growth for partners globally. The new specializations were added to the Unify Partner Program to help further differentiate and grow business in new markets

Others  Atos lost a contract with Transport for Greater Manchester (TfGM), in August 2015, after failing to deliver the smart ticketing scheme for all tram customers, called Oyster card, on time. The firm is now liable to pay back a compensation of US$19.7 million (GBP15 million) to TfGM that includes direct as well as third-party costs  Worldline received European Union regulatory approval to create a new Equens Worldline Company in which 63.6% will be owned by Worldline and the remaining 36.4% by Equens, a service card and payment processor. The firm also acquired PaySquare from Equens. The authority approved the bid with certain conditions, under which Worldline agreed to divest Belgian subsidiary of its 100% owned PaySquare, and will grant software licenses to rivals

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services City of Kitchener April 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments Canada Toronto June N/A N/A Capgemini opened a new innovation center in Toronto, Ontario, Canada to discover and deploy innovative technologies. The new facility includes an ideation and digital innovation zone for consultants and a discovery zone for rapid prototyping to help organizations transform ideas into business results Spain Murcia May 190, plans to ITO – ADM Capgemini announced plans to hire 70 specialists by the end of increase the and cloud 2016 for its technology center in Murcia, Spain. The firm also headcount to computing plans to have a staff strength of 570 by the end of 2017 570 by the and BP – end of 2017 analytics India Mumbai April Seating N/A Capgemini opened an innovation center in Mumbai, India. The capacity of facility will offer application services, digital services, and 30,000 FTEs infrastructure services, with a seating capacity of 30,000 employees Brazil Sao Paulo April N/A ITO – IO Capgemini opened a new data center in Sao Paulo, Brazil to support its service center in Araraquara. The facility will offer cloud computing, managed services, and data recovery services in the region to customers in consumer products, retail, and finance

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Ascribe Capgemini partnered with Ascribe, a company that registers and tracks intellectual property, to develop a (Germany) blockchain database solution built on BigchainDB. The offering will help banks in implementing a reward system that is cost efficient, secure, and can be used by consumers to combine loyalty points from various programs. Capgemini will provide financial services, consulting and digital technology expertise in BigchainDB to design and develop a loyalty and rewards system Alliance ERI Capgemini entered into an alliance with ERI, a banking software vendor, to launch a shared service (Switzerland) center for private banks and wealth managers in Europe. As per the alliance, Capgemini will offer its infrastructure services, application management services, and business process outsourcing services through the Olympic banking system by ERI Alliance FICO Capgemini partnered with FICO, an analytics software company, to provide fraud management analytic (United States) solutions to the financial services sector. As per the agreement, Capgemini will provide FICO’s risk and fraud management products through consulting and integration services in North America Alliance Siemens Capgemini collaborated with Siemens’ Building Technologies division, to develop analytics-based (Germany) services for the smart buildings space. Under the alliance, Capgemini will combine its expertise in IoT, data analytics, and cloud services with Siemens Building Technologies to enhance digital transformation of the clients

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 4.8% from the last quarter to reach US$3,410 million in Q1 2016 (in reported currency EUR, revenue declined by 5.5%)

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Geographies: All geographies witnessed a sequential fall during the quarter. United Kingdom and Ireland reported the maximum sequential decline of 7.7% (8.4% in EUR) followed by Rest of Europe1 by 5.7% (6.4% in EUR), North America by 4.4% (5.1% in EUR), France by 2.7% (3.4% in EUR), and APAC and Latin America by 2.0% (2.7% in EUR)  Segments: During the quarter, the firm witnessed a sequential decline of 4.8% (5.5% in EUR) across all the service lines i.e. local professional services, consulting & other managed services, and application services  Verticals: During the quarter, manufacturing, automotive & life sciences witnessed the maximum sequential fall of 13.1%, followed by telecom, media & entertainment and consumer product, retail, distribution, & transportation, that declined by 4.8% each and public sector by 0.5%. On the other hand, financial services and energy, utilities & chemicals witnessed an increase of 3.7% and 1.2% respectively

Talent  Headcount increased to 182,908 in Q1 2016, compared to 180,639 in Q4 2015  In Q1 2016, utilization rate remained flat for consulting services at 70%, while it declined for local professional services and application services to 82% and 81% respectively

Future growth  Capgemini continues to expect revenue growth at constant exchange rates to be in the range of 7.5-9.5% in FY 2016 (year ending December)  The company anticipates an operating margin of 11.1-11.3% in FY 2016 (year ending December), and organic free cash flow to exceed US$931 million (€850 million)  The firm expects a 2% negative impact on revenue primarily due to the appreciation of the EUR against the GBP and the BRL

Other significant developments Type of announcement Description

Capability  Capgemini launched Backelite, a digital and technology offering in Australia, to enhance customer experience capabilities.  Capgemini launched digital manufacturing services for the manufacturing clients. The offering will help clients to improve their digital maturity across smart product & services development, product & asset lifecycle management, industrial cybersecurity, on-site & remote operations management, Industrial IoT & big data, and complex system simulation

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  Capgemini developed an Intelligent Test Automation platform for financial service institutions. The solution will offer short test (continued) cycles and improved collaboration between development and test operation teams  Capgemini launched the Smart Quality Assurance (QA) testing ecosystem for financial services institutions. The offering will help in building an end-to-end ecosystem that is designed to work in conjunction with Smart Foundry and Command Center  Capgemini launched an upgraded version of MFGPath on SAP Business Suite 4 SAP HANA (SAP S/4HANA). This solution will offer enhanced mobility and efficiency to the manufacturing companies  Capgemini launched AutomotiveConnect service line for automotive retailers. The offering will provide consulting and technology expertise to dealers, distributors, and importers to deploy digital technology and leverage new data. It will help in achieving increased customer retention and improved operational efficiency

Management changes  During the quarter, Capgemini announced the following appointments: – Douglas Regan as Head of Service Lines, Senior Vice President, Australia and New Zealand. Prior to this, he was Partner with IBM – Rainer Mehl as Senior Vice President and Head of Digital Operations for Germany, Switzerland, and Austria. Prior to this, he was the Senior Vice President at NTT Data – Kai-Michael Schaper as Vice President, Capgemini Consulting. Prior to this, he was Partner with Horn & Company – Patrick Vance as Vice President of United Kingdom Financial Services division. Previously, he served as Director, Risk Consulting at KPMG – Srinivas Kandula as Head of Capgemini, India. Previously, he served as Chief People Officer at IGATE – Srikanth Iyengar, Group Sales Director and a member of the Group Executive Committee. Previously, he served as Senior Vice-President and Head of Europe & Australia at IGATE  Capgemini announced the following promotions: – Dee Burger, Head of Capgemini Consulting’s North America operation to Head of Digital Services. He also joined the Group Executive Committee – Viginie Regis, Vice President and Group Branding, Marketing, and Digital Director to Director of Group Marketing & Communications. She also joined the Group Executive Committee

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description Management changes (continued) (continued) – Philippe Grangeon, Director of Group Marketing & Communications to Special Advisor to the Chairman and CEO – Paul Nannetti, Group Sales Director to Head of Cloud Infrastructure Services. He also joined the Group Executive Committee – Aruna Jayanthi, Head of Capgemini, India to Head of Business Services. She continues to be a member of the Group Executive Committee – Patrick Nicolet, Head of the Infrastructure Services promoted to Head of Capgemini in India. He continues to be a member of the Group Executive Committee  Thierry Delaporte, in addition to taking care of the Global Financial Services business, will now also be responsible for Capgemini’s Latin America Operation. He also joined the Group Executive Board

Headcount  Capgemini announced plans to hire 100 blockchain professionals to its financial services business by the end of 2016 to help clients in improving operational efficiency, security, and customer service

Others  Capgemini launched a digital literacy center at the Helen Keller Institute of Deaf and Deafblind in Mumbai, India. The facility will offer digital literacy training to over 1,200 persons with disabilities from the institute  Capgemini signed a Memorandum of Understanding (MoU) with the Skill Development and Entrepreneurship Department of Maharashtra Government, India. The company will provide skilled manpower, infrastructure, and new technologies across various industries  Capgemini partnered with Saahas, an NGO, and Bruhat Bengaluru Mahanagara Palike (BBMP), to set up a new Waste Management Center in Bengaluru, India. Launched as a part of Capgemini CSR activities, the facility focused on decentralized waste management driven by segregation at source  Capgemini announced plans to partner with start-ups in India in the area of data analytics, artificial intelligence, and IoT. As part of Capgemini's Applied Innovation Exchange (AIE) program, the company will leverage startups globally in retail, banking, insurance, and telecommunications sector  Capgemini announced plans to use IGATE's account management for all its clients

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Biogen June 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments Malaysia Kuala April Plans to hire N/A Cognizant opened a new delivery center in Cyberjaya, Kuala Lumpur 100 FTEs Lumpur, Malaysia, to enhance its existing operations in the region. The center will hire more than 100 people to serve regional and global clients. The firm currently employs 300 people in Malaysia, delivering applications, IT infrastructure, consulting, and business process services to clients across different sectors United States Des Moines May Plans to hire BPO – CC Cognizant plans to open two new offices in Des Moines, Iowa, 1,000 FTEs United States to accelerate development in the region. The center in next 5 will employ more than 1,000 people in the coming five years, years supporting back office and call center operations of the company

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Box Cognizant partnered with Box, a provider of enterprise content management and collaboration platform, to (United States) accelerate digital transformation. The companies will co-develop industry solutions on Box Platform, and help enterprises migrate business content to the cloud. Cognizant will also be Box's preferred systems integrations partner and the two companies will provide training, consulting, and custom services to customers

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Kony Cognizant collaborated with Kony, a provider of cloud-based mobility solutions, to enhance business security. (United States) Together, the firms will develop solutions spanning mobile applications, application design, and mobile back- end services for banking, healthcare, manufacturing, retail, and government sectors Alliance Oracle Cognizant partnered with Oracle, to co-develop the Oracle Utilities Analytics Cloud Service. The new solution (United States) will reduce IT and maintenance cost for firms, enabling them to access, organize, and analyze huge data sets Alliance ReD Associates Cognizant partnered with ReD Associates, a management consulting firm, to model digital strategies by (Denmark) focusing on using human sciences. Together, the companies will work to help businesses connect more closely to real-world consumer behaviors and experiences. As part of the partnership, Cognizant acquired 49% stake in ReD Associates with the latter continuing to operate independently with its existing management and customer base

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 0.9% sequentially to reach US$3,202 million in Q1 2016, attributed to negative impact of currency fluctuation  Operating margin increased by 18 bps to reach 17.3%, reporting an operating profit of US$554 million

Pricing  Cognizant witnessed a stable pricing environment in Q1 2016. Fixed price contracts accounted for 37% of the revenue during the quarter

Segments  Geographies: – North America continued to remain the largest revenue generating geography with 78% share of revenue. The revenue from the region declined by 1.4% sequentially, to reach US$2,497 million – United Kingdom contributed 9% to the revenue and declined by 2.3% sequentially, to reach US$299 million – Rest of Europe contributed 7% share to revenue and accounted for US$227 million, a sequential growth of 5.4% – Rest of the World (RoW) revenue reached US$179 million, representing 6% share in total revenue and growth of 0.3% over the last quarter. Growth was driven by traction in the adoption of digital technology in markets such as India, Australia, and Middle East Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Services: Consulting & technology services and outsourcing services represented 57.8% and 42.2% of the total revenue, (continued) respectively. While the revenue from consulting & technology services declined by 1.6% sequentially, revenue from outsourcing services remained flat compared to Q4 2015  Verticals: – Financial services remained the largest vertical and accounted for 40% share of the total revenue. The segment registered a sequential decline of 1.7% to reach US$1,286 million, due to the financial market volatility affecting the banking sector – Healthcare accounted for 29% share of the revenue and declined by 4.0% sequentially, to reach US$914 million in Q1 2016. The decline was attributed to industry consolidation within the healthcare payer sector – Manufacturing, retail, and logistics witnessed a sequential growth of 3.6% to reach US$633 million and contributed 20% share to the revenue. The growth was driven by increased demand for digital and IoT in the manufacturing and logistics segment – The remaining 11% share came from other verticals that included high-tech, communications, and Information, Media, & Entertainment (IME) clients. The vertical reported a sequential growth of 2.0%, driven by demand of platform engineering for cloud services from high-tech clients

Talent  The headcount reached ~233,000 with a net addition of ~11,300 employees in Q1 2016  Annualized attrition in the quarter declined by 450 bps to reach 14.6%. The company plans to continue improving its retention level through various employee engagement initiatives in FY 2016  Utilization rate declined on a sequential basis in Q1 2016. Offshore utilization declined by 100 bps to reach ~75%, while onsite utilization fell by 100 bps to reach ~92% during the quarter

Future growth  Cognizant changed the revenue guidance from US$13.65-14.20 billion to US$13.65-14.0 billion for FY 2016 (year ending December 2016). This represents a growth of 10-13% compared to 2015, including ~1% negative currency impact  For Q2 2016 (quarter ending June 2016), the company expects revenue to be in the range of US$3.34-3.40 billion  The operating margin is expected to be in the range of 19-20% for FY 2016

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Type of announcement Description

Management  Cognizant appointed Jonathan Chadwick to its Board of Directors. He most recently served as the Chief Financial Officer, Chief Operating Officer, and Executive Vice President of VMware

Others  Cognizant announced a 142% bonus for its top executives for a stellar performance in 2015. The company also made changes in the Performance Share Units (PSUs) for its top executives, moving to a two-year performance measurement period from a one year clause  Cognizant performed better than TCS, Infosys, and Wipro in getting higher incremental revenue from both North America and Europe as compared to the previous year. Cognizant witnessed~20% increase in the incremental revenue from the United States and 8.9% from Europe in 2015-2016  Following the exit of United Kingdom from the European Union, companies such as Cognizant and Accenture might face losses due to the high exposure of these firms to the UK market  Cognizant reported a higher average Revenue Per Employee (RPE), compared to TCS, Wipro, and Infosys in FY 2015-2016. Company’s average RPE in FY 2015-2016 was US$54,549, an increase of 11% from the previous year

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Transport for NSW April 2016 75 3 IO BAE Systems May 2016 600 5 AO and IO GCS E-Sante May 2016 N/A N/A AO Bourgogne Scandinavian Airlines May 2016 N/A 4 AO and IO (Extension)

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition Aspediens CSC acquired Aspediens, a provider of technology solutions for the service management sector, to (Switzerland) strengthen its position as a ServiceNow integrator globally. Aspediens will join CSC ServiceNow practice within Fruition Partners. The acquisition will help CSC in addressing client demand for service management capabilities across process, applications, and infrastructure in the enterprise Software- as-a-Service (SaaS) market Alliance ArisGlobal CSC partnered with ArisGlobal, a software solution provider, to launch Identification of Medicinal (United States) Products-as-a-Service (IDMPaaS), for pharmaceutical and life sciences companies. The solution will provide the access to Regulatory Information Management (RIM) solutions, drug safety monitoring software, business process services, and risk management analytics to its clients

In May 2016, Hewlett Packard Enterprise (HPE) announced that it will spin off its Enterprise Services business and merge it with CSC for US$8.5 billion to form a new entity by 2017

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance IBM CSC collaborated with IBM by adding latter’s cloud solution to CSC Agility Platform, to strengthen its (United States) hybrid cloud offering. The collaboration will help CSC in catering to the increasing demand of cross platform cloud-based applications for analytics, mobile, networking, storage, IoT, and cognitive computing Alliance Racemi CSC partnered with Racemi, a provider of migrating applications to the public cloud, to help clients (United States) accelerate their transformation into cloud environments. Per the alliance, CSC will also invest in the development of DynaCenter, Racemi’s migration automation tools

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue increased by 3.3% to reach US$1,807 million in Q1 2016, driven by growth in Business Process Services (BPS) and consulting services within Global Business Services (GBS) segment  Operating margin decreased by 322 bps to reach 7.6% with an operating profit of US$138 million in Q1 2016

Segments  Services: – GBS registered a sequential growth of 6.2%, to reach US$941 million in Q1 2016, driven by growth in consulting services and big data services – Global Infrastructure Services (GIS) revenue increased by 0.2% sequentially, to reach US$866 million in Q1 2016. Growth in cloud was offset by the decline in the traditional outsourcing business

Future growth  CSC expects low double-digit revenue growth for FY 2017 (year ending March 2017). Non-GAAP EPS from continuing operations is expected to be in the range of US$2.75-3.00  CSC expects cost synergies of ~US$25-45 million in the second half of FY 2017 from the acquisition of UXC and Xchanging

Source: Everest Group (2016); company websites

Other significant developments Type of announcement Description

Capability  CSC launched a Usage-Based Insurance (UBI) and telematics offering to help insurers price new products based on the driving behavior. The solution will help insurance providers to develop long-term and profitable customer relationships by employing “pay-how-you-drive” risk assessment and underwriting  CSC added VMware Horizon Air and VMware AirWatch as part of the MyWorkStyle Virtual Desktop and Applications (VDA) and Device & Mobility Management (DMM). The expanded portfolio will address the fluctuating demands of large- and mid- sized enterprises and the needs of low-volume users

Others  In May 2016, HPE announced the spin off of its Enterprise Services business and its merger with CSC for US$8.5 billion. Together, the companies will form a new entity by March 2017, whose board will comprise a 50-50 split between Directors nominated by CSC and HPE. The new firm will have following developments: – Annual revenue of US$26 billion, making it the third largest IT services company after IBM and Accenture – More than 5,000 customers across 70 countries with 20 global delivery centers and 95 datacenters – US$3 billion revenue from next-generation offerings – Anticipated first-year cost synergies of ~US$1 billion post-close, with a run rate of US$1.5 billion by the end of the first year – Mike Lawrie, Chairman, President, and CEO of CSC, will assume the same position in the combined entity – Paul Saleh, Chief Financial Officer of CSC will continue with the same position in the new entity – Meg Whitman, HPE’s President and CEO, will join the new company’s Board of Directors – Mike Nefkens, Executive Vice President and General Manager of HPE Enterprise Services, will report to Mike Lawrie and become a part of new firm’s executive team  CSC completed the acquisition of Xchanging in May 2016 following which the latter was delisted from London Stock Exchange in June 2016. Post the delisting, Geoff Unwin, Group Chairman, Ian Cormack, Senior Independent Non-Executive Director, and Saurabh Srivastava, Bill Thomas, and Stephen Wilson stepped down from Xchanging’s Board of Directors  A District Court in Alexandria, United States, ruled the decision in favor of CSC in a case against Finmarc Acquisitions. In Feb 2016, CSC filed a case against Finmarc alleging that the company missed the deadlines to either acquire or terminate its contract to buy one of its buildings for a contract price of ~ US$10.8 million

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Telia Norge AS June 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments United States Sergeant Bluff June Plans to hire BPO – CC Convergys announced plans to hire 200 health insurance 250 agents for its contact center in Sergeant Bluff, Iowa, United employees States. The company also plans to add 50 new jobs in talent acquisition, training & quality, and operations El Salvador San Salvador May Plans to hire BPO – CC Convergys announced plans to hire 300 customer service, 300 sales, and technical support representatives for its call employees center in San Salvador, El Salvador United States Columbus May Plans to hire BPO – CC Convergys opened a new center in Columbus, United 450 States, to expand its contact center services. The company employees in also plans to add 450 new jobs in talent acquisition, human next 18 resources, and operations management over the next 18 months months. The center will bring the total headcount to 800 in Columbus, United States United States Chattanooga May Plans to hire BPO – CC Convergys plans to hire 300 sales and service associates 300 by the end of August 2016, for its call center in employees Chattanooga, United States United States Lubbock May Plans to hire BPO – CC Convergys announced plans to hire 240 health insurance 240 agent for its contact center in Lubbock, Texas, United employees States

Source: Everest Group (2016); company websites

Location footprint (continued) Country City Month Headcount Function Other comments United States Phoenix May Plans to hire BPO – CC Convergys plans to hire 500 customer service, sales, and 500 technical support representatives for its contact center in employees Phoenix, Arizona, the Unites States United States Valdosta May Plans to hire BPO – CC Convergys plans to hire 400 sales and service associates 400 by the end of August 2016, for its contact center in Valdosta, employees the Unites States, to provide telephonic support United States Watertown May 900; plans to BPO – CC Convergys plans to hire 300 sales and service associates hire 300 by the end of May 2016, for its contact center in Watertown, employees New York, United States. The expansion is a result of addition of two clients from the healthcare and satellite television industries United States Orem April N/A BPO – CC Convergys plans to hire employees for its contact center in Orem, Utah, United States

M&A and alliance activity No M&A or alliance activity announced during the quarter

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 3.9% to reach US$722 million in Q1 2016, due to the headwinds from the ongoing softness in the global economy and volatility in the communications industry  The company reported an operating margin of 8.2%, a minimal increase of 4 bps over Q4 2015, with an operating income of US$59 million

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Verticals: Communication, the largest vertical which accounted for 51% share in revenue, declined by 4.8% due to the increased economic volatility in the sector causing changes in customer service strategies of the clients. Technology accounted for 23% share in revenue and reported a sequential decline of 0.7% in Q1 2016. On the other hand, financial services, which accounted for 8% share in the revenue, reported the maximum sequential growth of 6.8% in Q1 2016

Talent  At the end of Q1 2016 (quarter ending March 2016), 48% of Convergys’ contact center employees were in the Philippines, 23% in North America, 13% in India, Southeast Asia, & China, 9% in Europe, Middle East, & Africa, and 7% in Latin America

Future growth  For Q2 2016 (quarter ending June 2016), Convergys anticipates revenue decline to be in the range of 3-4% due to the seasonality of business and volume fluctuations with some clients  Operating margin is expected to decline by 200 bps in Q2 2016 due to seasonal reduction in revenue and negative impact on profit on account of increased investment in agent training and infrastructure for new programs to be launched later in FY 2016 (year ending December 2016)

Other significant developments Type of announcement Description

Headcount  During the quarter, Convergys announced plans to: – Lay off 163 employees from the Jacksonville, United States, as its contract with an existing client will end in August 2016 – Lay off 300 employees from its Swords, Dublin facility as the firm lost a major client in April 2016  Convergys plans to expand its business in the United States and Canada to strengthen its customer service and technical operations. The firm also plans to hire approximately 12,000 employees by end of August 2016  Convergys plans to hire 640 customer service, sales, and technical support representatives for its call centers in Columbia. Convergys currently employs ~1,000 people at the location

Others  During the quarter, there were speculations that Convergys planned to acquire Minacs, a BPO firm, for US$500 million. The acquisition would help the company to strengthen its position in India

Source: Everest Group (2016); company websites

Recent transaction announcement No transaction activity announced during the quarter

Location footprint Country City Month Headcount Function Other comments United States Chicago April N/A ITO – ADM Dell opened a new solution center in Chicago, United States, to help and IO customers test and develop next-generation technologies. The facility will serve clients across all industries such as healthcare, education, manufacturing, banking, and retail, by providing them access to Dell technology, such as PCs, servers, software, and security

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance CodeObjects Dell Services expanded its partnership with CodeObjects, a provider of software and services platform (United States) for the Property and Casualty (P&C) insurance industry. As a part of the partnership, the firm launched a new Business Process-as-a-Service (BPaaS) offering to enable insurance carriers improve agent customer service, control costs, increase productivity, and focus resources on higher-value business activities Alliance Ensocare Dell partnered with Ensocare, a healthcare organization, to enable the coordination of discharge (United States) management and care transition processes for hospitals. The cloud-based discharge management platform is designed to help Dell hospital clients improve bed utilization and patient experience

Note: For this report, Dell services has been considered as a subsidiary of Dell Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance SAP Dell partnered with SAP to launch new solutions, innovations, and services that will deliver insights and (Germany) agility to organizations processing large volumes of data. The new offerings will help customers optimize SAP solution environments running on the cloud, deploy IoT-enabled solutions, and streamline data migration and analytics with Dell’s services Alliance Securonix Dell partnered with Securonix, a provider of security intelligence platform, to provide improved security (United States) analytics in Active Directory (AD) and enterprise application. As per the alliance, Securonix’s products combine machine learning and AI with advance anomaly detection techniques, to help predict, prevent, and respond to cyber-security threats Alliance Software AG Dell collaborated with Software AG, an enterprise software company, to launch a new IoT architecture (Germany) that allows enterprises to perform real-time edge analytics. The partnership will focus on preventative and predictive maintenance, to help companies address their top operational challenges Alliance Utilitywise Dell partnered with Utilitywise, a utility, energy, and water cost management consultancy, to sell IoT (United Kingdom) solutions to clients. The alliance will focus on selling building automation solutions by integrating Utilitywise's infrastructure and industry knowledge with Dell’s software and hardware

Other significant developments Type of announcement Description

Capability  Dell updated SharePlex, an Oracle-to-Oracle replication suite, to help SAP customers switch from the Big Red One to ERP’s Hana in-memory database. The expanded support for modern database platforms will help organizations leverage improved performance from in-memory databases and drive analytics initiatives  Dell launched an updated version of Statistica, an advanced analytics platform, for making the systems accessible to users. The expansion includes updating the user interface, making the platform available for a wider range of users, expanding in- database analytics to systems including Apache Hive, and adding edge IoT analytics

Note: For this report, Dell Services has been considered as a subsidiary of Dell Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  Dell announced that it will provide the open-source Midokura Enterprise MidoNet (MEM) as an alternate performance (continued) speeding agent for the Dell Red Hat OpenStack Cloud Solution. The collaboration will enable organizations to build Dell’s solution with network virtualization technology from Midokura

Management changes  Dell Services appointed Dan Allison as Vice President and Global General Manager for the healthcare and life sciences division. He most recently served as Managing Director of DEAllison Enterprises  Paul Perez, Chief Technology Officer for Enterprise Solutions, left the firm to pursue other opportunities. Following his departure, Robert Hormuth, Dell Fellow, will assume interim leadership of the CTO team  Dell appointed Pete Koliopoulos as Vice President of Global Channels and Alliances for its systems and information management group. He most recently served as Vice President, Global Partner Marketing of VCE, a division of EMC

Others  Dell-EMC merger update: – Dell retained its name after merging EMC and the new entity will be called Dell Technologies – All enterprise products and solutions, sold directly and indirectly through the combined enterprise business, will go by the name of Dell-EMC – Dell received approvals from the U.S. and European regulators and is now only awaiting approval from the Chinese authorities and shareholders – Howard Elias, President and Chief Operating Officer for EMC’s Global Enterprise Services, will become the President of the combined Dell-EMC services group – Dell announced that the company sold Dell Software Group, its software division, to Francisco Partners, a private equity group and Elliott Management, a hedge fund management firm. The deal is estimated to be worth US$2 billion. The divestiture includes several of Dell’s acquisitions in recent years such as Quest, SonicWall, and Enstratius – Dell launched a US$3.25 billion junk bond, as a part of a financing package to fund its US$ 67 billion purchase of EMC

Note: For this report, Dell Services has been considered as a subsidiary of Dell Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others (continued)  NTT received approval from Competition Commission of India (CCI) to acquire Dell Services, the IT services arm of Dell. The acquisition will help NTT expand its presence in North America, strengthen its global delivery network, and bolster its infrastructure services capabilities  Dell launched the Smart City Partner Ecosystem that aims to create a network of organizations with technology expertise. The network will bring together providers offering different solutions and capabilities to help in execution of Smart Cities & IoT projects. Currently, the network has 12 partners  Dell Launched an IoT Solutions Partner Program with over 30 companies including firms such as General Electric, Microsoft, OSISoft, SAP, and Software AG. The firm is looking for Independent Software Developers (ISVs) and integrators in Brazil to develop IoT projects. Through the program, Dell will offer partners access to its product portfolio, support, and opportunities for business growth  Dell launched an entrepreneurial growth program for scale-ups in Scotland. The program aims at providing technology, training, and access to Dell events to the selected companies  Dell Software announced plans to launch a new partner program to focus on four business lines – systems and information management, security solutions, Dell Boomi, and StatSoft  In an effort to expand its presence in China's cloud-computing market, Dell helped its Chinese local partner establish a new firm by offering technology support  A magistrate judge in Texas, United States, refused to put on hold RealTime Data's patent infringement suit against Dell, HP, and Oracle along with several other companies. The defendants continue to challenge the validity of RealTime's patents in a separate proceeding  Dell collaborated with Shiv Nadar University to drive research and innovation. Under this agreement, Dell will engage with students and jointly work on technology projects in areas such as big data, cloud computing, and IoT. The firm has also set up two laboratories jointly with the university, to integrate theoretical concepts with practical experience  A United States court ruled that Michael Dell, founder of Dell and Silver Lake Partners, an investment firm, underpriced their 2013 US$24.9 billion buyout of Dell by about 22%. After the presiding, Michael Dell and Silver Lake Partners might have to pay in millions to investors who opposed the deal  Dell announced plans to offer initial stock sale of SecureWorks, the security firm it bought for US$612 million in 2011. Once it goes public, SecureWorks would be worth around US$1.4 billion

Note: For this report, Dell Services has been considered as a subsidiary of Dell Source: Everest Group (2016); company websites

Recent transaction announcement No transaction activity announced during the quarter

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Automation EXL collaborated with Automation Anywhere, a provider of RPA solutions, to enhance its automation Anywhere and robotic suite of solutions. As per the alliance, EXL will combine its business operation, analytics, (United States) and industry expertise with Automation Anywhere’s RPA platform to help clients in increasing the speed and accuracy of business processes

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue increased by 0.7% sequentially to reach US$167 million in Q1 2016, driven by growth in analytics services  Adjusted operating margin increased by 26 bps over the last quarter to reach 15.0%, driven by optimization in the cost structure

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Geographies: The United States reported a sequential increase of 0.9% followed by 0.6% increase in United Kingdom. Rest of the World (RoW) witnessed a decline of 1.9%, compared to Q4 2015  Services: Analytics grew by 6.9% over the last quarter to reach US$39 million, driven by strong organic growth and contribution from RPM Direct. On the other hand, operations management declined by 1% sequentially to reach US$128 million due to the decline in consulting services  Verticals: Insurance witnessed the maximum sequential growth of 3.7%, followed by healthcare (1.7%) and travel, transportation, & logistics (0.3%). Utilities and banking & financial services fell by 6.1% and 0.2% respectively

Talent  Headcount was 24,375 at the end of Q1 2016, witnessing an addition of 314 employees over Q4 2015  Attrition rate increased to 31.0% in Q1 2016 from 30.6% in Q4 2015

Future growth  EXL increased its revenue guidance from US$690-706 million to US$694-706 million, with constant currency growth to be in the range of 12-14% for FY 2016 (year ending December 2016)  Revenue growth will be driven by strong momentum in analytics, strong pipeline in operations management, and in the insurance, healthcare, and travel, transportation, & logistics vertical

Other significant developments Type of announcement Description

Capability  EXL launched Care Radius 3.1, a new version of its cloud-based total population health platform. The offering will integrate members’ data from multiple sources and help practitioners to enhance clinical decision-making, improved workflows, and reduced administration cost

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services No transaction activity announced during the quarter

Location footprint Country City Month Headcount Function Other comments United States San Francisco April N/A N/A Genpact opened its Lean Digital Innovation Center in Silicon valley, United States to drive digital transformation for its customers. The new facility aims to create synergies between its partner and client ecosystems using digital technologies

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition PNMsoft Genpact entered into an agreement to acquire PNMsoft, a provider of business process management (United Kingdom) solutions. PNMSoft will act as a core component in Genpact's digital portfolio as it complements and integrates pre-existing systems of records that host manual process work. The amount for the acquisition was not disclosed Alliance BPI Technologies Genpact partnered with BPI Technologies, an IT solutions provider, to help large pharmaceutical, (United States) biotech, and medical device companies automate Gross-to-Net (GTN) processes across various functions. The two companies will jointly launch a solution to allow firms to eliminate the cost of internal and external linkages in their supply chain Alliance Mendix Genpact partnered with Mendix, an application Platform-as-a-Service (aPaaS) provider, to launch (United States) solution for financial institutions helping them standardize model risk processes. Genpact will develop automation solutions by using Mendix platform to improve model compliance operations

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance NFU Mutual Genpact partnered with NFU Mutual, an insurance company, to deliver NFU Mutual advised and direct- (United Kingdom) to-consumer offerings on Genpact’s OpenWealth platform. The platform will enable wealth managers raise assets and manage investor relationships

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 5.7% over the last quarter to reach US$610 million in Q1 2016  Operating margin decreased by 50 bps to reach 12.4% in Q1 2016

Segments  Services: Revenue from business process outsourcing declined by 3.6% sequentially and contributed 80% to the total share. IT services revenue fell by 13.5% and contributed the remaining 20% share  Verticals: The revenue declined across all the verticals, as technology, healthcare, and other services declined by 8.4%, followed by BFSI (5.5%) and pharmaceuticals & medical equipment manufacturing (4.3%)

Talent  Headcount increased from 72,400 in Q4 2015 to 73,900 in Q1 2016  Attrition rate increased by 50 bps from the last quarter to reach 24.9% in Q1 2016

Future growth  For FY 2016 (year ending December 2016), Genpact expects: – Revenue to be in the range of US$2.62-2.66 billion (growth of 8-10% on constant currency basis), assuming an adverse foreign exchange impact of ~US$35 million – Adjusted operating margin to be ~15.5% – Global client revenue growth to be in the range of 12.5-14% on constant currency basis

Source: Everest Group (2016); company websites

Other significant developments

Management changes  Genpact appointed Carol Lindstrom to its Board of Directors. Carol retired from Deloitte where she served as the Vice Chairman of the firm

Capability  Genpact launched Neural Intelligence Platform, to automate and digitize business process solutions. The new platform will use Genpact’s lean digital approach and deep learning technologies to transform customer experience. The platform consists of three layers – a data engagement platform that manages unstructured data sources, an intent assessment & reasoning engine that includes sentiment and predictive analytics, and a machine learning capability that can sense, act, and learn over time

Others  Genpact announced Returning Moms Program, a policy for new mothers, where women returning from maternity will be able to chose their own shift and work from the nearest office location. The company will also offer subsidized day care for employees’ children and reserve car parking spaces for women  Genpact partnered with the Institute for Certification of Computing Professionals (ICCP) to develop a certification program for data scientists. The program will certify scientists to address the regulatory compliance needs of clients in banking and financial services sector  Genpact deployed xiQ's Watson powered Marketing Intelligence Platform, to identify real-time market intelligence that will enhance efficiency and support client growth

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services LeasePlan June 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments Mexico Guadalajara July Plans to ITO – ADM HCL opened a new delivery center in Guadalajara, Mexico, to serve hire 500 and IO clients in the United States. The new facility will provide application FTEs development, software testing, and IT infrastructure management services. HCL plans to hire 500 employees, increasing the total headcount of the location to 1,500 in the next few years

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Aspect Software HCL expanded its collaboration with Aspect Software, a software company, to offer Aspect’s complete (United States) Contact Center solutions to Middle East and Singapore. HCL Services will resell Aspect’s contact center solutions including Unified IP (UIP), Self Service, and Aspect Workforce Optimization (WFO), broadening its portfolio Alliance Movimento HCL collaborated with Movimento, a provider of Over-The-Air (OTA) technology solutions, to expand its (United States) offerings for the smart vehicle ecosystem. The partnership will offer automotive lifecycle management, updates, and support for on and off-board software. Both the companies will provide Original Equipment Manufacturing (OEM) solutions to automotive industries, which includes system integration to deployment, ongoing operations, and customer support

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Rightware HCL partnered with Rightware, a provider of advanced User Interface (UI) technology for automotive (Finland) applications, to expand smart mobility services. The partnership will enable HCL to help automotive solution providers and manufacturers with advanced UI creation, including design, development, systems integration, deployment, and support

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue in Q1 2016 increased by 1.3% over the previous quarter to reach US$1,587 million  Operating margin increased by 70 bps against Q4 2015 to reach 20.7% in Q1 2016

Segments  Geographies: During Q1 2016, Americas, the largest market with a share of 62.5%, grew by 3.8%. Rest of the World grew by 1.3%, while Europe witnessed a decline of 3.7%  Services: All service lines except business services, which declined by 4.2%, witnessed sequential growth during the quarter. Infrastructure services reported a sequential growth of 3.3%, followed by engineering and R&D services (1.9%), and application services (0.1%)  Verticals: Lifesciences and healthcare witnessed the maximum sequential growth of 6.3%, followed by public services (6.1%) telecommunications, media, publishing, & entertainment (3.4%), and manufacturing (1.0%). On the other hand, financial services and retail & CPG witnessed a sequential decline of 2.2% and 1.9% respectively

Talent  Attrition in IT services (last twelve months) and business services increased by 60 bps and 50 bps, compared to the last quarter to reach 17.3% and 6.9% respectively  Blended utilization improved during the quarter from 84.7% in Q4 2015 to 85.6% in Q1 2016

Future growth  HCL continues to expect EBIT margin to be in the range of 21-22% in the fiscal year ending June 2016

Source: Everest Group (2016); company websites

Other significant developments Type of announcement Description

Management changes  Tim Bohling, Strategic Advisor, Vice President & Head of North America Marketing, left the firm to join Stratasys as Chief Marketing Officer

Others  HCL and Disney filed motions to dismiss the complaint filed by by two former Walt Disney employees in Orlando, United States. The lawsuit alleged that HCL along with Cognizant and Disney World, had replaced Disney’s workers with less costly foreign employees using H-1B visa  HCL along with IBM, Dell, Infosys have decided not to seek gender information from the applicants, in order to promote gender equal opportunity at the work place  HCL was sued by one of its former employees, K Ramesha, for unsatisfactory performance after which he filed a lawsuit against the firm questioning his removal. The court has asked HCL to reinstate him with full salary, back dated wages, and a position of seniority. According to the Court, HCL’s appointment order did not contain any provision to show that failure to improve the performance would result in dismissal of the employee  HCL announced plans to change its appraisal cycle to April-March effective from FY 2017. Earlier, the company had changed its financial year reporting from July-June to April-March  HCL announced Inspire, a program to drive employee awareness and adoption of various internal platforms. As a part of the initiative, 200 managers have already been trained, who will guide a minimum of a five team members each to support the company’s culture and beliefs  HCL, along with TCS and Infosys, is following the concept of offering shadow positions to the top-performing employees. The initiative will allow the company to build a talent pipeline and retain & promote youngsters to handle company’s top level positions and company’s primary projects  According to sources, HCL may lose clients in the future because of the recent shift to cloud services. In the past, the company lost US$1.5 billion renewal contracts, bringing down net erosion to 20% in the last two years  HCL along with Infosys, Wipro, TCS, and Tech Mahindra lost US$7.33 billion (INR 50,000 crore) market value due to the exit of United Kingdom from the European Union. HCL alone accounted for a loss of US$758 million (INR 5,078.73 crore) in the process. The firms are taking cost cutting measures to overcome currency fluctuations

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services U.S. Department of April 2016 443 10 AO and IO Defense

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance General Electric HPE collaborated with General Electric’s digital business segment. Together, the companies will offer (United States) solutions to clients for real-time analytics and insights by combining HPE’s IoT technology with GE’s industrial expertise and its Predix platform Alliance SAP HPE expanded its partnership with SAP to include new technology innovations across its portfolio of (Germany) products and services to help customers transform to a hybrid infrastructure. In addition to the product innovations, HPE also launched services to support implementation stages of SAP HANA Alliance NEC Corporation HPE and Aruba, a subsidiary of HPE, collaborated with NEC Corporation, an IT service provider. By (Japan) integrating HPE and Aruba’s wireless and wired networking portfolio with NEC’s Software-Defined Networking (SDN) solutions, the companies will accelerate the adoption of mobile-first networking to improve workplace productivity

In May 2016, Hewlett Packard Enterprise (HPE) announced that it will spin off its Enterprise Services business and merge it with CSC for US$8.5 billion to form a new entity by 2017

Source: Everest Group (2016); company websites

Key takeaways from Q1 20161 earnings call Category Description

Financials  Revenue from HP ES increased marginally by 0.7% over the last quarter to reach US$4,723 million  Operating margin increased by 164 bps to reach 6.7% in this quarter

Segments  Services: Infrastructure technology outsourcing accounted for 60% share in revenue and reported a sequential decline of 1.2%, while application and business services, accounting for the remaining 40% share, witnessed a sequential growth of 3.9%

Future growth  For FY 2016 (quarter ending October 2016), the firm continues to expect margins to be in the range of 7-9%  HPE continues to anticipate operating profit margin to be in the range of 6-7% for FY 2016 (year ending October 2016), on account of progress made on cost improvements, sales strength, and quarterly seasonality

Other significant developments Type of announcement Description

Capability  HPE launched the Universal IoT Platform, a software designed to help manage different network-connected devices and collect and analyze the data generated. The software can be run on servers operated by customers or on machines operated by the company or by the public cloud services of Amazon and Microsoft  HPE launched new High-Performance Computing (HPC) solutions, including a comprehensive software-defined platform, and ANSYS, a computer-aided engineering software-based solution. The platform is designed to help manufacturing organizations in optimizing their design simulation deployments  HPE launched an upgraded version of HPE Helion cloud portfolio. The new software suite will help customers in delivering and managing applications across a range of infrastructure environments  HPE launched HPE Verity suite, an integrated set of applications and services to help businesses manage, govern, and extract insights from enterprise information. In addition, HPE also launched HPE Verity Information Archiving to help organizations manage and control data in accordance with regulatory, legal, and operational needs  HPE launched workload-optimized compute platforms and solutions to help customers accelerate time-to-value with learning systems, HPC, and financial services industry applications

1 For the quarter ended April 30, 2016 Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  HPE launched the Operations Bridge Suite (OpsBridge), an analytics-driven IT management software. The new solution will (continued) give IT managers key insights about the performance of the hybrid applications and platforms to ensure the efficiency of the operations

Management changes  HPE announced the following management changes during the quarter – Martin Fink, Chief Technology Officer and Head of Hewlett Packard Labs, to retire from the firm by the end of 2016 – John Hinshaw, Chief Customer Officer, will step down from the position by the end of 2016. Chris Hsu, Chief Operating Officer will now supervise HPE’s security and internal IT operations – Peter Ryan, Senior Vice President and Managing Director for EMEA will also lead the global sales team  HPE plans to create a single marketing organization under Henry Gomez, Chief Marketing and Communications Officer. Besides product marketing, he will also be responsible for e-commerce and customer advocacy

Others  In May 2016, HPE announced the spin off its Enterprise Services business and its merger with CSC for US$8.5 billion. Together, the companies will form a new entity by March 2017, whose board will comprise a 50-50 split between Directors nominated by CSC and HPE. The new firm will have following developments: – Annual revenue of US$26 billion, making it the third largest IT services company after IBM and Accenture – More than 5,000 customers across 70 countries with 20 global delivery centers and 95 datacenters – US$3 billion revenue from next-generation offerings – Anticipated first-year cost synergies of ~US$1 billion post-close, with a run rate of US$1.5 billion by the end of first year – Mike Lawrie, Chairman, President, and CEO of CSC, will assume the same position in the combined entity – Paul Saleh, Chief Financial Officer of CSC will continue with the same position in the new entity – Meg Whitman, HPE’s President and CEO, will join the new company’s Board of Directors – Mike Nefkens, Executive Vice President and General Manager of HPE Enterprise Services, will report to Mike Lawrie and become a part of new firm’s executive team

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  HPE signed a definitive agreement to sell its equity stake in Mphasis, a Bengaluru-based IT Services company, to (continued) Blackstone Group for US$825 million. As a part of the deal, HPE will continue to work with Mphasis for ~11 years, it being the largest client for Mphasis  A magistrate judge in Texas, United States refused to put on hold RealTime Data's patent infringement suit against HP, Dell, and Oracle along with several other companies. The defendants continue to challenge the validity of RealTime's patents in a separate proceeding  HPE accused Oracle for aiding the sales collapse of Itanium chip-based systems and seeks US$3 billion in damages. HPE alleged that Oracle helped Itanium-powered systems sales to plunge after the acquisition of Sun Microsystems in January 2010 that turned Oracle into a competitor for erstwhile HP

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services BBC April 2016 N/A 5 BPO – CC, HR, and F&A and AO Abof May 2016 N/A N/A AO Bendigo and Adelaide June 2016 N/A N/A IO Bank Blackboard June 2016 N/A N/A IO Boots June 2016 N/A N/A AO Emirates Airline June 2016 300 10 AO INPEX Corporation June 2016 N/A 5 AO

Location footprint Country City Month Headcount Function Other comments Australia Canberra June N/A N/A IBM announced plans to open a National Cyber Security Center (NCSC) in Canberra, Australia. The facility will allow clients to access IBM threat sharing platform and will provide emergency response teams for the security incidents and will partner with Australian Security Development Lab Costa Rica N/A June N/A ITO – cloud IBM opened a new cloud services center in Costa Rica. The center supports computing 14 datacenters globally, more than 15 cloud products, infrastructure, and and IO customer applications used within the cloud services

Source: Everest Group (2016); company websites

Location footprint (continued) Country City Month Headcount Function Other comments Hungary Székesfehérv June Plans to hire BPO – IBM announced plans to expand its IT service center in Székesfehérvár, ár 410 FTEs procurement Hungary, by adding 410 employees at the facility. The center will provide IT, and ITO procurement, laboratory, and education services from the center, serving more than 300 Western European companies South Korea Seoul and June N/A ITO IBM opened a design studio in Seoul, South Korea and Singapore, to support and Singapore digital reinvention for clients in Asia. The facility will host designers and Singapore digital experts from IBM Interactive Experience (iX), which provides next- generation services dedicated to creating personalized brand experiences United States Columbus June Plans to hire BPO – IBM announced plans to add 500 jobs in its business intelligence campus in 500 FTEs analytics Northwest Columbus, Ohio, United States for the role of big data analytics United States New York June N/A ITO IBM launched a new Bluemix Garage in New York, United States, to provide blockchain code on its cloud to developers, entrepreneurs, and Fintech companies Thailand Bangkok May N/A ITO and R&D IBM launched a new R&D center in Bangkok, Thailand in collaboration with / engineering True Corporation, a Thailand-based communication conglomerate. The facility will provide digital technology solutions to startups and enterprises United States Monroe May Plans to ITO – ADM IBM announced plans to open an application development and innovation create ~400 and R&D / center in Monroe, Louisiana, United States jobs engineering United States New York May N/A N/A IBM plans to expand the center in North Castle, New York, United States as it closes its facility Somers, New York. The office in Somers employs ~2,000 FTEs in systems and software divisions and will be relocated to North Castle center by March 2017

Source: Everest Group (2016); company websites

Location footprint (continued) Country City Month Headcount Function Other comments Canada Saint John April Plans to hire ITO IBM announced plans to expand the center in Saint John, New Brunswick, 110 FTEs Canada by adding 100 more employees. The firm is looking to fill a range of positions, from entry level to senior technical roles United States Buffalo April Plans to hire ITO IBM announced plans to open an IBM Innovation Center in Buffalo, New 500 FTEs by York, United States. The firm will hire 500 employees by the end of 2021 September 2021

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition EZSource IBM acquired EZSource, an application discovery company, to help developers in modernizing mainframe (Israel) application for digital business. Together, the companies will help developers in identifying and changing parts of applications that connect into the hybrid cloud via application programming interfaces Alliance Acxiom IBM partnered with Acxiom, an enterprise data, analytics, and SaaS company, to develop analytics tools. (United States) Together, the firms will help enterprises utilize predictive customer analytics on IBM Cloud to reduce time spent in data wrangling Alliance Bausch + Lomb IBM partnered with Bausch & Lomb to develop a new cataract surgery application. The offering will help (United States) doctors to access and store patient health-related data on IBM cloud Alliance Cisco IBM partnered with Cisco to provide instant IoT insights to businesses and organizations in remote and (United States) autonomous locations. The partnership will enable the businesses to tap IBM’s Watson IoT and business analytics technologies and Cisco’s edge IoT analytics capabilities to understand and act on critical data on network edge

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance DocuSign IBM collaborated with DocuSign, a provider of electronic signature technology and digital transaction (United States) management services. The collaboration will give access to public, private, and hybrid cloud services to clients in banking, retail, and telecom industry and users of IBM solutions for human resources and enterprise content management Alliance ODH IBM partnered with ODH, a provider of healthcare solution, to launch Mentrics, a health management platform. (United States) This solution will generate cognitive insights into risk stratification that will optimize care for patients with behavioral health conditions. IBM Watson Health Cloud will be used to analyze the data and identify trends Alliance Pfizer IBM partnered with Pfizer, to develop innovative remote monitoring solutions for people suffering from (United States) Parkinson's disease. Together, the firms will provide a real-time symptom information to clinicians and researchers Alliance Rambam Health Care IBM Watson Health along with Medtronics, a medical device company, collaborated with Rambam Health Care (Israel) in Haifa, Israel. Under the partnership called MindUP, the companies plans to set up an incubator to encourage innovations in digital medicine in Haifa. The companies will help startups in the field of telemedicine, cloud computing, wearable & implantable diagnostic sensors, and information technology systems for hospitals Alliance Reliance IBM partnered with Reliance Communications, to provide end-to-end integrated e-commerce services for Communications India’s small- and medium-size business market. As per the alliance, IBM will provide Reliance Communication (India) customers secure and scalable Infrastructure-as-a-Service (IaaS) on IBM Cloud Alliance SAP IBM partnered with SAP, to develop analytics solutions based on SAP Business Suite 4 SAP HANA (SAP (Germany) S/4HANA). Together, firms will provide an increased customer value through cognitive extensions, enhanced customer and user experiences, and industry-specific functionality Alliance SK Holdings C&C IBM partnered with SK Holdings C&C, an IT company, to provide the Korean-language edition of IBM's Artificial (South Korea) Intelligence (AI) program by mid-2017. The alliance will give South Korea-based developers a set of localized APIs and services they can use to create own applications and build new businesses

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Trintech IBM partnered with Trintech, a provider of financial software solutions, to offer operational reconciliation and (United States) data matching solutions to BPO clients. IBM will integrate Trintech’s ReconNET and develop a SaaS-based solution to ensure transparency and control while mitigating risks in the process Alliance True Corporation IBM launched a new R&D center in Bangkok, Thailand in collaboration with True Corporation, a (Thailand) telecommunications company. The facility will provide digital technology solutions to startups and enterprises to help them enhance their competitive business advantage Alliance Twilio IBM partnered Twilio, the cloud communications company, to launch IBM Watson Message Sentiment and (United States) IBM Watson Message Insights, available as add-ons in Twilio marketplace. The offering provides additional message enhancement capability to help understand sentiment, keywords, and concepts from text messages Alliance Vodacom (United IBM partnered with Vodacom and Gijima to launch a cloud datacenter in Johannesburg, South Africa. The Kingdom) and Gijima facility will provide SAP enterprise customers in Africa access to IBM's global network of cloud datacenters (South Africa) and services expertise

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue for IBM Global Services stood at US$12,555 million in Q1 2016. The firm reclassified its segments including consulting, global process services, and application management in its Global Business Services (GBS), however, overall content of the segment remained unchanged. Global Technology Services (GTS) is not a part of technology services & cloud platforms which includes infrastructure services, technical support services, and integration software  Operating margin for Q1 2016 was 3.6%, with an operating income of US$448 million

Segments  Services: Technology services & cloud platforms represented 67% of revenue with US$8,424 million during Q1 2016. While, Global Business Services (GBS), that represented 33% of revenue, witnessed a sequential decline of 3.9% to reach US$4,131 million

Source: Everest Group (2016); company websites

Other significant developments Type of announcement Description

Capability  IBM launched the MobileFirst Foundation 8.0, an enterprise middleware that provides cloud-based Mobile Back-end-as-a-Service (MBaaS) for enterprise mobile applications, along with other associated products and services  IBM announced new advancements for Bluemix OpenWhisk, its serverless platform utilizing Docker containers. The new tools allow developers to build applications that connect to IoT and tap into cognitive and analytics services without the need to deploy and manage extra infrastructure  IBM launched a new version of its database software, the IBM DB2 V11.1, which will help developers in the development of on- premises applications to cloud. The software offers a secure environment to protect data both during transmission and at rest  IBM launched Data Science Experience, a cloud-based development environment for Apache Spark. The environment provides curated data sets, open source toolsets, and a collaborative space, helping data scientists work with developers to build applications  IBM launched Spectrum Computing, a resource and workload management software, that will allow organizations to extract value from data for analytics or machine learning. The platform assists organizations in consolidating datacenter infrastructure and sharing resources across on-premise, cloud, or hybrid environments  IBM launched the Cloud Security Enforcer, a cloud security solution with integrated access control, transparency, and protection functionality. The solution enables businesses to detect all cloud applications in use and monitor user activity, including usage on mobile devices  IBM launched the Quantum Experience, a cloud-enabled quantum computing platform, to allow users run algorithms and experiments on IBM’s quantum processor  IBM added new features to the RefStack Project, which was created as part of the OpenStack community’s effort to drive interoperability across clouds. RefStack’s new functionality includes improved usability and stability to ensure integration of cloud workloads running on OpenStack  IBM launched a new framework for securely operating blockchain networks, as well as new services on the IBM cloud that are designed to meet existing regulatory and security requirements. Working with teams of security experts, cryptographers, hardware experts, and researchers, IBM created new cloud services for secure blockchain networks

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Headcount  As per sources, IBM announced plans to initiate another round of layoffs that will impact nearly 14,000 jobs in 2016. The firm announced that it plans to restructure its workforce to retool for cloud services and data analytics, and will hire an equal number of new employees by the end of 2016. However, the company employees are of the opinion that the jobs will be transferred to offshore locations such as India, Brazil, and Costa Rica – Nearly 185 employees are expected to leave the organization from Global Technology Services in United Kingdom by August 2016 – About 900 jobs cuts are anticipated in Germany in 2016  IBM announced plans to hire 25,000 employees for newer technologies such as cognitive and cloud computing

Management  IBM made the following appointments during the quarter: changes – Rani Borkar was appointed as Vice President, IBM OpenPower Development. Previously, she was Vice president and General Manger of Product Development Group in Intel Corporation – David Hathaway, Vice President and Partner of Public Sector Application Development and Innovation was promoted to Vice President and Partner of Defence and Intelligence, IBM Global Business Services  During the quarter, IBM announced following departures: – Raymond Kanner, Chief Investment Officer, retired from the firm – Sajid Awan, Country Leader, IBM Global Services, left the firm to join Veriflow as Vice President of Products – Akash Singh, Chief Researcher, left the firm to join Skry as the Chief Technology Officer

Others  IBM partnered with University of Maryland, Baltimore County (UMBC) to create the Accelerated Cognitive Cybersecurity Laboratory (ACCL), which will be housed within the College of Engineering and Information Technology at UMBC. The lab will focus on the advancement of cognitive computing, cybersecurity, and machine learning  IBM partnered with National Association of Software and Services Companies (NASSCOM) to launch Techstartup.in, an online digital platform for the Indian startups, in Mumbai on IBM cloud. The platform serves as a centralized hub for India’s tech ecosystem, providing information and resources to help turn ideas into businesses  IBM collaborated with University of Michigan, to develop and deliver a data-centric supercomputing system. The offering will provide increased scientific discovery in the field of aircraft & rocket engine design, cardiovascular disease treatment, materials physics, climate modeling, and cosmology Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  IBM partnered with American Cancer Society (ACS), to provide cancer patients, survivors, and caregivers with ACS resources and (continued) guidance through their journey against cancer  IBM collaborated with American Diabetes Association to analyze clinical and research data to manage diabetes patients. IBM Watson Health will use data to build cognitive applications for doctors, researchers, and patients  IBM announced plans to undertake research with Melanoma Institute in Australia to help further advance the identification of melanoma using cognitive technology. IBM Research plans to analyze dermatological images of skin lesions to help identify specific clinical patterns in the early stages of melanoma. This will help reduce unnecessary biopsies and help clinicians more accurately understand skin cancer which could help to improve patient care  IBM partnered with the United States Government to bring Watson technology into America’s hospital and healthcare network. The partnership will bring IBM Watson for Genomics technology into the U.S. Department of Veterans Affair’s hospitals and doctors’ offices, enabling soldiers to access innovative genomic treatment options  IBM announced plans to offer Apple Pay on the web to its online clients, to enable secure and private payments for the customers. IBM clients will be able to offer their customers the option to use Apple Pay on the web to help eliminate time-consuming steps required when making a purchase on any of the Apple devices  IBM collaborated with ING Direct Australia to attract, engage, and build brand loyalty. Under the partnership, ING Direct will deliver personalized banking services to online and mobile customers using IBM’s technology. The collaboration will generate insights of a consumer’s interactions and preferences and immediately connect them with the information they need  IBM collaborated with University of Calgary to accelerate and expand genomic research into autism, congenital diseases and other unknown causes of illness. As part of the collaboration, IBM will augment the existing research capacity at Cumming School of Medicine’s Alberta Children’s Hospital Research Institute by installing a POWER8-based computing and storage infrastructure along with advanced analytics and cognitive computing software  IBM partnered with Sheridan Healthcare, ifa systems, vRad, University of Miami Health System, Baptist Health South Florida, and Radiology Associates of South Florida, on a global medical initiative. The firms will use IBM’s Watson technology to extract insight from imaging data and bring it to daily medical practice to assist in addressing critical diseases such as cancer

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  IBM partnered with Cloudsoft, a provider of hybrid cloud applications management software, to allow the latter to run its Cloudsoft (continued) Application Management Platform (AMP) on IBM cloud. As part of the agreement, Cloudsoft and its customers will be able to deploy and manage applications in IBM Blue Box OpenStack-powered private clouds in IBM cloud datacenters in the Americas, Europe, and Asia Pacific  IBM plans to collaborate with the University of Illinois Urbana-Champaign to create the Center for Cognitive Computing Systems Research (C3SR) that will be housed within the College of Engineering on the Urbana campus. The C3SR will build and optimize integrated systems such as cognitive computing systems modeled on IBM's Watson technology  IBM launched IBM Health Corps, a corporate citizenship program, to help communities address health challenges such as primary care gaps, health worker shortages, and access to safe water and nutritious food. The initiative will provide expertise in data, analytics, and AI to public health leaders to understand the challenges and implement solutions for health problems

Source: Everest Group (2016); company websites

Recent transaction announcement TCV estimate Buyer name Announcement date (US$ million) Duration (years) Services Asia Green Development Bank April 2016 N/A N/A AO Welsh Water April 2016 N/A 10 IO Commerzbank May 2016 N/A 5 AO Ontario Ministry of May 2016 N/A N/A AO Transportation District of Columbia June 2016 N/A N/A AO Paytm June 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments India Bengaluru May N/A ITO Infosys plans to setup an IT Special Economic Zone (SEZ) in Bengaluru, India. The firm has also received approval for the same from the state government India Bengaluru April N/A ITO – ADM Infosys plans to open a software development center in Bengaluru, India. The facility will have a capacity of 3,000 employees

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Amazon Web Infosys partnered with Amazon Web Services (AWS) to accelerate cloud transitioning. Together, the Services companies will enable clients to move enterprise workloads to the AWS Cloud and securely adopt cloud- (United States) based systems. As a part of the initiative, Infosys is also creating a dedicated AWS Cloud Center of Excellence (CoE) to focus on the services Alliance KUKA Infosys partnered with KUKA Aktiengesellschaft, a provider of solutions for factory automation, to jointly Aktiengesellschaft develop a software platform, to support companies adopt Industry 4.0 Cloud Platform. The new platform will (Germany) allow customers to collect, evaluate, and utilize data for improving their own processes. Connyun, a subsidiary of KUKA will deploy new software and services Alliance Microsoft Infosys expanded its collaboration with Microsoft to simplify and automate migration to Microsoft products and (United States) to help clients in digital transformation. As a part of the partnership, Infosys will expand its team of Azure consultants to 5,000. Both the companies will also establish a global Azure Innovation Center, to help their clients utilize Microsoft cloud platform Alliance Onegini Infosys Finacle, part of EdgeVerve Systems, a subsidiary of Infosys, partnered with Onegini, a software (Netherlands) company, to strengthen digital banking offering. The partnership will integrate the Onegini mobile security platform with Finacle banking solutions. The integration will help banks in providing transactional security to their customers by offering advanced authentication methods, such as fingerprint, facial, eye, and voice recognition Alliance Samsung SDS Infosys partnered with Samsung SDS, a subsidiary of Samsung group, to simplify micro payments and (South Korea) reduce payment authentication processes. The partnership will provide financial services customers with a secure, fast, and convenient way to access mobile banking and payment services

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue increased by 1.6% over the previous quarter to reach US$2,446 million in Q1 2016  Operating margin increased by 67 bps to reach 25.6% in Q1 2016, driven by improved utilization rates and a favorable currency movement

Pricing  The company witnessed a decline in the pricing pressure in Q1 2016. Fixed price contracts increased during the quarter and accounted for 45.1% of the revenue

Segments  Geographies: In line with the previous quarter, India reported the maximum sequential growth of 8.9%, followed by Europe (2.5%), and North America (0.6%). Rest of World reported an increase of 3.4%  Services: Infrastructure management services registered the maximum sequential growth of 8.4%, followed by products, platforms, and solutions (5.7%), application maintenance (4.8%), business process management (3.7%), and product engineering services (1.6%). On the other hand, application development reported a sequential fall of 1.3%, followed by testing services (0.6%), and consulting, package implementation, and others (0.2%)  Verticals: Telecom witnessed the highest sequential growth of 9.2%, followed by healthcare (7.0%), retail & CPG (3.7%), energy & utilities (3.6%), manufacturing & high-tech (1.2%), and banking & financial services (0.9%). On the other hand, insurance reported a decline in revenue by 7.0%, followed by transport & logistics (3.7%), and life sciences (0.1%)

Talent  Attrition rate declined by 80 bps to reach 12.6% in Q1 2016  Infosys reported a net increase of 661 employees during the quarter to reach 1,94,044  Utilization for consolidated IT services (including trainees) increased to 74.7% in Q1 2016, compared to 74.2% in the previous quarter

Future growth  During the Q1 2016 earnings call, Infosys anticipated constant currency revenue growth to be in the range of 11.5-13.5% for FY 2017 (year ending March 2017). However, in June 2016, the firm revised its revenue growth forecast to 10-12% from 11.5-13.5%, considering the impact of exit of United Kingdom from the European Union  Operating margin is expected to be in the range of 24-26% for FY 2017  Infosys expects margins in Q2 2016 (quarter ending June 2016) to be impacted by increase in compensation as well as visa costs

Other significant developments Type of announcement Description

Capability  Infosys launched Infosys Mana, a knowledge-based AI platform, to help clients with automation and innovation. The platform will enable firms to lower the maintenance cost of both old and new systems, reinvent their system landscapes, and enable businesses to bring new user experiences. As a part of the new platform launch, the company hired specialized executives to build the system  EdgeVerve, a product subsidiary of Infosys, launched EdgeVerve Blockchain Framework , a blockchain-based software platform, to promote the adoption of blockchain technology by the global financial services sector. The new framework will help banks in upgrading existing legacy technology systems and achieving low cost, accurate, and secure transactions

Headcount  Infosys announced plans to expand in Indian cities such as Indore, Mohali, Belgaum, Hubli, and Nagpur: – The firm is planning to develop a campus in Nagpur, India, with a capacity of over 4,500 people which will be operational in the next 18 months – The center in Hubli will have a seating capacity of 3,000 employees and is expected to become operational by March 2017 – Other centers will have a total capacity of 5,000 people – The firm also leased additional office space in Pune and Bengaluru during Q1 2016

Management  Sudhir Jha was appointed as Senior Vice President and Head of Product Management & Strategy. Most recently, he served as changes Product Lead at Google  Infosys announced the following promotions: – Mohit Joshi was appointed as President along with his current position of Global Head of Financial Services and Head, Infosys Brazil & Mexico – Anantha Radhakrishnan, as the CEO and Managing Director of Infosys BPO. He previously served as the COO of Infosys, India. Radhakrishnan succeeds Anup Uppadhayay, the incumbent CEO of Infosys BPO, who was promoted to the position of Executive Vice President and Head of Strategic Sales Program – Ravi Kumar S. as the President and the Chief Delivery Officer. He previously served the position of Executive Vice President and Global Head of Insurance, HealthCare, Cards & Payments Business Unit – Sandeep Dadlani, as President and Head of Americas, Infosys. He previously served as the Senior Vice President & Global Head, Retail, CPG & Logistics

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Management  Infosys announced additional responsibilities for the following executives: changes – Mohit Joshi, President and Global Head, Financial Services, was given the additional responsibility of overseeing large deals (continued) – Ravi Kumar, President and Chief Delivery Officer, will look into cost effectiveness and operational efficiency – Rajesh Krishnamurthy, Head of Global Energy, was given additional responsibility of Infosys Consulting – Sanjay Purohit, Consulting Head will work on expanding design thinking to services lines – Sandeep Dadlani, President and Head of Americas, will oversee sales of Mana, its new AI platform – Samson David, Global Head of Cloud and Infrastructure Services, will oversee Mana in implementation

Others  As a part of the broader strategy to bring a cultural shift in the organization, Infosys is training its board members in design thinking. The board members are going through training sessions to solve traditional technological problems using newer & innovative methods. The firm has already trained over 80,000 employees on design thinking  Infosys bought minority stake in Trifacta, a software company, to deploy Trifacta’s data wrangling solution for the Infosys Information Platform (IIP) and other offerings. The investment in the startup will allow Infosys to integrate large & complex data sets, transform & filter the results, and share insights from data within the IIP platform. The collaboration will help clients to enhance their investments from big data  Infosys Foundation USA partnered with National Science Foundation (NSF) and DonorsChoose.org, to provide computer science training to 2,000 teachers. NSF and Infosys Foundation USA have together contributed US$6 million to the initiative  Infosys announced that it has addressed the issues that Ministry of Corporate Affairs (MCA) faced, after Infosys upgraded its system to run on the SAP Platform. However, the authority claimed that the issues were not resolved and the firm has extended the deadline for fixing the glitches from June 10, 2016 to July 10, 2016  Infosys along with Samsung partnered the Karnataka government to launch Chetana, a program to encourage & support girl students who have topped in SSLC (class 10th ) exam from government schools. As a part of the initiative, a five-day camp will be organized to develop their interest in technology

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  As part of the strategy to improve productivity, Infosys overhauled its existing internal systems and processes across various (continued) verticals such as finance, travel, and human resources. The firm extended its earlier announced Process Plus Plus Initiative, by introducing Optionwise, a cost-savings initiative, that led to 10-15% cost reduction for the firm. In addition to this, Infosys also created a new unit, a corporate strategic initiative which is headed by Srividhya VS  Infosys Foundation will provide grants of US$3.55 million (INR 240 million) to Indraprastha Institute of Information Technology (IIIT), Delhi over the next three years. The company is providing funds to establish Infosys’ Center for AI to allow research on new technologies  Infosys announced that the company will provide added rewards to employees who are willing to relocate to smaller towns. The company is taking this step to increase hiring and strengthen its presence in smaller regions  Infosys, along with Wipro, is ramping up its hiring process in the United States to lower its dependence on visas and create a local employee base in the country  Infosys announced an average salary hike of 6-12% for its employees in India and 1.5-2% for on-site employees. The company also promoted around 2,147 employees in the quarter ended March 2016 and gave out 90% of the variable pay to all employees  Infosys Foundation signed an MoU to protect Hebbal lake in Bengaluru, India. The foundation will contribute US$4.43 million for restoring the lake  Infosys announced plans to club the BPO subsidiary business into its service line in order to revive its overall growth. As a part of the strategy, the sales team at BPO and IT services will work together, while the delivery side will continue to work like before  Infosys inaugurated Maharashtra Tourism Development Corporation (MTDC) Tourism Pavilion at its Pune development center. The pavilion will fulfil the objective of promoting tourism and cultural understanding of Maharashtra amongst the employees of the company in Pune, India  Infosys, along with TCS and HCL, is following the concept of offering shadow positions to the top performing employees. The initiative will allow the company to build a talent pipeline and retain & promote youngsters to handle company’s top level positions and company’s primary projects  Infosys announced plans to partner with online education firms such as Udacity, Coursera, and edX, to help its employees develop an understanding of newer AI technologies

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  Infosys formed a finance and investment committee to administer the major investments that the company is making in startups, and (continued) the acquisitions it pursues. The committee will provide oversight on key investment policies of the company. Infosys appointed Roopa Kudva, the current board member, as the Head of the committee  Infosys announced plans to build 170 MW of solar capacity over the next four years to lower its dependence on the grid power. The company will be using its own technology and data from its labs to lay down specifications for future projects  Infosys along with HCL, Wipro, TCS, and Tech Mahindra lost US$7.33 billion (INR 50,000 crore) market value due to the exit of United Kingdom from the European Union. Infosys alone accounted for a loss of US$2.5 billion (INR 12,000 crore) in the process. The firms are taking cost cutting measures to overcome currency fluctuations  Infosys, along with IBM, Dell, and HCL, have decided not to seek gender information from the applicants, in order to promote gender equal opportunity at the work place  Infosys, along with IBM, Wipro, TCS, and Cognizant, is changing the hiring strategy due to increased competition and customers technical requirements. The firms are now looking to hire employees with niche skill sets and is willing to pay them higher salaries  According to sources, Partners Group is in talks with Infosys and TCS to sell its IT services subsidiary, CSS Corporation. Partners Group values CSS at US$400-450 million. The firm is also said to be in talks with private equity funds such as Blackstone Group, Carlyle, and Apax Partners  Infosys and Wipro may see a revival in their long standing investment proposal in Kolkata, West Bengal, India. The new elected government in the state is expected to consider reversing their stance on the IT SEZ status. In 2008, Infosys and Wipro purchased 50 acres each in the city

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Vistara April 2016 N/A 4 AO and IO IDBI Capital May 2016 N/A N/A AO Randstad Group June 2016 N/A N/A AO Bajaj Finance Limited June 2016 N/A N/A AO

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance General Electric TCS partnered with GE to develop digital solutions on the GE Health Cloud. The firm, along with GE’s (United States) healthcare and digital business, will help the healthcare clients in ensuring quality control and regulatory compliance on the GE Health Cloud and its solutions Alliance Sernova Financial TCS collaborated with Sernova Financial, a provider of turn-key post-trade services, to deliver next-generation (United Kingdom) cloud-based derivatives post trade processing services on the Calypso platform. The partnership will enable banks and institutional investment managers maintain compliance with the changing global regulatory environment while reducing risk Alliance Siemens TCS expanded its partnership with Siemens to provide big data analytics solutions to the manufacturing (Germany) industry. The companies will jointly build statistical tools and industrial solution accelerators to simplify and automate the processes on product performance intelligence

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue increased by 1.5% over the last quarter to reach US$4,207 million in Q1 2016, driven by the growth in business volume  Operating margin declined by 53 bps to reach 26.1% during the quarter, due to an increase in the expenses, which was slightly mitigated by favorable currency movements

Pricing  The company witnessed a stable pricing environment during Q1 2016

Segments  Geographies: Middle East & Africa, contributing 2.4% to the total revenue, witnessed the maximum sequential growth of 10.7%, followed by Continental Europe (4.3%), Asia Pacific (3.7%), and North America (2.4%). On the other hand, United Kingdom reported the maximum sequential decline of 4.9%, followed by Latin America (3.3%) and India (0.2%)  Services: Asset leverage solutions registered the highest sequential growth of 16.0%, followed by engineering & industrial services (6.0%), assurance services (3.9%), infrastructure services (1.5%), and ADM (0.7%). While enterprise solutions & consulting and BPO reported a sequential decline of 0.3% and 0.2% respectively  Verticals: Manufacturing reported a sequential growth of 4.5%, followed by BFSI (2.2%), media & entertainment, travel & hospitality, life sciences & healthcare, energy & utilities, and retail & distribution (1.5% each), and telecom (0.3%). On the other hand, high-tech declined by 2.0%, compared to Q4 2015

Talent  Headcount grew by 2.7% to reach 353,843 in Q1 2016  Attrition rate (LTM) including BPS in Q1 2016 was 15.5%, compared to 15.9% in the previous quarter

Other significant developments Type of announcement Description

Capability  TCS launched a new module for its Digital Software & Solutions (DS&S) Group’s Customer Insights & Intelligence (CI&I) Solution for retail banks. The offering includes an operational analytics module which will help retail banks in understanding the impact of the product fulfillment process for consumer banking operations on multiple departmental touch points

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  TCS launched Mobile NFV Management framework for Red Hat OpenStack platform to help network administrators in managing (continued) critical operations safely  TCS launched the Intelligent Urban Exchange (IUX) application to provide intelligent water management to cities. The analytics application will offer prebuilt ‘use cases’ to cost-effectively reduce Non Revenue Water (NRW) loss and ensure delivery of safe water

Others  The Court of Western District Madison, Wisconsin, United States, imposed a fine of US$940 million on TCS and Tata American International in a lawsuit filed by Epic Systems, an electronics medical records vendor. TCS is accused of misusing the documents and confidential information downloaded from Epic System’s user web portal. TCS had denied all the allegations and will appeal in the higher courts  GMB, a UK-based labor union, accused TCS for violating visa rules with respect to Tier-2 visas used to employ foreign workers in the United Kingdom  Following United Kingdom’s decision to exit from the European Union, companies such as TCS, Infosys, Wipro, HCL, and Tech Mahindra lost a combined market value of US$7.33 billion. TCS has ~11,000 people in United Kingdom and is taking cost-cutting measures as a part of the currency fluctuations  TCS replaced the bell curve appraisal system with a continuous feedback evaluation system. With the new system, performance of employees will be judged on a regular basis rather than annually or quarterly  TCS Co-Innovation Network (COIN) partnered with Microsoft Accelerator to develop a platform that provides a boost to the Indian startup ecosystem. Under the partnership, an open innovation framework will be created to help startups in brining innovative solutions to the market  TCS collaborated with Nordea for Nordea Startup Accelerator, a 12-week startup development program in the Nordic region. TCS will provide startups with an insight into the latest technology trends, client requirements, and industry best practices  TCS partnered with Bharathiar University (Tamil Nadu), Swami Vivekananda University (West Bengal), St Xavier's College of Arts and Science (Ahmedabad), Central University of Rajasthan (Rajasthan), and St Joseph's College (Bengaluru), to provide programs in big data starting in July 2016  TCS increased the compensation of its CEO, N Chandrasekaran, by 20% to US$3.8 million (INR25.6 crore) in FY 2016. He was also awarded additional US$1.5 million (INR10 crore) as onetime bonus

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  During the quarter, the IT industry witnessed a slowdown in hiring, attributed to slow revenue growth and adoption of newer (continued) technologies such as cloud computing and automation platforms. Firms such as HCL, Wipro, and Tech Mahindra witnessed a decline in their total hiring, TCS, on the other hand, added 9,152 employees in Q1 2016  TCS announced plans to increase the salary of the employees in India by 8-12% in FY 2017, higher than the 6-12% increment announced by Infosys  TCS signed a MoU with Dubai Electricity and Water Authority (DEWA), to develop DEWA's strategy in R&D, sustainability, and diversification of the energy mix. Both the firms will work together through an innovation program network “Co-Innovation”  In order to increase the diversity of the workforce, companies such as TCS, Dell, IBM, and Infosys, decided that the applicants no longer need to disclose their gender information  According to the sources, TCS has increased the hiring of local employees in onsite locations leading to a fall in the visa application. TCS’ visa applications in April 2016 were a third of that in April 2015  TCS, along with firms such as IBM, Wipro, Infosys and Cognizant, is changing its hiring strategy due to increased competition and customers technical requirement. The firms are now looking to hire employees with niche skill sets and is willing to pay them higher salaries  In order to increase the retention of employees and attract quality talent, TCS plans to introduce shadow positions for top roles to the best performers. The company will offer Mini – CEO, COO or General Manager position to reward and prepare a pipeline for its top performers  According to sources, Partners Group is in talks with TCS and Infosys to sell its IT services subsidiary, CSS Corporation. Partners Group values CSS at US$400-450 million. The firm is also said to be in talks with private equity funds such as Blackstone Group, Carlyle, and Apax Partners

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Nevada Department of Motor June 2016 70 5 AO Vehicles

Location footprint Country City Month Headcount Function Other comments India Tirupati April N/A ITO Tech Mahindra announced plans to set up a CoE in robotics and analytics department in Tirupati, Andhra Pradesh, India. The center will be established at the International Institute of Digital Technologies, the state’s upcoming initiative for development of IT sector India Vizag April Plans to hire N/A Tech Mahindra announced plans to expand its center in Vizag, Andhra Pradesh, 1,000 FTEs India, by hiring 1,000 additional employees at the facility

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Acquisition Target Group Tech Mahindra entered into an agreement to acquire Target Group, a provider of BPO and software solutions, to (United Kingdom) enhance its financial technology offerings. The acquisition will strengthen Tech Mahindra’s BFSI practice by accessing Target Group’s IP and platform for end-to-end process automation in lending, investments, and insurance market. The transaction is expected to be closed by Q2 FY2017 (quarter ending September 2016) Acquisition The BIO Agency Tech Mahindra acquired The BIO Agency, a provider of digital services, for US$60 million, to help clients in (United Kingdom) digital transformation. With the acquisition, both the firms will combine their expertise to create innovative practices, expand their client base, and engage with clients by designing the customer experience for their businesses

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Apttus Tech Mahindra partnered with Apttus, a Quote-to-Cash (QTC) software provider, to enable CSPs streamline (United States) their sales process. As per the alliance, Tech Mahindra will combine its CRM framework, will Apttus’ QTC solutions to create a value proposition for CSPs globally Alliance ArisGlobal Tech Mahindra partnered with ArisGlobal, a provider of cloud-based software solutions. The collaboration will (United States) provide the life sciences industry with an end-to-end solution that addresses the Identification of Medicinal Products (IDMP) regulatory compliance requirements. The solution will enable companies to ensure compliance, efficiency, and the safety of their products Alliance SAP Tech Mahindra collaborated with SAP to launch Fresh Produce End-to-End Digital Supply Chain (FEEDS), a (Germany) connected intelligent solution, to manage the food supply chain. The new solution, built on SAP HANA cloud platform, will transform the physical supply chain into a connected intelligent digital supply chain with the ability to track and maintain freshness at each step of the process Alliance The Wall Street Tech Mahindra collaborated with Custom Studios, the custom content marketing division of The Wall Street Journal Journal, to launch In The Future, a multimedia custom-content program. As per the alliance, the program will (United States) deliver digital and print storytelling and executive events driving thought leadership on global connectivity

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue increased marginally by 0.8% over the previous quarter to reach US$1,022 million in Q1 2016. The low growth during the quarter was a result of cross currency headwinds of about 50 bps due to appreciation of USD against all major currencies except GBP  During the quarter, operating margin remained stagnant at 16.9%, compared to Q4 2015. The small increase in margins can be attributed to improved efficiency and seasonally strong Comviva business, however, its was offset by wage hikes and restructuring of the LCC business

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Geographies: In Q1 2016, Americas, which contributed 47% share to the revenue, declined by 1.3% as compared to the previous quarter. Europe declined by 0.6%, while, Rest of the World witnessed an increase of 7.3%  Verticals: All verticals reported sequential growth in revenue during the quarter except for retail, transport, and logistics, which declined by 8.1%. BFSI reported maximum growth of 9.0%, followed by technology, media, and entertainment (2.1%), and manufacturing (0.8%), while revenue from communication was in line with the previous quarter

Talent  Headcount stood at 105,432 in Q1 2016. BPO headcount declined to 27,254 and software headcount was 72,125  In Q1 2016, attrition (IT) rate (LTM) increased to 21%, compared to 20% in Q4 2015  Utilization (IT) levels (including trainees) was in line with Q4 2015 at 77% during the quarter

Future growth  The firm continues to expect improved margin for FY 2017 (year ending December), on a full year basis

Other significant developments Type of announcement Description

Others  Tech Mahindra selected AGNITY MobileCare™ Platform to enable better patient care coordination, care team collaboration, and patient engagement. The firm will offer the platform as a part of its M-Health Solution, which enables remote health management and improves the quality of patient care  Tech Mahindra withdrew its plans to setup the payment bank. The firm already received approvals to start the bank in August 2016, however, it dropped the idea realizing that intense competition in the space will pull down its margins  Tech Mahindra plans to modernize old vehicles by targeting its ageing fleet for connectivity. The firm is looking to bring telematics capabilities to end-consumers with older vehicles to extend connectivity to the masses  Mahindra Comviva, Tech Mahindra’s mobility solutions arm, consolidated its Latin America operations and the recently acquired company, Advanced Technology Solutions (ATS) under a single brand - Mahindra Comviva. The consolidation will strengthen both entities of Comviva and will ensure enhanced customer engagement

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  Following United Kingdom’s decision to exit from the European Union, companies such as Tech Mahindra, along with Infosys, Wipro, (continued) HCL, and TCS, lost US$7.33 billion market value as these firms derive a significant percentage of their revenue from the region. The effect of the announcement individually on Tech Mahindra is as follows: – The firm lost US$632 million and its share fell by 0.94% – The firm is looking to boost its business in the United States as it offers both opportunity and economic stability  Tech Mahindra announced that it will continue to lookout for more acquisitions with a focus on digital technologies space, platforms, PaaS, and SaaS  Tech Mahindra Foundation, the corporate social responsibility arm of Tech Mahindra, launched a smart academy for healthcare in New Delhi, India. The academy focuses on training youth from low income families with skills that will help them begin a career in healthcare

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services ANGKASA April 2016 N/A N/A AO HubSky April 2016 N/A 5 IO MerckKGaA April 2016 N/A 5 IO Netherlands' Custodial Institutions Service April 2016 N/A 10 AO Washington State Department of Social and April 2016 20 5 IO Health Services Air Canada May 2016 N/A N/A AO (extension) MASkargo June 2016 N/A N/A AO

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Brighterion Unisys collaborated with Brighterion, an AI and machine learning company, to provide anti-fraud real-time (United States) analytics software solutions to fintech firms in Asia Pacific. Unisys will act as Brighterion's solution integrator within Asia Pacific and will provide end-to-end integration, deployment, and support services Alliance Dacuda Unisys collaborated with Dacuda, a technology company, to launch the Rapid Input MRZ Reader, an image (Switzerland) processing and mobile text recognition tool, to automate personal data entry on mobile devices. The tool will allow instant and accurate detection of information including the MRZ on passports, IDs, and driving licences

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity (continued) Type of activity Target/partner firm Description Alliance Microsoft Unisys expanded its alliance with Microsoft to develop new solutions for increasing cyber security in the (United States) cloud. The solution will allow customers to save time and money by expanding protection from their data centers to Azure Alliance Sandstone Technology Unisys partnered with Sandstone Technology and Payment Card Technologies (PCT), providers of (Australia) and Payment technology solution for Fintech firms, to launch the Unisys Sandstone and PCT (USP) digital banking Card Technologies platform. The new platform will reduce fraud by providing built-in adaptive biometric and data analytics that (United Kingdom) identify customers and validate transactions Alliance BehavioSec (Sweden) Unisys partnered with BehavioSec, a provider of network security and Nationwide, a financial services firm, and Nationwide Building to develop a prototype application for making behavioral biometrics a standard feature in digital services. The Society (United application will measure the details of a user’s behavior, in order to grant access, preventing any kind of Kingdom) intrusion Alliance Mitel Unisys collaborated with Mitel, a telecom company, to offer Unisys Stealth security to Mitel’s customers for (Canada) protecting the data. The new offering will integrate Unisys Stealth (mobile) capabilities into Mitel's mobile communications services, enabling clients to access public networks such as the Internet without any threat of exposure

Key takeaways from Q1 2016 earnings call Category Description

Financials  Unisys witnessed a decline of 15.6% in revenue to reach US$667 million in Q1 2016, due to a decline in both technology as well as services segment  Unisys reported an operating loss of US$27.6 million in Q1 2016

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call (continued) Category Description

Segments  Geographies: All geographies reported a sequential decline in revenue during the quarter. EMEA witnessed the maximum sequential decline of 25.9% due to lower BPO revenue, followed by Latin America (18.8%), United States & Canada (10.3%), and Asia Pacific (6.1%)  Services: Technology reported a sequential decline of 49.1% to reach US$71.7 million, followed by BPO (9.5%), cloud & infrastructure services (8.5%), and application services (7.8%)  Verticals: All verticals reported a sequential decline in revenue during the quarter except for public sector, which increased by 2.1%. The financial sector witnessed the maximum sequential decline of 41.1%, followed by commercial sector (9.4%), and U.S. Federal (5.1%)

Future growth  Unisys continued to maintain revenue guidance for FY 2016 (year ending December 2016) at US$2.775-2.875 billion. On constant currency basis, revenue is expected to decline in the range of 3-6% compared to 2015, due to lower technology and services revenue as anticipated: – Services revenue is expected to be in the range of US$2.43-2.51 billion – Technology revenue is anticipated to be in the range of US$345-365 million – Operating profit margin between 7-8% in FY 2016 with adjusted free cash flow to be in the range of US$160-200 million

Other significant developments Type of announcement Description

Capability  Unisys added new consulting and advisory services to the suite of offerings for ServiceNow, its enterprise cloud platform. The new solution advances in data analytics and cloud to allow clients deploy ServiceNow enterprise cloud platform and help in their digital business transformation  Unisys launched two versions of its ClearPath MCP operating environment that will run on VMware's ESXi platform. The company also announced plans to release similar hardware-independent versions of the company's OS 2200 operating system

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  Unisys launched ClearPath Forward ePortal 7.0, an updated version of the solution, for extending applications onto mobile devices, (continued) the web, and Service Oriented Application (SOA) environments. The new solution will help developers to build hybrid mobile applications by enhancing availability, scalability, and mobility  Unisys announced the availability of Unisys Stealth (cloud) for the users of Microsoft Azure. The offering will help the users by providing them greater protection, control, and efficiency when working with Azure, using encryption and identity-driven micro- segmentation techniques

Management  During the quarter, Unisys announced the following appointments: changes – Corrine Murphy as Director of Planning and Operations. She most recently served as the COO, ANZ Global Business Systems – Belinda Hilberts as Director, Asia Pacific Field Marketing. She previously held a senior position in Sabbatical – Dheeraj Kohli, as Vice President and Global Head for Travel and Transportation. He most recently served as the Principal at Capgemini  Laura Lafayette, Human Resource Head, Brazil, was promoted to the position of Head of Human Resources, Latin America  D. Neil Gissler, Senior Vice President of Services, Unisys, left the company to join Merkle

Others  Unisys announced plans to double its security-oriented consulting, infrastructure, and managed services and extend its Stealth cybersecurity offering to vertical practices. The company will make Stealth available to vendors and other resellers

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Bristol Water Plc May 2016 N/A N/A ITO Paytm May 2016 N/A N/A AO and IO Thames Water May 2016 N/A N/A AO Vestas May 2016 N/A N/A AO

Location footprint Country City Month Headcount Function Other comments Saudi Arabia N/A May Plans to hire ITO and Wipro opened an all women business & technology park in Saudi Arabia, to 21,000 FTEs BPO provide engineering drafting services, IT, and Business Process Services (BPS). in next 10 The center established in collaboration with Princess Nourah University (PNU) will years create 21,000 knowledge-based jobs for women in the country over the next 10 years United States New York May N/A ITO Designit, a global strategic design subsidiary of Wipro, opened a new center in New York, United States. The new office will serve as a global center of innovation, particularly in design and technology. The firm also partnered with New York City to support its clients in North America

Source: Everest Group (2016); company websites

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Authentise Wipro partnered with Authentise, a provider of printing technologies and consulting services, to enable the (United States) adoption of additive manufacturing among the global 2,000 companies. The alliance will help Wipro to deliver 3D printing services including consulting, design optimization, software & system integration, product management, and testing services to customers across all industries Alliance Etiya Wipro partnered with Etiya, an independent software vendor, to deliver business and operations support (Turkey) systems to customers and help them in exploring new market opportunities. As per the alliance, both the firms will offer a joint solution that will provide digital services to CSPs Alliance Hortonworks Wipro partnered with Hortonworks, a provider of business computer software, to launch Big Data Ready (United States) Enterprise (BDRE), a big data and analytics product. This new solution will address problems related to big data and analytics and will enhance Wipro’s presence in the open source market Alliance Qlik Wipro extended its partnership with Qlik, a visual analytics provider, to offer advanced enterprise analytics (United States) solutions to customers across various sectors. As a part of this expanded alliance, QlikView is now fully integrated into Wipro's SmartView – ServiceNXT, to help organizations model, optimize, forecast, budget, execute, manage, and measure product & customer performance globally Alliance Xactly Wipro partnered with Xactly, a provider of SaaS- and cloud-based solutions, to help customers improve sales (United States) performance. The partnership will offer Sales Performance Management (SPM) solutions for organizations across various sectors and will enable them to improve the performance of their employees

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call Category Description

Financials  IT services revenue increased by 2.4% over the last quarter to reach US$1,882 million in Q1 2016  Operating margin decreased by 10 bps over Q4 2015 to reach 20.1%

Pricing  The share of fixed price projects increased from 55.9% in Q4 2015 to 56.9% in Q1 2016

Segments  Geographies: Europe witnessed the maximum sequential growth of 5.8%, followed by Americas (1.8%), and India & Middle East business (1.7%). On the other hand, Asia Pacific & other emerging markets witnessed a sequential fall of 1.6%  Services: Consulting witnessed the maximum sequential decline of 8.2%, followed by Wipro analytics (1.0%) and application services (0.6%). On the other hand, business process services increased by 10.6%, followed by global infrastructure services (5.5%), product engineering (1.8%), and R&D business (1.1%)  Verticals: Healthcare, life sciences, and services witnessed the maximum sequential growth of 13.4%, followed by manufacturing & hi-tech (4.8%), and retail, consumer goods, & transportation (1.4%), while finance solutions witnessed a sequential fall of 0.9%, followed by energy, natural resources & utilities (0.6%) and global media & telecom (0.2%)

Talent  Headcount increased by 2,248 employees over the previous quarter to reach 172,912 in Q1 2016  During the quarter, voluntary attrition of IT services, excluding BPO and India & Middle East business, on a quarterly-annualized basis was 14.9%, compared to 16.3% in Q4 2015  Utilization (for IT services, excluding BPO and India & Middle East business and trainees) declined from 78.0% in Q4 2015 to 77.5% in Q1 2016

Future growth  Wipro expects revenue growth in IT services segment to be in the range of 1-3% for Q2 2016 (quarter ending June 2016) on a constant currency basis  Wipro reaffirms its target of 23% operating margin to become a US$15 billion company by 2020

Source: Everest Group (2016); company websites

Other significant developments Type of announcement Description

Capability  Wipro launched Total Customer Centricity (TCC), a solution powered by Informatica Master Data Management (MDM) suite of solutions, for the manufacturing sector. The solution will help global manufacturers in transiting from a product-centric to a customer- centric approach and will provide visibility into the relationships between devices, locations, and customers  Wipro implemented Managed File Transfer-as-a-Service (MFTaaS), its SaaS platform on Amazon Web Services (AWS) for organizations, to help them integrate digitally with their clients, partners, and employees. The solution will help clients in adopting cloud technologies, develop cloud native applications, and will provide expertise in cloud migration  Wipro launched Data Discovery Platform, an analytics solution, to provide business insights across the value chain of an industry. The platform will enable businesses to shift to analytics with value-added services of process simplification and business transformation

Headcount  Wipro announced plans to layoff 4,500 people during FY 2017 (year ending March 2017) as a part of its automation drive. The firm is replacing mundane activities with hyper automation tools. The layoffs will include 1,500 employees from the BPO division

Management  In order to retain its key leaders, Wipro promoted the following executives changes – Saurabh Govil, Chief Human Resources Officer now holds an additional position of President – Soumitro Ghosh, Head of Wipro Infotech was promoted to President, India & Middle East Markets – Srini Pallia, Chief Executive, Consumer Business Unit was promoted to the President of the division – N. S. Bala, Chief Executive of Manufacturing & Technology was promoted to the President of the division

Others  Wipro announced plans to introduce automation in all its service lines. As a part of the automation drive, the firm also deployed Holmes, an AI platform, to automate its fixed-price projects. The firm plans to generate US$60-70 million in revenue by selling the platform to new and existing clients in FY 2017 (year ending March 2017). While the platform is expected to save up to US$46.5 million, it will also replace around 3,000 engineers from software maintenance activities. This includes 1,300 engineers from fixed price contracts and about 2,000 people from off-site locations  Wipro, along with IBM, TCS, Infosys, and Cognizant, is changing the hiring strategy due to increased competition and customers’ technical requirement. The firms are now looking to hire employees with niche skill sets and is willing to pay them higher salaries. Wipro did not participate in the mass recruitment category

` Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  Wipro and Infosys may see a revival in their long standing investment proposal in Kolkata, West Bengal, India. The new elected (continued) government in the state is expected to consider reversing their stance on the IT SEZ status. In 2008, Wipro and Infosys purchased 50 acres each in the city  Wipro, along with Infosys, is ramping up its hiring process in the United States to lower its dependence on visas and create a local employee base in the country  Wipro Ventures, the venture capital arm of Wipro, acquired a minority stake in Vectra Networks, a cybersecurity startup, for an undisclosed amount. With the acquisition, Wipro will gain access to Vectra’s cybersecurity and risk services practice offerings  Wipro announced increments for its top performers with an average salary increment as per industry standards, however, top performers would get two to three times more than the average performer  Wipro announced plans to replace complex organizational structures with a more decentralized and leaner structure. The firm has assigned a special team that focuses on this exercise and will trim away the excess layers of managers and executives inside the company  Wipro is looking to expand its presence both globally and within India, to achieve its target of becoming a US$15 billion company by 2020. The firm announced plans to open new delivery centers in the various cities of the United States such as San Francisco, Atlanta, Dallas, and New Jersey. The firm also plans to expand its presence in tier 2 cities such as Bhubaneswar, Kochi, and Vizag in India  Following United Kingdom’s decision to exit from the European Union, companies such as Wipro, along with Infosys, Tech Mahindra, HCL, and TCS, lost US$7.33 billion market value as these firms derive a significant percentage of their revenue from the region. As an effect of the announcement, Wipro lost US$733 million (INR3420 crore)  Wipro signed a two-year MoU with Xavier University Bhubaneswar (XUB) for building a learning and sharing ecosystem around sustainability in eastern India  Shreya Ukil, a former employee of Wipro claimed that she won a lawsuit in a British tribunal against Wipro for sacking her on the grounds of gender discrimination, unequal pay, and victimization. On the other hand, Wipro claims that the tribunal upheld the dismissal as appropriate and rejected all the claims. Shreya Ukil filed a lawsuit against Wipro accusing the firm for inequality and gender discrimination

Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Etraveli May 2016 N/A N/A AO Tour East Group May 2016 N/A N/A AO

Location footprint No location activity announced during the quarter

Mergers & Acquisitions (M&A) and alliance activity No M&A activity announced during the quarter

Key takeaways from Q1 2016 earnings call1 Category Description

Financials  Revenue in Q1 2016 declined by 0.4% over the previous quarter, to reach US$135.3 million  Operating margins decreased by 32 bps over Q4 2015, to reach 13.9% in Q1 2016, attributed to higher costs associated with the increased hiring during the quarter

1 All revenue figures are less repair payments Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call1 (continued) Category Description

Segments  Geographies: During Q1 2016, North America led the growth charts with a sequential increase of 9.6%. All other regions reported a fall in revenue, South Africa declined by 12.4%, followed by the European Union (10.0%) and United Kingdom (4.2%)  Services: Research & analytics services registered the highest sequential growth of 3.6%, followed by contact center (2.8%), and industry-specific (1.1%). On the other hand, legal services witnessed a fall of 12.8%, followed by autoclaim (12.0%), technology services (6.8%), and finance & accounting (6.1%)  Verticals: Healthcare services witnessed the maximum sequential growth of 13.1%, followed by banking & financial services (11.8%), travel & leisure (5.9%), and shipping & logistics (4.1%). On the contrary, manufacturing, retail, consumer products, telecom & diversified business declined by 12.2%, followed by insurance services (3.2%), consulting & professional services (0.8%), and utilities (0.5%)

Talent  Headcount in Q1 2016 stood at 32,388, an addition of 1,048 employees over the previous quarter  Attrition increased by 525 bps in Q1 2016 to reach 35.1%

Future growth  WNS increased it revenue guidance from US$531 million to US$551-583 million for FY 2017 (year ending March 2017). This reflects the growth of 4-10% (8-14% on constant currency basis), compared to FY 2016 (year ending March 2016)  The company expects its adjusted net income to be in the range of US$97-105 million as against the earlier stated US$99- 101 million  Capital expenditures of the firm are expected to be in the range of US$22-25 million

Other significant developments Type of announcement Description

Others  WNS introduced an entrepreneurship challenge WiNCUBATE, that provides a platform for employees to develop their business idea into an actual model. The program awards a seeded funding of US$0.25 million to the wining team. Previously, three solutions namely WNS Analytics Decision Engine (WADESM), ProGenie, and SmartPRO were the products of WiNCUBATE

1 All revenue figures are less repair payments Source: Everest Group (2016); company websites

Recent transaction announcement Buyer name Announcement date TCV estimate (US$ million) Duration (years) Services Hogan Lovells April 2016 N/A 5 BPO – others (renewal) Region 4 Education June 2016 N/A N/A BPO – F&A, CC, industry-specific, Service Center and others

Location footprint Country City Month Headcount Function Other comments United States Webster June Plans to cut 48 BPO – As a part of restructuring, Xerox announced plans to close its supply distribution jobs Supply center in Webster, United States. The move will result in the lay off of 48 Xerox Chain employees at the site United Manchester May 85 BPO – HR Xerox expanded its center in Manchester, United Kingdom, by acquiring Kingdom additional space in the building. Xerox currently employs 85 people at the location to provide actuarial consulting, investment consulting, and pensions administration services United States Dallas May N/A N/A Xerox announced plans to close its campus in Dallas, Texas, United States, by the end of May 2016 United Sates Ocoee May Plans to hire 500 N/A Xerox opened a new customer care facility in West Oaks, Florida, United States. employees The firm plans to hire 500 employees to focus on processing statewide toll transactions for the Florida Department of Transportation

Source: Everest Group (2016); company websites

Location footprint (continued) Country City Month Headcount Function Other comments United States Bakersfield April 600; plans to hire BPO – CC Xerox announced plans to hire 545 employees in its customer care facility in 545 more Bakersfield, California, United States. The firm currently employs more than 600 employees employees in Bakersfield and about 4,800 in California, United States United States Yukon April Plans to hire 425 BPO – CC Xerox announced plans to add 425 employees to its customer care facility in employees Yukon, Oklahoma, United States

Mergers & Acquisitions (M&A) and alliance activity Type of activity Target/partner firm Description Alliance Alchemist PARC, a Xerox company, partnered with Alchemist Accelerator, a venture-backed business incubator focused Accelerator on accelerating startups. As a part of the collaboration, the firms will provide technology innovation expertise to (United States) encourage and support the startups Alliance Impartus Xerox Research Center entered into a partnership with Impartus, a video-enabled learning solution provider, to (India) develop video learning tools. As per the alliance, Impartus will license and integrate Xerox technology into its interactive video learning solution Alliance Zinnov PARC, a Xerox company, signed an MoU with Zinnov, a consulting and IT solution service provider. The (India) partnership will enable Indian companies to innovate disruptive technologies for digital manufacturing, smart infrastructure, data analytics, and security for various markets including industrial manufacturing, energy, transportation, and financial services. The partnership will combine PARC’s R&D capabilities with Zinnov’s consulting and system integration services to helps customers drive new innovations

Source: Everest Group (2016); company websites

Key takeaways from Q1 2016 earnings call Category Description

Financials  Revenue declined by 5.9% over the previous quarter to reach US$2,482 million, due to decline in both BPO and document outsourcing revenue  Operating margin declined by 178 bps to reach 7.7% in Q1 2016. The decline can be attributed to the accelerated cost reduction initiatives by the company that resulted in restructuring charges

Segments  Services: BPO, which accounted for 68% share of the revenue, declined by 5.4% sequentially to reach US$1,690 million due to the decline in volume and lost business. Document outsourcing accounted for the remaining 32% share and declined by 7.0% to reach US$792 million

Future growth  Xerox continues to expect revenue for FY 2016 (year ending December 2016) to decline by 2-4% at constant currency, and maintains segment revenue guidance with services up by 3% and document technology down by 5-7%  The company anticipates one-time separation cost, consisting of professional fees, transaction costs, and operational separation investments, to be US$200-250 million for FY 2016  Due to the strategic transformation initiatives, Xerox expects restructuring costs to be US$300 million in FY 2016, US$100 million more than previously anticipated figure  Factoring in the cash separation cost and higher restructuring cost, Xerox increases the operating cash flow guidance from US$950 million to US$1.2 billion for FY 2016

Other significant developments Type of announcement Description

Capability  Xerox launched 15 digital workflow solutions, to automate and simplify work for manufacturing, retail banking, and education industries. The new process will help companies to manage both paper and digital data and will alert the employees if any important data is misplaced  Xerox launched TutorSpace, to help students in accessing a specific part of recording by analyzing the contents of video and index. The new technology provides a topic-based table of content and a list of keywords that capture the important concepts covered during the video

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Capability  Xerox launched Transit Matrix Solution, a Computer-Aided Dispatch and Automatic Vehicle Location (CAD/AVL) system. The (continued) offering will help transport agencies to enhance the quality of services by providing current vehicle locations, messaging, and camera feeds  Xerox launched a new market segment series that will serve as a blueprint for print service providers who are looking for growth opportunities in application segments  Xerox launched virtual health solutions, to provide consulting and technology services to healthcare service providers. The offering will help providers to verify a patient’s identity and medical history and enable them to connect with patients virtually  Xerox Litigation Services, the electronic discovery division of Xerox, launched a new pricing program for corporate legal departments and law firms. The offering will help users of Viewpoint e-discovery platform to manage their electronic discovery projects  Xerox launched Xerox Seamless Transportation Solution, to provide ticketless public transport payments by smartphone in France  Xerox launched GO Bengaluru app, in Bengaluru, India, to provide all available transit methods of getting around the city. The offering will combine transportation modes including walking, cycling, buses, cabs, metro rail, and autorickshaws to provide cheaper, faster, and sustainable travel options  Xerox launched ConsumerMedical into its RightOpt, a private health exchange, to enhance personalized support for making healthcare decisions. The offering will provide RightOpt users one-on-one support by telephone or computer and help them to make smarter health choices

Headcount  During the quarter, Xerox announced plans to lay off a number of employees by August 2016 from the following cities in the United States: – Plans to lay off 53 employees from its facility in Cary, North Carolina, due to change in business conditions – Plans to lay off 95 employees from its facility in South Orlando, Florida, as the firm lost a client – Plans to lay off 39 employees from its facility in Cerritos, California, as the firm plans to partner with a third-party provider to manage those operations  Xerox plans to lay off 139 employees by May 31, 2016 from its facility in Henderson, Nevada, United States, due to change in business conditions. The firm will be left with a headcount of 320 in the facility

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Headcount  Xerox plans to retain 328 employees who were earlier laid off from its call center in Colorado Springs, United States, on May 31, (continued) 2016. Out of the total 328 employees, 128 employees had already been placed with other Xerox clients and the firm is contacting the remaining 200 people of which 90 have agreed to rejoin

Management  Xerox announced the following management changes post spilt: changes – Jonathan Christodor was elected to Xerox Board of Directors. He currently serves as Managing Director of Icahn Capital – Dean Aloise as Head of HR Consulting function of Xerox HR Services. He previously served as the Practice Leader of U.S. Wealth – Carl Icahn was elected to Xerox Board of Directors  Robert Evans, Principal, Buck Consultants at Xerox left the firm to join Mercer as Principal in Retirement business  Josh Golden, Vice President of Global Digital Marketing, Xerox, left the firm to join Advertising Age as a Publisher  Ashwin Ram, Area Manager & Chief Innovation Officer, PARC, a Xerox company, left the firm to join Amazon as a Lead of AI and R&D team

Others  Xerox announced following updates on its split into two companies: – The BPO division of the firm will be named Conduent and the Document Technology division will continue to be called Xerox Corporation – Ursula Burns step down from the position of CEO of Xerox but will remain the Chairman of newly formed printer, copier, and document division of Xerox Corporation. She will be succeeded by Jeff Jacobson, President of Xerox Technology – Ashok Vemuri will be appointed as CEO of Conduent. Previously, he served as President and CEO at IGATE – Conduent, worth US$7 billion, will employ 96,000 employees globally and will be a Fortune 500 scale business process services company with expertise in transaction-intensive processing, analytics, and automation – Document Technology company, worth US$11 billion, will employ about 39,000 people and will be a Fortune 500 scale company with a diverse portfolio of hardware, software, and services supporting governments and commercial enterprises from small to large enterprises – Following the announcement of split, Xerox laid off 4,800 employees globally

Source: Everest Group (2016); company websites

Other significant developments (continued) Type of announcement Description

Others  Xerox sued Tate Publishing, an online book and product store, for US$1.7 million as the firm failed to pay the bills and a personal (continued) guaranty as part of the promissory note under the lease and service agreement  Xerox announced a strategic transformation program, that will help the firm to achieve a saving of US$2.4 billion from ongoing and incremental productivity initiatives  Xerox agreed to pay US$123 million to settle their dispute with the California Department of Health Care Services, for a contract to replace the state's Medicaid claims processing system. Xerox will pay the state US$103.3 million in three cash payments through January 2017, US$15 million in computer equipment and drop US$5 million in pending claims  Xerox filed a suit to recover the lump-sum payout it had made to retired workers in 2009. Xerox reclaims US$2.6 million out of US$4 million that it had paid to employees who took early retirement but then later joined the work claiming that they had been shortchanged in the calculation of their retirement benefits

Source: Everest Group (2016); company websites

Offshore-centric service providers Details

Atos  Worldline, a payment and transactional services subsidiary of Atos, received the European Union regulatory approval to create a new Equens Worldline Company in which 63.6% will be owned by Worldline and the remaining 36.4% by Equens, a service card and payment processor

Convergys  During the quarter, there were speculations that Convergys plans to acquire Minacs, a BPO firm, for US$500 million. The acquisition will help the company to strengthen its position in India

Infosys  Infosys formed a finance and investment committee to administer the major investments that the company is making in startups, and the acquisitions it pursues. The committee will provide oversight on key investment policies of the company

Tech Mahindra  Tech Mahindra announced that it will continue to lookout for more acquisitions with a focus on digital technologies space, platforms, product-as-a-service, and software-as-a-service

Source: Everest Group (2016); company websites

Term Definition ACV Annual Contract Value (ACV) is the potential annual revenue associated with the transaction and estimated at the commencement of the contract (e.g., sum total of revenues accrued to the service provider from the transaction over the entire transaction term, usually measured in millions of dollars, divided by the duration of the contract) ADM Application Development and Maintenance (ADM) refers to the custom development and maintenance of application software systems BFSI BFSI refers to the vertical comprising Banking, Insurance, and other financial services BPO Business Process Outsourcing (BPO) refers to the purchase of one or more processes or functions from a company in the business of providing such services at large or as a third-party provider Buyer A Buyer is the company/entity that purchases offshoring services from a service provider of such services Call Center (CC) A Call Center refers to a centralized operation that provides voice-based services such as managing incoming telephone calls from customers or making outgoing telephone calls to customers (telemarketing). Such operations may also respond to letters, faxes, e-mails and similar written correspondence, and in these generalized cases, the operations are often referred to as a “contact center” Destination geography Destination geography is the servicing location associated with the transaction FAO Finance and Accounting Outsourcing (FAO) is the transfer of ownership of some or all of finance and accounting (F&A) processes or functions to a service provider. This could include administrative, delivery, or management-related processes or functions

Term Definition FTE Full-Time Equivalent. An effort equal to one employee working 100% of the time HRO Human Resources Outsourcing (HRO) is the transfer of ownership of some or all of human resources processes or functions to a service provider. This could include administrative, delivery, or management-related processes or functions ITO Information Technology Outsourcing (ITO) is the transfer of ownership of some or all information technology processes or functions to a service provider. This could include administrative, delivery, or management-related processes or functions Labor arbitrage Labor arbitrage refers to the savings gained during offshoring due to the difference in the labor costs between the source and destination locations Offshoring/offshoring Transferring activities or ownership of a complete business process to a different country from the services country (or countries) where the company receiving the services is located. This is primarily done for the purpose of gaining access to a lower-cost labor market, but may also be done to gain access to additional skilled labor, establish a business presence in a foreign country, etc. Companies may utilize offshore either through an outsourcing arrangement with a third-party or by establishing their own GIC presence in the offshore location, among other business models. Offshoring also encompasses “nearshoring” as a special case of the more generic Source geography Source geography is the buyer location or the signing region associated with the transaction TCV Total Contract Value (TCV) is the potential revenue associated with the transaction and estimated at the commencement of the contract (e.g., sum total of revenues accrued to the service provider from the transaction over the entire transaction term, usually measured in millions of dollars)

Copyright © 2016, Everest Global, Inc. 95 EGR-2016-8-R-1857 Market Vista encompasses a suite of offerings Multiple delivery formats allow Global Sourcing Managers to access information in a way that supports the decision-making process

Standard subscription Premium subscription Market Vista offering Description access (annual) access (annual)

Quarterly report with in-depth coverage of transaction, Quarterly Report location, and service provider trends  

Quarterly brief of expert perspectives on emerging Primer market trends (e.g., Expanding Frontiers and   Maturation across sourcing locations)

Annually updated database of location statistics (e.g., Location database cost, attrition, inflation rates) for 23 major cities  

Locations insights Bi-monthly Global Location Insights e-newsletter e-newsletter containing detailed country and region information  

Exclusive Exclusive quarterly webinars with stakeholders in the webinars subscriber organization on key market trends and developments highlighted in Market Vista research 

Analyst Analyst access for personalized insights and additional  consultation perspectives

Copyright © 2016, Everest Global, Inc. 96 EGR-2016-8-R-1857 Trends reports complement Market Vista quarterly reports by providing in-depth coverage of global sourcing across industry verticals and regions

Market Vista Buyer Geography Trends reports Market Vista Industry Trends reports Regions tracked Industries tracked  United States and Canada  Banking, Financial Services,  Healthcare  Europe & Insurance (BFSI)  Technology  Rest of the World (RoW), including Asia Pacific (APAC),  Manufacturing, Distribution,  Telecom Latin America (LATAM), and Middle East & Africa (MEA) and Retail (MDR)  Public Sector  Energy & Utilities (E&U)  Travel & Hospitality

30+ pages of analysis on each industry vertical/region every quarter

Outsourcing transaction GIC set-up and Service provider trends activity expansion activity Processes and models and developments

Decreased from last quarter Similar to last quarter Increased from last quarter

Current quarter Previous year ITO by process1 ITO by process1 Q2 2011; Frequency of occurrence 2010; Frequency of occurrence Change in number of ITO Total = 354 Total = 1,381 transactions, by process1 Q2 10 to Q2 11 Q1 11 to Q2 11

Application development 111 472

Application 90 348 maintenance

Systems integration 87 307

Datacenter 60 263

Network 81 339

Desktop 34 139

Helpdesk 27 138

 Transaction activity was higher among IT ADM processes than IT infrastructure  Adoption of ITO processes in Q2 2011 was similar to that in 2010 (yearly average)  Adoption of Desktop process declined compared to the previous quarter

 Trends in transaction  GIC set-ups, expansions, and  Process-level and  Service provider performance volumes, contract values, and divestures subprocess-level transaction (transactions, market shares) momentum  Analysis of buyers, locations, trends  Significant deals signed by  Events with industry impact and scope of work offshored  Emerging opportunity areas leading enterprises

The following documents are recommended for additional insight into the topic covered in this report. The recommended documents either provide additional details on the topic or complementary content that may be of interest:

1. Market Vista™ Q1 2016 (EGR-2016-8-R-1755); 2016. This report summarizes the key trends and developments for Q1 2016 in the global offshoring and outsourcing market

2. Bulgaria – The Digital Engine of Europe? (EGR-2016-2-R-1796); 2016. This report looks at Bulgaria as a location for delivery of global services, offering insights on key trends in the global services industry that are likely to influence growth and delivery portfolios, going forward. The report also provides perspectives on the role Bulgaria can play in the emerging global services industry, and imperatives for government and industry associations to enable growth

3. Buyer Geography and Industry Trends reports: Trends for Q1 2016. These reports provide data, developments, and insights on outsourcing and offshoring trends for a particular buyer geography / industry. These reports provide the research and analysis that enable users to navigate through complexity and make clear, effective decisions suited to their focus region or specific industry. These reports provide detailed information on transaction activities, Global In-house Center (GIC) developments, service providers’ market shares, and key outsourcing transactions. Regions covered include: U.S. and Canada; Europe; and Rest of the World. Industries covered include: Banking, Financial Services, and Insurance (BFSI); Manufacturing, Distribution, and Retail (MDR); Energy & Utilities (E&U); Healthcare; Technology; Telecom; Public Sector; and Travel and Hospitality

For more information on this and other research published by Everest Group, please contact us:

H Karthik, Partner – Global Sourcing: [email protected] Salil Dani, Vice President – Global Sourcing: [email protected] Namita Dahiya, Senior Analyst – Global Sourcing: [email protected] Anirban Deuri, Assistant Manager, IS, Research: [email protected] Anand Tiwari, Assistant Manager, IS, Research: [email protected]

Website: www.everestgrp.com | Phone: +1-214-451-3000 | Email: [email protected]

Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility, and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem- solving skills and original research. Details and in-depth content are available at www.everestgrp.com and research.everestgrp.com.

Dallas (Headquarters) Stay connected [email protected] +1-214-451-3000 Websites

New York www.everestgrp.com [email protected] research.everestgrp.com +1-646-805-4000

Toronto Twitter [email protected] +1-647-557-3475 @EverestGroup London [email protected] +44-207-129-1318 Blog Delhi [email protected] +91-124-284-1000 www.sherpasinblueshirts.com