2Q 2021 DVP-Research, Institutional Equities at HDFC Securities Ltd

Managed Services & As-a-Service Market Insights

7 July 2021

HOSTED BY Apurva Prasad 2Q 2021 DVP-Research, Institutional Equities at HDFC Securities Ltd

HDFC Securities Ltd @ISG_News #ISGIndex #ISGIndexInsider

© 2021 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. Welcome The ISG Experts th Steve Kathy Hall Rudy to the 75 Quarterly Partner & Chief Data & President Analytics Officer

Stanton Jones Johanna Director & von Geyr Principal Partner, BFSI Analyst

Covering the State of the Managed Services & As-a-Service Industry for the Global Commercial Market

@ISG_News #ISGIndex #ISGIndexInsider

Q2 Combined Market ACV Accelerated for Third Straight Quarter +32% Both XaaS and Managed Services YoY generated all-time highs; Managed Services up 24% on strength in midsized deals

ACV = Annual Contract Value

Q2 Americas Continues to Grow with Second Successive Quarter +25% XaaS approached $6B in ACV YoY for the first time; without benefit of softer compare, Managed Services was up 14% Y/Y

ACV = Annual Contract Value

Q2 EMEA Combined Market Up 31% In Managed Services, most +31% geographies up significantly Y/Y, YoY although entire region pulled back sequentially; XaaS grew at its strongest levels since 2018

ACV = Annual Contract Value

5 2Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider ISG’s Top Findings – 2Q 2021 Q2 Asia Pacific Combined Market Up Significantly +59% Led by strength in ANZ, YoY Managed Services had its best quarter since 2Q19; XaaS accelerated further while adding $250M in sequential ACV growth

ACV = Annual Contract Value

Quarterly Trends 19.1 17.2 14.5 Combined Market ACV surpassed 11.2 9.9 $19B for the first time 7.9 8.1 6.4 7.3 Managed Services registered its best quarter ever, up nearly 24% Q2 Q1 Q2 Q2 Q1 Q2 Q2 Q1 Q2 20 21 21 20 21 21 20 21 21 Y/Y

Midsized deals dominated the market composition with 17% of awards valued with an ACV 20% 15% 25% between $20M and $40M 1H21 1H21 1H21

As-a-Service ACV exceeded $11B for first time; Y/Y growth rate was Combined Market Managed Services As-a-Service the best since 4Q18

1H = First half ACV = Annual Contract Value

ACV $B 1H19 1H20 1H21

15.3

12.0 29% 1H21 15% Growth 8% 1H21 48% Growth 1H21 1H21 Growth Growth 5.7

3.3

ITO BPO IaaS SaaS

ACV = Annual Contract Value

ACV $B Key Trends $8 Demand has returned – 2Q/2020 saw a 17% drop in ACV Transformation deals require investments to achieve ROI – used managed services to $7 reduce costs Almost 60% of the ITO market is $6.03 now application services

$6 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 19 19 19 19 20 20 20 20 21 21 21 21

ACV = Annual Contract Value. * = ISG forecast.

ACV $B 1H19 1H20 1H21

15.3

12.0 29% 1H21 15% Growth 8% 1H21 48% Growth 1H21 1H21 Growth Growth 5.7

3.3

ITO BPO IaaS SaaS

ACV = Annual Contract Value

ACV $B Key Trends $1.5 Traditional BPO remains soft Traditional BPO Industry-Specific BPO Engineering with CRM and Facilities Management still struggling to achieve pre-pandemic levels $1.0 Industry Specific BPO seeing increased investments $0.5 Engineering is rising at 30% CAGR

$0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 19 19 19 19 20 20 20 20 21 21

ACV = Annual Contract Value

ACV $B 1H19 1H20 1H21

15.3

12.0 29% 1H21 15% Growth 8% 1H21 48% Growth 1H21 1H21 Growth Growth 5.7

3.3

ITO BPO IaaS SaaS

ACV = Annual Contract Value

ACV $B Key Trends $12 Slight dip when pandemic 1st occurred as organizations focused on work-from-home strategies Segment continuing to grow at $8 20%+ CAGR with Cloud leading the way Forecast projected to grow at 24%+ $4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 19 19 19 19 20 20 20 20 21 21 21 21

ACV = Annual Contract Value. * = ISG forecast.

1H Trends ACV $B 1H20 1H21 ITO ACV up 8% with ADM activity up 30%+ versus both 1H19 and 15.3 1H20 BPO ACV up 48% versus 1H20 but 12.0 29% down slightly versus 1H19; 1H21 15% strength in Industry-specific Growth BPO, F&A and ER&D 8% 1H21 48% Growth IaaS ACV surpassed $15B with 1H21 1H21 28.5% growth outpacing growth Growth 5.7 rates from 1H18-1H20 Growth SaaS ACV up 15% accelerating 3.3 from the 1H20 slowdown of just 6% ITO BPO IaaS SaaS

ACV = Annual Contract Value

14 2Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider Global Service & Technology Provider Standouts THE ISG15 Our ISG Contract KnowledgeBase™ is used to determine The Big 15 placements based on the annual value of commercial contracts awarded in the past 12 months The Building 15 The Breakthrough 15 The Booming 15

@ISG_News #ISGIndex #ISGIndexInsider

Our ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.

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

HGS * Accenture CGI * Samsung SDS * Asseco * HCL Rackspace Hosting Birlasoft L&T Technology Atos Computacenter * Sopra Steria EPAM Systems Managed IBM Global Services TietoEvry Coforge * Services Services Capgemini Genpact Tech Mahindra LTI Infosys TTEC EXL Persistent Systems Market Cognizant Global Payments T-Systems Mindtree TCS Unisys Globant * Softtek DXC Technology OptumInsight Wipro Mphasis WNS

Adobe * Snowflake As-a- Google Autodesk Digital Realty Palo Alto Networks Atlassian Alibaba ServiceNow Computing Service Microsoft Equinix Dropbox Shopify Coresite Amazon Web Workday Veeva Systems Market Salesforce Intuit * Okta * Twilio Crowdstrike Services Zoom Video

* New to leaderboard in 2Q21 • ** Promoted to the Big 15 from the Building 15 Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.

Quarterly Trends 9.5 8.6 7.6 Combined Market surpassed 5.9 5.2 $9B for the first time, with ACV 4.4 3.2 3.4 3.6 up 25% Y/Y Q2 Q1 Q2 Q2 Q1 Q2 Q2 Q1 Q2 Managed Services, up 14% with 20 21 21 20 21 21 20 21 21 its second consecutive Q/Q increase As-a-Service nearly reached $6B 14% 5% 21% for the first time, up 33% Y/Y 1H21 1H21 1H21

Combined Market Managed Services As-a-Service

1H = First half ACV = Annual Contract Value

1H Trends ACV $B 1H20 1H21

ITO dropped 3.2%, weighed 7.4 down by Infrastructure decline of 25.5%; ADM activity was 15% stellar, up 22% 1H21 5.1 24% BPO grew 39% versus 1H20 1H21 Growth 39% Growth IaaS achieved record highs and -3% 1H21 3.7 continued to grow at more than 1H21 Growth Growth 20% at the half-year mark since 1H 2016 1.9 SaaS ACV was up 15% versus 1H20 growth of 11% ITO BPO IaaS SaaS

ACV = Annual Contract Value

Quarterly Trends 3.3 2.5 2.4 Combined Market ACV up 59% 2.1 2.1 0.9 1.6 Y/Y, surpassing $3B for the 0.5 0.4 first time Q2 Q1 Q2 Q2 Q1 Q2 Q2 Q1 Q2 Managed Services sector had 20 21 21 20 21 21 20 21 21 its best quarter since 2Q19; up 87% Y/Y versus a weaker 2Q20 compare 32% 29% 33% As-a-Service ACV surpassed $2B 1H21 1H21 1H21 for the third straight quarter, best Y/Y growth rate since 2018 Combined Market Managed Services As-a-Service

1H = First half ACV = Annual Contract Value

1H Trends ACV $B 1H20 1H21

ITO segment improved from 3.9 slower 1H20 and was up over 20%; down 25% versus 1H19 BPO up 75% off a smaller base; 34% 1H21 60% of BPO activity confined to 22% Growth Industry-specific BPO and ER&D 1H21 Growth 23% IaaS up 34% with a strong 2Q 75% 1H21 Growth providing upside; SaaS 1.1 1H21 accelerated 23% for its best Growth growth since 1H17 0.6 0.2 ITO BPO IaaS SaaS

ACV = Annual Contract Value

Quarterly Trends 6.0 6.3 Combined Market ACV 4.8 generated its third straight $6B 3.5 3.4 2.8 2.5 2.9 quarter, up 31% YoY and almost 2.0 25% compared to 1H/2020 Q2 Q1 Q2 Q2 Q1 Q2 Q2 Q1 Q2 20 21 21 20 21 21 20 21 21 Managed Services was down QoQ, up 23% YoY, and up 23% compared to 1H/2020 25% 23% 27% As-a-Service ACV is approaching 1H21 1H21 1H21 $3B in ACV up 15% QoQ, 38% YoY and almost 27% compared to 1H/2020 Combined Market Managed Services As-a-Service

1H = First half ACV = Annual Contract Value

1H Trends ACV $B 1H20 1H21 ITO ACV up 18% with ADM ACV 5.8 up 17% and Infrastructure up 4%

BPO activity rebounded from 18% 4.0 weaker 2020, up 60% but still 1H21 down 10% versus 1H19 pre- Growth 13% 60% pandemic levels 33% 1H21 1H21 Growth Both segments of As-a-Service Growth 1H21 Growth reached new quarterly highs in 1.4 ACV; IaaS accelerated versus 1.1 both 1H19 and 1H20 growth rates ITO BPO IaaS SaaS

ACV = Annual Contract Value

Retail & Travel, Business Consumer Financial Healthcare Telecom Transport 1H Growth Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure $6.9B ACV $4.9B ACV $2.4B ACV $7.6B ACV $2.8B ACV $5.4B ACV $3.2B ACV $3.2B ACV

Combined Market 25% 33% 26% 24% 1% 16% 12% 18%

Managed -22% -3% Services 36% 49% 25% 24% 5% 7%

As-a-Service 22% 25% 26% 24% 24% 27% 27% 26%

ACV = Annual Contract Value

Combined Market 25% 33% 26% 24% 1% 16% 12% 18%

Managed Services 36% 49% 25% 24% -22% 5% -3% 7%

As-a-Service 22% 25% 26% 24% 24% 27% 27% 26%

ACV = Annual Contract Value

Johanna von Geyr Partner, BFSI

@ISG_News #ISGIndex #ISGIndexInsider

Manage Reduce legacy IT Gain agility ambiguity of multiple Ecosystem Network Expand product existing and portfolio unity Enable Market Strategy future-state products

Speed to Simplification M&A Cyber Regulatory Transformation Security Compliance

Cloud AI Digital Cyber Big Data Customer Transformation Platforms Security Experience

Infrastructure Over-deliver Enable Discrete Cloud Strategy Solutions & Solutions

IT & Business Services “Moving faster 2Q21 by simplifying.“

Stanton Jones

Director & Principal Analyst ISG Research

@ISG_News #ISGIndex #ISGIndexInsider

⬤ Enterprises buy for many reasons – not just cost 30% In competitive managed services ⬤ Low bid only wins 40% of bids between 2015 and 2020, the time 30% high bids won 30% of the time ⬤ Low bids can create doubt High bid in buyer’s mind 40% wins Bid between ⬤ Environment, social and high & low wins Low bid governance criteria WinningBids 2015 bids- between2020 2015-2020 wins

becoming critical in Source: ISG ProBenchmark®, a basket of ISG-advised tenders representing ≈ 2.3B in TCV. evaluations

Global Security Spend Per User, 2019 – 2020

⬤ Ransomware attacks up $659 300% since 2020 $466 ⬤ Phishing primary attack vector; crypto hard to track 42% ⬤ ACV for managed security services is growing ⬤ Cyber insurance will be 2019 2020 Per User

costlier – and harder to get Source: ISG Inform, 2021. Fortune 500 enterprises.

⬤ First wave required huge Client Impact of Recent COVID-19 Surge in India operational pivot 8% 13% 21% 20% productivity hit; ⬤ Yes discounts & delays 92% No ⬤ Second wave impacted 88% 79% family, friends & colleagues; provider

stepped up Missed CSL or Asked for relief from CSL Fallen behind on Key Milestones or Key Milestone project work ⬤ Enterprises saw limited Source: ISG advisors with clients with India-based delivery, May 2021. N=24 disruption

Summary Outlook Managed Services Recovers Managed Services Forecast

⚫ Managed Services up nearly 15% with Americas and ⚫ Market no longer dominated by smaller EMEA both up against 1H20 and 1H19 transactions, which were indicative of the market ⚫ Broad-based recovery across ITO/BPO with composition since onset of pandemic 9% strength in Applications, ER&D, F&A and Industry- ⚫ Forecast implies 2021 ACV would approach $30B, 2021e Specific BPO representing a 5.7% gain over 2019’s pre- pandemic full-year ACV

New Highs in XaaS As-a-Service Market Forecast

⚫ Record-setting ACV results across each region ⚫ Expect fits and starts due to inflationary ⚫ Growth accelerating in EMEA and Asia Pacific, but in pressures, increased regulations, scrutiny and more mature Americas market, 1H growth rates taxation; but the multi-year secular growth 21% drivers remain very healthy. steadily decline since 2016 2021e ⚫ Cloud is still roughly 10%-15% of the global IT business, and it will occupy a much more influential profile in the next 10 years

Want to Ask a Question? Steve Hall Kathy Rudy Partner & President Chief Data & Analytics Officer +44 7384 259676 +1 972 653 2153 1. The “Chat” feature is [email protected] [email protected] to the right of the slides

2. Type your question and click the up arrow to send it! Stanton Jones Johanna von Geyr Director & Principal Analyst Partner, BFSI +1 281 795 2636 +49 175 2400481 [email protected] [email protected] @ISG_News #ISGIndex #ISGIndexInsider

© 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider Broadcast Scheduled for October 13, 2021 Sign up https://isg-one.com/isg-index-insider 3Q21 Mark Your Calendars! for the © 2021 Information Services Group, Inc. All Rights Reserved. th The 75 Quarterly Thank you!

@ISG_News #ISGIndex #ISGIndexInsider

Our ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.

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

Accenture IBM Global Birlasoft L&T Technology Capgemini Services Amdocs EPAM Systems Rackspace OptumInsight Coforge Services Managed Cognizant Infosys Conduent LTI Hosting Services Tech Mahindra Ensono Persistent Systems DXC Technology NTT Data Genpact Mindtree TTEC Market Wipro EXL Softtek FIS Global Tata Consultancy Global Payments Mphasis Unisys Globant WNS HCL Services

Google Autodesk Iron Mountain Digital Realty Shopify Coresite Snowflake Adobe Systems As-a- Microsoft Citrix ServiceNow DropBox Splunk CrowdStrike Computing Service Amazon Web Salesforce Equinix Vmware Palo Alto Networks Twilio HubSpot Zoom Video Market Services Intuit Workday RingCentral UKG QTS Communications

Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.

Our ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.

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

Accenture Bechtle Serco Asseco Mphasis HCL adesso AG Reed Specialist Atos Capita Sopra Steria Dustin AB Rackspace Recruitment IBM Global Atea ASA Managed BT Group Services CGI Tech Mahindra EPAM Systems Technology Transportes Services EXL Capgemini Infosys Computacenter Teleperformance JLL Reply SpA Blindados Market Fastweb Cognizant Tata Consultancy Global Payments T-Systems LTI TietoEvry WIIT S.p.A. KPIT Technologies DXC Technology Services Orange Wipro Mindtree Unisys WNS

Atlassian Visma As-a- Adobe Systems Google Autodesk Digital Realty Nice Systems Corporation Zoom Video Service Amazon Web Microsoft Equinix DropBox Twilio OVH Communications Market Services Salesforce Vmware Veeva Systems Zscaler

Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.

Our ISG Contract KnowledgeBase™ is used to determine placements based on the annual value of commercial contracts awarded in the past 12 months.

The Big 15 The Building 15 The Breakthrough 15 The Booming 15 Revenues > $10B Revenues $3B-$10B Revenues $1B-$3B Revenues <$1B Amdocs SCSK Accenture IBM Global Canon Samsung SDS LG CNS Fuji Soft Inc. Managed SK C&C Beyondsoft Cognizant Services Genpact Serco Mindtree PCCW Solutions Services transcosmos ChinaSoft Market DXC Technology Tata Consultancy Global Payments Tech Mahindra Mphasis Taiji Computer Services TTEC Data#3 HCL Nomura Research Wipro Neusoft Corp. Unisys Institute

Atlassian China Telecom Alibaba Corporation Veeva Systems Inc. Google Autodesk Equinix Akamai Shopify As-a- Adobe Systems CloudFlare Xero Microsoft Citrix ServiceNow Palo Alto Networks Splunk Service Amazon Web CrowdStrike Zoho Corp. Market Services Salesforce Dassault Systemes Telstra Sage Twilio Kingdee Zoom Video Baidu Tencent Communications MongoDB

Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.

41 2Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including more than 75 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data.

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