Information Services Group, Inc. · NASDAQ:III
Information Services — Q1 2023 Earnings Presentation
18 slides from Information Services's earnings presentation, Apr 13, 2023
Slide 1: Managed Services & As-a-Service Market Insights
Managed Services & As-a-Service Market Insights April 13, 2023 1Q 2023 HOSTED BY Rishi Jhunjhunwala VP - IT Services & Insurance IIFL - Institutional Equities © 2023 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any
Slide 2: 1Q23: Three Big Thoughts
1Q23: Three Big Thoughts Demand for enterprise digitization continues to be robust with applications, industry BPO and engineering delivering strong Managed Services results. SaaS and IaaS bookings both declined year-over-year as enterprises slow migrations and optimize workloads. Recent cost manage
Slide 3: Global Broader Market Results
Global Broader Market Results ACV $B Quarterly Trends 26.1 23.9 24.1 After four straight quarters of 16.4 decline, Combined Market improved 14.3 14.3 9.7 9.6 9.8 sequentially by 1% Managed Services remained well 1Q 4Q 1Q 1Q 4Q 1Q 1Q 4Q 1Q 22 22 23 22 22 23 22 22 23 above $9B in ACV while registering
Slide 4: Hiring Slows
Hiring Slows Hiring slowdown is temporary; Managed Services ACV ($B) Annualized Employee Growth likely to resume in 2H23 to meet 10.0 30% Annualized Employee Growth demand. Managed Services ACV ($B) 9.0 20% Providers are rebalancing to 8.0 protect margins. 10% 7.0 Layoffs are mainly focused on 0% 6.
Slide 5: Provider Margin & Revenue Growth
Provider Margin & Revenue Growth ACV $B Y/Y Avg. Weighted Y/Y Avg. Weighted Margin Growth Revenue Growth Provider revenues continue to show steady growth 20.0% Provider margins remain under pressure 10.0% Right-sizing activities in the market are occurring to improve 0.0% margins Pricing increases f
Slide 6: Outsourcing Market Prices Fall Faster Than Contract Prices
Outsourcing Market Prices Fall Faster Than Contract Prices Contract Price Market Price Market Price Range ITO Managed Services pricing Contracts are typically out continues to fall annually 105% of market price range in % of Year 1 Unit Price 100% year two Most deals included Y/Y reductions but typi
Slide 7: Managed Services ITO/BPO Results
Managed Services ITO/BPO Results Quarterly Trends ACV $B 1Q22 1Q23 Third best quarter ever for ITO ADM 23% ACV with nearly 500 transactions awarded (most ever) 6.8 BPO saw second best quarter ever with over $3B in ACV; transactions 7% -10% Infrastructure -16% Y/Y proving to be less exposed to Y/Y bu
Slide 8: IaaS Results
IaaS Results Quarterly Trends ACV $B Top 3 Hyperscaler Growth in ACV Second straight quarterly Y/Y (2020 – 2023) decline; cloud consumption is Total ACV Y/Y % of Growth slowing $12.0 80% Each of the three regions posted 60% Y/Y declines $9.0 40% Big 3 hyperscalers (AWS, Azure and $6.0 GCP) experienc
Slide 9: SaaS Results
SaaS Results Quarterly Trends ACV $B App Category ACV Growth SaaS ACV remained under $4B for 1Q23 Y/Y 5-Quarter Avg. 1Q22 1Q23 third straight quarter, down 4% Y/Y Sales cycles lengthened with Analytics & BI 6% enterprises looking to optimize 3.9 29% cloud workloads ERP Fin. Mgmt. -10% Top 10 SaaS pr
Slide 10: Global Service & Technology Provider Standouts
Global Service & Technology Provider Standouts THE ISG 15 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
Slide 11: Service & Technology Provider Standouts – Global
Service & Technology Provider Standouts – Global The 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 $
Slide 12: Americas Broader Market Results
Americas Broader Market Results ACV $B Quarterly Trends 13.5 12.5 12.5 Combined Market ACV flattens out 8.2 7.8 7.3 sequentially after decelerating 5.3 4.7 5.2 throughout 2022 Managed Services exceeds $5B in 1Q 4Q 1Q 1Q 4Q 1Q 1Q 4Q 1Q 22 22 23 22 22 23 22 22 23 ACV Six Managed Services mega-deals aw
Slide 13: EMEA Broader Market Results
EMEA Broader Market Results ACV $B Quarterly Trends 7.8 7.5 7.4 Combined Market remained in a very tight range around $7.5B 3.9 3.6 3.7 3.9 3.9 3.7 Managed Services down slightly Y/Y yet has not dipped below $3.5B 1Q 4Q 1Q 1Q 4Q 1Q 1Q 4Q 1Q 22 22 23 22 22 23 22 22 23 in ACV since end of 2020 U.K. AC
Slide 14: Asia Pacific Broader Market Results
Asia Pacific Broader Market Results ACV $B Quarterly Trends 4.8 Asia Pacific Combined Market 4.0 4.1 4.3 3.3 remains above $4B, breaking four 1.3 2.6 0.5 0.8 straight quarters of sequential decline 1Q 4Q 1Q 1Q 4Q 1Q 1Q 4Q 1Q 22 22 23 22 22 23 22 22 23 Managed Services ACV surpasses $800M level, up s
Slide 15: Global Technology Services Industry Award Trends
Global Technology Services Industry Award Trends Retail & Travel, TTM ACV Business Consumer Financial Healthcare Telecom Transport Change Y/Y Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure Combined Market -9% -1% 21% 3% 8% 12% -13% 3% Managed Services 3% -16% 24% -2%
Slide 16: Summary and Outlook
Summary and Outlook Summary Market Outlook Managed Services Macro Recap ⚫ Bookings remained strong, establishing a record high for a ⚫ Central Banks continue to tighten with a more dovish tone quarterly performance; focus on growing existing business ⚫ Inflation falling but not as fast as Central Ba
Slide 17: Thank you!
The 82 Quarterly nd Thank you! @ISG_News #ISGIndex #ISGIndexInsider © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 18: About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service
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