Global Sourcing and As-A-Service Market Insights FIRST QUARTER 2019

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

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. © 2019 Information Services Group, Inc. All Rights Reserved. 9 Asia Pacific Commercial Sector Contracting Trends 1Q19 Combined Market Y/Y growth remains above 30% as the region produces the second-best quarter ever; most of the geographic markets generate positive trend data led by strong gains in ANZ and North Asia.

Asia Pacific Commercial Sector Quarterly ACV (€B)

Traditional Sourcing As-a-Service

1.66 1.58 1.59 1.34 1.23 1.19 1.10 1.18 0.86 0.86 0.98 0.77 0.84 0.78 1.00 1.09 0.61 0.54 0.69 0.82 0.97 0.37 0.42 0.48 0.38 0.49 0.67 0.49 0.55 0.62 0.49 0.58 0.50 0.39 0.42 0.38 0.29 0.38 0.38

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19

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

Traditional Sourcing As-a-Service 2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19

6.17 4.70 3.34 3.45 4.04 2.18 2.66 1.78 1.20 1.52 0.59 1.34 1.76 0.38 0.52 0.34 0.42 0.48 1.58 2.04 2.13

2Q16 - 1Q17 2Q17 - 1Q18 2Q18 - 1Q19 ITO BPO SaaS IaaS

Utilities Sector

Eleanor Winn Director – Digital Sourcing United Kingdom

EMEA 1Q2019 Business Trends Affecting the Utilities Sector

Customer service is LAGGING relative to other industries and needs to be improved Rapidly changing customer demands FORCE an operating model change, especially Real-Time Customer with grid management Communication Consumer Generated Power

Electric Vehicles NEW TECHNOLOGIES and Charging Stations and DATA PROLIFERATION can be used for competitive advantage

Smart Devices and Data Analytics

Cybersecurity ERP and CIS Integration

1 Government mandates CIS Value comes from 2 implementation of connecting data with cybersecurity and a near-real-time 3 security parameters ERP platform

Automated Metering Infrastructure –AMI

Smart meter use improves electricity supply & demand and profitability

Providers can help with Systems Cloud Legacy Systems Safety Regulatory planning & regulatory Integration Migration Digitization Automation Requirements accounting SAP and CIS

With these changes, we can expect to see an uptick in: Multi-Sourcing – Organizational Change Management (OCM) – Governance To help utility companies navigate new rules and regulations.

The Future of SaaS

Wayne Butterfield Director, EMEA Practice Lead for AI & Cognitive Automation

EMEA 1Q2019 SaaS − Strong Movement to the Cloud

SaaS

Predictable Reduces the Burden Innovation Financial Outflows of Support Teams Producing Machine

Enterprises SMBs SaaS Market Shifting focus from solely IT to Market largely ISG projects this to be a quarter- include marketing, product underpenetrated trillion-dollar market in 5 years engineering and development, et al.

Land and Expand Cross-selling across app categories Year 5 Year 4 Year Year 3 2018 Year 2 1 $125B+

Changing Nature For Service Providers to Evolve and Continue to Grow of Services Revenue

Platform App Development Micro-services Architecture on Top of SaaS Products to Modernize Application Estates Services Revenue

2012 Today

Software Spend Service Providers With Platform Specific Talents

Stitching Together SaaS Platforms SaaS Predictive Analytics That Deliver Critical Business Outcomes

● Global macro slowdown is a possibility, with technology markets supporting a mixed narrative. ● IaaS sector still growing at a fast pace as the major providers continue to invest in building out their infrastructures while pushing deeper into the enterprise. Summary ● SaaS market potential remains robust with revenue headwinds existing in the near term. ● Traditional Sourcing grew markedly in both EMEA and Asia Pacific against softer Y/Y comparisons; metrics tempered by flat results in the U.K., a moderate decline in the U.S. and slowing number of contract awards globally during the first quarter.

● Our forecast of 25% growth on the digital side of the business holds as new transformative operating Outlook models and the transitional to digital are only in the early stages. ● With ongoing macro-economic challenges, we expect the services market to advance at a pace of 3.2%.

Steven Hall Will Thoretz

President, ISG EMEA and Global Leader, Corporate Partner, ISG Digital Services Communications and Brand +44 7384 259676 +1 203 517 3119 [email protected] [email protected]

Stanton Jones Denise Colgan Thank Director, Principal Analyst EMEA & AP Media Contact ISG Research isg-one.com +44 1737 371523 +1 281 795 2636 [email protected] You [email protected]

Esteban Herrera Paul Reynolds

Partner, Global Leader Partner, ISG Research Chief Research Officer ISG Momentum +1 972 730 1749 +1 508 488 6361 esteban.herrera@isg- one.com [email protected]

FIRST QUARTER 2019

EMEA 1Q19 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the Global 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. Regional leaderboards are on slides 24-26.

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 - €2.4 B Co. Revenues < €.8 B Traditional Sourcing Traditional Sourcing Traditional Sourcing Traditional Sourcing Market Market Market Market Accenture Amdocs Alten * Bouvet ASA Atos Bechtle Altran ChinaSoft Capgemini Conduent * Diebold Nixdorf EXL CBRE FIS Global * EVRY ASA Mindtree Cognizant First Data Giesecke & Devrient * NNIT A/S DXC Technology Genpact * JLL Posco ICT * IBM HCL Technologies LTI Virtusa Infosys OptumInsight Mphasis * WNS * TCS Tech Mahindra Sutherland Global Services Zensar * T-Systems * Total System Services TTEC Wipro Unisys As-a-Service Market As-a-Service Market Atlassian * Alibaba As-a-Service Market As-a-Service Market Blackbaud * Amazon Web Services Adobe Systems Autodesk CyrusOne Google Equinix Digital Realty * Interxion Microsoft Iron Mountain ServiceNow OVH Salesforce United Internet Workday ProofPoint

EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 22 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the AMERICAS 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 in 1Q19.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > $10 B Co. Revenues $3 - $10 B Co. Revenues $1 - $3 B Co. Revenues < $1 B Traditional Sourcing Traditional Sourcing Traditional Sourcing Traditional Sourcing Market Market Market Market Accenture Alorica Diebold Nixdorf EXL Atos * Cerner Corporation Epic Systems * FirstSource Solutions BNY Mellon Concentrix * Groupe Acticall Hexaware Capgemini Conduent InnerWorkings Mindtree CBRE First Data LTI StarTek Cognizant FIS Global Mphasis Virtusa DXC Technology Genpact * Pitney Bowes WNS * IBM HCL Technologies Sutherland * Zensar * Infosys OptumInsight TTEC NTT DATA Paychex * Unisys As-a-Service Market TCS Tech Mahindra WEX Blackbaud Wipro CyrusOne As-a-Service Market As-a-Service Market IPSoft Amazon Web Services As-a-Service Market Autodesk Internap * Google Adobe Systems Digital Realty Paycom * Microsoft Equinix ServiceNow Proofpoint Salesforce Iron Mountain Workday RingCentral

EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 23 Our Contracts Knowledgebase™ is used to determine placements based on the annual value of commercial the Asia Pacific contracts awarded in the past 12 months. Sourcing Standouts Providers in alphabetical order; no rankings implied. Revenues ISG15 sourced from D&B and individual company financial fillings. * New to leaderboard in 1Q19.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Co. Revenues > $10 B Co. Revenues $3 - $10 B Co. Revenues $1 - $3 B Co. Revenues < $1 B Traditional Sourcing Traditional Sourcing Traditional Sourcing Traditional Sourcing Market Market Market Market Accenture Amdocs Diebold Nixdorf Aspen Technology Cognizant First Data Corporation Digital China Beyondsoft DXC Technology Genpact * JLL Chinasoft Fujitsu * HCL Technologies Konica Minolta Datacom Hitachi IT Holdings (TIS) Mphasis * Fuji Soft IBM ITOCHU Techno-Solutions Nihon Unisys HGS Infosys JLL NS Solutions * Neusoft NTT Data NCR * Sumitomo SCSK Posco ICT * TCS Nomura Research Institute Sutherland Global Services Relia Samsung SDS transcosmos Shinsegae I&C As-a-Service Market Tech Mahindra Unisys Sichuan Troy Information Tech Telstra Taiji Computer * Alibaba Wipro Amazon Web Services As-a-Service Market Autodesk As-a-Service Market China Telecom As-a-Service Market Google PTC Atlassian Adobe Systems Sage Kingdee Microsoft Equinix Tencent ServiceNow Xero

EMEA 1Q19 ISG Confidential. © 2019 Information Services Group, Inc. All Rights Reserved. 24 Global Commercial Sector Industry Award Trends BFSI sets the pace among the industries with a clear technology imperative and propensity to spend; most industry verticals continue to observe yearly growth with the exception of Telcom & Media, which is undergoing significant consolidation and change.

Global Commercial Industries ACV (€B)

Traditional Sourcing As-a-Service 8.7 7.0 7.4 6.6 6.4 5.0 5.5 5.4 2.6 3.8 4.3 3.9 3.0 1.9 3.4 3.5 3.1 3.3 2.6 2.7 1.5 2.5 2.9 2.6 2.8 2.4 2.5 1.9 5.4 1.6 1.8 1.8 1.7 1.4 3.0 3.8 1.5 1.0 0.5 0.6 0.8 1.3 1.8 1.3 1.6 1.1 1.2 1.2 1.5 1.0 0.6 0.8 0.9 1.2 5.0 5.5 6.1 3.0 3.5 3.9 2.0 2.2 2.2 2.2 2.3 2.9 2.2 1.8 1.8 1.7 1.6 1.0 1.0 1.3 1.3 1.7 0.8 0.7 1.0 1.8 1.7

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