1Q22 Global ISG Index™

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Managed Services &
As-a-Service
Market Insights
April 6, 2022
1Q 2022
@ISG_News #ISGIndex #ISGIndexInsider
HOSTED BY
Rishi Jhunjhunwala
Vice President and Lead Analyst
Technology & Insurance Sectors
IIFL Institutional Equities

The ISG Experts
Covering the State of the
Managed Services & As-a-Service Industry
for the Global Commercial Market
Steve
Hall
Partner &
President
Kathy
Rudy
Chief Data &
Analytics Officer
Welcome
to the Quarterly
78th
Stanton
Jones
Director &
Principal
Analyst
Namratha
Dharshan
Director of
Research and
Principal Analyst
Doug
Saylors
Partner &
Co-lead, ISG
Cybersecurity

1Q22 3
© 2022 Information Services Group, Inc. All Rights Reserved. @ISG_News #ISGIndex #ISGIndexInsider
ISG Index: Three Big Thoughts
Demand for talent is outstripping supply, creating pricing and
delivery challenges for both enterprises and providers.
Enterprise costs are rising (inflation, energy, talent, etc.);
this will drive reprioritization of technology budget
and major programs over next several quarters.
Managed Services Contracting levels remain at
very high levels but there are signs of flattening.

1Q22 4
1Q22 4
ACV = Annual Contract Value
ACV $B
Quarterly Trends
Managed Services segment
posted its fourth straight
quarter over $8B in ACV
13% Y/Y growth rate for
Managed Services was fourth
straight quarter that has
exceeded 10%
XaaS segment growth rate
exceeded 40%+ for the third
straight quarter
13%
Y/Y
Managed Services
7.6 8.6 8.6
1Q
21
4Q
21
1Q
22
Combined Market
31%
Y/Y
18.5
23.0 24.2
1Q
21
4Q
21
1Q
22
As-a-Service
43%
Y/Y
10.9
14.4
15.6
1Q
21
4Q
21
1Q
22
Global
Broader Market Results

1Q22 5
Has Wage Inflation Impacted the Market?
Managed Services T&M / Project Work
4%-7% increase in skills base rates across
the board
Unit rates that previously dropped by 4%
annually are now closer to a 2% decline Y/Y
For in demand skills, such as Digital
Engineering and Cybersecurity, some rate
increases are as high as 15%
Average declines that were 4%-7%,
depending on technology area, are now
averaging a 2.5%-3.5% decline
Some areas are flat while others are still
benefiting from continued automation
Americas and EMEA tend toward the lower
end of the 4%-7% range, with India moving
toward the upper end

1Q22 6
1Q22 6
Attrition Will Persist in the Short Term
Key Trends
Combination of strong demand
and high attrition cause
challenges on buy and sell sides
Providers struggle to staff
transition and run services
Enterprises agree to increases
for in-demand skills and
evaluating other providers
Retention and upskilling
strategies become critical
differentiator for providers
10%
15%
20%
25%
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
Source: ISG, 2022; Includes providers from ISG Index™ Leaderboard.
Weighted Average Attrition Levels
in IT Services, 2019 - 2021
21%

1Q22 7
1Q22 7
ACV $B
1Q21 1Q22
5.6
3.0
ITO BPO
Managed Services
Quarterly Results
Quarter Trends
ITO pulled back 6% Y/Y against difficult
comps; market pulled lower by 4% drop in
the Americas and 11% decline in EMEA
Infrastructure ACV continued to weigh on
the market and fell 11%
ADM award ACV remained above $3B for
fifth straight quarter, but slipped 1.5% Y/Y
BPO market had its second-best quarter
ever with nearly $3B of ACV
After two years of flattening performance,
Industry-Specific BPO generated over $1B
in ACV, its best quarter yet
-6%
Y/Y
Decrease
86%
Y/Y
Growth
Industry
Specific BPO
ER&D
Infrastructure
ADM -1.5%
+196%
+35.5%
-11.4%

1Q22 8
1Q22 8
ACV $B
1Q21 1Q22
11.7
3.9
IaaS SaaS
XaaS
Quarterly Results
Quarter Trends
IaaS generated ACV of $11.8B, led
higher by the Americas and EMEA;
Asia Pacific performance flattening
The Big 3 hyperscalers further
penetrated enterprise with long
term contracts and have sizable
increases in their backlogs (AWS:
$53B, GCP: $51B, Microsoft $141B)
SaaS rose 22% Y/Y but remained flat
during the past nine months; Top 10
SaaS providers underperformed the
market with ACV growth of 6% Y/Y
51%
Y/Y
Growth
22%
Y/Y
Growth
-10%
10%
30%
50%
70%
1Q20 1Q21 1Q22
Y/Y ACV Growth
Total SaaS Market SaaS Cybersecurity

1Q22
The Big 15
The Building 15
The Breakthrough 15
The Booming 15
THE
ISG15
Global Service & Technology
Provider Standouts
Our ISG Contract KnowledgeBase™ is used to determine
placements based on the annual value of commercial
contracts awarded in the past 12 months

1Q22 10
Service & Technology Provider
Standouts – Global
Our ISG Contract KnowledgeBase™ is used to determine placements based
on the annual value of commercial contracts awarded in the past 12 months.
* New to leaderboard in 1Q22
Providers in alphabetical order; no rankings implied. Revenues sourced from D&B and individual company financial fillings.
The Big 15 The Building 15 The Breakthrough 15 The Booming 15
Revenues > $10B Revenues $3B-$10B Revenues $1B-$3B Revenues <$1B
Managed
Services
Market
Accenture
Capgemini
Cognizant
DXC Technology
HCL
IBM Consulting
Infosys
Kyndryl*
NTT Data*
TCS
Capita*
Computacenter
EPAM Systems*
Genpact
Global Payments
Sitel Group
Tech Mahindra
Teleperformance
TietoEVRY*
T-Systems
Wipro
Alten SA*
EXL*
Globant*
LTI
Mindtree
Mphasis
Rackspace
Unisys
WNS Global
Services*
Birlasoft
Endava*
Ensono*
L&T Technology
Services
PersistentSystems
Softtek
As-a-
Service
Market
Adobe
Amazon Web
Services
Google Cloud
Microsoft
Salesforce
Equinix
Intuit
Palo Alto Networks*
ServiceNow
Atlassian*
CrowdStrike*
Okta*
Shopify
Snowflake
Computing*
Twilio
Bill.com*
Cloudflare*
DigitalOcean*
Global Switch*
MongoDB*
OVHcloud
Splunk*
21Vianet Group*
Zscaler*

1Q22 11
1Q22 11
ACV $B
Quarterly Trends
Managed Services posted its
second-best quarter of ACV and
fourth straight quarter with
20%+ Y/Y growth
Managed Services generated
301 contract awards, the
second-best quarter yet
XaaS accounted for 64% of
Global Combined Market ACV
and grew at its fastest Y/Y
growth rate since 3Q18
22%
Y/Y
Managed Services
3.6 4.2 4.4
1Q
21
4Q
21
1Q
22
Combined Market
38%
Y/Y
9.0
11.3
12.4
1Q
21
4Q
21
1Q
22
As-a-Service
50%
Y/Y
5.4
7.1
8.0
1Q
21
4Q
21
1Q
21
Americas

1Q22 12
1Q22 12
ACV $B
Quarterly Trends
Managed Services, up 3% Y/Y,
continued at high sustained
levels with its sixth straight
quarter over $3.4B in ACV
The U.K. exceeded $1B in ACV
for second quarter in a row; the
Nordics and Southern Europe
also contributed to Y/Y growth
XaaS accounted for 51% of
Global Combined Market ACV,
after first hitting 50% in 4Q21 Combined Market
6.3
7.0 7.5
1Q
21
4Q
21
1Q
22
21%
Y/Y
As-a-Service
2.7
3.5
3.8
1Q
21
4Q
21
1Q
22
44%
Y/Y
Managed Services
3.6 3.5 3.7
1Q
21
4Q
21
1Q
22
3%
Y/Y
EMEA

1Q22 13
1Q22 13
ACV $B
Quarterly Trends
Across the Combined Market, all
segments rose Y/Y but fell Q/Q
In Managed Services, ANZ was
down slightly by ACV while the
Southeast Asia region rose Y/Y,
posting a third straight strong
quarter
Over the last four quarters, XaaS
ACV has been uneven with new
market highs followed by a Q/Q
decline
28.2%
Y/Y
3.3
4.7
4.2
1Q
21
4Q
21
1Q
22
Combined Market
27.6%
Y/Y
Managed Services
0.39
0.93
0.50
1Q
21
4Q
21
1Q
22
As-a-Service
28.3%
Y/Y
2.9
3.8 3.7
1Q
21
4Q
21
1Q
22
Asia Pacific

1Q22 14
1Q22 14
44%
Global Technology Services
Industry Award Trends
Business
Services
Retail &
Consumer
Packaged Goods Energy
Financial
Services
Healthcare
& Pharma Manufacturing
Telecom
& Media
Travel,
Transport
Leisure
Managed
Services
As-a-Service
-5%
34% 52% 36% 50% 42% 51%
49%
42%
1Q22 Y/Y
Growth
44% 31%
Combined
Market 15% 2% 40% 35% 28% 42%
47%
25%
12%
-21% -20% -32%

1Q22 © 2022 Information Services Group, Inc. All Rights Reserved.
Special Topic –
Cybersecurity
“Accelerating toward
a connected and
intelligent future.“
Partner & Co-Lead, ISG Cybersecurity
Doug Saylors

1Q22 16
Market Overview
1/2
of all attacks are caused by
human error
Nearly45% Growth
inACV inthepastyearfor
cybersecurityfirmsintheSaaS
segment,outpacingmarket
growth.
65+
total cybersecurity M&A
transactions in 2021, worth
>$21B
Today
critical Infrastructure &
financial firms are the top
targets
#1 issue
enterprises are facing is
ransomware
23% increase
in the number of awards
with cybersecurity services
in scope
$3.3B
in Managed Services
Contract ACV awarded in
2021 had some
cybersecurity in scope
2x
as many M&A transactions
in 2021 vs 2020, with 5x the
acquisition value
+45 Unicorns
who have a of value
over $1B

1Q22 17
Trends in Cybersecurity
Staggering volume
of attacks on critical
infrastructure, but
few breaches
Expanding use of
Multi-Cloud opens
new avenues of
attack
OT & IoT exposure
in every industry
Ever increasing
amount of
cyberattacks
Labor shortages are
driving enterprises
towards MDR/XDR
solutions

1Q22 18
Deal Profiles
ISG is seeing a significant shift in how organizations source Cybersecurity
Current Market Trend
Previous Approach
Differentiation is key to winning; frequently
positioned as a revenue enabler vs commodity.
Strong shift to Cybersecurity as oversight function
of other towers.
Higher value functions (, e.g., Threat Hunting,
Forensics, IGA, DLP ) starting to be bundled into
larger standalone Cybersecurity contracts.
“Cybersecurity buried within other towers;
commoditized Services”
“Cybersecurity functions viewed as Specialty Skill
Enabling Business”
150 Broader Market Managed Service deals with
Cyber in Scope are up for renewal in 2022-23
Contract award values are increasing
40% of the cybersecurity award volume is tied to
stand-alone ADM deals; the remainder is
infrastructure-related

1Q22 19
1Q22 19
What MSSP Providers Are Doing Well
Provider Tiers
Leaders in the field provide full-
stack support, covering many
security disciplines and can
support the largest enterprises
Mid-tier offer strong
commoditized services and
flexibility but tend to operate in
stack augmentation mode
Niche-oriented providers
provide deep knowledge in
specific topics

1Q22 20
Summary: What Does This Mean for You?
Increasing threats require
enterprises to prove their
cyber resilience to their
customers, board and third-
party partners
Migration to the cloud
necessitates new operating
models to deliver
cybersecurity, both internal
and external

1Q22 21
1Q22 ISG Index – Summary and Outlook
Summary Market Outlook
⚫ Industry is at the beginning of a multiyear secular
demand cycle of heightened investment
⚫ Budgets have been rising as companies continue
to increase investments in driving their digital
transformation agendas.
5.1%
2022e
Market Tailwinds
Managed Services
⚫ ACV, while remaining at elevated levels, is
leveling off sequentially
⚫ Large number of smaller deals; record BPO
activity is centered on AI and analytics
⚫ IT pulls back as ADM falls slightly on weakness in
EMEA; infrastructure continues to slide
⚫ Industry has finished cycling through its easier comps
from the COVID-impacted quarters
⚫ Attrition issues will likely persist longer than originally
thought
⚫ Overall risk setup related to the macro is worse than
where it stood 90 days ago (Omicron; higher rates
and Fed tightening; geopolitical concerns in Ukraine)
22%
2022e
Market Headwinds
As-a-Service
⚫ Big 3 hyperscalers continue enterprise growth
while expanding their backlogs
⚫ Top 10 SaaS providers continue to see growth
rates that underperform overall market
⚫ Smaller SaaS sectors such as cybersecurity
continue to innovate and grow rapidly

Thank you!
The Quarterly
78th

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 800 clients, including more than 75 of the top 100 enterprises in
the world, ISG is committed to helping corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster growth. The firm specializes in digital
transformation services, including automation, cloud and data analytics; sourcing advisory; managed
governance and risk services; network carrier services; strategy and operations design; change
management; market intelligence and technology research and analysis. Founded in 2006, and based in
Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20
countries—a global team known for its innovative thinking, market influence, deep industry and
technology expertise, and world-class research and analytical capabilities based on the industry’s most
comprehensive marketplace data.

1Q22 Global ISG Index™

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