The ISG Index Global Combined Outsourcing and As-a-Service Market Insights. Second Quarter and First Half 2016

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1 1 The ISG Index Global Combined Outsourcing and As-a-Service Market Insights Second Quarter and First Half 2016 Hosted by: Moshe Katri, Williams Trading 14 July 2016

2 2 Welcome to the 55th Quarterly ISG Index Review Covering the state of the combined sourcing and as-a-service industry for global, commercial contracts John Keppel Partner & President Esteban Herrera Partner

3 3 New! Growing As-a-Service Market Featured in the ISG Index Combined Market ACV = Outsourcing ACV + As-a-Service ACV (IaaS and SaaS) NEW! As-a-Service ACV ($B) by Type 2Q16 As-a-Service % of the Combined Market up 16 pts over 1Q14 % As-a-Service as a % of Combined ACV Global SaaS 36% $1.7 $0.7 $1.6 $0.7 $1.6 $0.8 $0.8 $1.7 $0.8 $1.9 $2.0 $1.1 $2.3 $1.4 $2.4 $1.5 $2.6 $1.6 $2.8 $1.8 20% 19% 24% 30% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 1Q 2Q14 3Q 4Q 1Q 2Q15 3Q 4Q 1Q 2Q16 2Q16 As-a-Service ACV had a growth rate of 45% from it s 2015 like-quarter compare

4 At a Glance 4 2Q ACV OF $7.9B DRIVEN BY RECORD AS-A-SERVICE GROWTH; HALF-YEAR ACV OF $16.6B UP 10% Y/Y AMERICAS 2Q ACV OF $4.2B UP 7%, ECLIPSING EMEA FOR FIRST TIME SINCE 2013; HALF-YEAR AMERICAS ACV OF $8.7B UP NEARLY 20% EMEA 2Q ACV FALLS 18% Y/Y; WEAKNESS DUE TO FEWER LARGE AND RESTRUCTURING AWARDS; TENTATIVE AS-A-SERVICE GROWTH CAN'T BOOST COMBINED RESULTS ASIA PACIFIC 2Q ACV UP 13% Y/Y, DRIVEN BY 50%+ GAINS IN IAAS; TRADITIONAL MARKET FLAT, REMAINING IN A TIGHT RANGE Scorecard 2Q16 2Q Y/Y 2Q Q/Q 1H16 1H Y/Y ACV ($B)* Change Change ACV (B)* Change Global Combined Market $ 7.9-2% -9% $ % By Type Outsourcing $ % -16% $ % As-a-Service $ % 7% $ % By Service ITO $ % -14% $ 7.9-4% BPO $ 1.5 4% -21% $ 3.3 6% IaaS $ % 9% $ % SaaS $ % 4% $ % By Region Americas $ 4.2 7% -4% $ % EMEA $ % -22% $ 6.1 0% Asia Pacific $ % 18% $ 1.8 7% Contracts with ACV $5M from the ISG Contracts Knowledgebase

5 Global Combined Market Contracting Trends 2Q16 Combined Market ACV down 2% Y/Y on New Scope weakness; YTD, Combined Market ACV up 10% with As-a-Service increasing 44% and traditional sourcing flat. 5 Global Combined Quarterly ACV ($B) $8.3 $1.7 $6.6 $8.5 $1.6 $6.9 $7.4 $1.6 $5.8 $8.6 $1.7 $6.8 Outsourcing ACV $7.0 $1.9 $5.1 $8.1 $2.0 $6.1 As-a-Service ACV $7.7 $2.3 $5.5 $9.3 $2.4 $6.9 $8.7 $2.6 $6.1 $7.9 $2.8 $5.1 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Global Combined Half-Year ACV ($B) $16.8 $3.3 $13.5 1H14 Outsourcing $15.9 $3.3 $12.6 2H14 $15.1 $3.8 $11.3 1H15 As-a- Service $17.1 $4.7 $12.4 2H15 $16.6 $5.4 $11.2 1H16 Contracts with ACV $5M from the ISG Contracts Knowledgebase $12 $10 $8 $6 $4 $2 $0 Global Combined Half-Year ACV by Type ($B) Range of Prior 4 Halves Avg of Prior 4 Halves 2H15 1H16 $7.9 $3.3 $2.0 ITO BPO SaaS IaaS $3.4

6 Americas Combined Market Contracting Trends 2Q16 Combined Market ACV up 7% Y/Y on surging As-a-Service activity; YTD, Americas shows promise with 6% sourcing growth and 48% As-a-Service ACV growth. 6 Americas Combined Quarterly ACV ($B) Outsourcing ACV As-a-Service ACV $3.1 $2.1 $3.5 $2.6 $3.6 $2.6 $3.8 $1.1 $2.7 $3.3 $1.1 $2.2 $4.0 $1.2 $2.8 $3.7 $1.4 $2.3 $4.1 $1.5 $2.6 $4.5 $1.7 $2.8 $4.2 $1.7 $2.5 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Americas Combined Half-Year ACV ($B) Outsourcing As-a-Service $8.7 $7.3 $7.8 $7.3 $6.7 $3.4 $2.0 $2.3 $2.9 $2.0 $4.7 $5.3 $5.0 $4.9 $5.3 1H14 2H14 1H15 2H15 1H16 Americas Combined Half-Year ACV by Type ($B) $4.5 $3.5 $2.5 $1.5 Range of Prior 5 Halves Avg of Prior 5 Halves 2H15 1H16 $4.0 $1.3 $1.4 ITO BPO SaaS IaaS $2.0 Contracts with ACV $5M from the ISG Contracts Knowledgebase

7 ISG Combined Market Standouts in the Americas Well-established IaaS and SaaS firms enter the Big 10 leader board; moderate turnover in the medium- and small-size firms. 7 SOURCING STANDOUTS GROUPED BY COMPANY SIZE The Big 10 Sourcing Standouts The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts Outsourcing Market Accenture Capgemini Cognizant HPE IBM TCS As-a-Service Market Amazon Web Services Google Oracle SAP Outsourcing Market CGI Dell Genpact HCL Infosys Wipro As-a-Service Market Adobe Systems Equinix Rackspace Salesforce.com Outsourcing Market Luxoft Minacs Mindtree Mphasis SITEL Sutherland Global Synacor Syntel VirtusaPolaris As-a-Service Market Workday Co. Revenues > $10 B Co. Revenues $2-10 B Co. Revenues < $2 B Placements based on the annual value 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

8 Americas Traditional Outsourcing Award Trends While ACV in traditional sourcing market is flat, number of contracts sets record high each year; YTD ACV activity led by Financial Services and Healthcare. 8 Americas - Half-Year Contract Counts - Traditional Outsourcing Only 1H Counts 2H Counts Americas - Half-Year ACV ($B) by Industry - Traditional Outsourcing Only $1.4 $1.2 $0.8 $0.6 $0.4 $0.2 $0.0 Financial Services $1.27 $0.84 $0.79 Manufacturing Healthcare & Pharma Business Services Contracts with ACV $5M from the ISG Contracts Knowledgebase Range of Prior 5 Halves Avg of Prior 5 Halves 2H15 1H Telecom & Media Energy $0.28 $0.27 Travel, Transport & Leisure Retail $0.37 Consumer Packaged Goods $0.31

9 Asia Pacific Combined Market Contracting Trends 2Q16 Combined Market ACV up 13% Y/Y while traditional sourcing stays flat for the sixth quarter; YTD, IaaS ACV responsible for positive market trajectory. 9 Asia Pacific Combined Quarterly ACV ($B) Outsourcing ACV As-a-Service ACV $1.3 $1.3 $0.3 $0.3 $0.8 $0.8 $1.1 $0.7 $0.3 $0.3 $0.4 $0.3 $0.3 $0.3 $0.2 $0.4 $0.7 $0.6 $0.6 $0.6 $0.4 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 AP Combined Half-Year ACV ($B) Outsourcing As-a-Service $2.6 $1.7 $1.7 $1.7 $1.8 Asia Pacific Combined Half-Year ACV by Type ($B) $2.0 $1.5 Range of Prior 4 Halves Avg of Prior 4 Halves 2H15 1H16 $2.1 1H14 $1.2 2H14 $1.1 1H15 $0.7 2H15 $0.8 1H16 $0.0 $0.6 $0.6 $0.4 $0.2 ITO BPO SaaS IaaS Contracts with ACV $5M from the ISG Contracts Knowledgebase

10 ISG Combined Market Standouts in Asia Pacific Turnover of 30%-40% in the leader board across all Service Provider segments with prominent As-a-Service firms making the Top 10 in large-firm category. 10 SOURCING STANDOUTS GROUPED BY COMPANY SIZE The Big 10 Sourcing Standouts The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts Outsourcing Market Capgemini Cognizant Fujitsu HPE IBM Sodexho TCS As-a-Service Market Amazon Web Services China Telecom KT Corp. Outsourcing Market Avaya HCL Indra Sistemas Infosys Unisys Wipro As-a-Service Market Adobe Systems Equinix Rackspace Salesforce.com Outsourcing Market Aegis Ajilon ASG ChinaSoft Hollysys Automation Interactive Pty Minacs Neusoft Sutherland Global As-a-Service Market Xero Co. Revenues > $10 B Co. Revenues $2-10 B Co. Revenues < $2 B Placements based on the annual value 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

11 Asia Pacific Traditional Outsourcing Award Trends YTD, contracting activity remains muted; ACV half-year gains come from Manufacturing and Telecom while most other Industry groups struggle. 11 Asia Pacific - Half-Year Contract Counts - Traditional Outsourcing Only 1H Counts 2H Counts Asia Pacific - Half-Year ACV ($B) by Industry - Traditional Outsourcing Only Contracts with ACV $5M from the ISG Contracts Knowledgebase

12 EMEA Combined Market Contracting Trends 2Q16 Combined Market down 18% Y/Y; As-a-Service growth unable to compensate for 28% shortfall in traditional sourcing; YTD, EMEA flat, with of larger market awards and sluggish Restructuring activity. EMEA Combined Quarterly ACV ($B) 12 Outsourcing ACV As-a-Service ACV $3.8 $0.4 $3.4 $3.7 $0.4 $3.4 $3.1 $0.4 $2.7 $3.8 $0.4 $3.4 $2.8 $2.4 $3.3 $2.8 $3.2 $2.6 $4.3 $0.6 $3.8 $3.4 $0.6 $2.8 $2.7 $0.7 $2.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 EMEA Combined Half-Year ACV ($B) $7.5 $7.5 $6.9 $0.8 $6.1 $1.1 $0.8 $6.1 $1.3 $6.8 1H14 Outsurcing $6.1 2H14 $5.2 1H15 As-a-Service $6.4 2H15 $4.8 1H16 Contracts with ACV $5M from the ISG Contracts Knowledgebase $6 $5 $4 $3 $2 $1 EMEA Combined Half-Year ACV by Type ($B) $- Range of Prior 4 Halves Avg of Prior 4 Halves 2H15 1H16 $3.29 $1.52 $0.47 ITO BPO SaaS IaaS $0.80

13 ISG Combined Market Standouts in EMEA Very little leader board turnover across the region, except for a few As-a-Service firms and a couple of traditional sourcing providers in the high-growth category. 13 SOURCING STANDOUTS GROUPED BY COMPANY SIZE The Big 10 Sourcing Standouts The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts Outsourcing Market Accenture Atos BT Capgemini Cognizant HPE IBM TCS T-Systems As-a-Service Market Amazon Web Services Outsourcing Market HCL Capita CGI Genpact Infosys Jones Lang LaSalle Serco Wipro As-a-Service Market Adobe Systems Equinix Outsourcing Market FleetCor Frontica Business Solutions GFI Informatique ISON Group Luxoft Mindtree NNIT Transcom VirtusaPolaris WNS Co. Revenues > $10 B Co. Revenues $2-10 B Co. Revenues < $2 B Placements based on the annual value 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

14 EMEA Traditional Outsourcing Award Trends YTD, number of contracts flat despite strength in DACH and Nordic markets; U.K. pulls back; Manufacturing and Retail support ACV growth with remaining verticals experiencing YTD shortfalls. EMEA - Half-Year Contract Counts - Traditional Outsourcing Only 14 1H Counts 2H Counts EMEA - Half-Year ACV ($B) by Industry - Traditional Outsourcing Only $3.0 $2.5 $2.0 $1.5 $0.0 Financial Services $ $ $0.47 Manufacturing Energy Travel, Transport & Leisure Contracts with ACV $5M from the ISG Contracts Knowledgebase Range of Prior 4 Halves Avg of Prior 4 Halves 2H15 1H16 Telecom & Media Business Services $0.22 $0.19 $0.17 Healthcare & Pharma Consumer Packaged Goods Retail $0.35

15 15 DEFINING THE AS-A-SERVICE MARKET VALUE Discussion Topic Second Quarter 2016 John Keppel Partner & President

16 Growing As-a-Service Market Now Featured in ISG Index 16 Defining the As-a-Service Market co-location firms carrier cloud firms Nearly 30 leading IaaS Providers public cloud infra providers The ISG IaaS Market Basket 550+ leading SaaS Providers 83% with Co Revs The ISG SaaS Market Basket Across Functional Domains < $100M 17% with Co Revs $100M+ Market Size in Perspective As-a-Service vs. Traditional Outsourcing Market Size billions 40% Combined Market IaaS $24 SaaS $51 Outsourcing $114 $189

17 Comparing the As-a-Service and Outsourcing Markets The Global SaaS and IaaS markets are trending upward with Infrastructure building at a more pronounced rate; Americas leads in As-a-Service growth. 17 As-a-Service ACV ($B) by Type Regional As-a-Service ACV ($B) $1.7 $0.7 1Q14 $1.6 $0.7 2Q14 $1.6 $0.8 $0.8 3Q14 Global SaaS $1.7 $1.9 $0.8 4Q14 1Q15 Global IaaS $2.0 $2.3 $1.1 $1.4 2Q15 3Q15 $2.4 $1.5 4Q15 $2.6 $1.6 1Q16 $2.8 $1.8 2Q16 $2.0 $1.8 $1.5 $1.3 $0.8 $0.3 $0.0 2Q14 2Q15 Americas $1.8 2Q16 EMEA $0.7 AP $0.4 Comparing Global Outsourcing and As-a-Service ACV ($B) As-a-Service as a % of Combined ACV $6.6 $6.9 Outsourcing ACV $6.8 $5.8 $5.1 Global As-a-Service $6.9 $6.1 $5.5 $6.1 $5.1 20% 19% 24% 30% 36% $1.7 1Q14 $1.6 2Q14 $1.6 3Q14 $1.7 4Q14 $1.9 1Q15 $2.0 2Q15 $2.3 3Q15 $2.4 4Q15 $2.6 1Q16 $2.8 2Q16 1Q 2Q14 3Q 4Q 1Q 2Q15 3Q 4Q 1Q 2Q16

18 18 2Q/1H 2016 ISG Index - Global Summary and Outlook market summary Combined Market dips slightly Y/Y in 2Q16; outsourcing market endures a rougher than expected stretch in 2Q and falls by double digits YTD, Combined Market rises 10%, driven by As-a-Service segment, specifically high-growth area of IaaS; outsourcing segment comes in basically flat Americas shows promising YTD growth with nearly 50% growth in As-a- Service and a 6% growth in outsourcing segment EMEA edges down YTD with weakness in outsourcing, most notably a shortfall in large-contract activity and Restructuring awards Asia Pacific is on an upswing at the half year point, due to growth in the as-a-service segment that counteracted stagnant traditional sourcing activity market outlook The As-a-Service space is growing at a fast pace and likely will continue that trajectory Outsourcing markets pull back in 2Q and come in at lower levels than initially projected. Even though sourcing demand is increasing, 2 nd half results will face a difficult compare; outsourcing ACV may come in slightly lower than in 2015 Factoring in As-a-Service contract flow into the Combined Market, ACV likely will finish 2016 with high single-digit growth

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20 Learn More Please contact us with your questions and comments. 20 John Keppel Partner and President +44 (0) www. Will Thoretz Americas Media Contact Denise Colgan EMEA and AP Media Contact Bill McNee CEO Saugatuck Technologies, an ISG Business Paul Reynolds Partner & Chief Research Officer, ISG Momentum

21 21 APPENDIX: SCORE CARD FOR TCV Second Quarter and First Half 2016

22 2Q and 1H 2016 TCV Scorecard Outsourcing Market 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. 22 Scorecard 2Q16 2Q Y/Y 2Q Q/Q 1H16 Y/Y TCV ($B)* Change Change TCV ($B)* Change Global Market $ % 2% $ % New Scope $ % -13% $ % Restructurings $ % 38% $ % Mega-deals $ 0.0 0% -100% $ % ITO $ % 24% $ % BPO $ % -33% $ % Americas $ % 30% $ % EMEA $ % -9% $ % Asia Pacific $ % -26% $ 4.9-3% *Contracts with TCV $25M from the ISG Contracts Knowledgebase

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