Global Sourcing and As-A-Service Market Insights FIRST QUARTER 2019
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Global Sourcing and As-a-Service Market Insights FIRST QUARTER 2019 Hosted by: John King, Bank of America Merrill Lynch April 12, 2019 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc. Steve Hall Welcome Partner and President ISG to the 66th Barry Matthews Managing Partner, Quarterly North Europe ISG Index Eleanor Winn Director – Digital Sourcing Covering the state of the United Kingdom combined Traditional Sourcing and As-a-Service industry for the global Wayne Butterfield commercial market. Director, EMEA Practice Lead for AI & Cognitive Automation EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 2 Global Combined Market ACV rose 12% Y/Y At a Glance fueled by robust IaaS market. Traditional Sourcing ACV up 2% Y/Y and up 8% on a Trailing-12-Month basis, Scorecard 1Q19 1Q Y/Y TTM TTM on record contracting activity. ACV (€B)* Change ACV (€B)* Change Americas up slightly Y/Y; As-a-Service Global Commercial Combined Market 10.8 12% 40.9 20% surpassed Traditional Sourcing for the first time. By Type Traditional Sourcing 5.6 2% 22 8% As-a-Service 5.2 26% 18.9 37% EMEA advanced Y/Y with 20%+ growth in both Sourcing and As-a-Service segments; By Region Americas Combined 5.3 1% 20.1 11% Traditional Sourcing boosted by larger deal sizes EMEA Combined 3.9 23% 14.4 29% and strength in DACH, France and the Nordics. Asia-Pacific Combined 1.6 33% 6.2 31% Asia Pacific up significantly Y/Y, fueled by strong growth in Traditional Sourcing and As-a-Service; strong ITO results and healthy activity in ANZ and *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase™ North Asia drove the gains in Traditional Sourcing. EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 3 Global Commercial Sector Contracting Trends 1Q19 Combined Market ACV up 12% Y/Y with the As-a-Service sector seeing continued strong gains; Traditional Sourcing up 2% Y/Y as ITO results remain strong; however, the number of contract awards softens. Combined Market Quarterly ACV (€B) Traditional Sourcing As-a-Service 10.8 10.2 10.2 9.6 9.7 8.6 8.7 7.7 7.6 7.7 8.1 7.0 7.5 4.5 4.6 5.2 3.0 4.2 4.6 2.3 3.2 3.6 2.4 2.7 3.0 2.9 5.8 5.4 4.6 4.8 4.6 5.7 4.8 4.9 5.1 5.4 5.1 5.5 5.6 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 Global Commercial Sector ACV (€B) Global Commercial Sector ACV by Type (€B) Traditional Sourcing As-a-Service 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 40.9 34.1 30.8 18.9 13.8 11.0 14.1 17.3 15.5 13.7 5.6 9.1 4.7 4.7 5.2 6.9 19.8 20.2 22.0 4.2 4.7 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 ITO BPO SaaS IaaS EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 4 EMEA Commercial Sector Contracting Trends 1Q19 Combined Market ACV up 23% Y/Y as IaaS growth offsets decline in SaaS; Traditional Sourcing ACV gains 24% Y/Y on uptick in larger transactions; DACH leads the way with gains also in France, Southern Europe and the Nordics. EMEA Commercial Sector Quarterly ACV (€B) Traditional Sourcing As-a-Service 3.8 3.8 3.9 3.5 3.3 3.2 3.2 3.0 3.0 3.2 0.8 3.0 2.6 1.3 1.4 0.6 1.3 0.7 0.8 0.8 2.2 1.1 1.3 0.6 1.0 3.0 0.9 2.6 2.5 2.6 2.6 1.9 2.2 2.2 1.9 2.1 2.2 2.0 1.3 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 EMEA Commercial Sector ACV (€B) EMEA Commercial Sector ACV by Type (€B) Traditional Sourcing As-a-Service 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 14.6 12.6 11.4 3.0 5.2 3.8 6.8 7.8 6.0 3.8 3.0 2.6 1.5 1.6 1.4 1.8 9.7 7.5 9.4 1.0 1.3 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 ITO BPO SaaS IaaS EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 5 EMEA Commercial Sector Industry Award Trends As-a-Service ACV grows across all sectors. Financial Services and Manufacturing sectors post strong growth in both Traditional Sourcing and As-a-Service as focus on customer experience and speed to market takes hold. EMEA Commercial Industries ACV (€B) Traditional Sourcing As-a-Service 3.7 3.1 2.7 0.8 2.5 0.5 1.9 1.9 1.8 0.6 1.7 1.6 1.6 1.6 0.8 1.5 1.4 1.3 1.3 1.1 0.4 0.3 1.2 0.2 0.2 0.2 1.0 0.8 0.6 0.7 1.2 0.5 0.6 0.6 0.5 0.5 0.6 0.3 0.4 0.5 0.9 0.4 0.5 0.6 2.6 2.9 0.4 2.1 0.4 0.4 0.2 0.3 0.3 0.3 1.7 0.2 0.3 0.2 1.4 1.4 1.4 1.5 1.6 1.1 1.0 0.9 1.0 0.5 0.5 0.6 0.6 0.7 0.2 0.3 0.3 0.3 0.2 0.4 0.3 0.3 0.3 Business Consumer Financial Healthcare Telecom Travel, Transport Manufacturing Services Packaged Goods Energy Services & Pharma Retail & Media & Leisure EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 6 EMEA Sub-Regions - Traditional Sourcing Only Increased contract sizes and a boost in the number of contracts boosts the DACH market and pushes up the regional results.. Steady growth across most EMEA markets lends support. UK growth remains tepid as Brexit uncertainty runs on. EMEA Commercial Industries ACV (€B) 2Q16-1Q17 2Q17-1Q18 2Q18-1Q19 3.63 2.72 3.06 2.54 2.38 1.88 1.18 1.11 0.94 0.83 0.76 0.73 0.58 0.70 0.72 0.33 0.42 0.38 0.38 0.38 0.36 0.23 0.14 0.24 UK and Ireland DACH Nordics Africa and Middle East France Southern Europe Benelux Eastern Europe EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 7 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the EMEA contracts awarded in the past 12 months. Sourcing Standouts Providers in alphabetical order; no rankings implied. Revenues ISG15 sourced from D&B and individual company financial fillings. * New to leaderboard since 1Q19. The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > €8 B Co. Revenues €2.4 - €8 B Co. Revenues €.8 - €2.4B Co. Revenues < €.8 B Traditional Sourcing Traditional Sourcing Traditional Sourcing Traditional Sourcing Market Market Market Market Accenture Amdocs Alten SA Allgeier SE Atos Arvato * Altran Bouvet ASA BT Bechtle Axians Comarch Capgemini CGI Cancom Comparex AG CBRE HCL Technologies Diebold Nixdorf Datagroup Cognizant Indra Sistemas EVRY ASA Devoteam * DXC Technology Kuehne & Nagel * GFI Informatique Mindtree IBM Orange Business Services Giesecke & Devrient NNIT A/S Infosys SopraSteria JLL QIWI ISS A/S Tech Mahindra Mitie Quest Global * TCS Teleperformance * Sutherland * Reply SpA T-Systems * Wipro Tieto SVA System Vertrieb Alexander Unisys Virtusa As-a-Service Market As-a-Service Market Webhelp Amazon Web Services Adobe Systems As-a-Service Market Google Equinix As-a-Service Market Interxion Microsoft United Internet Autodesk OVH EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 8 Americas Commercial Sector Contracting Trends 1Q19 Combined Market ACV up 1% Y/Y boosted by 25% growth in As-a-Service; Traditional Sourcing ACV remains above €2.5B but declines 16% Y/Y on weakness across both ITO and BPO. Americas Commercial Sector Quarterly ACV (€B) Traditional Sourcing As-a-Service 5.2 5.3 5.3 4.7 4.6 4.7 4.8 4.0 3.8 3.7 3.5 3.8 3.5 2.2 2.4 2.7 1.8 1.9 2.2 2.3 1.4 1.7 1.4 1.6 1.7 1.5 3.0 3.0 2.7 2.5 2.5 2.9 2.6 2.4 2.2 1.9 2.1 2.3 2.0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 Americas Commercial Sector ACV (€B) Americas Commercial Sector ACV by Type (€B) Traditional Sourcing As-a-Service 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 20.1 18.1 15.0 7.4 9.7 8.0 6.4 6.2 7.7 6.4 3.3 3.7 4.4 2.3 2.7 2.7 2.8 3.0 8.6 10.7 10.4 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 ITO BPO SaaS IaaS EMEA 1Q19 ISG Confidential.