The Services Research Company

ITO and BPO Contracts Analysis Q4 2017

January 2018

Suvradeep Bhattacharjee Jamie Snowdon

Research Director, Market Insight and Data Chief Data Officer
Solutions jamie.snowdon@hfsresearch.com
suvradeep.bhattacharjee@hfsresearch.com
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Table of Contents

Topic Page

Contract Analysis Summary 3

ITO Contracts Analysis 4

ITO Contracts Analysis by Region 5

ITO Contracts Analysis by Service Type 6

ITO Contracts Analysis by Key Verticals 7

ITO Contracts Analysis by Main Vendors 9

BPO Contracts Analysis 10

BPO Contracts Analysis by Region 11

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Contract Analysis Summary
This report analyses publicly announced ITO and BPO contracts in 2017 by region, service types, key verticals, and main
vendors.
• The number of ITO contracts is up sequentially in Q4 by 1% and up year-on-year (YoY) by 49%
• Total contract value (TCV) in ITO decreased sequentially 30% but increased 12% YoY
• North America dominates the ITO landscape with 49% share of total ITO TCV awarded in Q4 2017 but
registers a 5% decline in TCV YoY
• EMEA holds a 35% share of total ITO TCV awarded in Q4 2017 and registers a 9% growth in TCV awarded
YoY
• Asia Pacific holds a 16% share of total ITO TCV awarded in Q4 2017 and registers a strong 67% growth in
TCV awarded YoY
• Multi-process IT outsourcing and ADM dominate the ITO landscape with 32% and 30% share of total TCV
awarded in Q4 2017
• Media/Publishing and Travel/Transportation/Hospitality sector contracts displayed strong performance in
the ITO landscape with 36% and 19% share of total TCV awarded in commercial industries in Q4 2017
• Public sector contracts dominate the ITO landscape with 30% share of total TCV awarded in Q4 2017
• The public sector TCV declined QoQ for the first time in Q4 2017 since the start of 2017
• The number of BPO contracts is down sequentially in Q4 by 44% and down YoY by 73%
• TCV in BPO decreased 27% sequentially and 39% YoY
• North America dominates the BPO landscape with a 80% share of total BPO TCV awarded in Q4 2017

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 ITO Contracts Analysis
25000 Summary Q4
• The number of ITO contracts is up
265 sequentially in Q4 by 1%, up year-
20000
240 242 on-year (YoY) by 49%
• TCV in ITO decreased sequentially
194 30% but increased 12% YoY
15000
$ Millions

118 119 123

10000 110
87
76 72 75

5000

0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017
TCV $M ACV $M Number of deals
• Q3 2016: The largest multi IT outsourcing deal in this quarter was the one won by Accenture from Department of Veterans Affairs for $22.3 B; however, it
was not included in this analysis as it was a task-order and not a real contract.
• Q4 2016: This analysis excludes the CACI IDIQ deal with US Department of Defense for $6 B because it was a task order and not a real contract.
• Q3 2017: This analysis excludes the Lockheed Martin and US Special Operations Command deal for $8 B and SAIC and US GSA deal for $621 M because
these are task orders and not real contracts. However, two definite mega deals signed this quarter are: BT with US General Services Administration for $2
B and Infor with Koch Industries for $2.6 B.
• Q4 2017: This analysis excludes the CGI IDIQ deals with US Army Communications for $2 B and US General Services Administration for $1 B because they
are task orders and not real contracts. For the same reason, this analysis also excludes the NetCentrics IDIQ deal with US Department of Defense for $1 B,
Leidos IDIQ deals with US Social Security Administration for $2.3 B, and US National Geospatial Intelligence Agency for $1 B.
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 ITO Contracts Analysis by Region
ITO TCV ($M) over last six fiscal quarters by geographic region
18000
Summary Q4
• North America dominates the ITO
16000 landscape with 49% share of total
ITO TCV awarded in Q4 2017, but
14000
registers a 5% decline in TCV YoY
12000 • EMEA holds a 35% share of total ITO
$ Millions

TCV awarded in Q4 2017 and

10000 registers a 9% growth in TCV
awarded YoY
8000 • Asia Pacific holds a 16% share of
total ITO TCV awarded in Q4 2017
6000
and registers a strong 67% growth in
4000 TCV awarded YoY

2000

0
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
North America EMEA Asia Pacific Latin America

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 ITO Contracts Analysis by Service Type
ITO TCV ($M) over last six fiscal quarters by service type
18000
Summary Q4
• Multi-process IT outsourcing and
16000
ADM dominate the ITO landscape
14000 with 32% and 30% share of total TCV
awarded in Q4 2017
12000
• Digital transformation (2922% YoY
$ Millions

10000 growth) is the fastest growing

service type segment, followed by
8000
multi-process ITO (54% YoY growth)
6000 and ADM (51% YoY growth) in Q4
2017
4000
• TCV in infrastructure outsourcing
2000 declined 56% YoY for Q4 2017
0
• ADM still holds the top slot for the
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 TCV awarded, at $18 B in the last six
quarters
ADM Cloud
Digital transformation Infrastructure outsourcing
Multi-process IT outsourcing

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 ITO Contracts Analysis by Key Verticals
ITO TCV ($M) over last six fiscal quarters by key commercial industries
8000
Summary Q4
7000
• Media/Publishing and
Travel/Transportation/Hospitality
6000 sector contracts displayed strong
5000 performance in the ITO landscape
with 36% and 19% share of total TCV
4000 awarded in commercial industries in
$ Millions

3000 Q4 2017
• The Software/Hi-Tech vertical (896%
2000
YoY growth) is the fastest growing
1000 vertical segment among the
0 commercial industries, followed by
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Media/Publishing (737% YoY growth)
and
Banking and financial services Travel, transportation, and hospitality Travel/Transportation/Hospitality
Energy and utilities Software and hi-tech (443% YoY growth) in Q4 2017
Telecom Insurance • TCV in the Retail/E-Commerce,
Manufacturing Retail and e-commerce Banking/Financial Services and
Healthcare Media and publishing Energy/Utilities sectors have
declined 78%, 34%, and 17% YoY for
Q4 2017
• With $7 B, Q4 2017 holds the top
slot for the total TCV awarded over
last six quarters in commercial
industries
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 ITO Contracts Analysis by Key Verticals
ITO TCV ($M) over last six fiscal quarters by public sector
12000
Summary Q4
• Public sector contracts dominate the
10000
ITO landscape with 30% share of
total TCV awarded in Q4 2017
8000 • The public sector TCV declined QoQ
$ Millions

for the first time in Q4 2017 since

the start of 2017
6000

4000

2000

0
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Public sector

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 ITO Contracts Analysis by Main Vendors
ITO TCV ($M) over last six fiscal quarters by main vendors
Summary Q4
6000
• One of the largest digital contracts in
Q4 2017 was won by TCS from US
5000
media group Nielsen (five-year $2.25
B multi ITO/BPO deal signed in
4000 December 2017)
$ Millions

• IBM and Accenture dominate the ITO

3000
landscape with broad success, with
multiple publicly announced deals
2000 signed in each of the last six fiscal
quarters
1000

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

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 BPO Contracts Analysis
7000
Summary Q4
120 • The number of BPO contracts is
6000 down sequentially in Q4 by 44% and
99
95
down YoY by 73%
90 • TCV in BPO decreased 27%
5000
sequentially and 39% YoY
69
$ Millions

4000 60
56
50
3000 36
27
23
2000 15

1000

0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017
TCV $M ACV $M Number of deals
• Q3 2015: The spike in Q3 2015 TCV was due to the Capita contract with The Co-operative Bank
• Q3 2017: This does not include the Leidos second prime contract of $6.8 B to provide medical disability examinations for the Veterans Benefits
Administration (VBA).

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 BPO Contracts Analysis by Region
BPO TCV ($M) over last six fiscal quarters by geographic region
1800
Summary Q4
• North America dominates the BPO
1600 landscape with a 80% share of total
BPO TCV awarded in Q4 2017
1400
• EMEA registers a 42% decline in BPO
1200 TCV awarded YoY for Q4 2017
$ Millions

1000

800

600

400

200

0
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
North America EMEA Asia Pacific Latin America

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 About the Authors

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 Suvradeep Bhattacharjee
Research Director, Market Insight and Data Solutions
suvradeep.bhattacharjee@hfsresearch.com
© 2017 HfS Research Ltd.
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Suvradeep Bhattacharjee is a Research Director, Market Insight and Data Solutions at HfS Research.
Suvradeep is a market facing research leader for core HfS market insight data to the services and
operations industry. He currently manages delivery of HfS contracts database, delivery of HfS buyers
guides, and delivery of HfS PriceIndicator. Working with the HfS analysts to utilize data around
product areas more effectively and develop relationships across the industry to help support and
promote these products.
Suvradeep’s core expertise includes the ability to assess market opportunities and develop
product/service offerings. He has a wide range of consulting skills and project management
experience. Previous assignments include leading industry research, advising senior executives and
developing service offerings. Suvradeep’s global business experience includes working in the US,
Brazil, the UK, Germany, Sweden, Cyprus and India. Suvradeep has deep expertise in merger and
acquisitions, market opportunity assessment, telecom operator strategies and outsourcing vendor
landscape.
Prior to HfS Research, Suvradeep worked for AcceleratorIndia, Frost & Sullivan, Ovum, NelsonHall,
BT, Amdocs and Cognizant. Suvradeep worked as a Senior Analyst in Ovum, as a Principal Analyst in
NelsonHall leading the Customer Management Services research and advisory program and played
a key role in developing Amdocs’ business with Vodafone.
Suvradeep has a first class B.Engg. from Jadavpur University in Production Engineering and has an
MBA from Manchester Business School, University of Manchester, specializing in Strategy and
Marketing.
Suvradeep lives in Cambridge, England, with his wife and daughter where he enjoys going for long
walks along the river Cam near Granchester with his family.
Proprietary │Page 13
 Jamie Snowdon
Chief Data Officer
Jamie.snowdon@hfsresearch.com
© 2017 HfS Research Ltd.
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Jamie Snowdon has primary responsibility for overseeing the development of HfS’ Quarterly Market
Index, in addition to managing and developing the firm’s data-centric products and services. He
works across the HfS analyst teams to define evolving services markets and create market size
estimates and forecasts. He also manages HfS’ quantitative survey and benchmark data.
Jamie has over seventeen years experience in the IT and Business Services industry. In that time he
has worked in a variety of roles including sales, marketing, consulting and as an industry analyst.
Jamie’s analyst career has largely been spent conducting data analysis including market
size/forecast models, quantitative/qualitative survey analysis and competitive analysis.
Prior to HfS, Jamie worked for UK-based analyst firm Nelson-Hall as a Research Director, conducting
vendor and market analysis within the IT and Business Services community. Prior to Nelson-Hall,
Jamie spent seven years at IDC, where he was the European consulting director for IDC’s services
group, managing all of their bespoke research. Jamie specialised in delivering custom market
forecast models and forecasting tools tailored to his client’s individual needs. In addition, Jamie ran
IDC’s European outsourcing research, covering both IT and business process outsourcing. Jamie has
wide industry knowledge covering IT consulting, enterprise applications, IT & business process
outsourcing, desktop & network services, equipment maintenance, and business continuity.
Earlier in his analyst career, Jamie spent four and a half years at the IT services research specialist
INPUT in a mixture of marketing and analysis roles. He left as the UK operations manager having
spent two years as a customer services industry analyst. Jamie completed his graduate training at
one of the UK’s leading electronic and IT distribution companies.
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