Slide 1: Managed Services & As-a-Service Market Insights
Managed Services & As-a-Service Market Insights 12 January 2021 Q4 2020 HOSTED BY Bryan Bergin Managing Director Cowen and Company @ISG_News #ISGIndex #ISGIndexInsider © 2021 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduce
Slide 2: Welcome to the 73rd Quarterly ISG Index
Welcome The ISG Experts to the 73 nd Steve Kathy Quarterly Hall Partner & President Rudy Chief Data & Analytics Officer Stanton Owen Jones Wheatley Director & Partner, Principal Banking & Analyst Financial Services Covering the State of the Managed Services & As-a-Service Industry for the Global Com
Slide 3: ISG's Top Findings – Q4 2020
ISG’s Top Findings – Q4 2020 Q4 Best Quarter Ever for Global Combined +13% Market ACV Managed Services Outperformed Expectations While As-a-Service Continues to Accelerate ACV = Annual Contract Value 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsid
Slide 4: ISG's Top Findings – Q4 2020: Americas
ISG’s Top Findings – Q4 2020 Q4 Americas Up Modestly Year Over Year +4% Strength in As-a-Service Offset Weaker IT Managed Services Results 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 4
Slide 5: ISG's Top Findings – Q4 2020: EMEA
ISG’s Top Findings – Q4 2020 Q4 EMEA Up Significantly Year Over Year +18% Strong Deal Momentum in Managed Services and Robust Demand in As-a-Service Contributed to Upside 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 5
Slide 6: ISG's Top Findings – Q4 2020: Asia Pacific
ISG’s Top Findings – Q4 2020 Q4 Asia Pacific Up 35% Managed Services Had Its Best +35% Quarter of the Year While As-a-Service Regained Momentum Off Mid-year Lows 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 6
Slide 7: Global Broader Market Results
Global Broader Market Results ACV $B Quarterly Trends 16.0 14.1 14.6 Combined Market ACV reached $16B, up 13%, a new high 8.0 8.8 7.0 6.6 7.2 7.2 Managed Services had a strong quarter at $7B+ Q4 Q3 Q4 Q4 Q3 Q4 Q4 Q3 Q4 19 20 20 19 20 20 19 20 20 Five mega-deals awarded; best mega-deal ACV result sin
Slide 8: Global Results by Function
Global Results by Function Full Year 2020 Trends ACV $B 2019 2020 Best ACV ever for ITO, beating 24.3 previous high from 2018 21.4 BPO ACV down substantially on 22.8% weakness in Contact Centers 2020 2.1% 3.7% and Facilities Management 2020 2020 -22.9% IaaS growth accelerated on 2020 continued enter
Slide 9: ISG 15 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: ISG 15 The Big 15
Managed Services Market THE Accenture IBM Global Services ISG 15 Atos Infosys Capgemini Global Market NTT Data Cognizant TCS The Big 15 DXC Technology As-a-Service Market Revenues > $10B Alibaba Microsoft Amazon Web Services Salesforce Google SAP * * New to leaderboard in 4Q20 Providers in alphabeti
Slide 11: ISG 15 The Building 15
Managed Services Market THE ISG 15 Orange Business Amdocs Services * FIS Global * Sopra Steria * Genpact Tech Mahindra Global Market Global Payments * T-Systems HCL Wipro The Building 15 As-a-Service Market Revenues $3B-$10B ServiceNow Adobe Systems VMware Equinix Workday * New to leaderboard in 4Q2
Slide 12: ISG 15 The Breakthrough 15
Managed Services Market THE EPAM Systems Sutherland ISG 15 LTI TietoEvry Mindtree Unisys Global Market Mphasis Virtusa As-a-Service Market The Breakthrough 15 ACI Worldwide * Dropbox * Revenues $1B-$3B Palo Alto Networks Autodesk Rackspace Digital Realty Twilio * * New to leaderboard in 4Q20 Provide
Slide 13: ISG 15 The Booming 15
THE Managed Services Market ISG 15 Birlasoft Globant * Ensono L&T Technology Services* Global Market EXL Persistent Systems As-a-Service Market The Booming 15 Revenues <$1B Atlassian CyrusOne RingCentral Coresite DocuSign Veeva Systems Crowdstrike Flexential * Zoom Video * New to leaderboard in 4Q20
Slide 14: Americas Broader Market Results
Americas Broader Market Results ACV $B Quarterly Trends 8.0 Combined Market’s 4% Y/Y rise 6.9 7.2 was still its weakest quarter of 4.4 4.7 3.7 3.9 2020 3.0 2.5 Due to lack of large awards, Q4 Q3 Q4 Q4 Q3 Q4 Q4 Q3 Q4 19 20 20 19 20 20 19 20 20 Managed Services had its lightest quarter since 3Q16 IaaS
Slide 15: Americas Results by Function
Americas Results by Function Full Year 2020 Trends ACV $B 2019 2020 ITO weighed down by weak 4Q 12.2 performance, lightest since 2016 BPO was up 7% as F&A and 7.5% 9.2 24.6% R&D/Engineering reached 2020 new heights 2020 -8.0% 7.4% IaaS and SaaS both achieved all- 2020 5.8 2020 time highs in ACV; Ame
Slide 16: Asia Pacific Broader Market Results
Asia Pacific Broader Market Results ACV $B Quarterly Trends Combined Market ACV, up 35% 2.6 1.9 2.0 1.9 Y/Y, exceeding the previous 0.6 1.5 1.6 0.4 0.3 record from 2Q19 Managed Services ACV had its Q4 Q3 Q4 Q4 Q3 Q4 Q4 Q3 Q4 19 20 20 19 20 20 19 20 20 best quarter of the year; ANZ was highest in two
Slide 17: Asia Pacific Results by Function
Asia Pacific Results by Function Full Year 2020 Trends ACV $B 2019 2020 ITO fell to its lowest levels 6.0 since 2016 on absence of large transactions BPO declined 30% versus both 18.9% 2018 and 2019 2020 -25.9% Best year yet for IaaS but annual 2020 -1.6% growth rate slowed from 24% to -30.9% 2020 1
Slide 18: EMEA Broader Market Results
EMEA Broader Market Results ACV $B Quarterly Trends 6.2 Combined Market ACV broke 5.3 4.6 through $6B ceiling for first time 3.5 4.0 2.6 2.2 1.8 2.0 Managed Services generated a $4B quarter, its first in five years; Q4 Q3 Q4 Q4 Q3 Q4 Q4 Q3 Q4 19 20 20 19 20 20 19 20 20 DACH set a record in Managed S
Slide 19: EMEA Results by Function
EMEA Results by Function Full Year 2020 Trends ACV $B 2019 2020 Very strong 4th quarter boosted 10.5 ITO to third-best year, behind 2011 and 2014 BPO activity fell significantly as 20.9% largest functional areas of 2020 6.1 Contact Centers and FM faded -2.8% -50.3% 23.4% 2020 Annual growth rate of I
Slide 20: Global Technology Services Industry Award Trends
Global Technology Services Industry Award Trends Retail & Travel, 2020 Business Consumer Financial Healthcare Telecom Transport YTD Services Packaged Goods Energy Services & Pharma Manufacturing & Media Leisure Growth $11.1B ACV $7.3B ACV $3.9B ACV $12.0B ACV $5.3B ACV $10.0B ACV $5.2B ACV $5.1B ACV
Slide 21: Financial Services Quarterly Trends
Financial Services Quarterly Trends Global Technology Services Industry Award Trends Heavy concentration of investment XaaS displaced traditional outsourcing Financial banks buffered impact of COVID in U.S., models; platforms & automation in contrast to retail banks in Europe Services encroached on
Slide 22: Trends in Banking & Financial Services
Trends in Banking & Financial Services “Out of the chaos come reasons for optimism.“ Owen Wheatley Lead Partner – Banking & Financial Services @ISG_News #ISGIndex #ISGIndexInsider 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 23: 2020 Chaos: The Pandemic Effect
2020 Chaos: The Pandemic Effect Average Bank Stock Price Global GDP US Unemployment 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 23
Slide 24: Common Stress Themes
Common Stress Themes Equipping workers with tools, Offshore delivery centers Global banks hit hard on security, connectivity ensuring business continuity revenue and margin 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 24
Slide 25: Behavior Changes Between Customers and Business
Behavior Changes Between Customers and Business Customers embrace digital The online experience Corporate real estate is critical challenged 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 25
Slide 26: Prediction 1. Challenger Banks Shake Out
Prediction 1. Challenger Banks Shake Out Consumers are The average balance not switching full in a digital bank banking services account is less than to new online banking firms 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 26
Slide 27: Prediction 2. M&A Resurgence
Prediction 2. M&A Resurgence Banks seek scale and cost reduction 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 27
Slide 28: Prediction 3. Disintermediation
Prediction 3. Disintermediation Big Tech is encroaching on Financial Services Consumer Financial Concierge Banking Intermediaries Are Out of the Loop 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 28
Slide 29: Prediction 4. Regulation Divergence
Prediction 4. Regulation Divergence Breakdown of centralized regulation adds banking industry complexity 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 29
Slide 30: Prediction 5. Platform Adoption Accelerates
Prediction 5. Platform Adoption Accelerates Platforms, Ecosystems, Fintechs and Providers improve customer experience and speed to market 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 30
Slide 31: Prediction 6: Customer/Employee Axis
Prediction 6: Customer/Employee Axis Data insights enable the banking employee to give the customer a seamless experience and deliver more revenue 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 31
Slide 32: Prediction 7. Deployment of Machine Learning & Artificial Intelligence
Prediction 7. Deployment of Machine Learning & Artificial Intelligence Productivity is exponentially increasing. People using automation to AI & ML identify many more Data drive improved improve customer loyalty criminal transactions productivity 4Q20 © 2021 Information Services Group, Inc. All Righ
Slide 33: Enterprise Expectations & Priorities in 2021
Enterprise Expectations & “Virtual delivery Priorities in 2021 is here to stay; digital recovery is on the way.“ Stanton Jones Director & Principal Analyst ISG Research @ISG_News #ISGIndex #ISGIndexInsider 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 34: Enterprises Embraced a Virtual Managed Services Model in 2020
Enterprises Embraced a Virtual Managed Services Model in 2020 . . . . . . but delivery expectations did not change. Everything is virtual: ⚫ Sales and Due Diligence ⚫ Transition ⚫ Delivery Faster, Cheaper . . . and Often Better! 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_
Slide 35: In 2021 Moving Beyond Virtual Delivery and Into Digital Resilience and Recovery
In 2021 Moving Beyond Virtual Delivery and Into “Digital Resilience and Recovery” Increase Stay the same Decrease 2% 6% 3% 6% 13% 25% Managed Services 28% 45% 46% Spending Flat 41% 73% As-a-Service 66% 52% 46% 48% Spending Accelerated Cyber Public Automation Work From Saas Security Cloud Home Source
Slide 36: Five Demand Drivers as We Move Into New Future
Five Demand Drivers as We Move Into New Future Turbocharge Focus on Industry- Focus on Diversity & App Cyber Security Specific Customer Environmental, Modernization Solution Experience Social, Efforts Adoption Governance 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #IS
Slide 37: Key Takeaways
Key Takeaways The global delivery model delivered during the pandemic A virtual sales, transition and delivery model is here to stay As-a-Service spending increased with the top technology vendors Managed Services spending flat; opportunity for providers that can deliver on key digital drivers Moder
Slide 38: Weekly Briefing
New! Weekly Briefing What’s Important in IT Services – Every Week in Your Inbox! Sign up at https://isg-one.com/isg-index-insider 4Q20 © 2021 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider 38
Slide 39: 4Q 2020 ISG Index – Summary and Outlook
4Q 2020 ISG Index – Summary and Outlook Summary Outlook Managed Services Recovering Managed Services Forecast ⚫ 2020 outperformed expectations due to several ⚫ Middle part of 2021 will experience easier large mega-deal awards late in 4Q20 comparisons ⚫ Managed Services in Europe and Americas ⚫ Assum
Slide 40: Want to Ask a Question?
4Q 20 Global ISG IndexTM The ISG Experts Want to Ask a Question? 1. Click the "Listen by Phone“ button Listen by Phone Steve Hall Kathy Rudy on your webcast screen Partner & President Chief Data & Analytics Officer +44 7384 259676 +1 972 653 2153 steven.hall@isg-one.com kathy.rudy@isg-one.com 2. The
Slide 41: Thank you!
Thank you! @ISG_News #ISGIndex #ISGIndexInsider © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 42: Appendix
Appendix © 2021 Information Services Group, Inc. All Rights Reserved.
Slide 43: 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 44: 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 45: 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 46: 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