european services outsourcing trends

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EUROPEAN IT SERVICES OUTSOURCING SNAPSHOT & TRENDS CIONET International 26 August 2014 - Prepared by Frederic De Meyer @CIONET CIONET CIONET CIONET TV

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Page 1: European services outsourcing trends

EUROPEAN IT SERVICES OUTSOURCING SNAPSHOT & TRENDS

CIONET International

26 August 2014 - Prepared by Frederic De Meyer

@CIONET

CIONET

CIONET

CIONET TV

Page 2: European services outsourcing trends

AGENDA

The outsourcing market landscape in Europe Drivers & inhibitors of the European outsourcing market New trends in outsourcing Major conclusions

Page 3: European services outsourcing trends

AGENDA

The outsourcing market landscape in Europe Drivers & inhibitors of the European outsourcing market New trends in outsourcing Major conclusions

Page 4: European services outsourcing trends

EUROPE IS THE LARGEST SERVICES OUTSOURCING MARKET WORLDWIDE

Source: Frost & Sullivan 2012

Overall European Services Outsourcing market is worth 170$bn in 2012, European market share for overall outsourcing accounted for 43%

Page 5: European services outsourcing trends

DIFFERENCES IN ADOPTION RATE ACCROSS EUROPEAN COUNTRIES

In average, 14% of services are being outsourced in Europe

Source: E&Y 2013

Page 6: European services outsourcing trends

© 2014 CIONET

OUTSOURCING MARKET TRENDS

For the first quarter of 2014, the outsourcing market in EMEA was worth €2.4bn, up 10 percent over the previous quarter and 29 percent over the first quarter of 2013. This represented some 165 new or renewed contracts in the first quarter of this year, an increase of 21 percent on the same quarter last year but only a one percent increase over the previous quarter.

UK and France saw tremendous growth, Germany stagnated. EMEA notched its best first-half ACV in 2014, $6.3 billion, in

the last six years. Second-quarter ACV of $3.1 billion was up 45 percent from last year, fueled by continued strength in mega deals, new-scope and ITO contracts, as overall contract levels rose 35 percent from the prior-year period.

Source: ISG 2014

Page 7: European services outsourcing trends

GLOBAL IT SERVICES & OUTSOURCING MARKET

Global market size = 952$Bn

IT Services = 648$BnBPO = 304$Bn

Source: HfS Research 2013

Page 8: European services outsourcing trends

© 2014 CIONET

GLOBAL IT OUTSOURCING (ITO) MARKET TRENDS

Total market size for the global ITO industry is expected to reach $648 billion this year, with professional services representing $309 billion of the total.

ADM ITO will experience 4.8% year-over-year growth. IT infrastructure management ITO will see 3.8% year-over-year growth and professional services will undergo 3.1% year-over-year growth.

Regionally, North America and EMEA (Europe, Middle East, Asia) will continue to account for the vast majority of global BPO contracts.

Source: HfS Research 2013

Page 9: European services outsourcing trends

PUBLIC CLOUD BECOMES MAINSTREAM IN EUROPE

Public Cloud is growing +30% CAGR

Source: IDC 2012

Page 10: European services outsourcing trends

AGENDA

The outsourcing market landscape in Europe Drivers & inhibitors of the European outsourcing market New trends in outsourcing Major conclusions

Page 11: European services outsourcing trends

WHAT’S KEEPING CIO’S AWAKE AT NIGHT…

EU20

13 EU

201

2 EU20

11 EU

201

0

IT & Business Alignment

Business Agility

Business Cost reduction

IT Cost reduction

Business re-engineering (7)

…. .

Business Cost reduction

IT & Business Alignment

Business Agility

IT Cost reduction (8)

Business re-engineering

…. .

Source: CIONET IT Trends survey 2013

Maximizing business relevance is the single most important concern for European CIO’s nowadays. And outsourcing plays a vital role in this…

Page 12: European services outsourcing trends

ECONOMIES OF SCALE AND IT SIMPLIFICATION ARE MAJOR DRIVERS FOR IT OUTSOURCING

Financial drivers

Business drivers

Human Resources drivers

Technology drivers

Source: CIONET IT Sourcing survey 2013

Page 13: European services outsourcing trends

INHIBITORS TO OUTSOURCING

Source: EmeraldInsights

Page 14: European services outsourcing trends

AGENDA

The outsourcing market landscape in Europe Drivers & inhibitors of the European outsourcing market New trends in (IT) outsourcing Major conclusions

Page 15: European services outsourcing trends

SOME MEGADEALS STILL OCCUR

10 year multi-billion deal with IBM

5 year 2,2 billion deal with IBM & Tata, TCS & Infosys multi year 240 million deal

with IBM, Cap Gemini, HCL

5 year deal with Atos

Outsourcing is increasingly used as a strategic differentiator by European companies, indicating a maturing outsourcing market

Source: CIONET Research

Page 16: European services outsourcing trends

EMERGING OUTSOURCING TRENDS AND THEIR RELEVANCE FOR IT SERVICES

Source: multiple, CIONET Research

Page 17: European services outsourcing trends

AGENDA

The outsourcing market landscape in Europe Drivers & inhibitors of the European outsourcing market New trends in (IT) outsourcing Major conclusions

Page 18: European services outsourcing trends

© 2014 CIONET

CONCLUSIONS

European outsourcing market is mature and growing; Major driver is business relevance need of IT departments; Hybrid shoring models arise and provide great opportunities

for Tier-2, specialized providers; Though some mega-deals have emerged in 2014, the

market will increasingly move to smaller, shorter ITO deals; New trends in outsourcing will likely impact the European

ITO market as well; In-shoring and back-shoring will have limited influence in

Europe due to increasing IT skills gap.

Page 19: European services outsourcing trends