Information Services Group, Inc. · NASDAQ:III
Information Services — Q3 2023 Earnings Presentation
27 slides from Information Services's earnings presentation, Oct 12, 2023
Slide 1: Managed Services & As-a-Service Market Insights
Managed Services & As-a-Service Market Insights October 12, 2023 3Q 2023 HOSTED BY Sumeet Jain Research Analyst ICICI Securities © 2023 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 m
Slide 2: Three Big Thoughts
Three Big Thoughts Managed Services sets another quarterly record led by both mid-size and mega deals; cost optimization is key driver. Global capability center activity at an all-time high as enterprises focus on building internal capabilities and talent while reducing costs. Generative AI use case
Slide 3: Global Broader Market
Global Broader Market ACV $B Quarterly Trends 24.0 23.1 23.1 Combined Market fell Y/Y for the fifth straight quarter 14.7 13.1 12.8 9.3 10.0 10.4 Managed Services set record high with $10.4B in ACV 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 22 23 23 22 23 23 22 23 23 Nine mega-deals awarded; most mega-deal ACV awar
Slide 4: Global Capability Center Activity at All-Time High
Global Capability Center Activity at All-Time High Reasons to build – and exit – a GCC are very similar Top 5 GCC Drivers and Inhibitors Three Emerging GCC Archetypes Achieved cost savings at the expense of quality This archetype realized objectives around cost reduction, but quality suffered. Reali
Slide 5: State of Generative AI
State of Generative AI Use cases maturing quickly as AI moves from learning to creating Top Functional Use Cases of Generative AI Top Enterprise Concerns % Adoption of Use Cases % Mature Use Cases 1. ROI viability 2. Legacy data quality Virtual Assistant 3. Hallucinations and model control Recommend
Slide 6: Demand Trends: Managed Services
Demand Trends: Managed Services © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 7: Managed Services ITO/BPO Results
Managed Services ITO/BPO Results YTD Trends ACV $B 2022 YTD 2023 YTD Through nine months, most ever ITO ACV and number of contracts ADM 24% awarded 22.8 Americas and Asia ITO ACV up significantly; EMEA ITO up slightly 14% -12% Infrastructure -1% YTD YTD Applications ACV up 24% YTD with Industry each
Slide 8: Managed Services: Mega-Deals
Managed Services: Mega-Deals Mega-Deal Trends Mega Award ACV Mega Award Count YTD 27 mega awards 30 generated nearly $5B of ACV; most since 2014 25 Contributed approximately $2B $4.9 # Awards additional ACV versus 2022 20 $3.8 Mega-deals continue to be shaped through incumbency, consolidation 15 $2.
Slide 9: Managed Services Regional Results
Managed Services Regional Results Managed Services Trends ACV $B Americas: 3Q23 best quarter 6.0 4.5 3.8 3.7 ever as ACV reached $6B; YTD, 4.8 4.5 0.8 1.1 ACV gains driven by defensive 0.7 sectors (Energy & Healthcare) 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 22 23 23 22 23 23 22 23 23 EMEA: YTD, ACV activity led
Slide 10: Managed Services Industry Results
Managed Services Industry Results Retail & Travel, 2023 ACV Business Consumer Financial Healthcare Telecom Transport YTD Change Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure Combined Market -25% -7% 16% -8% 9% -6% -7% -10% Managed Services -13% 3% 40% -3% 75% 1% 17%
Slide 11: Demand Trends: Cloud
Demand Trends: Cloud © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 12: IaaS Results
IaaS Results YTD Trends ACV $B 2022 YTD 2023 YTD IaaS ACV declined 19% YTD; first time ever through nine months that award profile turned negative Big 3 19.3 -22% Declines are broad-based across 28.2 Hyperscalers regions, falling between 15%-20% Big 3 Hyperscalers (AWS, Azure and GCP) ACV declined 2
Slide 13: SaaS Results
SaaS Results YTD Trends ACV $B 2022 YTD 2023 YTD SaaS ACV down 6% YTD; App Category ACV Growth however, 3Q23 ACV moved in opposite direction, up 8% Y/Y Collaboration 1.2 2% EMEA ACV up YTD while Americas and 1.1 2% 11.5 HCM Asia remained in negative territory ITSM 1.6 -1% Top 10 SaaS providers have
Slide 14: ISG Provider Lens 15 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 3Q23 © 2023 Information Services Gro
Slide 15: 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 16: Summary and Outlook
Summary and Outlook © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 17: Summary and Outlook
Summary and Outlook Summary Market Outlook Managed Services Macro Recap ⚫ Managed Services has broken out of range-bound market ⚫ Wall of Worry: "higher for longer” rate environment; higher with consecutive $10B+ quarters energy prices, the strong dollar, geopolitical uncertainty, etc. ⚫ Record-brea
Slide 18: Thank you!
The 84 Quarterly th Thank you! © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 19: Index Insider
Index Insider TM Subscribe to the ISG Index Insider to stay on top of what's important in the IT & Stanton Jones Alex Bakker business services sector. Delivered to your inbox every Friday from the ISG Index Research Team. Amanda Lytle Sunder Sarangan https://isg-one.com/research/isg-index-insider/is
Slide 20: Appendix
Appendix © 2023 Information Services Group, Inc. All Rights Reserved.
Slide 21: Americas Broader Market Results
Americas Broader Market Results ACV $B Quarterly Trends 12.3 12.2 Combined Market ACV surged back 11.0 above $12B, down slightly at 0.4% 7.5 6.5 6.0 6.2 4.8 4.5 Y/Y Managed Services has best quarter 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 22 23 23 22 23 23 22 23 23 ever with $6B in ACV, up 25% Y/Y New Scope ACV
Slide 22: Service & Technology Provider Standouts – Americas
Service & Technology Provider Standouts – Americas 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 23: EMEA Broader Market Results
EMEA Broader Market Results ACV $B Quarterly Trends 7.2 7.6 6.9 Combined Market fell Y/Y; ACV landed below $7B for first time since 4.5 3.8 3.7 3.5 3.4 3.2 3Q21 Managed Services ACV fell from 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 22 23 23 22 23 23 22 23 23 record highs in 2Q23, down 2% Y/Y UK had its third str
Slide 24: Service & Technology Provider Standouts – EMEA
Service & Technology Provider Standouts – EMEA 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 $1B
Slide 25: Asia Pacific Broader Market Results
Asia Pacific Broader Market Results ACV $B Quarterly Trends Combined Market ACV declined 10% 4.5 4.5 4.0 3.7 3.4 3.4 Y/Y; remaining around $4B level over 1.1 0.8 0.7 the past 18 months Managed Services ACV down 13%; 3Q 2Q 3Q 3Q 2Q 3Q 3Q 2Q 3Q 22 23 23 22 23 23 22 23 23 region had been running hot wi
Slide 26: Service & Technology Provider Standouts – Asia Pacific
Service & Technology Provider Standouts – Asia Pacific 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 Reve
Slide 27: 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
Information Services Group — Q3 2023 Earnings Presentation on 6ix