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Press Release

European Outsourcing Market Weakened in First Quarter

1Q13 EMEA ISG Outsourcing Index finds annual contract value of €1.5 billion, down 20 percent year-on-year, 30 percent sequentially

Restructuring accounted for 50 percent of region's ACV

LONDON, April 22, 2013 ― Information Services Group (ISG) (NASDAQ:III), a leading technology insights, market intelligence and advisory services company, today released data showing the outsourcing market in Europe, the Middle East & Africa (EMEA) weakened during the first quarter of 2013.

The 1Q13 EMEA ISG Outsourcing Index, which covers commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more, totaled €1.5 billion during the first quarter, a 20 percent decline from the first quarter of 2012 and a 30 percent drop from the fourth quarter of 2012. The market awarded 105 contracts in EMEA, a drop of 15 percent year-on-year and 17 percent sequentially.

A key driver of the market’s weakness was a sharp drop in new scope ACV, which was off 50 percent from the prior quarter due both to a reduction in both the number and average size of contract awards. For the first time in more than a year, awards for restructuring accounted for about half of the region’s total, as the value of these deals increased both sequentially and year-on-year.

“Following a solid 2012 performance, the European outsourcing market is still in a state of flux,” said John Keppel, President, ISG North Europe. “While on the surface these figures might seem worrying, our pipeline analysis indicates a more bullish performance in the second half of the year.”

Now in its 42nd consecutive quarter, the ISG Outsourcing Index (formerly the TPI Index) provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media. For more than a decade, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance.

The U.K saw ACV of €500 million, a decline of 30 percent compared to the first quarter of 2012. However, this result was only slightly below the average for first quarters over the last five years, indicating that, following three particularly strong periods, activity in the largest European market remains robust.

Germany, the second-largest European market, recorded ACV of just €220 million, which was substantially below the average for first quarters over the last five years and a 48 percent decrease from the fourth quarter of 2012. [Bernd to add a sentence of explanation prior to issue].

France maintained its recent volatility, with ACV dropping by 81 percent compared with the fourth quarter of 2012 but up by one-third from the first quarter of 2012. Austerity measures continue to have an impact on activity in the region but these cost pressures could provide opportunity for outsourcing activity going forward.

Across the region, there was a marked decline in both IT outsourcing (ITO) and business process outsourcing (BPO) during the first quarter.

ITO ACV fell to €1.1 billion, its second straight quarterly drop. BPO, which lacked a large deal to bolster its performance, fell sharply to €390 million, but activity remained healthy, with contract numbers ahead of the average for first quarters over the last five years.

“While the disappointing ITO showing is not a European phenomenon, the total count of 66 contracts in EMEA represents an extremely poor performance,” Keppel said. “The BPO ACV was also subdued, but deal activity came in very strong.”

ISG presented the 1Q13 EMEA ISG Outsourcing Index during a conference call for media and analysts on Monday. To listen to an audio replay of the call and view presentation slides, please visit:


About Information Services Group
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 of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 800 employees and operates in 21 countries.

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Denise Colgan, ISG
+44 1737 371 523

Louise Fernley, Cohn & Wolfe for ISG
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