impending contract renewals: a futuristic view of the renewals market place
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7/28/2019 Impending Contract Renewals: A Futuristic View of the Renewals Market Place
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Topic: Impending Contract Renewals:
A Futurist ic View of the Renewals Market Place
Copyright 2013, Everest Global, Inc.EGR-2013-4-PD-0868
Information Technology Outsourcing (ITO)Market Report: May 2013 Preview Deck
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Copyright 2013, Everest Global, Inc.EGR-2013-4-PD-0868
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Background and methodology of the research
Background of the research The sourced services is a large US$400 billion market with deals lasting for an average of two to three
years. As a result, a large portion of the market scope comes back to the planning/negotiation table ascontracts keep expiring. Most of the deals had originally been procured via a competitive process involvingRequest for Proposals (RFPs), capability assessment, and short-listing of service providers
Renewals and recompetes provide opportunity for non-incumbent players to expand their wallet sharesamidst disruptive factors such as saturation, slowing growth rate, and newer and more agile competitorsetc. It also allows buyers a chance to make course corrections based on lessons learned during the lifetime
of the just-concluded engagement and adjust sourcing strategy to suit current business environment End-of-term assessments on the part of buyers also bring newer solutions within contention. For example, a
traditional infrastructure deal being serviced by a full-service MNC provider may now be open for pitch byoffshore service providers. There may also be scope for next generation IT technology paradigms, such as,cloud computing, to play a significant role. This research provides an analysis on the impending renewals inthe coming 12-18 month period, focusing on the assessment of one large ITO engagement coming up forrenewal
The scope of this report includes: Analysis of the ITO and BPO markets with deals in scope that are to renew in the future Key vertical, geographical, and scope-based trends Observations on how future renewals might look Implications for key stake holders
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Removed deals that expired before April 1, 2013
This research only focuses on deals that will renewin the future, specifically after April 1, 2013
The analysis shared in this report is based on Everest Groups
Transaction Intelligence Database, the most comprehensive
organized record of publicly announced outsourcing deals
Removed defense and government deals
Such deals usually are different from the regular
commercial outsourcing contracts with very differentsales diligence, contract scope, and set of providersspecially targeting this segment of buyers
Filters
Removed pure telecom and consult ing deals
Telecom deals differ in key characteristics,specifically, they are, typically, voice network andequipment maintenance deals
Consulting deals are usually one-time contracts
Removed deals that cannot be categorized
Certain deals cannot be categorized due to lack ofsufficient information. This report ignores such deals
4,358 cont racts
3,059 contracts
2,694 contracts
2,612contracts
The analysis was performed on 2,612 outsourcing deals that expire on or after April 1, 2013
Across nine industry buckets
Four geographical regions
Seven ITO towers and fourBPO functions in scope
TI database
1
2
3
4
Accounts formore than 30%
of the entiresourcing market
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Table of contents (page 1 of 2)
Background and methodology 5
Summary of key messages 7
Section I: Overview of contracts nearing end of term 10
Summary 11
Trends by cumulative total contract value among deals up for renewal 12
Overall outsourcing renewal trend 17
ITO renewals (global) 18
BPO renewals (global) 19
Industry-wise renewal trends 20
Geography-wise renewal trends 21
Renewals in defense and government sectors 23
Renewals by telecom service providers 25
Section II: Deep-dive into upcoming renewals by scope 26
Summary (ITO trends) 29
ITO trends by industry 30
ITO trends by geography 34
ITO renewal opportunities by industry 39
ITO trends by service provider category 40
Topic Page no.
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Table of contents (page 2 of 2)
Section II: Deep-dive into upcoming renewals by scope (continued)
Summary (BPO trends) 45
BPO trends by industry 47
BPO trends by geography 51
BPO trends by service provider category 54
Section III: Future renewals peek under the hood 56
Summary 57
IO deals geographical trends 59
ADM deals geographical trends 63
Offshore service providers replacing incumbent MNCs 66
Prominence of GICs 68
Section IV: Implications for key stakeholders 69
Appendix 73
Glossary of key terms 74
ITO research calendar 76
Recommendations 77
Topic Page no.
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Summary of key messages (page 1 of 2)
IT contracts will witness a dip in average deal size during the "12-18 month"period
Telecom has large sized IO and ADM deals for renewal in the next 12 monthswhile manufacturing has large sized bundled deals for renewal in the same period
Large multinational providers dominate renewal spending among IT contracts
Deep-dive intoupcoming renewalsby scope ITO
Overview ofcontracts nearingend of term
During next 18 months, over US$90 bill ion worth of IT and BPO contractswill be up for renewal
BFSI, manufacturing and telecom will drive IT renewals in the next 18 monthswhile BFSI dominates BPO renewals
Western Europe will have greater proportion of renewals, however, of smalleraverage size as compared to North America
This report investigates the contracts that are going to come up for renewal during the next 18 months startingApril 1, 2013. It provides analysis of IT and BPO deals along a number of silos e.g., industry, geography, andservice provider category. Additionally the report offers a more detailed look into deeper level trends in ITcontracts reaching end of term.
Some of the findings in this repor t, among others, are:
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Summary of key messages (page 2 of 2)
Contracts with datacenter or network in scope will have the highest frequencyamong IO renewals in the next 18 months while contracts with maintenance inscope among ADM renewals will witness a spurge in frequency in the"12-18 month" period
In the recent past, renewals with incumbents havebeen going down. Earlier, 95%of renewals used to stay with incumbents as opposed to 75 to85% currently
Global In-House Centers (GICs) are slowly regaining prominence as serviceproviders are losing parts of contracts to them
Future renewals peek under thehood
Among the single-tower BPO deals, HRO and contact center contracts will driverenewals in the next 18 months
BFSI and manufacturing will see most action on the BPO front Unlike IT contracts, BPO contracts will witness a jump in average size during the
12-18 month period
Deep-dive intoupcoming renewalsby scope BPO
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This study offers four distinct chapters providing a deep dive
into key aspects of the global sourcing market; below are four
charts to illustrate the depth of the report
Source: Everest Group (2013)
IT renewals by scope of service IT renewals opportunity
IT renewals by industry vertical Deep dive into impending ITO renewals
Sum of TCV of deals for renewalUS$ billion
Deals currently running with said tower in scopeNumber of deals
All impending renewals
Datacenter
Desktop
Network
Helpdesk
Application development
Application maintenance
Consulting
0-12 months 12-18 months
Bundled
ADM
IO
IT renewal opportuniti es by vertical and scope
Deal renewal volum e
De
alrenewalopportunity
Low High
High
Industry BB
Industry AA
Industry DD
Industry CC
Industry EE
Industry FF
Industry GGIndustry HH
Industry II
Number of deals for renewal across indust riesNumber of deals
BFSI
Energy & utilities
Healthcare
Manufacturing
Retail
Services
Technology
Telecom
Travel & transport
Others
ADM
IO
Bundled
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ITO research calendar
Topic Release date
Published Current
November-2012Application Services Crowdsourcing or Outsourcing
December-2012IT Services Landscape Market Size, Trends, and Buyer Insights
Q2-2013Consumerization of IT Enabling Enterprise Mobility
Application Outsourcing Market Update 2013 Q2-2013
Infrastructure Outsourcing Market Update 2013 Q2-2013
Remote Infrastructure Management Market report Q3-2013
Verticalizing Infrastructure Services Q3-2013
IT Service Landscape with PEAK Matrix Assessment 2013 Q4-2013
December-2012Who is Moving Enterprise IT's Cheese?
J anuary-2012Application Services Past, Present, and Future
March-2012How to Overcome Roadblocks while Shifting to Output-based Pricing?
May-2012Impending Contract Renewals: A Futuristic View of the Renewals Market Place
Assessment of RIM Providers Q4-2013
Network Service Outsourcing Q4-2013
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Additional ITO research recommendations
The following documents are recommended for additional insight into the topic covered in t his research report. The recommended
documents either provide additional details on the topic or complementary content w hich may be of i nterest
1. IT Services Landscape Market Size, Trends, and Buyer Insi ghts (EGR-2012-4-R-0809); 2012: Everest Groups research on ITservices market estimates its size across different service segments, geographies, and industries. It also analyzes the adoption ofnext-generation services, buyer sourcing preferences, and deal trends
2. Enterprise Cloud Adopt ion: Year 2012 in Review (EGR-2013-4-R-0849); 2013: This research, focusing on the cloud adoption in 2012,is a part of the periodic Everest Group Cloud Vista enterprise cloud adoption report. It analyzes various deals signed by service providersin terms of buyer adoption trends by industry, geography, size, cloud opportunity, roles of the providers, insights on key deals, etc.
For more information on this and other research published by the Everest Group, pleasecontact us:
Jimit Arora, VP Research: jimit.arora@everestgrp.comChirajeet Sengupta, Practice Director: chirajeet.sengupta@everestgrp.com
Yugal Joshi , Practice Director: yugal.joshi@everestgrp.comSivaram S, Analyst: sivaram.s@everestgrp.com
Phone: +1-214-451-3110Email: info@everestgrp.com
Everest GroupTwo Galleria Tower13455 Noel Road, Suite 2100Dallas, TX 75240
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