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TPI Index: Outsourcing Industry Sees Growth in Regional Markets, Restructurings

2Q11 total contract value up 13 percent in Europe, 55 percent in Asia Pacific, 30 percent for restructured contracts Overall market down 18 percent, driven by weak Americas, lack of large awards; contract pipelines suggest second-half pickup, full-year in line with 2010 results
STAMFORD, Conn., July 20, 2011 TPI, an Information Services Group company (ISG) (NASDAQ:III) and the leading independent sourcing data and advisory firm in the world, today released outsourcing market data showing growth in two of the worlds three major regions as well as in restructurings. The 2Q11 Global TPI Index, which measures commercial outsourcing contracts valued at $25 million or more, recorded year-over-year growth in total contract value (TCV) of 13 percent in Europe, the Middle East and Africa (EMEA) and 55 percent in Asia Pacific. Restructurings defined as contracts that are renewed, restructured or renegotiated saw TCV growth of 30 percent over the same quarter a year ago. Overall, TCV fell to $16.4 billion, a decline of 18 percent over the second quarter of 2010 and 21 percent over the first quarter of 2011. The results were driven by weakness in the Americas region and an overall drop in the number of large contracts awarded. However, current contract pipelines suggest an improvement in global TCV for the remainder of the year. The second quarter offered some welcome year-over-year TCV lift in several metrics, but a poor showing in Americas TCV and fewer large contracts drove down the overall global sourcing market, said John Keppel, Partner & President, Information Services, ISG. Despite this weakness in the big picture, we anticipate stepped-up second-half results that will find the market finishing the year near its 2010 levels.

Now in its 35th consecutive quarter, the TPI Index provides a quarterly snapshot of the sourcing industry for clients, service providers, analysts and the media. It is the industrys authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider metrics. At the halfway point of 2011, global TCV is down about 20 percent from last year, the Index found. However, the number of contracts awarded has dropped just 1 percent, a sign of the markets continued movement away from large awards due to the increased use of multisourcing by corporations as well as their general reluctance to commit to large investments. Through the first six months of this year, clients have signed just four mega-deals, those awards with a TCV of $1 billion or more. The $6 billion in mega-deal TCV in the first half of 2011 is down 40 percent from the first half of 2010 and is its smallest six-month contribution ever to overall TCV. The annualized contract value (ACV) of mega-relationships those transactions with an average annual value of $100 million or more fell by 62 percent. The shift away from large contracts has had its biggest impact on the Americas, where the $5.2 billion in TCV was down 51 percent during the second quarter. By contrast, EMEA has seen increased demand in the United Kingdom and The Netherlands, a mega-deal in Finland and the continuing expansion of outsourcing adoption in France. The region recorded $9.5 billion in TCV for the quarter. In Asia Pacific, growth has been driven by the continued expansion of outsourcing adoption, mounting interest in multi-sourcing, and the inroads made by India-heritage service providers. The region finished with $1.7 billion in second-quarter TCV. During the second quarter, business process outsourcing (BPO) awards did not add to the surge they began in the first quarter, dropping 18 percent to $4.9. billion. In IT outsourcing (ITO), the traditional foundation of the market, TCV fell 18 percent, but a mega-deal in the segment signed after the quarter ended gives reason for optimism for the second half. Among major industry sectors, Telecom & Media has nearly doubled its TCV year-to-date to about $7 billion, and Manufacturing, with about $8 billion so far in 2011, has awarded several substantial contracts and is expected to strengthen over the next two quarters. Financial Services recorded $9 billion in TCV, its worst half-year since 2007. While the market did not have a banner first half, we expect it to rally in the second half and end the year within the historical norm, said Keppel. To listen to the 2Q11 Global TPI Index conference call or view presentation slides, visit http://www.tpi.net/knowledgecenter/tpiindex.

About TPI TPI, an Information Services Group company, is the founder and innovator of the sourcing advisory industry and the leading independent sourcing data and advisory firm in the world. TPI advisors are expert at a broad range of business support functions and related research methodologies. Drawing on their deep functional domain expertise and extensive practical experience, they collaborate with organizations across all major industries to help them advance

their business operations through the best combination of business process improvement, shared services, outsourcing and offshoring. For additional information, visit www.tpi.net. About Information Services Group Information Services Group (ISG), founded in 2006, is a leading technology insights, market intelligence and advisory services company. ISG has three go-to-market brands: TPI, the leading independent data and sourcing advisory firm in the world; Compass, the premier independent global provider of business and information technology benchmarking, performance improvement, data and analytics services; and STA Consulting, a premier independent information technology advisor serving the public sector. The company has nearly 700 employees and operates in 21 countries. Based in Stamford, Conn., ISG has a proven leadership team with global experience in information-based services and a track record of creating significant value for shareowners, clients and employees. For additional information, visit www.informationsg.com.
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