Q3 2015 EMEA ISG Outsourcing Index, Report

Q3 2015 EMEA ISG Outsourcing Index, Report

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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 1 Hosted by: John King Bank of America Merrill Lynch 19 October 2015 The ISG Outsourcing Index® Third Quarter 2015 EMEA Market Data and Insights
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 2 Covering the state of the outsourcing industry for EMEA commercial contracts.* Welcome to the 52nd Quarterly ISG Outsourcing Index™ Review Bernd Schaefer Partner John Keppel Partner & President *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase®
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 3 At a Glance YTD YTD ACV (€B)* Change € 16.8 -11% € 10.7 -11% € 6.1 -11% € 2.5 -47% € 11.8 -19% € 5.0 17% € 7.3 4% € 7.8 -16% € 1.7 -34% Scorecard 3Q15 3Q Y/Y 3Q Q/Q ACV (€B)* Change Change Global Market € 5.6 0% -9% New Scope € 3.8 8% 5% Restructurings € 1.8 -13% -29% Mega-relationships € 0.9 -26% 126% ITO € 3.6 -15% -23% BPO € 2.0 53% 40% Americas € 2.4 -1% -12% EMEA € 2.7 0% -5% Asia Pacific € 0.5 13% -12% CONTRACT AWARDS UP ALMOST 20% Y/Y, YET GLOBAL MARKET VALUE (ACV) IS FLAT BPO ACV UP MORE THAN 50% Y/Y ON STRENGTH IN CONTACT CENTER AND INDUSTRY-SPECIFIC BPO AMERICAS PASSES €2 BILLION IN ACV IN FIVE OF THE LAST SIX QUARTERS; CONTRACT AWARDS JUMP 31%, ALTHOUGH ACV IS ESSENTIALLY FLAT Y/Y EMEA ACV FLAT Y/Y; DACH MARKET, FINANCIAL SERVICES SHOW STRENGTH; MANUFACTURING AWARDS HIT 8-YEAR LOW ASIA PACIFIC ACV UP 13% Y/Y, AS ANZ ACTIVITY REMAINS UNEVEN YTD CONTRACT COUNTS AT ALL-TIME HIGH, WITH DEALS UNDER $40 MILLION (ACV) DRIVING MARKET; YTD ACV DOWN 11% OVERALL
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 4 3Q15 Global Market ACV is flat Y/Y with the number of 3Q awards up 19% Y/Y. YTD, ACV is down 11% as smaller deals drive market activity. Broader Market Quarterly ACV (€B)* and Counts YTD Broader Market Counts Global Market Contract Award Trends 1,0941,016925950976 844784693 554529 386 319312334 271312 233 189212 1,402 1,2441,2621,310 1,1151,096 926 743741 201514131211100908072006 YTD Counts 4Q Counts YTD Broader Market ACV (€B)* € 4.5€ 4.9 € 4.0 € 5.3 € 4.5 € 5.4€ 5.2 € 3.9 € 5.1 € 3.2 € 4.8€ 4.6€ 4.8€ 5.2€ 5.7€ 6.0 € 5.3 344 448 302 386 288 373355 319 378 235 312312 263 315 372 334316 3Q153Q143Q133Q123Q11 ACV Counts € 13.4€ 15.1€ 13.1 € 15.8€ 13.9€ 14.4€ 12.5€ 12.4 € 9.9€ 10.3 € 5.3 € 3.9 € 4.6€ 6.0€ 4.7 € 6.0€ 4.3 € 5.1€ 3.8 € 20.4 € 17.0 € 20.4€ 19.9€ 19.1€ 18.5 € 16.7 € 15.0€ 14.1 201514131211100908072006 YTD ACV 4Q ACV
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 5 € 4.2 € 2.1 € 4.4 € 1.7 $0 $2 $4 $6 $8 New Scope Restructuring ITO BPO Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15 3Q15 EMEA ACV is flat Y/Y with counts up 7%. YTD EMEA ACV is down 16% with slowing contracting activity. Smaller awards are becoming more frequent. EMEA YTD ACV (€B)* EMEA Contract Award Trends EMEA Quarterly ACV (€B)* and Counts EMEA YTD Segment ACV (€B)*EMEA YTD Counts 431462451426460 356353320 248219 180163149 166 140146 98 8599 642614 575 626 496499 418 333318 201514131211100908072006 YTD Counts 4Q Counts € 2.1€ 2.3 € 1.9 € 2.7 € 2.1 € 2.6€ 2.7 € 2.1 € 3.1 € 1.9 € 2.2€ 2.3€ 2.5 139 168 124 180 130 157 175 163 185 121 145149 119 3Q153Q143Q133Q12 ACV Counts € 6.2€ 7.4€ 7.2€ 7.8€ 7.7€ 6.8 € 5.4 € 7.1 € 4.8€ 4.0 € 2.7€ 2.1 € 2.3€ 3.5 € 2.9 € 3.4 € 1.9 € 2.1 € 1.8 € 10.1 € 9.3 € 10.1 € 11.2 € 9.7 € 8.8€ 9.0 € 7.0 € 5.9 201514131211100908072006 YTD ACV 4Q ACV
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 6 € 2.30 € 1.54 € 0.56 € 0.25 € 0.49 € 0.44 € 0.47 € 0.19€ 0.0 € 1.0 € 2.0 € 3.0 € 4.0 U.K. & Ireland DACH Nordics France Benelux Southern Europe Africa & Middle East E. Europe & Russia Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15 YTD, ACV in the U.K. is down 2%, but counts are up 35%. Nordics and France hit YTD lows. The Financial Services industry continues to dominate EMEA activity. EMEA Sub-regions YTD ACV (€B)* EMEA Industry YTD ACV (€B)* EMEA Contract Award Trends Detail € 1.87 € 0.69 € 1.01 € 0.82 € 0.75 € 0.19 € 0.24 € 0.15 € 0.53 € - € 0.5 € 1.0 € 1.5 € 2.0 € 2.5 € 3.0 Financial Services Manufacturing Energy Travel, Transport & Leisure Telecom & Media Business Services Retail Consumer Packaged Goods Healthcare & Pharma Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 7 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in EMEA All three company size groups experience a bit of turnover. Large multinationals and providers with a strong local profile lead each segment. 1New to group as of the current quarter Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings Co. Revenues > $10 B SOURCING STANDOUTS GROUPED BY COMPANY SIZE The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts Accenture Atos BT Capgemini Cognizant HP IBM ISS Global1 TCS T-Systems1 Capita CGI Computacenter HCL Infosys Jones Lang LaSalle1 MITIE Serco Tieto Wipro InnerWorkings ISON Group1 Kuehne & Nagel Luxoft MAYKOR Mindtree Transcom Virtusa1 WNS Xchanging
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 8 3Q15 Americas ACV is down 1% Y/Y, yet counts are up 31% Y/Y. Still, YTD ACV is up 4% as the trend toward smaller-deal growth is most prevalent in the Americas. Americas YTD ACV (€B)* Americas Contract Award Trends Americas Quarterly ACV (€B)* and Counts Americas YTD Segment ACV (€B)*Americas YTD Counts 543 432 362395389380329291233243 159 126123141 87 120 95 8285 591 488518530 467449 386 315328 201514131211100908072006 YTD Counts 4Q Counts € 2.0 € 2.2 € 1.7 € 2.1€ 2.0€ 2.0 € 1.7 € 1.3€ 1.5 € 0.9 € 2.1 € 1.7€ 1.6 165 235 143 159 126 175 131126 150 79 133123 103 3Q153Q143Q133Q12 ACV Counts € 5.9€ 5.7 € 4.6 € 5.7 € 4.9 € 6.5 € 5.3 € 3.9€ 3.7 € 5.3 € 2.1 € 1.3 € 1.7 € 2.0 € 0.9 € 1.9 € 1.6€ 2.3 € 1.6 € 7.7 € 5.9 € 7.4 € 6.9 € 7.4€ 7.2 € 5.5 € 6.0 € 6.9 201514131211100908072006 YTD ACV 4Q ACV € 3.3 € 2.5 € 3.9 € 2.0 € 0 € 1 € 2 € 3 € 4 € 5 New Scope Restructuring ITO BPO Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 9 YTD, U.S. ACV is at its highest level this decade, up 4% over 2014. Growth in smaller markets of Retail and Transportation supports the results. Americas Sub-regions YTD ACV (€B)* Americas Industry YTD ACV (€B)* Americas Contract Award Trends Detail € 1.10 € 1.09 € 0.62 € 0.75 € 0.58 € 0.38 € 0.35 € 0.51 € 0.47 € - € 0.5 € 1.0 € 1.5 € 2.0 Financial Services Manufacturing Telecom & Media Healthcare & Pharma Business Services Energy Consumer Packaged Goods Retail Travel, Transport & Leisure Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15 € 0.34 € 0.13 € 0.06 € 0.09 € 0.0 € 0.1 € 0.2 € 0.3 € 0.4 € 0.5 Canada Brazil Mexico Other LatAm Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15 € 5.23 € - € 1 € 2 € 3 € 4 € 5 € 6 U.S.
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 10 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in the Americas Largest two tiers experience very little turnover as competition for the top spots remains intense. Sutherland and EXL reach Top 10 status in the Breakthrough group. 1New to group as of the current quarter Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts Co. Revenues > $10 B SOURCING STANDOUTS GROUPED BY COMPANY SIZE Accenture Atos BT Capgemini Cognizant Dell HP IBM State Street1 TCS Aon Hewitt CGI CompuCom Convergys Genpact HCL Infosys Tech Mahindra Teleperformance Wipro EXL1 Firstsource Solutions ICF International Luxoft Minacs Mindtree Sutherland Global1 Syntel UST Global Virtusa
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 11 3Q15 Asia Pacific ACV is up 13% Y/Y with number of contacts up 25%. YTD, Asia Pacific ACV is down 34% against 2014, with counts down 2%. Asia Pacific YTD ACV (€B)* Asia Pacific Contract Award Trends Asia Pacific Quarterly ACV (€B)* and Counts Asia Pacific YTD Segment ACV (€B)*Asia Pacific YTD Counts 120122112129127 108102 827367 47 30 4027 4446 40 2228 169 142 169 154152148 122 9595 201514131211100908072006 YTD Counts 4Q Counts € 0.41€ 0.47€ 0.44 € 0.58 € 0.37 € 0.80€ 0.84 € 0.46€ 0.40€ 0.44€ 0.44 € 0.56 € 0.76 40 45 35 47 32 41 49 30 43 3Q153Q143Q133Q12 ACV Counts € 1.33 € 2.00 € 1.29 € 2.28 € 1.37€ 1.11 € 1.80 € 1.30€ 1.36 € 1.02 € 0.58 € 0.46 € 0.56 € 0.46€ 0.86 € 0.67 € 0.82€ 0.69 € 0.33 € 2.6 € 1.7 € 2.8 € 1.8€ 2.0 € 2.5 € 2.1€ 2.0 € 1.3 201514131211100908072006 YTD ACV 4Q ACV € 1.03 € 0.30 € 1.10 € 0.33 $0 $1 $1 $2 $2 $3 New Scope Restructuring ITO BPO Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 12 All AP geographies decline YTD, with ANZ and Japan losing the most ground. With the exception of Retail and Business Services, the decline crosses all industries. Asia Pacific Sub-regions YTD ACV (€B)* Asia Pacific Industry YTD ACV (€B)* Asia Pacific Contract Award Trends Detail € 0.36 € 0.31 € 0.21 € 0.16 € 0.10 € 0.07 € 0.05 € 0.01 € 0.06€ 0.0 € 0.2 € 0.4 € 0.6 € 0.8 € 1.0 Telecom & Media Financial Services Manufacturing Travel, Transport & Leisure Energy Business Services Consumer Packaged Goods Healthcare & Pharma Retail Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15 € 0.34 € 0.42 € 0.23 € 0.19 € 0.14 € 0.02€ 0.0 € 0.2 € 0.4 € 0.6 € 0.8 € 1.0 ANZ India and South Asia Japan Greater China Southeast Asia South Korea Range of Prior 4 YTDs Avg of Prior 4 YTDs YTD 3Q14 YTD 3Q15
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 13 Co. Revenues < $2 BCo. Revenues $2 -10 B ISG Sourcing Market Standouts in Asia Pacific Australian and India-based providers have a strong showing in the Building 10 group, while the Breakthrough 10 experiences a 30% turnover. 1New to group as of the current quarter Placements based on ACV of commercial contract awards in the past 12 months sourced from ISG Contracts Knowledgebase®. Service providers in alphabetical order; no rankings implied. Revenues sourced from Hoovers and individual company financial fillings Co. Revenues > $10 B SOURCING STANDOUTS GROUPED BY COMPANY SIZE The Building 10 Sourcing Standouts The Breakthrough 10 Sourcing Standouts The Big 10 Sourcing Standouts Accenture BT Cognizant CSC Fujitsu Hitachi HP IBM Ricoh TCS Amdocs1 Genpact HCL Infosys NEC Nihon Unisys1 Optus Tech Mahindra Transfield Services Wipro Aegis ChinaSoft Hollysys Automation Minacs NCS PTE1 Sutherland Global1 TeleTech UXC1 Vertex WNS
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 14 Special Topic for Third Quarter 2015 AUTOMATION, ROBOTICS AND CLOUD -THE ARC EFFECT- DRIVE ENTERPRISES TO SOURCE IN NEW WAYS John Keppel Partner and President
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 15 The auto industry highlights the ARC effect Looking at its sourcing history and its demands for new technologies, we can see the effects on both sourcing industry leaders and new sourcing relationships brought to bear as a result of new mega-trends. Direct-to-customer sales challenge the value of dealers Profit Margin Up TOP 15 AUTOMAKERS in the last 10 Years LITTLE TURNOVER LIMITED ACQUISITIONS HEAVILY MULTI-SOURCED LOOKING AHEAD AT MASSIVE CHANGES IN CONSUMER EXPECTATIONS FROM MULTIPLE DIRECTIONS LOOKING BACK AT AN INDUSTRY INVESTED IN SOURCING… AUTOMAKERS ARE RESPONDING BY CREATING DIFFERENTIATED TECHNOLOGY, ENABLED BY SOFTWARE, SENSORS AND TELEMATICS SYSTEMS. MONETIZING DRIVER BEHAVIOR DATA Fuel economy mandates and green driving increase costs Generation Y looking to car-share, not own DIGITAL-SAVVY DISRUPTORS JUMP IN
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 16 The ARC creates opportunities for Digital-savvy Disruptors of Auto Manufacturing is IT-DRIVEN SOFTWARE AND ELECTRONICS INFOTAINMENT-GEARED IN-CAR SOFTWARE ► a primary differentiator for many manufacturers. Includes in-car systems like Apple Carplay and Android Auto. SEASONED ENGINEERS and USER INTERFACE DESIGN EXPERTS boost the reliability of systems needing constant updates via regression testing, patch distribution and mobile platform as-a-service. OWNERSHIP-FOCUSED IN-CAR SOFTWARE ► Daimler’s “Mercedes Me” pulls together the leasing, financing and service offerings into an integrated platform. PROVIDERS OF ANALYTICS SERVICES employed to gain information through analytics, monetize the data by increasing customer engagement and maximizing the customer’s lifetime value. Providers with DEEP VERTICAL EXPERIENCE and DEV-OPS AND DATA-SCIENCE-DRIVEN DELIVERY capabilities move beyond back office sourcing to CAPTURE SIGNIFICANT NEW REVENUE in the in digital-enabled world. New Features Drive….. Innovation by Digital-savvy Disruptors Automakers may NOT HAVE THE SKILLS or scale TO CREATE QUICKLY and STAY COMPETITIVE.
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 17 3Q Global Market flat Y/Y; Americas and EMEA results are in line with prior year 3Q, and AP is up 13%. YTD the number of contracts hit an all-time high, but Global Market ACV is still down 11%. Structural aspects of the Market have changed, and the award profile is made up of smaller deals under €40 million in ACV . Expect an active 4Q15 and a strong start to 2016 with high award counts in both the Americas and EMEA. Deal values will remain smaller with the occasional large contract award mixed in as businesses focus on areas like security, digital and cloud. Even though the fourth quarter may be robust, deal activity will not be enough to cover the YTD gap, and the Global Market will fall short of 2014 award levels by 7 to 10%. 3Q15 ISG Outsourcing Index® - Global Summary and Outlook summary market outlook market
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 18 Please contact us with your questions and comments. Learn More Paul Reynolds Partner +1 508 625 2194 [email protected] ISG insights serving providers and market analysts www.isg-one.com Denise Colgan EMEA and AP Media Contact +44 1737 371523 [email protected] Laura Mountain Cohn & Wolfe for ISG +44 (0) 20 7331 5372 [email protected] John Keppel Partner and President +44 (0)7879 432 212 [email protected]
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 19 Third Quarter 2015 APPENDIX: SCORE CARD FOR TCV
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 20 The ISG Outsourcing Index has moved to ACV as the primary measure of the Broader Market. We will continue to provide a high-level TCV view of the market via a Scorecard analysis. Third Quarter 2015 TCV Scorecard *Contracts with TCV ≥ €25M from the ISG Contracts Knowledgebase® Scorecard 3Q15 3Q Y/Y 3Q Q/Q YTD Y/Y TCV (€B)* Change Change TCV (€B)* Change Global Market € 21.0 -17% 5% € 62.8 -22% New Scope € 15.3 -10% 10% € 45.3 -16% Restructurings € 5.6 -32% -8% € 17.5 -36% Mega-deals € 0.0 -100% 0% € 4.8 -68% ITO € 13.0 -30% -10% € 43.7 -27% BPO € 7.9 20% 42% € 19.1 -8% Americas € 8.1 -30% 7% € 22.9 -22% EMEA € 10.8 -8% 8% € 32.9 -18% Asia Pacific € 2.0 -1% -14% € 7.1 -38%
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  © 2015 Information Services Group,Inc. All Rights Reserved isg-one.com *Contracts with ACV ≥ €4M from the ISG Contracts Knowledgebase® 21 Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience and global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 900 employees and operates in 21 countries. www.isg-one.com