1Q 2016 Global ISG Outsourcing Index®

© 2016 Information Services

Group, Inc. All Rights Reserved

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*Contracts with ACV ≥ $5M from the ISG Contracts Knowledgebase®

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Hosted by: Goldman Sachs

Rishi Jhunjhunwala

13 April 2016

The ISG Outsourcing Index®

First Quarter 2016

Global Market Data and Insights



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Covering the state of the outsourcing industry for global, commercial contracts.*

Welcome to the 54th Quarterly ISG Outsourcing Index® Review

Esteban Herrera Partner

John Keppel Partner & President




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At a Glance GLOBAL BROADER MARKET ACV UP 20% Y/Y

WITH SMALLER AWARDS DRIVING MARKET GROWTH

NUMBER OF RESTRUCTURING AWARDS SETS QUARTERLY RECORD, WHILE RESTRUCTURING ACV SURGES ALMOST 50% Y/Y

AMERICAS UP 30% ON BEST QUARTERLY PERFORMANCE IN FOUR YEARS

EMEA UP 19% Y/Y WITH STRONG SHOWING IN THE RESTRUCTURING MARKET

ASIA PACIFIC ACV AND NUMBER OF AWARDS DOWN Y/Y;

EXTENDED WEAKNESS ACROSS MANY GEOGRAPHIC MARKETS

Scorecard 1Q16 1Q Y/Y 1Q Q/Q 1Q16 1Q Y/Y 1Q Q/Q ACV ($B)* Change Change Counts Change Change

Global Market Totals $ 6.1 20% -12% 404 32% 13% Mega-relationships $ 1.1 -3% -49% 5 -29% -38%

By Type New Scope $ 3.3 4% 0% 231 11% 3% Restructurings $ 2.8 48% -23% 173 78% 31%

By Scope ITO $ 4.2 24% -21% 301 51% 20% BPO $ 1.9 12% 17% 103 -4% -2%

By Region Americas $ 2.8 30% 6% 217 49% 47% EMEA $ 2.8 19% -26% 160 28% -6% Asia Pacific $ 0.5 -13% -4% 27 -23% -29%



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Broader Market ACV is up 20% Y/Y, and smaller awards drive market growth; ACV surpasses $6B level, while number of awards exceeds the 400 mark.

Broader Market Quarterly ACV ($B)*

Broader Market Quarterly Contract Counts

Broader Market Contract Award Trends

$6.1 $6.9

$5.5 $6.1

$5.1

$6.7 $5.8

$6.8 $6.5

$4.9 $6.3

$4.0

$6.1 $5.7 $6.1 $6.5 $7.3 $7.6

$6.8

$4.7

$24.7 $24.3 $21.9

$24.4 $26.5

1Q164Q3Q2Q1Q154Q3Q2Q1Q144Q3Q2Q1Q134Q3Q2Q1Q124Q3Q2Q11

Quarterly ACV TTM ACV Totals

404 356 336

446

306 387

295 376 358 325

378

233

323 313 263

313 370

332 313 275

1542 1364 1294 1212 1290

1Q164Q3Q2Q1Q154Q3Q2Q1Q144Q3Q2Q1Q134Q3Q2Q1Q124Q3Q2Q11

Quarterly Counts TTM Count Totals



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Americas Quarterly Counts

Americas Contract Award Trends

Americas Quarterly ACV ($B)*

Americas First-Quarter Segment ACV ($B)* Americas Trailing 12 Months ACV ($B)*

Americas ACV rises 30% Y/Y as Restructuring activity achieves record-setting levels; ITO ACV was best in four years, and number of ITO awards was second-best ever.

$2.8 $2.6

$2.2 $2.1

$2.8 $3.2

$1.9

1Q161Q151Q141Q131Q122Q11

217

148 146 134 142 177

119

1Q161Q151Q141Q131Q122Q11

$10.5 $9.9

$6.9 $9.0 $9.5

756 616

488 483 555

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12

TTM ACV TTM Counts

$1.38 $1.43

$2.13

$0.67 $0.5

$1.0

$1.5

$2.0

$2.5

New Scope Restructuring ITO BPO

Range of 5 Prior 1Qs Avg of 5 Prior 1Qs1Q15 1Q16



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U.S. ACV makes best showing in four years; the number of awards sets record high; best quarter in 10 years for Financial Services as ACV soars 80% Y/Y.

Americas Sub-Regions First-Quarter ACV ($B)*

Americas Industry First-Quarter ACV ($B)*

Americas Contract Award Trends Detail

$0.07 $0.06

$0.01

$0.04

$0.00$0.05$0.10$0.15$0.20$0.25$0.30

Canada Brazil Mexico Other LatAm

Range of 5 Prior 1Qs Avg of 5 Prior 1Qs 1Q15 1Q16

$2.62

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

U.S.

$0.69

$0.41 $0.24

$0.48

$0.21 $0.14

$0.22 $0.25 $0.15

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

FinancialServices

Manufacturing Telecom &Media

Healthcare &Pharma

BusinessServices

Energy ConsumerPackaged

Goods

Retail Travel,Transport &

Leisure




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EXL Hinduja Global Solutions

Luxoft Minacs

Mindtree SITEL

Sutherland Global Syntel

UST Global VirtusaPolaris

Co. Revenues < $2 B

Aon Hewitt CGI

CompuCom Convergys Genpact

HCL Infosys

Tech Mahindra Teleperformance

Wipro

Co. Revenues $2 -10 B

Accenture AT&T

BT Capgemini Cognizant

Dell HPE

Hitachi* IBM TCS

ISG Sourcing Market Standouts in the Americas Only one Service Provider change in the Sourcing Standouts for the Americas. First time ever that the Breakthrough 10 experiences no turnover.

*New to group as of the current quarter Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings

The Building 10 Sourcing Standouts

The Breakthrough 10 Sourcing Standouts

The Big 10 Sourcing Standouts

Co. Revenues > $10 B

SOURCING STANDOUTS GROUPED BY COMPANY SIZE



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Asia Pacific ACV slips 13% from a modest Q1 compare with number of contracts also falling; both New Scope and Restructuring ACV lag Y/Y.

Asia Pacific Quarterly Counts

Asia Pacific Contract Award Trends

Asia Pacific Quarterly ACV ($B)*

Asia Pacific First-Quarter Segment ACV ($B)* Asia Pacific Trailing 12 Months ACV ($B)*

$0.5 $0.6

$1.1

$0.6 $0.5 $0.4

1Q161Q151Q141Q131Q122Q11

27

38 35

50

34 32 33

1Q161Q151Q141Q131Q122Q11

$2.1 $2.7 $2.7

$3.6

$2.1

149 156 159 169

133

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12

TTM ACV TTM Counts

$0.41

$0.07

$0.24 $0.23

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0





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One large mega award helps support ANZ and Manufacturing short-term growth; remaining geographic and vertical markets in Asia Pacific struggle to gain traction.

Asia Pacific Sub-Regions First-Quarter ACV ($B)*

Asia Pacific Industry First-Quarter ACV ($B)*

Asia Pacific Contract Award Trends Detail

$0.06 $0.05 $0.01

$0.26

$0.05 $-

$0.04 $0.01 $- $0.0

$0.1

$0.2

$0.3

$0.4

FinancialServices

Telecom &Media

Travel,Transport &

Leisure

Manufacturing Energy ConsumerPackaged

Goods

BusinessServices

Retail Healthcare &Pharma


$0.28

$0.03 $0.09

$-

$0.08

$- $0.0

$0.1

$0.2

$0.3

$0.4

ANZ India and South Asia Japan Greater China Southeast Asia South Korea




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Aegis ASG*

ChinaSoft Hollysys Automation

Minacs Neusoft

Sutherland Global TeleTech

UST Global* Xchanging

Co. Revenues < $2 B

CGI Dimension Data*

Emcor Group* Genpact

HCL Indra Sistemas

Infosys NEC

Serco* Wipro


Accenture Canon

Capgemini Cognizant

Fujitsu HPE

Hitachi IBM

Sodexho* TCS

ISG Sourcing Market Standouts in Asia Pacific Most Sourcing Standout segments experience turnover with some BPO providers entering the Top 10 leader boards based on a few recent contract awards.









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EMEA ACV rises 19% Y/Y due to a surge of Restructuring activity that ranks among some of the best results ever; both BPO and ITO markets made slight Y/Y gains.

EMEA Quarterly Counts

EMEA Contract Award Trends

EMEA Quarterly ACV ($B)*

EMEA First-Quarter Segment ACV ($B)* EMEA Trailing 12 Months ACV ($B)*

$2.8

$3.8

$2.4

$3.4 $2.8

$3.6

$2.5

1Q161Q151Q141Q131Q122Q11

160 170

125

174 147

161

123

1Q161Q151Q141Q131Q122Q11

$12.1 $11.6 $12.3 $11.9 $14.8

637 592

647

560 602

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12

TTM ACV Totals TTM Count Totals

$1.52 $1.29

$1.85

$0.96

$0

$1

$2

$3





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U.K. inches up Y/Y, while Nordics and Southern Europe make larger gains. DACH market ACV declines Y/Y, even as number of DACH awards increases over 30% Y/Y.

EMEA Sub-Regions First-Quarter ACV ($B)*

EMEA Industry First-Quarter ACV ($B)*

EMEA Contract Award Trends Detail

$0.84 $0.63

$0.32 $0.31 $0.29 $0.06 $0.12 $0.15 $0.10 $0.0

$0.2$0.4$0.6$0.8$1.0$1.2$1.4

FinancialServices

Manufacturing Telecom &Media

Travel,Transport &

Leisure

Energy BusinessServices

ConsumerPackaged

Goods

Retail Healthcare &Pharma


$1.1

$0.36

$0.7

$0.1 $0.2 $0.1 $0.3

$0.0 $0.0

$0.5

$1.0

$1.5

$2.0

U.K. & Ireland DACH Nordics Benelux France Africa &Middle East

SouthernEurope

E. Europe &Russia




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Firstsource Solutions* FleetCor*

GFI Informatique* ISON Group

Luxoft Mindtree NGA HR* Transcom

VirtusaPolaris WNS

Co. Revenues < $2 B

Capita Ceva Logistics

CGI G4S* HCL

Infosys Jones Lang LaSalle*

MITIE Serco Wipro


Accenture Atos BT

Capgemini Cognizant

HPE IBM

ISS Global* TCS

T-Systems

ISG Sourcing Market Standouts in EMEA The Breakthrough 10 category experiences 40% turnover during the quarter as several Service Providers featured on the Leader Board re-enter the Top 10 lists.









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Special Topic First Quarter 2016 PUBLIC SECTOR OUTSOURCING

John Keppel Partner & President



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Relative to the Commercial Sector, Public Sector sees strong five-year growth. Most ACV is generated by ITO awards, with BPO ACV varying by geography.

Public Sector Trailing 12 Months Counts

Global Public Sector Award Trends

1,542 1,364 1,290

1,636 1,629

1,006

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12

Commercial Sector Public Sector

Public Sector Trailing 12 Months ACV ($B)*

$24.7

$65.6 $52.4

$41.1 $37.0 $31.5

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12


Public Sector ITO vs. BPO TTM ACV ($B)*

$51.8

$39.0 $32.1

$26.7 $24.3

$13.9 $13.5 $9.0 $10.3 $7.2

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12

Public Sector ITO ACV Public Sector BPO ACV

3.25

4.28

3.19

3.77

Average Deal Size and Duration TTM Compare

$16.0 $20.5

$40.1 $31.4

2Q15 -1Q16

2Q14 -1Q15

2Q13 -1Q14

2Q12 -1Q13

2Q11 -1Q12


Avg. Duration in Yrs.

Avg. Contract Value ($K)



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Global Public Sector Award Trends North America, led by federal government IT spending, accounts for a large share of sourcing. Average deal values increase, whereas durations shorten.

Share of Public Sector ACV for Trailing 12 Months Top Public Sector Providers

in Recent 12 Months

58%

17% 5% 3%

17%

U.S. &Canada

U.K. ContinentalEurope

ANZ Other

*New to List for 2016 Service providers in alphabetical order; no rankings implied. Placements based on counts of public sector contract awards sourced from ISG Contracts Knowledgebase ®.

U.S. & Canada ANZ

U.K. Continental Europe

Booz Allen Hamilton* CACI* HPE*

Lockheed Martin Northrop Grumman

Raytheon Science Applications

BT Capgemini*

Capita Carillion

CGI Fujitsu*

G4S* HPE

Accenture Atea Atos BT*

Capgemini HPE

Indra Sistemas

Accenture Boeing

Harris Corp. HPE* IBM

Raytheon* SingTel Optus*

Telstra* Public Sector Regional ITO vs. BPO % TTM

79%

31%

88% 76%

21%

69%

12% 24%

U.S. & Canada U.K. ContinentalEurope

ANZ

ITO ACV BPO ACV



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U.S. Public Sector Contract Award Details Department of Defense (DoD) ITO dominates the U.S. Public Sector sourcing; Health and Human Services (HHS) and Homeland Security (DHS) remain active.

$39.2

$30.1

$19.2

$7.2 $3.7 $5.9

$1.2 $1.2 $1.5

$0.4 $0.9 $0.7

$16.3 $7.6 $5.1

2Q15-1Q162Q14-1Q152Q13-1Q14

Local Government

Public Healthcare

Other CentralGovernmentDepartment ofDefense

$48.0 $35.8 $27.3

1,041 1,059 723

2Q15-1Q162Q14-1Q152Q13-1Q14

ACV $B Contract Counts

% of DOD Consortium Contracts up 17 percentage pts in Recent 12 Months

Local Government Capgemini

Dell Harris HPE

Verizon

Public Healthcare Atos

Booz Allen Hamilton HPE

ICF International Kelly Services

Other Federal Government

Accenture CSC HPE

Raytheon Science Applications

DoD Single Provider General Dynamics Lockheed Martin

Northrop Grumman Science Applications

Raytheon

DoD Consortium Participation**

BAE Systems Booz Allen

General Dynamics Leidos

Lockheed Martin

U.S. Activity Details by Sub-Sector

U.S. Public Sector Activity for Last 3 TTMs Top U.S. Public Sector Providers for the Most Recent 12 Months*

*Service providers in alphabetical order; no rankings implied. Placements based on counts of contract awards in the ISG Contracts Knowledgebase ®. **Providers who had the highest participation rates in consortiums who were awarded DOD contracts.

Other Federal Government



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U.K. Public Sector Contract Award Details Volume of deals increase sharply and by significantly more value in Central Government functions, Healthcare (NHS) and Defence (MoD).

Local Government

Accenture Capita Group

Carillion CSC

Liberata

Public Healthcare BT

Capita CSC

Interserve Serco Group

Other Central Government

Carillion Capita Group

HPE BT Group

Fujitsu

Defence BT

Carillion General Dynamics

HPE Leidos

U.K. Activity Details by Sub-Sector

U.K. Public Sector Activity for Last 3 TTMs Top U.K. Public Sector Providers for the

Most Recent 12 Months*

*Service providers in alphabetical order; no rankings implied. Placements based on counts of contract awards in the ISG Contracts Knowledgebase ®.

$1.8 $1.1 $0.2

$5.4

$3.9 $2.6

$2.5 $0.3 $0.7

$1.4 $1.2 $2.3

2Q15-1Q162Q14-1Q152Q13-1Q14

LocalGovernment

PublicHealthcare

CentralGovernment

Defense

$11.1

$6.5 $5.9

160 140

167

2Q15-1Q162Q14-1Q152Q13-1Q14

ACV $B Contract Counts

Other Central Government

Defence



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Broader Market starts year on an upswing, with ACV surpassing $6B. Number of awards generated ranks this quarter among the best ever. Americas tops $2B for ninth quarter in a row, aided by strong U.S. and

Financial Services performances. Growth in EMEA driven by several large awards, consistent U.K. markets

and strong activity in the Nordics and Southern Europe. Slowing pace of contracting in Asia Pacific; most sub-regions decelerate.

Expect a difficult compare in 2Q16; if vigorous small-deal activity continues, markets should grow.

Long term, look for ACV to remain in positive territory; Europe and Asia-Pac may see increasing demand across secondary markets; U.S. and U.K. markets likely will maintain consistent demand.

1Q16 ISG Outsourcing Index® - Global Summary and Outlook

summary market

outlook market



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Please contact us with your questions and comments. Learn More

Paul Reynolds Partner & Chief Research Officer,

ISG Momentum +1 508 625 2194

[email protected]

www.isg-one.com John Keppel

Partner and President +44 (0)7879 432 212

[email protected]

Will Thoretz Americas Media Contact

+1 203 517 3119 [email protected]

Denise Colgan EMEA and AP Media Contact

+44 1737 371523 [email protected]

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an ISG Business +1 203 820 8987

[email protected]

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First Quarter 2016 APPENDIX: SCORE CARD FOR TCV



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The ISG Outsourcing Index has moved to ACV as the primary measure of the Broader Market. We will continue to provide a high-level TCV view of the market via a Scorecard analysis.

First Quarter 2016 TCV Scorecard

*Contracts with TCV ≥ $25M from the ISG Contracts Knowledgebase®

Scorecard 1Q16 1Q Y/Y 1Q Q/Q

TCV ($B)* Change Change

Global Market $ 19.3 -12% -24%

New Scope $ 13.6 -15% -4%

Restructurings $ 5.7 -3% -49%

Mega-deals $ 3.6 -26% -37%

ITO $ 11.8 -28% -39%

BPO $ 7.6 33% 22%

Americas $ 7.0 -2% -25%

EMEA $ 9.5 -21% -35%

Asia Pacific $ 2.8 5% 107%



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