Information Services Group, Inc. · NASDAQ:III
Information Services — Q3 2021 Earnings Presentation
34 slides from Information Services's earnings presentation, Oct 12, 2021
Slide 1: Managed Services & As-a-Service Market Insights
Managed Services & As-a-Service Market Insights 12 October 2021 HOSTED BY Moshe Katri 3Q 2021 Managing Director, Equity Research Wedbush Securities @ISG_News #ISGIndex #ISGIndexInsider © 2021 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document
Slide 2: Welcome to the 76th Quarterly Hall: The ISG Experts
Welcome The ISG Experts to the 76 th Steve Kathy Quarterly Hall Partner & President Rudy Chief Data & Analytics Officer Stanton Gaurav Jones Director & Gupta Partner, Digital Principal Engineering Analyst Covering the State of the Managed Services & As-a-Service Industry for the Global Commercial Ma
Slide 3: ISG's Top Findings – 3Q 2021
ISG’s Top Findings – 3Q 2021 Q3 Combined Market ACV has accelerated since 3Q20 +40% YoY 40% growth rate is highest since we moved to Combined Market view in 2014 ACV = Annual Contract Value 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 3
Slide 4: ISG's Top Findings – 3Q 2021: Americas Managed Services
ISG’s Top Findings – 3Q 2021 Q3 Americas Managed Services ACV crossed $8B ACV for second +37% YoY consecutive quarter Combined Market ACV has accelerated since the 4Q20 decline ACV = Annual Contract Value 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndex
Slide 5: ISG's Top Findings – 3Q 2021: EMEA Combined Market
ISG’s Top Findings – 3Q 2021 Q3 EMEA Combined Market four consecutive quarters above $6B ACV +36% YoY Managed Services ACV generated $3B of ACV but experienced its third successive sequential decline as both the U.K. and DACH market pulled back ACV = Annual Contract Value 3Q21 © 2021 Information Ser
Slide 6: ISG's Top Findings – 3Q 2021: Asia Pacific
ISG’s Top Findings – 3Q 2021 Q3 Asia Pacific advanced at a rate of 60% for second straight quarter +60% YoY led by strength in Managed Services as many of its regional markets posted double-digit gains ACV = Annual Contract Value 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG
Slide 7: Global Broader Market Results
Global Broader Market Results Quarterly Trends 21.8 19.9 13.4 Combined market added nearly 15.5 11.7 $2B in ACV from 2Q21 6.9 8.2 8.4 8.6 Managed Services sets another Q3 Q2 Q3 Q3 Q2 Q3 Q3 Q2 Q3 record, up 22% Y/Y 20 21 21 20 21 21 20 21 21 Managed Services saw most awards in a quarter (564) and mos
Slide 8: Global Results by Function
Global Results by Function 2021 YTD Trends ACV $B 2020 YTD 2021 YTD ITO ACV up 12%, with ADM 25.8 activity up 29% versus 2020 and 34% versus 2019 BPO ACV up 40% versus 2020 18.3 36% and up 11% versus 2019, driven 2021 YTD 26% by surge in ER&D 40% Growth 2021 IaaS ACV generated $25B, up 12% 2021 YTD
Slide 9: 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 10: Service & Technology Provider Standouts – Global
Service & Technology Provider Standouts – Global 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 $
Slide 11: Americas Broader Market Results
Americas Broader Market Results Quarterly Trends 11.6 Combined Market ACV 8.5 9.7 6.9 surpassed $11B for the first 5.9 4.7 4.6 3.9 3.8 time, with ACV up 37% Y/Y Managed Services ACV of $4.7B Q3 Q2 Q3 Q3 Q2 Q3 Q3 Q2 Q3 20 21 21 20 21 21 20 21 21 was the most ever, up 21% Y/Y 282 contracts awarded wer
Slide 12: Americas Results by Function
Americas Results by Function 2021 YTD Trends ACV $B 2020 YTD 2021 YTD ITO ACV up 8% versus 2020 and up 12.0 12% versus 2019; ADM market was active, up 28% 25% 2021 BPO grew 27% versus 2020 on 8.6 26% YTD increasing activity in ER&D and 27% 2021 Growth Industry-specific BPO YTD 8% 2021 Growth 6.2 YTD
Slide 13: Asia Pacific Broader Market Results
Asia Pacific Broader Market Results Quarterly Trends 3.89 3.64 2.93 3.07 Combined Market ACV up 60% 2.28 0.96 Y/Y for the second consecutive 0.57 1.9 0.38 quarter Q3 Q2 Q3 Q3 Q2 Q3 Q3 Q2 Q3 Managed Services ACV up 50% 20 21 21 20 21 21 20 21 21 Y/Y but down 40% Q/Q Pullback in larger awards in the M
Slide 14: Asia Pacific Results by Function
Asia Pacific Results by Function 2021 YTD Trends ACV $B 2020 YTD 2021 YTD ITO segment up 15%; both ADM 7.42 and Infrastructure contributed to the upside BPO up $400M in incremental ACV 52% over 2020, driven by increases in 2021 YTD Industry-specific BPO 15% Growth 2021 37% IaaS up over 50% with stro
Slide 15: EMEA Broader Market Results
EMEA Broader Market Results Quarterly Trends 6.3 6.5 Combined Market ACV up 30% Y/Y 4.8 but has remained in a tight range 2.7 3.4 3.2 2.9 3.3 just above $6B for the past year 2.1 Q3 Q2 Q3 Q3 Q2 Q3 Q3 Q2 Q3 Managed Services posted a $3B+ 20 21 21 20 21 21 20 21 21 quarter but also saw ACV decline seq
Slide 16: EMEA Results by Function
EMEA Results by Function 2021 YTD Trends ACV $B 2020 YTD 2021 YTD ITO ACV up 15% with ADM ACV up 8.2 36% and Infrastructure declining by 1.3% 6.4 BPO activity rebounded from 15% weaker 2020, up 58% but still 2021 down 6% versus 2019 pre- YTD 26% 58% 2021 pandemic levels Growth 2021 YTD YTD 37% Growt
Slide 17: Global Technology Services Industry Award Trends
Global Technology Services Industry Award Trends Retail & Travel, 2021 YTD Business Consumer Financial Healthcare Telecom Transport Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure Growth $9.5B ACV $8.2B ACV $3.7B ACV $12.2B ACV $5.4B ACV $9.8B ACV $5.8B ACV $5.1B ACV C
Slide 18: Trends in Digital Engineering 3Q21
Trends in Digital Engineering “Accelerating toward a connected and Gaurav Gupta intelligent future.“ Partner & Global Head, Digital Engineering Stanton Jones Director & Principal Analyst @ISG_News #ISGIndex #ISGIndexInsider 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 19: Engineering ACV Is On the Rise
Engineering ACV Is On the Rise # of Transactions ACV $Bs 60 $0.70 $0.60 $0.50 # of Transactions 40 ACV in $Bs $0.40 $0.30 20 $0.20 $0.10 0 $0.00 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 17 17 17 17 18 18 18 18 19 19 19 19 20 20 20 20 21 21 21 3Q21 © 2021 Information Services Group, I
Slide 20: Engineering Is Not the Same Anymore
Engineering Is Not the Same Anymore (Further Accelerated by COVID Pandemic) Connected/data Designing for Products Product enabled Services Experiences Completing functionality Start of Operating for Production continuous releases at point-of-sale Capturing profit via Software, data and sustainabilit
Slide 21: 2019, 2020: The Years Earth Changed ...
2019, 2020: The Years Earth Changed ... [Or the Years of Magical Thinking?] Changing customer COVID expectations COVID as a catalyst: ⬤ More top-down buy-in and a converged approach for transformation ⬤ Remote, autonomous and predictive operations in plants and factories Organization as an “Organism
Slide 22: Digital Engineering Megatrend #1
Digital Engineering Megatrend #1 Increasingly more transformation programs will be defined spanning a converged IT-ET-OT-CT* transformation to increase value realization Realigned Reimagined Reshaped Redesigned Data Organization Security Ecosystem *ET=Engineering Technology, OT=Operational Technolgy
Slide 23: Digital Engineering Megatrend #2
Digital Engineering Megatrend #2 Maturing of Industry 4.0 driven by Digital Twin-/Thread across the product lifecycle and ecosystem System Lifecycle IoT Insights Driving Edge Management Autonomous & Adoption Predictive Operations 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG
Slide 24: Digital Engineering Megatrend #3
Digital Engineering Megatrend #3 As companies are reimagining their products and Expect OEMs to redefine their services for a connected world, software and software operating model for higher data-driven capabilities become table stakes. productivity, throughput and quality. Virtualization / Standar
Slide 25: Summary: What Does This Mean for You?
Summary: What Does This Mean for You? Blurring of the ecosystem Transformation spanning both boundaries opens up new sell- Strategy and Implementation → to and sell-with opportunities → Engineering/OT deals become Innovative ways to partner, complex, multi-year and large source, transform, govern 3Q
Slide 26: Weekly Briefing
Weekly Briefing What’s Important in IT Services – Every Week in Your Inbox! Sign up at https://isg-one.com/isg-index-insider 3Q21 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 26
Slide 27: 3Q21 ISG Index – Summary and Outlook
3Q21 ISG Index – Summary and Outlook Summary Outlook Managed Services Recovers Managed Services Forecast ⚫ Managed Services up 17% YTD, with the Americas ⚫ Many positives in the market; recovery has been setting the pace with a record-setting third quarter broad-based ⚫ ADM, ER&D and Industry-specif
Slide 28: Thank you!
The 76 Quarterly th Thank you! @ISG_News #ISGIndex #ISGIndexInsider © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 29: Appendix
Appendix © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 30: Global TCV Scorecard
Global TCV Scorecard The ISG Index has moved to TCV 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. 3Q21 3Q Y/Y 2021 YTD 2021 YTD TCV ($B)* Change TCV ($B)* Change Global Commercial Combined Market 46.4 25% 125.9
Slide 31: Service & Technology Provider Standouts – Americas
Service & Technology Provider Standouts – Americas 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
Slide 32: Service & Technology Provider Standouts – EMEA
Service & Technology Provider Standouts – EMEA 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
Slide 33: Service & Technology Provider Standouts – Asia Pacific
Service & Technology Provider Standouts – Asia Pacific 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 Reve
Slide 34: isg-one.com
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 se
Information Services Group — Q3 2021 Earnings Presentation on 6ix