PROFESSIONAL SERVICES BUSINESS QUARTERLYSM
IT Services Vendor Benchmark
First Calendar Quarter 2014
Publish Date: June 27, 2014
Authors:
John Caucis, Professional Services Senior Analyst;
Stephanie Artigliere, Elitsa Bakalova, Jennifer Hamel, Boz Hristov,
Sebastian Lagana, Cassandra Mooshian and Joseph Walent,
Professional Services Analysts;
Jacob Gordon, Harry Norton, Kevin Collupy, Deleon Narcisse,
Meaghan McGrath, and Kelsey Mason, Research Analysts
Content Editors:
Patrick Heffernan ([email protected]),
IT Services Practice Manager/Principal Analyst
Ramunas Svarcas,
Professional Services Principal Analyst
TBR
T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
Contents
TBR
Table of Contents
Executive Summary
3
4
11
21
Key Findings
Market Overview and Market Leaders
Other Market Trends
Future Outlook
44
46
48
54
Key Metrics
Cost Metrics
Productivity/Resource Metrics
Operations/Investment Metrics
Appendix
Segment Views
22
26
29
32
Financial Metrics
Consulting and Systems Integration (C&SI)
Information Technology Outsourcing (ITO)
Business Process Outsourcing (BPO)
Applications Outsourcing (AO)
60
61
62
64
IT Services Segment Definitions
IT Services Vendor Benchmark Coverage
TBR Coverage
About TBR
Geographic Views
35 Americas
38 EMEA
41 APAC
TBR offers this benchmark data in an Excel format.
For further information, contact your TBR account executive.
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1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Key Findings
TBR
Vendors invest in vertical-specific and next-generation IT services;
however, commoditization exerts downward pressure on revenue growth
IT Services* Vendor Trends for 1Q14
Performance: Average trailing 12-month (TTM) IT services revenue grew 1.1% yearto-year in 1Q14, lower than the 1.5% year-to-year growth in 4Q13 and the 3.5% yearto-year growth in 1Q13. To counter slowing IT services growth, firms are investing in
sales initiatives and transforming their portfolios to provide vertical-specific solutions
and emerging technologies that encompass developed or acquired IP.
SOURCE: PPTBACKGROUNDS.NET
SOURCE: BLOG.ENTREPENUERARTS.COM
Service lines: Vendor emphasis on embedding growth offerings such as cloud,
mobility, big data and analytics, security, and social media into their core consulting
and systems integration (C&SI) offerings accelerated C&SI TTM revenue growth from
1.5% year-to-year in 1Q13 to 2.1% year-to-year in 1Q14. Commoditization of
traditional IT services and businesses shifting to cloud environments continue to
hinder legacy IT outsourcing (ITO) revenue streams. In 1Q14 ITO TTM revenue
declined 1.1% year-to-year in contrast to 0.8% growth year-to-year in 1Q13.
SOURCE: FREEWORLDMAPS.NET
Geographies: India-centric vendors’ regional expansion in EMEA through investments
in resources, offerings and alliances helped improve revenue share in EMEA. Average
EMEA TTM revenue shifted from a 2.1% year-to-year decline in 1Q13 to 2.5% year-toyear growth in 1Q14. APAC average TTM revenue declined by 4.8% year-to-year in
1Q14, down from 4.4% year-to-year growth in 1Q13, due to slowing economic
growth in China, India and Australia.
*IT services include consulting and systems integration (C&SI), applications outsourcing (AO), IT outsourcing (ITO) and business process outsourcing (BPO). IT services market growth is determined on the
basis of the 30 vendors included in TBR’s Professional Services Business Quarterly coverage. The growth rates represent trailing 12-month comparisons and compare 1Q12-4Q12 and 1Q13-4Q13 periods.
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1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
TCS’ emphasis on digital offerings and a rebound in spending in Europe led
the firm to the most revenue growth among benchmark services vendors
IT SERVICES REVENUE LEADERS: TOP TEN TTM REVENUE
TBR
$60,000
15.0%
10.2%
13.7%
10.0%
$40,000
5.0%
3.6%
2.0%
-5.7%
0.0%
$11,862
-5.0%
$11,627
$11,889
$12,607
$14,195
$13,443
$11,568
$13,559
$13,132
$12,998
-8.4%
-9.2%
-3.7%
$14,762
-8.5%
-1.9%
1.0%
$14,616
$28,612
$-
$28,774
$34,071
$10,000
-4.8%
-7.0%
-3.4%
$28,269
$20,000
-4.6%
$31,669
-2.7%
$26,166
1.8%
$30,000
5.0%
3.3%
TTM Revenue Growth YTY
$58,219
16.2%
$56,671
TTM Revenue i n $ mi llions
$50,000
20.0%
-10.0%
-15.0%
1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14
IBM GS
HP SVCS
ACCENTURE
FUJITSU
ERICSSON CAPGEMINI
TCS
CSC
T-SYSTEMS
XEROX
SOURCE: TBR AND COMPANIES
Note: Bubbles indicate YTY revenue growth and arrows indicate directional change relative to the year-ago quarter (accelerating or decelerating growth).
•
•
4
TCS’ investments in R&D and strategic partnerships such as those with Microsoft Business Solutions ramp up the
firm’s capabilities to meet the supply-side demand for digital transformation solutions spanning cloud, mobility and
big data. However, to sustain its double-digit revenue growth in FY15, TCS will need to hire and acquire more techsavvy consultants to help competitively tout its portfolio across mature and emerging markets. As TCS increases its
focus on these opportunities, adding consultants will help it capture multiple digital-focused deals that support
overall sales.
Fujitsu, despite its announcement of a Global Delivery Organization, continues to report TTM revenue declines, still
challenged by its long-standing inability to build and expand revenue streams outside Japan. Fujitsu’s business is
more seasonal than its peers’ due to its reliance on hardware and IT to sell accompanying IT services, thus affecting
its TTM growth.
1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
India-centric firms lead peers in growth and profitability by meeting the
need of clients in Europe to reduce costs using nearshore delivery centers
Growth and Profit Leaders
• CGI continued to register the positive
revenue impact of its 2012 acquisition
of professional services peer Logica,
putting it in the lead position in 1Q14
TTM services revenue growth, despite
posting its second consecutive quarter
of sequential revenue contraction.
TBR expects CGI will slip further in
growth rankings in 2Q14.
• Cognizant registered strong year-toyear revenue growth, benefiting from
2013 large-scale outsourcing wins and
recent consulting acquisitions that
accelerated expansion in Europe.
Cognizant adhered to its strategy of
reinvesting profits over its target 19%
to 20% margin range in growth
initiatives such as cloud and analytics
technologies, global delivery
expansion, and niche acquisitions
such as Itaas Inc., a digital video
solutions company headquartered in
the U.S.
5
1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
Revenue growth and profitability laggards are investing in automation
and improved productivity to reduce service delivery costs
Growth and Profit Laggards
• To improve profitability, Fujitsu needs to
better automate its processes and delivery
and further consolidate its workforce while
better utilizing offshore labor. TBR expects
the tasks will take at least one year to pay off
as the company struggles with shifting to a
global delivery model.
• CSC’s high level of exposure to contracting
federal IT services budgets combined with its
migration of commercial clients to lowercost, higher-value cloud-based infrastructure
yielded four quarters of revenue contraction.
Improved activity from CSC’s commercial
business will help mitigate revenue declines
in the government business in 2Q14.
• IBM GS’ revenue remains challenged by
declining global sales and competitive
pressures brought on by low-cost firms. The
company identifies and invests in industry
disruptors and technologies to realign its
business to grow revenue and profit. IBM
accelerated investments in 1Q14 to build out
technology initiatives such as BlueMix,
MobileFirst and Smarter Commerce.
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1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
India-centric vendors gain market share by leveraging low-cost global
service delivery capabilities to offer competitively priced IT solutions
Note: Bubbles indicate YTY revenue growth and arrows indicate directional change relative to the year-ago quarter (accelerating or decelerating growth).
•
•
7
The positive effect of CGI’s acquisition of Logica diminished during 1Q14, leading to a drop of 5,910 basis points in
TTM revenue growth from the year-ago quarter. However, CGI still led all IT services firms in the benchmark as the
acquisition still impacts TTM revenue growth.
TCS had a strong close to its fiscal year, delivering robust, broad-based revenue growth of 15.2% year-to-year in
1Q14 and 16.2% for FY14 against the year-ago compare. The firm gained momentum in continental Europe, where it
registered 36.1% year-to-year growth in FY14 as the demand for cost-saving transformational solutions from
budget-conscious clients in Germany, France and Nordic countries drove regional signings.
1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
Revenue and growth leaders are leveraging next-generation IT offerings
and investments in European expansion to solidify their top positions
IBM GS: IBM drives its service business through its Global Business
Services unit due to the demand for digital transformation via nextgeneration applications and IT environments. Conversely, IBM’s Global
Technology Services unit poses challenges for overall services
revenues owing to the erosion of legacy ITO due to cloud.
HP Services: HP Services ranks second in TTM revenue as a result of
its sheer size and global footprint. Revenue decline is decelerating,
however, as the company builds out its portfolio to better align with
market trends.
Accenture: Maintaining its lead in the market will depend on the
firm’s ability to leverage and synchronize growth platforms such as
digital, strategy, technology and BPO at a pace faster than the
converging IT services market.
CGI: Industry-leading TTM revenue growth reflects the addition of
Logica’s revenues to CGI financials, providing favorable year-to-year
compares. Western Europe, particularly the U.K., served as an engine
for organic growth as higher-value service offerings resonated with
clients in the region.
Cognizant: Growth was broad-based across industries and service
lines, primarily driven by Europe, aided by recent onshore consulting
acquisitions and large-scale outsourcing contracts won in 2H13. TBR
expects growth will decelerate in 2Q14 as longer decision cycles for
new deals in the pipeline delay revenue recognition until 2H14.
Capita: Capita delivered double-digit revenue growth thanks to its
market focus in the U.K. and enhanced capabilities gained through
integration of the slew of M&As the firm pursued over the past three
years. The firm won deals with public and private sector clients for a
total of £1.1 billion in 1Q14.
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1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
Client migration to cloud-based IT systems drives growth for consulting
and AO but leads to ITO revenue declines due to cannibalization
C&SI
• Top Revenue: IBM GS, $20.4B
• Top Growth: CGI, 48.2% year-to-year*
• Client migration to cloud-based ecosystems and mobile
platforms will continue to drive consulting and
integration services. Vendors will look to embed growth
technologies such as cloud, mobility, analytics and social
media into core C&SI offerings. Enterprises will continue
to build onshore delivery resources and invest in training
programs to enhance their global delivery models and
better compete.
Note: Bubbles indicate YTY revenue growth and arrows indicate directional
change relative to the year-ago quarter (accelerating or decelerating growth).
*The inclusion of acquired Logica and Northgate Managed Services revenues skews CGI’s and
Capita’s year-to-year growth figures, respectively, bringing the firms to top spots in TTM revenue
growth.
9
BPO
• Top Revenue: Xerox, $10.5B
• Top Growth: Cognizant, 25% year-to-year
• Demand for BPO and services that support cost takeout
and improve operational efficiency will drive
outsourcing growth. Vendors will expand core BPO
(horizontal — F&A, HR, etc.) and industry-specific BPO,
and focus on growing in emerging markets in 2014.
AO
• Top Revenue: Accenture, $7.8B
• Top Growth: SAP Services, 21.7% year-to-year
• Increasing demand for application modernization
services will expand AO revenue as clients seek to move
traditional applications to cloud and mobility IT
environments. The combination of cloud, industry
capabilities, geographic reach, and internal IP and tools
will help AO vendors maximize revenue and profits.
ITO
• Top Revenue: IBM GS, $23.4B
• Top Growth: Capita, 544.6% year-to-year*
• Evolving ITO delivery models, economic conditions and
businesses shifting to cloud environments continue to
hinder legacy ITO revenue streams. Vendors will
establish data centers in APAC and LATAM to capture
the increasing demand.
1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Market Overview and Market Leaders
TBR
Economic recovery in Europe drives higher IT services spending in
EMEA, while the economic slowdown in China hurts APAC growth
Americas
• Top Revenue: IBM GS, $25.2B
• Top Growth: Genpact, 24.7% year-to-year
• Revenue from healthcare and financial services
industries continues to increase in the Americas but not
enough to yield growth in 1Q14. Despite an uptick in
public sector signings, the small value of those contracts
outweighs the growth in healthcare and financial
services. Vendors will look to capitalize on the increased
healthcare spending spurred by the Affordable Care Act,
while others, including some India-centric firms and
Cisco and Fujitsu, invest in Canada to diversify their
revenues in the Americas.
TTM GEO REVENUE AND TTM GEO REVENUE GROWTH
TTM Revenue i n $ mi llions
$5,000
8.0%
6.1%
6.0%
4.4%
$4,000
4.0%
2.5%
$3,000
2.0%
2.7%
$2,000
0.0%
-2.1%
-4.8%
$1,000
-2.0%
-4.0%
$-
-6.0%
1Q13
1Q14
Americas
1Q13
1Q14
EMEA
1Q13
1Q14
APAC
SOURCE: TBR
Note: Bubbles indicate YTY revenue growth and arrows indicate directional
change relative to the year-ago quarter (accelerating or decelerating growth).
TTM Revenue Growth YTY
TBR
EMEA
• Top Revenue: IBM GS, $18.2B
• Top Growth: CGI, 56.6% year-to-year*
• Vendors will leverage their established footprints and
capabilities in faster-recovering central European
countries and developed MEA markets to drive
revenues and offset pricing challenges across EMEA.
• Europe-based vendors are increasing investments in big
data and analytics, cloud, digital innovation, mobility,
and particularly security due to increased demand from
clients as they shift from legacy application and IT
systems to the cloud.
APAC
• Top Revenue: Fujitsu, $18.7B
• Top Growth: WNS, 58.8% year-to-year
• Persistent challenges in China’s business environment
will continue to impact IT vendors’ expansion plans in
low-cost markets in APAC. Vendors will selectively
target M&As that will boost their global footprints in
underpenetrated regions such as Australia, New
Zealand and the Philippines, where firms such as
Cognizant and Atos continue to leverage acquisitions
Medicall and WindowLogic, respectively, to expand in
APAC.
*The inclusion of acquired Logica revenue skews CGI’s year-to-year growth figures, bringing the
firm to the top spot in TTM revenue growth.
10 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Operating margin leaders are bolstering profitability by emphasizing sales
of higher-margin, next-generation IT and optimizing their services mix
IT SERVICES PROFITS LEADERS: TOP TEN TTM OPERATING MARGIN
TBR
15.5%
14.8%
16.1%
16.5%
17.4%
19.2%
17.4%
10.0%
18.4%
22.5%
20.7%
23.2%
15.0%
19.4%
24.0%
25.9%
29.0%
20.0%
27.0%
25.0%
29.4%
30.0%
27.0%
TTM Operating Margin
35.0%
41.7%
40.0%
40.2%
45.0%
5.0%
0.0%
1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14
CISCO SVCS ORACLE SVCS
TCS
INFOSYS
HCLT
WIPRO
COGNIZANT
IBM GS
DELL SVCS
GENPACT
SOURCE: TBR AND COMPANIES
•
•
Wipro continues to hone its delivery efficiency and quality through the use of platform-based managed services
offerings such as ServiceNXT, increasing the firm’s profitability despite smaller deal sizes. Gross profit jumped 20.6%
year-to-year to $626 million, and operating margin expanded 430 basis points year-to-year in 1Q14 to 24.5% on the
strength of productivity improvements and increased employee utilization.
Dell Services’ TTM operating margin benefits from the firm’s emphasis on shifting its work mix from commoditized
services to high-value application development and maintenance (ADM) and BPO engagements providing industry
knowledge and expertise. TBR expects increased spending on training to educate direct and channel sales staff on
the full portfolio of Dell Services solutions will exert downward pressure on the firm’s operating margin in 2014.
11 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Operating margin leaders are investing in automation, efficiencyenhancing tools and training to drive productivity gains
TOP THREE TTM OPERATING MARGIN
41.7%
1Q14
1Q13
40.2%
1Q14
29.4%
1Q13
27.0%
1Q14
29.0%
TCS
ORACLE SVCS
CISCO SVCS
TBR
27.0%
1Q13
0%
5%
10%
15%
20%
25%
30%
TTM Operating Margin
SOURCE: TBR AND COMPANIES
35%
40%
45%
Cisco Services: Cisco Services’ peer-leading margins continued to
expand during the quarter, indicating improved efficiency in service
delivery as a result of reorganization, automation, leverage of
channel partners and reduced variable compensation expenses. TBR
expects Cisco Services’ margins will be among the highest in the IT
services industry over the next couple of years.
Oracle Services: TBR estimates that Oracle Services’ operating
margin grew 240 basis points year-to-year in 1Q14, driven by a 54%
operating margin in hardware systems support, which was 42.4% of
Oracle services revenue. TBR believes that reported 10% annual
growth in hardware system product revenue initiated almost 5%
annual growth in hardware systems support and, coupled with
increased efficiencies, led to an increase of 450 basis points in
hardware systems support operating margin year-to-year. Oracle’s
position in TBR’s IT Services Vendor Benchmark will continue to
improve as the company monetizes investments in hardware and
drives increased profitability from hardware support.
TCS: TCS remained a leader in TTM operating margin, expanding 200
basis points against the year-ago compare to 29% in 1Q14. Robust
margin performance was due to TCS’ ability to successfully manage
operational costs and reinvest in its portfolio, arming it with tools
and IP that enable the company to stay ahead of its competition.
TCS noted in its earnings call that it will give wage hikes as high as
14% to top performers for FY15, and promotions are planned in
FY2Q15, but the effect on margins will not be significant.
Please contact TBR if you are interested in company-specific go-to-market views, including M&A analyses,
alliance analyses, deal analyses or other GTM-related information.
1Q14
IT
Services
Vendor
Benchmark
| Professional Services Business Quarterly
12
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Vendors build industry-specific IP portfolios to differentiate, reduce
reliance on labor-based services and boost revenues and profits
IP-rich industry-related solutions help vendors to differentiate, capture growth and increase margins
TBR Assessment
Examples of vendors’ recent investments in industry-specific IP:
Vendors continue ramping up internal
investment in IP-based solutions while
purchasing or partnering with niche firms
to fill portfolio gaps. Industry-related
solutions help IT firms address specific
client needs and support growth across
service areas such as C&SI and BPO. IPrelated solutions enhance vendors’ brand
recognition and market differentiation;
however, it takes several quarters after its
release before new IP contributes
revenue.
•
Accenture and SAP partnered to develop the Business Solutions Group and
launch the Upstream Production Operation solution. The Business Solutions
Group will coinnovate intellectual-property-driven technology solutions
centered on specific industries and in collaboration with select clients.
Accenture’s continual investments in its IP assets coupled with the firm’s
decision to automate parts of IT infrastructure management services through
implementation of IPsoft’s IPcenter solution, will enable Accenture to deliver
transformation services and solutions converging business processes and IT.
• Capgemini is experiencing client interest in its IP-based products and solutions
under the Ready2Series brand. The Ready2Series includes industry-specific
solutions that provide the firm with opportunities to accelerate long-term
revenue growth across verticals and services such as C&SI and BPO.
• Infosys’ efforts to improve sales efficiency were highlighted by its success in
capturing large-scale outsourcing engagements. The firm continued to invest
in IP tools such as Process Progression Model, an end-to-end BPO platform, to
address the shift in client demand from BPO to Business Process Services.
• Cognizant looks to expand its presence in the healthcare industry. IP-based
solutions enable the firm to differentiate from peers. The firm builds industryspecific IP for the healthcare vertical through a combination of internal R&D
and customer cocreation. Cognizant codeveloped an online quoting tool,
QuoteNow, with U.S.-based health insurance provider Fallon Community
Health Plan. The firm also offers the CareSERV Medical Management Platform,
which combines cloud and analytics technologies with Cognizant’s clinical staff
to optimize care and utilization management, and the iAlign analytics platform
that assists life sciences clients with sales planning.
SOURCE: BLOGS.ADOBE.COM
13 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
IT service providers remain focused on providing solutions to the evolving
security needs of their global clients
Vendors invest in security services and capabilities to meet the demand for mobile and cloud security
TBR Assessment
Examples of vendors’ recent investments in security:
Security is increasing in importance for
clients, driven by the shift of legacy
applications and IT systems to the cloud,
coupled with enterprise mobility, the
Bring-Your-Own-Device trend and public
awareness of security breaches.
Less visibility of security capabilities
positions firms such as Capgemini and Atos
at a competitive disadvantage, which they
attempt to overcome with new alliances,
offerings and security service delivery
announcements. At the same time IT
service providers such as IBM, HP and
Accenture are continually expanding their
security practices to attract clients across
the IT services life cycle.
•
•
•
•
•
•
SOURCE: CFO.COM
Security services emerged as a key interest area for partnering in 1Q14, as
IBM looks to shore up managed security offerings that complement its cloud
and on-premises infrastructure management portfolios. IBM and CrowdStrike
Inc. will launch Advanced Cyber Threat Intelligence Service in 1H14.
Xerox’s alliance efforts in 1Q14 were centered around enhancing its offerings
by adding new capabilities to security (Authentix) and automation (LabTech,
DocuSign) solutions.
HP opened a 130,000-square-foot Security Operations Center in Sydney,
which will join HP’s U.S. and U.K. security centers.
In February CSC released an incident response offering for commercial clients
enabling uninterrupted access to CSC’s cybersecurity professionals in case of
a cybersecurity incident. In April CSC unveiled a new cybersecurity offering,
AppSEC on Demand, which enables organizations to test the security of their
software applications in a hosted secure environment that meets U.S. federal
and commercial regulatory requirements.
Atos plans to make its managed security and cybersecurity services more
visible to the market in 2014. Atos launched a Security Service Delivery unit
at the end of 2013 with a global reach and 24/7 availability. In 2014 the firm
is enhancing its cybersecurity offerings and launching services such as Next
Generation Endpoint Protection, Cyber Threat Management Dashboard,
Cloud Data Loss Prevention and Identity & Access Management as a Service.
Capgemini partnered with Unisys in March to resell Unisys’ Stealth
cybersecurity software. Capgemini’s security offerings are not visible to
clients, with the exception of Sogeti, which has an IT security offerings group.
The firm embeds security across consulting, technology services and
outsourcing.
14 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Canada emerges as a key focus for IT services growth through alliances,
acquisitions and organic investments for several IT services firms
Vendors’ strategic investments in Canada will position the IT service companies to benefit from the
growing need for IT solutions from expanding financial and oil & gas companies in the region
TBR Assessment
Examples of vendors’ recent investments in Canada:
Faced with challenging prospects in
emerging LATAM and APAC countries
such as difficult business environments
in Brazil and China, vendors are
intensifying their expansion efforts in
Canada. Vendors seek growth
opportunities from the vast amounts of
natural resource companies and
continued growth in the financial
services industry in the region. TBR
expects the pace of investments in
Canada will continue to increase
through 2014.
•
Cognizant acquired Itaas Inc., a digital video solutions firm headquartered in the
U.S. Cognizant will onboard an estimated 200 employees across Canada, the U.S.
and India. Cognizant adds next-wave technology capabilities including connected
device application development and strengthens its position in the
underpenetrated media and communications market.
• As part of its plan to invest $4 billion over the next 10 years in Ontario, Canada,
and create 1,700 new jobs, Cisco is investing $100 million in Toronto, which will
be a site for one of four Internet of Everything Innovation Centers. The move
signals Cisco’s transition toward becoming a Services-led business, as Toronto
will be the North American hub for thought leadership and innovation,
facilitating adoption of Cisco technologies and Smart+Connected solutions.
• Fujitsu is combining alliances, joint ventures and niche applications to increase
its global sales and marketing reach. The company extended its Westcon
marketing agreement to cover the U.S. and Canada, whereby Westcon will sell
Fujitsu’s integrated data center solutions in the region. TBR believes this
approach will boost sales, but that larger acquisitions in the U.S. and Europe may
be necessary for significant market gains.
• Wipro’s chairman, Azim Premji, noted in 1Q13 that Wipro planned to hire locally
in Canada to pursue opportunities in the oil and gas industry. In 1Q14 the firm
highlighted Canada’s financial services vertical as a key growth area as declining
natural resource prices are pressuring banks to cut operational costs. Wipro
faces competition from top India-centric peers such as TCS and Cognizant, and
from up-and-coming players such as Tech Mahindra, which has a broader
delivery footprint in Canada and offers similar services.
SOURCE: WIKIPEDIA.ORG
15 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
IT services vendors focus on improving client relationships — best
accomplished with client proximity and use of channel partners
Vendors invest in sales initiatives to improve client relationships, expand wallet share with key accounts
and support revenue growth
TBR Assessment
Examples of vendors’ recent investments in sales:
Vendors such as Cisco, Unisys and Xerox
emphasize channel sales due to the
superior margins attributed to shared
sales and marketing costs as well as low
fixed costs. Capgemini’s culture change
to foster client relationships, coordinate
efforts globally, offer all dimensions of
the firm’s portfolio and leverage its
consulting business to generate sales will
help it catch up with competitors such as
Accenture and IBM, which, in TBR’s view,
have stronger relationships with clients.
•
Unisys expands channel-led sales to keep sales costs under control and expand
coverage of its addressable market. The company generates less than 5% of
total revenue from the reseller channel currently, and is partnered with over 60
value-added resellers (VARs). The latest announced channel partnerships, with
Hotelogix for the hospitality sector in Kuwait and with Capgemini to expand
cybersecurity sales, are indicative of solution areas Unisys will target in 2014.
• Xerox is attempting to emulate Cisco’s and HP’s channel programs by offering
enhanced training and incentives for its partners through a modified Global
Partner Program, which provides partners access to Xerox’s tools and expertise.
• Infosys’ sales strategy will continue to focus on increasing mindshare of end-toend services capabilities spanning clients’ operational, transformation and
innovation needs. Investments in its onshore sales force will enable the firm to
tout its IT transformational capabilities and help Infosys regain its status as a
premium professional services vendor during FY15. Infosys will seek to adopt a
more holistic selling approach by marketing its expertise in delivering highvalue, vertical-specific business solutions and developing a market-competitive
portfolio as the IT services market evolves.
• Capgemini’s Account Management Strategic Initiative (AMSI) helps the firm
accelerate and diversify its portfolio growth, improve the win rate on big deals,
generate more sole-sourcing deals and improve cost effectiveness of its
business development efforts. AMSI follows a “One Group” approach, which is
to sell the entire Capgemini portfolio and expand wallet share with clients, and
offer the Rightshore global delivery model.
SOURCE: FOTOSEARCH.COM
16 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Application outsourcing signings coupled with multiple smaller deals for
cloud migration fuel revenue expansion
Key Deals in 1Q14
Vendor/Client
CGI/Trafikverket
Accenture/
Washington Metro
Wipro/Deutsche
Bank Germany
Deal Value
$220
million
(CAD)
Years
4, with two
1-year
options
TBR Insights
The Swedish Transport Administration signed CGI to provide
application development services by coordinating its IT systems.
$184
million
N/A
Accenture will implement a new electronic fare payment system
based on Accenture Fare Management Solution to expand fare
payment options, adding chip-enabled credit cards, federal
government ID cards and mobile phones that use near-field
communications.
$125
million
Multiyear
Deutsche Bank selected Wipro to provide ADM services.
N/A
Unisys Brazil and a few other companies won a contract from the
SESGE to provide IT services such as infrastructure solutions for
the 2014 FIFA World Cup. Unisys Brazil will support the integrated
command and control centers that will monitor and manage
communications for security purposes.
Multiyear
The contract is part of TNT Express’ $200 million IT modernization
initiative. Infosys will provide ADM outsourcing services helping
the logistics provider streamline its supply-chain tracking system.
1
The U.K.-based education lender selected HCLT, in collaboration
with software vendor Misys and implementation partner Deloitte,
to upgrade SLC’s core banking and payment system.
Unisys/Extraordinary
Security Department
for Large-scale Events
(SESGE)
$110
Million
Infosys/TNT Express
$100
Million
HCLT/Student Loans
Company (SLC)
£50 million
($69.1
million)
Please contact TBR if you are interested in company-specific go-to-market views, including M&A analyses,
alliance analyses, deal analyses or other GTM-related information.
17 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Partnerships enable IT services vendors to offer end-to-end solution
packages for cloud migration and IT infrastructure security improvement
Key Acquisitions in 1Q14
Companies
People
IBM GS/
Cloudant Inc.
65
Accenture/
ClientHouse
10-50
(Est.)
Atos/
Bull
9,200
Impact
The acquisition will be merged into IBM’s recently formed Information and Analytics Group
to enhance the firm’s portfolio in big data, analytics, cloud and mobility.
ClientHouse expanded Accenture’s Salesforce.com and Veeva Systems implementation
capabilities and expertise. The ClientHouse office in Jena, Germany, will be a Center of
Excellence and training facility for Accenture clients, which will help Accenture gain SaaS
traction in Europe.
On May 26 Atos announced its intent to acquire France-based IT services firm Bull to expand
in cloud, cybersecurity and big data; support its expansion outside Europe and solidify its
core C&SI and Managed Services capabilities in the region.
Key Alliance Additions/Changes in 1Q14
Companies
Accenture/
SAP
IBM/
CrowdStrike Inc.
Wipro/Agnik
Scope of Alliance/Impact
Accenture expanded its collaboration with longtime partner SAP, forming the joint venture Business
Solutions Group, to develop and implement industry-specific solutions that are based on the SAP
HANA Cloud Platform and other cloud, analytics, digital and mobility technologies. Accenture and SAP
introduced the Upstream Production Operations solution, and Accenture opened its 12th Innovation
Center for SAP Solutions. Accenture will gain consulting and implementation business opportunities
around its collaboration with SAP.
IBM and CrowdStrike Inc., a security solutions and services provider, will develop a new managed
security service, Advanced Cyber Threat Intelligence Service. The service will provide proactive
monitoring capabilities to minimize and mitigate threats before they become an issue.
Wipro partnered with connected vehicle software company Agnik to utilize Agnik’s cloud-based big
data and analytics technology to augment Wipro’s machine-to-machine solutions for the automotive
industry. The partnership will strengthen Wipro’s capabilities for the manufacturing and high-tech
industries.
Please contact TBR if you are interested in company-specific go-to-market views, including M&A analyses,
alliance analyses, deal analyses or other GTM-related information.
1Q14
IT
Services
Vendor
Benchmark
| Professional Services Business Quarterly
18
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
Vendors continue reorganization efforts and hire industry-specific experts
to address growing demand in cloud and analytics
Trends and Strategy Changes
Hiring levels will continue to fluctuate across IT services
vendors. Vendors such as IBM, Xerox and CSC reduced or
stabilized headcount in 1H14, and the firms will shift hiring
focus to lower-cost labor pools in the latter half of 2014 in
addition to hiring people with industry-specific expertise and in
growth areas such as cloud and analytics.
• Vendors hire across the globe to diversify global revenues and
increase leverage of low-cost resources for service delivery.
Accenture will recruit in APAC, Africa and LATAM to support its
growth strategy, while Capgemini’s strategy is to increase its
India headcount from 37.3% of total headcount, or 50,000
employees, to 50% in the next three years.
•
Management Changes
Capgemini is grouping its APAC operations in one unit to expand
in the local market, and appointed Luc-François Salvador,
formerly the CEO of Sogeti, to chair of the new APAC entity.
• Fujitsu appointed Michael Keegan to lead its business in the U.K.
and Ireland, taking over for Duncan Tait, who was recently
promoted to head of EMEIA, CSVP, Fujitsu Ltd. In early 2014
Fujitsu announced a restructuring initiative to improve
operational efficiency and communication across divisions,
which led to nine top management resignations.
• Infosys’ C-level exits continued, with Senior VP Chandrashekar
Kakal, head of the Indian Business Unit, and Chief Compliance
Officer Nithyanandan Radhakrishnan resigning in April. In June
Infosys appointed Vishal Sikka, former CTO of SAP, as CEO and
managing director.
•
19 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Other Market Trends
TBR
HCLT’s and TCS’ R&D investments position them to overtake Cognizant,
which continued to lead IT services vendors in organic growth
HCLT: HCLT has not made an acquisition
since 1Q11, instead focusing on
expanding its IP through alliances and
R&D. The firm targets large-scale
transformational deals to maintain
double-digit organic revenue growth,
winning several infrastructure
management and Digital Systems
Integration deals in 1Q14.
• Ericsson: While Ericsson did not make
any acquisitions that would impact
services revenue in 1Q14, the company’s
top line fell 8.7% year-to-year partially
due to unfavorable compares with large
deals won in 1H13.
•
*ORGANIC REVENUE GROWTH IS ESTIMATED WHEN NOT REPORTED. GROWTH IS IN U.S. DOLLARS. REVENUE GROWTH IS MEASURED ON A YEAR-TO-YEAR BASIS FROM 1Q13 TO 1Q14.
20 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Executive Summary: Future Outlook
TBR
Vendors are building out cloud, analytics and mobility portfolios and
expanding low-cost headcount to position for profitable growth
Key: Bubble = 1Q14 Vendor Position;
Arrow = 2Q14 Expected Vendor Position
According to TBR estimates, IT services’ average TTM revenue growth year-to-year will accelerate slightly from 1.1%
in 1Q14 to 1.3% in 2Q14. Demand in Europe and North America is gradually improving; however, clients’ hesitancy
to invest in transformational projects is hampering growth. IT services growth in 2014 will be driven by companies
focusing on incorporating vertical-specific solutions into their operations to boost performance and efficiency.
Vendors take advantage of the growing verticalization trend by adding vertical-specific consulting headcount as well
as acquiring and developing industry-specific IP. Vendors turn to small niche acquisitions to broaden portfolios,
develop unique capabilities and receive immediate revenue boosts; however, some acquisitions take time to
engineer, thus challenging revenue growth.
21 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: C&SI
TBR
India-centric firms are expanding consulting headcount in Europe and
the U.S. to capture high-value consulting-led engagements
Leaders
The positive impact of CGI more that doubling its C&SI revenue stream when it purchased Logica in 3Q12 continues to
project the company to the front of the pack with 48.2% year-to-year growth of TTM C&SI revenue.
• Infosys’ expanding sales forces in the U.S. and Europe will drive CS&I revenue growth. However, long-term sales success
depends on the firm’s ability to tout its services as a unified entity rather than separate subsidiaries. Consulting, package
implementation & systems integration (C&PI&SI) revenue growth decelerated to 7.3% year-to-year in 1Q14 from 12.6% and
27.6% year-to-year expansion in 4Q13 and 3Q13, respectively, due to reportedly muted discretionary spending from maturemarket clients. In 1Q14 Infosys won a large-scale engagement to implement an Oracle-based finance ERP transformation
platform for SITA, a global air transport IT services vendor, which we expect will fuel segment sales during FY1H15.
• EMC ended the quarter with a year-to-year TTM growth rate of 16.4%, which was led by the shift in software license orders
to subscription-based services within Pivotal. EMC is also realizing an increase in C&SI engagements driven by customer
adoption of cloud-related services realized in Pivotal implementation services.
•
22 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: C&SI
TBR
Public sector spending declines and continued hesitancy by firms to spend
on transformational engagements weigh on laggards’ C&SI revenues
Laggards
•
•
CSC’s TTM C&SI revenue was down 12.6% year-to-year in 1Q14, as defense and civilian U.S. government agencies
continued to pull back on discretionary IT project spending. TBR expects CSC’s shift to a partner-oriented
consulting organization within its commercial operations will serve as a partial counterweight to expected
contraction of nonoperational federal IT spend in 2014.
Convergys aggressively reshaped its portfolio over the past two years to concentrate on its core customer
management business. In 1Q12 the firm sold its information management business, which Convergys generated
most of its C&SI revenues from, resulting in weaker C&SI capabilities and deteriorating C&SI revenues for 1Q14.
TBR believes that although Convergys is focused on scaling its customer management business, evidenced by its
acquisition of Stream Global, the recently acquired company will boost its exposure to C&SI, leading to a recovery
in C&SI revenue growth in 2Q14.
23 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: C&SI
TBR
C&SI revenue leaders leverage vertical-specific capabilities and nextgeneration IT expertise to consult and deliver desired business outcomes
TOP THREE TTM C&SI REVENUE
FUJITSU
ACCENTURE
IBM GS
TBR
1Q14
$20,440
1Q13
$20,387
1Q14
$15,304
1Q13
$15,417
1Q14
$9,882
1Q13
$10,759
$-
$5,000
$10,000
SOURCE: TBR AND COMPANIES
TBR
$15,000
$20,000
TOP THREE TTM C&SI REVENUE GROWTH
1Q14
CGI
48.2%
1Q13
TCS
1Q14
1Q13
COGNIZANT
$25,000
Revenue i n $ mi lions
1Q14
1Q13
133.9%
21.7%
13.6%
20.5%
17.5%
0.0%
50.0%
100.0%
YTY Growth
SOURCE: TBR AND COMPANIES
150.0%
IBM GS: IBM will drive low-single-digit C&SI growth in 2014 anchored
by its end-to-end solution packages, which leverage cross-service-line
offerings. The newly established Interactive Experience consulting
practice will help fuel service line growth as clients seek more datadriven strategy development.
Accenture: The firm uses its vertical expertise and will target C-Suite
executives by pairing the consulting expertise of the Accenture
Strategy Growth platform with the technology capabilities of the
recently formed Business Solution Group in collaboration with SAP.
Fujitsu: Increased IT services spend stemming from public sectors in
more mature markets in APAC enabled Fujitsu to drive solutions/SI
revenue growth year-to-year in local currency during 1Q14.
CGI: Adjusting for the impact of the Logica acquisition, CGI’s systems
integration projects in the U.S. and Europe expanded C&SI revenue
48.2% year-to-year in 1Q14 as public and private sector engagement
teams fielded additional demand.
TCS: Consulting growth was driven by advisory demand around
implementation and managed services, secure application
developments, and the adoption of cloud, analytics and social media.
Cognizant: Cognizant continues to invest in cloud, analytics and
mobility offerings to address growing demand for transformational IT
solutions, led by domain-specific consulting. TBR believes Cognizant
will leverage its “Code Halo” thought leadership approach to build
mindshare around its business intelligence (BI) and analytics strategy
consulting services.
24 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: C&SI
TBR
To overcome hesitancy, vendors provide narrow, niche C&SI solutions as
a stepping stone for larger future engagements with clients
Key M&As 1Q14
Company
TBR Insights
Xerox/
Smart Data
Consulting
Xerox acquired Smart Data to expand its ediscovery capabilities and consulting
services. The firm’s consulting focus and ediscovery managed services will help fill
gaps in Xerox’s Litigation Services portfolio.
Key Deals 1Q14
Company
TBR Insights
Accenture/
Government of
Canary Islands
Accenture will deliver technology services and
management consulting to modernize the
client’s judicial information system and
improve information sharing.
IBM/
Bank of China
IBM provided end-to-end consulting and
implementation services to aid the Bank of
China in the development and launch of a
new global online banking platform that
coordinates and centralizes customer
information from the bank’s 30 countries.
Capgemini/
HEMA
In an ongoing collaboration with HEMA,
Capgemini will provide IT services including
business consulting, SAP application
management, application development,
e-commerce hosting and ITO services.
Portfolio and Go-to-Market Changes
Demand for C&SI will be driven by system integration
services as clients seek to transform infrastructures.
Firms will look to leverage expertise to capture C&SI in
other verticals to help broaden pipelines.
• Consulting revenues will be driven by digital
engagements in cloud, mobility, security, social media
and analytics as clients look to modernize their
infrastructure, especially in regions such as North
America and Europe.
•
Trends and Outlook
Vendors will look to fuel growth in the C&SI segment
by focusing on disruptive and innovative solutions such
as cloud, big data and analytics, mobility and security.
• Xerox took restructuring actions in April to sharpen the
strategic focus of its HR consultancy, splitting Buck
Consultants’ retirement business into two separate
divisions, Corporate Solutions and Trustee Services.
David Piltz, a veteran of Buck Consultants, will run Buck
Trustee Services, and John Deacon, recruited from
Helm Godfrey, will lead Buck Corporate Solutions.
•
25 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: ITO
TBR
Vendors are developing cloud-based ITO offerings — replacing traditional
engagements with lower-revenue-stream deals, but at a higher margin
1Q14 ITO SERVICES TTM REVENUE AND YTY GROWTH
TBR
Total Services TTM Revenue Growth YTY
35%
Avg. ITO TTM YTY
Growth = -1.1%
30%
CGI
BT SVCS
25%
ATOS
CONVERGYS
20%
15%
0%
-5%
TCS
INFOSYS
UNISYS
10%
5%
COGNIZANT
CAPGEMINI
IBM GS
WIPRO
T-SYSTEMS
CAPITA
HCLT
EMC SVCS
GENPACT
Avg. Total Services TTM YTY
Growth = 1.1%
XEROX
ORACLE SVCS
SAP SVCS
HP SVCS
DELL SVCS
-10%
FUJITSU
CSC
-10%
ACCENTURE
≈
-15%
-20%
ERICSSON
0%
10%
20%
30%
40%
50%
550%
60%
ITO TTM Revenue Growth YTY
Leaders
NOTE: SPHERE SIZE REFLECTS VOLUME OF TTM REVENUE.
SOURCE: TBR ESTIMATES AND COMPANY DATA
EMC’s ITO TTM year-to-year revenue growth of 41.8% was driven by the company’s converged infrastructure
capabilities within VCE Vblocks, which enables customers to harness the power of on-premises IaaS. Solutions such
as EMC Unified Infrastructure Manager for VCE Vblock Systems provide customers with life cycle management and
integrated compliance services.
Laggards
Pricing pressures in IT and telecommunications services coupled with strict profitability criteria for new business
and cancellation of unprofitable deals negatively impacted T-Systems’ ITO revenue growth. T-Systems continues to
focus on higher-growth opportunities such as cloud instead of traditional IT systems management. In April the firm
sold its subsidiary Individual Desktop Solutions GmbH (IDS), which provides on-site desktop services and solutions,
to the Aurelius group.
26 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: ITO
TBR
ITO revenue and growth leaders are transitioning their ITO sales
capabilities to capture more small deals
TOP THREE TTM ITO REVENUE
FUJITSU HP SVCS IBM GS
TBR
1Q14
$23,412
1Q13
$24,559
1Q14
$14,482
1Q13
$15,568
1Q14
$6,624
1Q13
$7,140
$0
$5,000 $10,000 $15,000 $20,000 $25,000 $30,000
Revenue in $ millions
IBM GS: IBM continues to expand SoftLayer to capture large-scale
engagements that counter ITO runoff. In 1Q14 IBM committed $1
billion to develop PaaS and hybrid cloud infrastructure to support
cloud-based applications and environments.
HP Services: Smaller, more tactical and frequent cloud deals replace
large-scale transformations, eroding traditional revenues but
improving profitability. HP reported double-digit growth in cloudrelated revenue in 1Q14 due to the wider adoption of cloud.
Fujitsu: In March Fujitsu developed advanced cloud optimization
services that enable end users to automate services and more
efficiently manage operations.
SOURCE: TBR AND COMPANIES
TOP THREE TTM ITO REVENUE GROWTH
CAPITA
1Q14
HCLT
1Q14
EMC SVCS
TBR
1Q13
544.6%
N/A
41.8%
34.2%
1Q13
1Q14
36.2%
1Q13
10.0%
SOURCE: TBR AND COMPANIES
20.0%
30.0%
YTY Growth
≈
0.0%
26.2%
40.0%
50.0% 550.0%
60.0%
Capita: In 1Q14 Capita fully integrated IT managed services vendor
Northgate Managed Services, which it had purchased in 1Q13, under
the name of Capita Managed IT Services (CMITS), impacting the spike
in ITO revenue growth. We expect the subsidiary to become Capita’s
key ITO revenue contributor and will grow revenues at a pace
mirroring or surpassing corporate growth because demand from
regional clients for data center managed services is on the rise.
EMC Services: EMC relies on the federation and its partner program,
which provides EMC customers with partners’ “as a Service” offerings,
to continue to drive EMC Services’ revenue growth.
HCLT: HCLT maintains double-digit year-to-year ITO expansion by
capitalizing on ITO vendor churn in the U.S., Europe and Australia. The
firm recently won a cloud contract with a telecom client in the Middle
East for SaaS and IaaS.
27 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: ITO
TBR
Capital investments, M&As and alliances will expand as vendors look to
build capabilities in cloud to supplement ITO revenues
Key M&As 1Q14
Company
TBR Insights
TCS/
Mitsubishi
TCS merged TCS Japan with Mitsubishi’s IT
Frontier subsidiary, generating a combined
$600 million in annual revenue. With 51%
ownership, TCS will maintain control of the
merger, which will expand TCS’ footprint in
Japan and add 1,400 employees from IT
Frontier for a total of 2,400 employees in
the country.
Key Deals 1Q14
Company
Infosys/
UL
Wipro/
Carillion Plc.
TCS/
Cargill
TBR Insights
Infosys modernized and transformed UL’s
technology infrastructure, uniting disparate
business units, technology operations and
platforms in a connected structure.
Wipro will deliver ITO, AO and BPO services to
the U.K.-based construction services company
through the integrated transformation and
outsourcing deal.
TCS was chosen by the U.S. firm to act as an
outsourcing partner for IT operations, which
will impact 900 employees at Cargill. As part
of the deal some of these employees will
transfer to TCS.
Portfolio and Go-to-Market Changes
Capital investments, acquisitions and strategic
partnerships will remain a key point for global vendors as
they attempt to build out their capabilities in cloud and
offset declining revenues in their traditional ITO business.
In addition to IBM’s announced $1.2 billion investment in
cloud data centers, the firm recently acquired Database as
a Service (DBaaS) provider Cloudant and SaaS vendor
Silverpop to enhance its cloud-based application offerings.
• Vendors are reorganizing portfolios around high-growth
managed service offerings such as cloud, specifically in
IaaS and in regions such as France and North America. CSC
will leverage its BizCloud and managed security services to
reduce pricing pressures in ITO. Vendors will also bundle
ITO with C&SI, AO and BPO offerings to differentiate from
peers as traditional ITO services progressively become
commoditized.
•
Trends and Outlook
Vendors will strengthen their positions by integrating new
capabilities in cloud, security and mobility to exploit the
increasing demand for cost-reducing digital solutions.
Migration of clients from traditional ITO to cloud
architectures will continue to impact revenues through
2014. Vendors will selectively engage in partnerships to
optimize ITO offerings as cloud continues to revolutionize
the segment.
28 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: BPO
TBR
BPO leaders are expanding their vertical-specific offerings, while laggards
struggle with price competitiveness due to a lack of low-cost headcount
Leaders
Cognizant continues to develop industry expertise within its global delivery model to enhance its domain expertise
while still leveraging its global delivery capabilities to provide services that are cost-competitive against IBM and
Accenture. We expect Cognizant will leverage its rapidly expanding footprint in the Philippines to capture BPO
opportunities in the U.S. healthcare vertical.
Laggards
• HP’s TTM BPO revenue declined 13.4% year-to-year, partly due to account runoffs and the industry shift to a la
carte adoption of Business Process as a Service (BPaaS) cloud solutions, driving down traditional BPO opportunities
and shrinking the length and size of contracts.
•
29 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: BPO
TBR
BPO leaders build scale through acquisitions and platforms for quick
delivery and drive revenue expansion by adding analytics to increase value
Xerox: Xerox continued to dominate in BPO despite the runoff of its
government student loan business, which slowed its growth. Xerox’s
acquisition of Invoco will help grow BPO in Europe in 1H14.
Accenture: Accenture will benefit from the acquisitions of Europebased ClientHouse and Evopro Group, which targeted capabilities in
cloud and embedded software and will transform labor-intensive
BPO to BPaaS offerings.
Capita: Capita continues to win new business by leveraging M&As
that add industry-specific BPO services. In 1Q14 Capita acquired U.K.based residential mortgage administration services vendor Crown
Mortgage Management, which we believe will expand Capita’s
offerings within the commercial sector’s financial services vertical.
Cognizant: Cognizant leverages Horizon 2 and large-scale, verticalspecific deals in BPO, generating approximately 20% of the firm’s
total sales through deals that package BPO with consulting, AO and
ITO. The firm also builds platform-based BusinessCloud solutions to
enrich its BPO offerings.
TCS: TCS supports nonlinear growth in BPO by leveraging partnerships
such as the one with Microsoft Business Solutions to expand
industry-specific, platform-based BPaaS offerings. New offerings from
the Digital Software and Solutions Group will augment its other
vertical solutions.
Infosys: Infosys will expand and leverage its portfolio of cloud-based
BPO platforms such as DigitizeEdge to support opportunities in highgrowth verticals and markets. Infosys’ deal with Orange Business
Services showcases its expanding reach in the communications
vertical within continental Europe.
30 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Segment Views: BPO
TBR
BPO portfolios will be augmented by acquisitions and alliances in highgrowth areas such as mobility, cloud and big data
Key M&As 1Q14
Portfolio and Go-to-Market Changes
Company
TBR Insights
•
Xerox/
ISG Holdings
Xerox’s purchase of ISG Holdings adds 700
people and vertical-specific BPO capabilities
for the insurance and commercial
healthcare industries, building out the
firm’s higher-margin vertical services.
Key Deals 1Q14
Company
Accenture/
Statoil ASA
Infosys/
Royal Philips
TCS/
AMP
Xerox/
BBVA
Compass
TBR Insights
Accenture will provide finance and control
services that will improve costeffectiveness and expand the global
organization.
Infosys was awarded a five-year contract
extension by the European company to
continue to provide financial and actuarial
services, as well as procurement solutions.
AMP outsourced back-office functions to
TCS to enhance efficiency and reduce
employee costs. AMP will cut jobs as a
result of the outsourced work.
Xerox signed an outsourcing deal with
BBVA Compass to take over mortgage
servicing, loan processing and various
back-office tasks.
Vendors will continue to seek tuck-in acquisitions that will
enhance their BPO offerings and help differentiate against
peers. Xerox’s acquisitions provide it with vertical-specific
capabilities in the insurance and commercial healthcare
industry (ISG Holdings) as well as the legal services segment
(Smart Data Consulting), which will position the firm to
improve its margins through increased sales of highermargin vertical-specific offerings, specifically in the BPO
segment.
• Firms will expand core BPO (horizontal — F&A, HR, etc.) and
industry-specific BPO and increase focus on vertically
oriented BPO to bring in analytics and platform-driven BPO.
Capgemini shifted from a horizontal- and F&A-centric
structure to a vertically oriented BPO structure to bring
analytics- and platform-driven BPO.
Trends and Outlook
Acquisitions and alliances will expand BPO portfolios in highgrowth areas such as mobility, analytics, social, cloud and big
data.
• Enterprises will augment their BPO platforms and invest in
platforms to capture the growing demand in high-growth
verticals such as healthcare, retail and energy in the U.S. and
Europe.
•
31 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Segment Views: AO
TBR
AO leaders benefit from cloud application modernization capabilities,
while laggards’ lack of low-cost resources hurt their competitiveness
Leaders
SAP Services will transition to a strategic advisory role to differentiate itself by focusing on providing outcomes to its
customers. Application development services will remain a core driver of the company’s AO revenue as it tailors
offerings to customers’ industry- or role-specific needs through codevelopment efforts. SAP leverages its CoInnovation Labs (COILs) to collaborate with partners on industry-specific solutions.
Laggards
BT remains challenged in the AO segment due to India-based competitors such as Wipro and HCLT, which have
flooded the European market, taking market share from Europe-based vendors such as Capgemini, T-Systems and
Atos. The India-based companies can provide low-cost solutions by comparison.
32 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Segment Views: AO
TBR
Leading AO vendors are ramping up alliances and developing cloud and
vertical-specific AO offerings to bolster their portfolios
Accenture: Competition within the application services market and
clients’ shifts toward multisourcing contracts have pressured pricing,
forcing Accenture to increase use of its Global Delivery Network. The
firm will continue to bundle AO with C&SI and ITO.
TCS: Applications consolidation and rationalization are driving
opportunities in AO. Development and management of mobile
applications will remain a main focus of TCS.
Infosys: Infosys will strengthen key partnerships with Microsoft, SAP
and Oracle to capture end-to-end applications engagements as clients
move enterprise workloads to cloud environments. Infosys was
employed to deploy Oracle Business Suite and integrate a Strategic
Financial Systems system for global technology airline company SITA,
enabling it to improve operational efficiency.
SAP: SAP Custom Development drives SAP’s AO revenue as the
company helps customers streamline the application development
process. SAP is interested in expanding in the financial services
industry, customizing SAP for Banking to meet banks’ specific needs
while providing seamless integration with existing SAP applications.
Cognizant: The firm benefits from clients seeking to reduce IT costs
and increase flexibility by outsourcing applications management. The
fastest BusinessCloud platform builds on Cognizant’s AO strengths by
providing clients with instant access to the firm’s testing resources.
Genpact: Through its strategy to concentrate on select verticals such
as banking, financial services and insurance (BFSI), healthcare and
retail, Genpact leverages its institutional domain expertise to deliver
industry-focused application and database managed services to
accelerate AO growth.
33 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Segment Views: AO
TBR
AO providers will expand revenue pipelines by offering end-to-end
solutions that bundle AO with C&SI and ITO services
Portfolio and Go-to-Market Changes
Key Deals 4Q13
Company
TCS/
Qantas
Atos/
LCH.Clearnet
IBM/
BP
Accenture/
Tryg
Infosys/
Lansforsakringar
AB
TBR Insights
This contract is part of a larger deal awarded
to IBM in which TCS will provide application,
transformation and maintenance solutions
for Qantas. Over time the contract value will
be reduced, and 200 employees will be
transferred to IBM.
Atos will provide systems integration,
managed services, application hosting, and
application and production management.
IBM was selected by BP to provide
application management and integration
services for the firm’s global enterprise
systems as well as provide service desk
support for BP’s employees across the
Americas and Europe.
Accenture will provide application and
maintenance services for the client’s
noncore insurance applications such as
finance and accounting (F&A), CRM and
Web solutions that support Denmark and
Norway operations.
Infosys provides development and
management support services for the
client’s application infrastructure.
Application modernization will be a primary growth
driver in 2014 as demand continues to increase
from enterprises looking to migrate applications to
the cloud, to cut IT costs and allow for outsourcing
management for enterprise applications. TBR
anticipates cloud opportunities will help companies
broaden revenue streams in 2014 as firms
increasingly adopt SaaS applications, in turn
weakening demand for traditional AO services.
• Vendors such as Capgemini, Xerox, Fujitsu and
Wipro will win repeat business and augment value
by bundling ITO, BPO and C&SI with AO into end-toend solutions to generate revenues.
•
Trends and Outlook
Application consolidation and rationalization will
help drive revenue opportunities in AO.
• Vendors will seek partnerships to couple solutions
and services to provide clients end-to-end cloud
application solutions. Infosys will strengthen key
partnerships with Microsoft, SAP and Oracle to
capture end-to-end applications engagements as
clients move enterprise workloads to cloud
environments.
•
34 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Geographic Views: Americas
TBR
Americas revenue growth leaders leverage vertical-specific expertise to
win engagements in healthcare and financial services
Leaders
•
•
•
The U.S. healthcare and financial services
industries continue to generate opportunities
for Cognizant, though hesitant spending due
in part to recent regulatory shifts caused
North America year-to-year revenue growth
to decelerate compared to 4Q13 and 1Q13.
We believe Cognizant’s acquisition of Itaas,
Inc. will enable the firm to broaden its vertical
reach in the U.S. to the cable industry.
In North America, Genpact expands its
onshore sales and delivery presence and
targets underpenetrated verticals such as
capital markets and healthcare with solutions
that aid with regulatory compliance and
process transformation.
EXL has recently won a transformation project
that embeds analytics technology with a U.S.
bank. We expect EXL to continue to leverage
its industry-specific solutions to differentiate
in the marketplace, including successfully
deploying EXL Landa’s CareRadius medical
management suite for two leading BlueCross
BlueShield health plans.
35 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Geographic Views: Americas
TBR
Constrained public sector spending in the Americas negatively affected
revenue growth laggards
Laggards
•
•
•
CSC derives approximately one-third of its
revenue from its North American Public
Sector segment, making up roughly half of its
Americas business. CSC will continue to be a
laggard in Americas revenue through 2014
due to continued headwinds in the federal IT
sector.
TBR estimates HP Services experienced a
6.9% year-to-year revenue decline in the
Americas in 1Q14 despite winning large
deals with DMDC and the Colorado
Department of Health Care Policy and
Financing, and a high-profile win with the
U.S. Department of Homeland Security. We
believe HP’s embrace of OpenStack will aid
the company in rebounding within the
Americas to improve interoperability of what
were previously disparate customer
infrastructures.
IBM invests in niche IP-focused acquisitions
in the U.S. to bolster the company’s cloud
portfolio and entice legacy infrastructure
services clients to become cloud clients. The
firm recently acquired Massachusetts-based
DBaaS provider Cloudant and Atlanta-based
marketing automation vendor Silverpop.
36 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Geographic Views: Americas
TBR
Leaders are leveraging vertical-specific capabilities and expertise in cloudbased services to drive revenue growth
TOP THREE TTM AMERICAS REVENUE
IBM GS
1Q14
ACCENTURE
1Q14
HP SVCS
TBR
$25,211
1Q13
$26,344
$14,664
$15,472
1Q13
1Q14
$13,701
1Q13
$13,033
$0
$5,000 $10,000 $15,000 $20,000 $25,000 $30,000
SOURCE: TBR AND COMPANIES
Revenue i n $ mi llions
1Q14
24.7%
1Q13
16.7%
1Q14
17.5%
1Q13
19.1%
1Q14
14.9%
TCS
COGNIZANT
GENPACT
TBR TOP THREE TTM AMERICAS REVENUE GROWTH
1Q13
0.0%
12.9%
5.0%
SOURCE: TBR AND COMPANIES
10.0%
15.0%
YTY Growth
20.0%
25.0%
30.0%
IBM GS: IBM’s Americas performance will hinge on the firm’s success
in the cloud market space. It continues to bet big on its cloud
capabilities. In 1Q14 the firm announced plans to open cloud data
centers in Washington, D.C.; Toronto, Dallas and Mexico City, among
other global locations, as part of its SoftLayer expansion.
HP Services: HP’s growth in the healthcare industry will continue,
driven by demand for HP’s healthcare solutions. HP won a $116
million contract to support the implementation of a new Medicaid
management system for the Colorado Department of Health Care
Policy and Financing.
Accenture: TBR expects the firm will utilize the managed service
contract to improve HealthCare.gov as a lever to pursue payer and
provider opportunities in Canada, where patient demand for access
to electronic health records is on the rise.
Genpact: The acquisition of healthcare IT services firm Jawood in
1Q13 continued to boost Genpact’s TTM Americas revenue growth in
1Q14 as the company leverages cross-selling opportunities within its
expanded client base.
Cognizant: Cognizant continues to build onshore delivery resources in
the U.S. to drive Americas growth. Following the firm’s 4Q13
announcement of plans to hire 10,000 U.S. employees over the next
three years, Cognizant expanded its delivery center in Tampa, Fla., by
opening a new 500-seat facility in 1Q14.
TCS: TBR believes TCS’ recent onshore hiring efforts in the U.S. and
Canada to offset potential visa reform are generating higher-value,
longer-term signings opportunities, particularly in the BFSI and
healthcare verticals.
37 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Geographic Views: EMEA
TBR
EMEA revenue growth leaders make local acquisitions to inorganically
improve exposure to new clients and expand revenues in the region
Leaders
•
•
•
Actively shifting its revenue mix in Europe
on the heels of acquiring Europe-based
Logica provided CGI with a solid platform
to capture a lead position in growth and
revenue.
Like its India-centric peers, Cognizant
continues to target opportunities in
Europe, where clients are increasingly
open to outsourcing. Recent consulting
acquisitions position the firm well in
continental European countries such as
Germany and France, where language and
cultural customs have made onshore,
client-facing resources a prerequisite to
serving those regions.
WNS is benefiting from the South Africabased Fusion Outsourcing acquisition in
2Q12. The firm expands headcount in
South Africa to meet local market demand
and uses its locations in the country to
deliver global contracts. In the South
African market the firm is doing customer
service work, but identifies insurance as
an area of future opportunity.
38 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Geographic Views: EMEA
TBR
EMEA laggards invest in cloud, analytics and mobility offerings to capture
high-value deals that encompass C&SI and outsourcing components
Laggards
•
•
•
Atos experienced growth challenges in EMEA in
1Q14, but this performance is in line with Atos’
expectations, and the growth pressures will likely
remain in 2Q14. However, TBR expects Atos’
growth to gradually recover in 2H14. Atos’
investments in higher-value services with an
emphasis on cloud, security and vertical
specialization, largely in C&SI but also starting in
ITO, will help the firm ramp up revenue growth
through 2016.
TBR estimates CSC’s business in Europe was
down 9.8% year-to-year on a TTM basis in 1Q14
as overall demand remains soft. Early signs of
expansion of IT services spending in Europe
toward the end of 1Q14 indicate an improving
market for CSC’s operations in the region in
2H14.
Aon Hewitt’s U.K. pension consulting and
administration business supports marginal EMEA
growth, but demand remains weak in continental
Europe. We believe the acquisition of U.K.-based
consultancy Lorica Employee Benefits in March
enhances Aon Hewitt’s HR consulting portfolio
and removes a local competitor in one of the
firm’s key markets.
39 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Geographic Views: EMEA
TBR
Vendors in EMEA benefit from increasing client interest in outsourcing to
reduce costs and demand for IT modernization and cloud services
IBM GS: IBM GS drives revenue performance in Europe through largescale transformation and outsourcing deals as demand grows in the
region for cost reduction and transitioning to cloud and mobile IT
environments. The firm also seeks to diversify EMEA revenue over the
long term through “Project Lucy,” IBM’s 10-year, $100 million
innovation investment initiative in Africa.
Accenture: Demand for outsourcing services from budget-conscious
clients in central and northern Europe supported regional sales. The
firm won a five-year ADM services contract with insurance vendor
Tryg and a BPO services agreement with energy firm Statoil.
T-Systems: The firm transforms its portfolio to support digital
innovation, but offerings such as cloud are small in revenue share and
will not offset revenue declines in the firm’s core Information and
Communications Technology business.
CGI: The company’s TTM revenue growth in EMEA is a result of
integrating U.K.-based Logica, which enhanced the firm’s capabilities,
footprint and revenue in Europe. Demand for CGI’s SI and
modernization services remained healthy in 1Q14, leading TBR to
expect further expansion for the company in the region.
Cognizant: Cognizant continues to target opportunities in Europe,
where clients are opening up to outsourcing. Recent consulting
acquisitions position the firm well in Germany and France, where
language and cultural customs have made onshore, client-facing
resources a prerequisite to serving those regions.
Convergys: The acquisition of peer Stream Global in January
expanded the firm’s capabilities in Europe. Rising European
outsourcing spending and the Stream Global acquisition contributed
to the firm’s 25.1% year-to-year TTM revenue growth in 1Q14.
40 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Geographic Views: APAC
TBR
To compete with local APAC firms, vendors expand local market resources
through acquisitions and increase their global delivery staff
Leaders
•
•
•
Convergys accelerated its APAC revenue
growth to 27.6% in 1Q14 by leveraging an
aggressive M&A strategy, evidenced by its
acquisition of Datacom’s Philippines and
Malaysian operations in 2Q13 as well as its
purchase of Stream Global in 1Q14. We
believe Convergys will continue to expand
its headcount and operations in the region,
leading to further growth in 2Q14.
WNS made improvements to its sales team
structure by expanding the team across
geographies, including APAC, and verticals,
strengthening industry-specific expertise.
This structure better positions WNS to win
business in geographies where the firm
was previously underpenetrating the
market.
Capgemini’s emphasis on strengthening its
leadership outside Europe will help
diversify its global revenue. Salvador,
formerly the CEO of Sogeti, became head
of Capgemini in APAC and will group the
company’s operations in the region into
one unit to facilitate local market
expansion.
41 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Geographic Views: APAC
TBR
Slowing growth in China and reduced APAC public sector spending
negatively impact laggards
Laggards
•
•
•
Unisys’ growth in APAC was negatively
affected due to weakness in public
sector spend in the region, particularly in
Australia and New Zealand.
Ericsson will continue to suffer from
poor comparisons to 2Q13 due to
network completions in Japan and lower
spend on 2G in China. The scaling up of
LTE deployments in China offers
deployment and integration
opportunities for the vendor.
TBR sees an opportunity for SAP to
return to growth in CY14 by capitalizing
on newer partnerships, including its
work with China Telecom, to galvanize
revenue growth in high-opportunity
countries and regions such as China.
Weak demand in Japan resulted in SAP’s
APAC revenue contracting in the quarter.
42 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Geographic Views: APAC
TBR
Firms are investing in APAC delivery centers in Malaysia, Australia and
the Philippines to offer cost-competitive IT solutions
TOP THREE TTM APAC REVENUE
FUJITSU
1Q14
IBM GS
1Q14
$13,239
1Q13
$14,015
HP SVCS
TBR
1Q14
$18,673
1Q13
$20,927
$6,135
$6,491
1Q13
$0
$5,000
$10,000
SOURCE: TBR AND COMPANIES
WNS
$20,000
$25,000
TOP THREE TTM APAC REVENUE GROWTH
TBR
COGNIZANT CONVERGYS
$15,000
Revenue i n $ mi llions
1Q14
58.8%
1Q13
162.0%
1Q14
1Q13
27.6%
6.4%
1Q14
27.0%
1Q13
40.0%
0.0%
SOURCE: TBR AND COMPANIES
50.0%
100.0%
YTY Growth
150.0%
200.0%
Fujitsu: Outside of its core geography in Japan, Fujitsu uses its
virtualization and transformational data center services to win favor
in emerging economies. The company pursues business in Australia
and New Zealand in 2Q14 to diversify its existing APAC client base.
IBM GS: IBM will continue to invest in its service delivery capabilities
in APAC, evidenced by its new delivery center in Malaysia. IBM looks
to capture multiyear deals in growth markets that are centered on
cloud-centric IT modernization. Deals won in 1Q14 indicate traction
in India for run-the-business and change-the-business projects.
HP Services: The company expands in APAC, targeting Australia as a
strategic pivot point to serving the region. In April HP opened a
130,000-square-foot Security Operations Center in Sydney, which will
join HP’s U.S. and U.K. security centers. The investment in Australia
follows HP’s partnership with the state of South Australia in February
and helps support its desired growth in APAC.
WNS: WNS relies on its service delivery capabilities in the Philippines,
Sri Lanka and India to meet outsourcing demand from clients with an
APAC presence. WNS has invested in centers in special economic
zones in India, enabling the firm to improve its delivery capabilities.
Convergys: The firm is scaling its APAC operations through M&A,
evidenced by its acquisition of Datacom’s Malaysian and Philippines
operations as well as its purchase of Stream Global in 1Q14.
Convergys invests in APAC business to expand its presence in the
region and capture demand for customer management outsourcing.
Cognizant: Cognizant’s APAC revenue expansion was led by increasing
demand for large-scale outsourcing engagements supporting IT
modernization, including the firm’s recent application development
deal with Infocomm Development Authority of Singapore.
43 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
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Financial Metrics
TBR
Key Metrics (Revenue and Growth)
TBR
RANKING
COMPANY
IBM GS
HP SVCS
FUJITSU
ACCENTURE
TCS
CAPGEMINI
CSC
ERICSSON
XEROX
ATOS
T-SYSTEMS
CISCO SVCS
CGI
COGNIZANT
DELL SVCS
INFOSYS
WIPRO
CAPITA
BT SVCS
ORACLE SVCS
HCLT
EMC SVCS
AON HEWITT
SAP SVCS
UNISYS
CONVERGYS
GENPACT
CIBER
WNS
EXL
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$13,813
$7,834
$7,694
$7,131
$3,503
$3,429
$3,329
$3,149
$2,923
$2,828
$2,812
$2,725
$2,453
$2,422
$2,180
$2,092
$1,721
$1,708
$1,537
$1,417
$1,361
$1,066
$965
$868
$691
$606
$528
$218
$130
$122
1Q14 Avera ge = $2,775
1Q14 Sta ndard Deviation = $2,908
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
REVENUE (IN $ MILLIONS)
TBR SCORE
TOP 3 COMPANIES
8.75
6.72
6.68
6.49
5.26
5.23
5.20
5.14
5.06
5.03
5.02
4.99
4.90
4.89
N/A
4.78
4.65
4.65
4.59
4.55
4.53
4.43
4.39
4.36
4.30
4.27
4.25
4.14
4.11
4.11
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
44 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Key Metrics (Revenue and Growth)
TBR
RANKING
COMPANY
REVENUE GROWTH
-15%
CONVERGYS
COGNIZANT
TCS
HCLT
CAPITA
FUJITSU
WNS
WIPRO
INFOSYS
EMC SVCS
CGI
EXL
GENPACT
DELL SVCS
CISCO SVCS
ORACLE SVCS
AON HEWITT
ACCENTURE
CAPGEMINI
XEROX
CIBER
IBM GS
BT SVCS
ATOS
UNISYS
CSC
ERICSSON
HP SVCS
T-SYSTEMS
SAP SVCS
-10%
-5%
0%
5%
10%
15%
20%
25%
22.7%
19.9%
15.2%
14.3%
13.5%
9.6%
9.3%
9.0%
7.9%
7.8%
7.0%
5.0%
4.8%
3.5%
2.6%
1.2%
1.2%
1.0%
0.2%
0.1%
-0.7%
-2.0%
-2.1%
-2.5%
1Q14 Avera ge = 3.7%
1Q14 Standard Deviation = 8.0%
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
TBR SCORE
TOP 3 COMPANIES
5.88
5.73
5.48
5.43
5.39
5.18
5.16
5.15
5.09
5.09
5.04
4.93
4.93
N/A
4.80
4.73
4.73
4.72
4.68
4.67
4.63
4.56
4.56
4.53
4.43
4.40
4.40
4.32
4.25
4.23
-4.4%
-5.0%
-5.1%
-6.5%
-7.8%
-8.2%
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
45 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Cost Metrics
TBR
RANKING
COMPANY
CISCO SVCS
TCS
ORACLE SVCS
EMC SVCS
COGNIZANT
HCLT
GENPACT
EXL
AON HEWITT
CONVERGYS
WNS
INFOSYS
WIPRO
IBM GS
ATOS
ACCENTURE
CGI
DELL SVCS
BT SVCS
CAPITA
ERICSSON
CSC
XEROX
CIBER
FUJITSU
CAPGEMINI
T-SYSTEMS
HP SVCS
SAP SVCS
UNISYS
0%
10%
20%
30%
40%
50%
60%
70%
80%
65.4%
46.8%
44.3%
41.2%
40.9%
38.9%
38.6%
38.5%
38.4%
37.2%
37.1%
37.0%
36.4%
35.3%
35.0%
31.3%
30.0%
29.2%
29.1%
28.1%
28.1%
27.6%
26.7%
25.9%
25.6%
24.4%
24.2%
21.6%
1Q14 Avera ge = 33.1%
1Q14 Sta ndard Deviation = 10.0%
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
GROSS MARGIN
TBR SCORE
TOP 3 COMPANIES
8.40
6.45
6.18
5.85
5.82
5.61
5.58
5.57
5.57
5.44
5.42
5.41
5.35
5.24
5.20
4.81
4.67
N/A
4.57
4.48
4.47
4.42
4.33
4.25
4.21
4.08
4.07
3.79
3.21
3.02
16.1%
14.3%
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
46 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Cost Metrics
OPERATING EXPENSES AS A % OF SALES
TBR
RANKING
COMPANY
INFOSYS
WIPRO
UNISYS
ORACLE SVCS
SAP SVCS
DELL SVCS
HCLT
HP SVCS
FUJITSU
CAPGEMINI
TCS
ACCENTURE
XEROX
CGI
CSC
CAPITA
IBM GS
COGNIZANT
BT SVCS
CIBER
ERICSSON
T-SYSTEMS
GENPACT
WNS
CISCO SVCS
EXL
EMC SVCS
ATOS
AON HEWITT
CONVERGYS
0%
5%
10%
15%
20%
25%
11.5%
11.8%
12.4%
12.6%
13.4%
13.5%
14.2%
15.4%
16.5%
17.0%
17.7%
17.9%
18.1%
18.3%
18.7%
19.1%
30%
35%
40%
1Q14 Avera ge = 20.3%
1Q14 Sta ndard Deviation = 6.2%
1Q14
4Q13
Average
21.1%
21.9%
21.9%
22.7%
23.0%
24.3%
24.7%
24.9%
25.0%
25.8%
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
TBR SCORE
TOP 3 COMPANIES
6.50
6.44
6.34
6.31
6.16
N/A
6.02
5.82
5.62
5.54
5.42
5.37
5.35
5.31
5.23
5.18
4.83
4.69
4.69
4.54
4.49
4.26
4.20
4.16
4.14
4.01
3.24
3.20
3.01
2.64
30.2%
30.4%
31.5%
33.6%
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
47 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Productivity/Resource Metrics
TBR
REVENUE PER EMPLOYEE
TBR
RANKING
COMPANY
CISCO SVCS
EMC SVCS
BT SVCS
ORACLE SVCS
FUJITSU
SAP SVCS
T-SYSTEMS
ERICSSON
IBM GS
HP SVCS
DELL SVCS
CSC
ATOS
CGI
UNISYS
AON HEWITT
CIBER
CAPITA
XEROX
ACCENTURE
CAPGEMINI
HCLT
COGNIZANT
INFOSYS
TCS
WIPRO
GENPACT
CONVERGYS
EXL
WNS
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$860,367
$616,166
$565,155
$276,257
$265,993
$258,814
$238,886
$235,070
$217,413
$196,947
$187,022
$157,285
$149,893
$144,084
$141,311
$138,840
$132,290
$117,985
$112,372
$104,897
$104,312
$59,460
$54,807
$52,012
$46,995
$45,141
$34,657
$24,341
$22,153
$19,049
1Q14 Avera ge = $185,999
1Q14 Standard Deviation = $189,201
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
TBR SCORE
TOP 3 COMPANIES
8.57
7.28
7.01
5.48
5.42
5.38
5.28
5.26
5.16
5.05
N/A
4.84
4.81
4.77
4.76
4.75
4.71
4.64
4.61
4.57
4.56
4.33
4.30
4.29
4.26
4.25
4.19
4.14
4.13
4.11
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
48 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Productivity/Resource Metrics
TBR
RANKING
COMPANY
CISCO SVCS
EMC SVCS
ORACLE SVCS
IBM GS
DELL SVCS
BT SVCS
SAP SVCS
CGI
ERICSSON
FUJITSU
ACCENTURE
HCLT
TCS
HP SVCS
CSC
INFOSYS
AON HEWITT
XEROX
COGNIZANT
WIPRO
CAPITA
UNISYS
CAPGEMINI
ATOS
GENPACT
T-SYSTEMS
EXL
WNS
CONVERGYS
CIBER
OPERATING INCOME PER EMPLOYEE
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$358,456
$92,196
$81,345
$37,911
$30,037
$26,548
$25,839
$15,855
$15,839
$15,195
$15,194
$13,853
$13,656
$13,137
$12,815
$12,478
1Q14 Avera ge = $29,073
1Q14 Sta ndard Deviation = $65,546
1Q14
$11,399
4Q13
$10,763
Average
$10,505
$10,179
$9,503
$8,480
$7,811
$7,463
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
TBR SCORE
TOP 3 COMPANIES
10.00
6.00
5.83
5.15
N/A
4.98
4.97
4.81
4.81
4.80
4.80
4.78
4.78
4.77
4.76
4.76
4.74
4.73
4.73
4.72
4.71
4.70
4.69
4.68
4.65
4.62
4.61
4.59
4.59
4.57
$5,358
$3,466
$3,239
$1,871
$1,386
$418
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
49 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Productivity/Resource Metrics
TBR
RANKING
COMPANY
0%
10%
20%
30%
40%
50%
SAP SVCS
CIBER
DELL SVCS
HP SVCS
ACCENTURE
IBM GS
COGNIZANT
HCLT
TCS
T-SYSTEMS
XEROX
CAPGEMINI
ORACLE SVCS
CSC
EXL
INFOSYS
ERICSSON
CISCO SVCS
CGI
WIPRO
UNISYS
AON HEWITT
EMC SVCS
ATOS
FUJITSU
BT SVCS
GENPACT
CAPITA
CONVERGYS
WNS
60%
90%
80%
70%
100%
88.3%
87.5%
87.5%
87.5%
87.0%
87.0%
84.9%
84.2%
83.8%
82.2%
81.2%
81.0%
79.2%
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
UTILIZATION RATE
TBR SCORE
TOP 3 COMPANIES
6.76
6.62
N/A
6.61
6.53
6.53
6.14
6.02
5.94
5.65
5.47
5.43
5.11
5.07
5.03
4.89
4.81
4.78
4.67
4.61
4.27
4.25
4.16
4.01
4.00
3.98
3.98
3.94
3.92
3.34
79.0%
78.8%
78.0%
77.6%
77.4%
76.8%
76.5%
74.6%
74.5%
74.0%
73.2%
73.1%
73.0%
73.0%
72.8%
72.7%
69.5%
1Q14 Avera ge = 79.2%
1Q14 Standard Deviation = 5.6%
1Q14
4Q13
Average
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR. TBR estimates utilization rates or uses reported utilization rates by the vendors based on their own
definitions, which can vary across the vendors.
50 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Productivity/Resource Metrics
TBR
RANKING
TBR SCORE
TOP 3 COMPANIES
6.08
6.08
6.01
5.73
5.71
5.58
5.52
5.48
5.43
5.43
5.29
5.20
5.19
5.17
5.15
5.15
5.11
5.02
5.00
5.00
4.93
4.92
4.89
4.87
4.81
N/A
4.33
3.72
2.45
2.04
COMPANY
ATOS
CISCO SVCS
SAP SVCS
CIBER
TCS
ACCENTURE
CGI
CAPITA
BT SVCS
FUJITSU
ERICSSON
IBM GS
COGNIZANT
ORACLE SVCS
EMC SVCS
T-SYSTEMS
CONVERGYS
UNISYS
CAPGEMINI
XEROX
AON HEWITT
HCLT
WIPRO
HP SVCS
CSC
DELL SVCS
INFOSYS
GENPACT
EXL
WNS
0%
5%
10%
15%
20%
25%
30%
35%
9.3%
9.3%
9.7%
11.2%
11.3%
12.0%
12.3%
12.5%
12.8%
12.8%
13.6%
14.0%
1Q14 Avera ge = 15.1%
1Q14 Sta ndard Deviation = 4.8%
1Q14
4Q13
Average
14.1%
14.2%
14.3%
14.3%
14.5%
15.0%
15.1%
15.1%
15.5%
15.5%
15.7%
15.8%
16.1%
16.5%
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
TURNOVER RATE
18.7%
22.0%
28.8%
31.0%
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR. TBR estimates turnover rates or uses reported turnover rates by the vendors based on their own
definitions, which can vary across the vendors.
51 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Productivity/Resource Metrics
TBR
RANKING
TBR SCORE
TOP 3 COMPANIES
7.44
7.34
6.24
6.21
6.07
6.04
5.73
5.73
5.63
5.58
5.42
5.35
4.99
4.93
N/A
4.67
4.57
4.56
4.56
4.45
4.38
4.38
4.20
4.18
4.17
4.14
3.96
3.73
3.65
3.20
COMPANY
GENPACT
HP SVCS
INFOSYS
CAPITA
SAP SVCS
ORACLE SVCS
ACCENTURE
COGNIZANT
EXL
EMC SVCS
IBM GS
CSC
XEROX
AON HEWITT
DELL SVCS
BT SVCS
CONVERGYS
CGI
FUJITSU
ATOS
WNS
CAPGEMINI
ERICSSON
CIBER
UNISYS
WIPRO
HCLT
T-SYSTEMS
TCS
CISCO SVCS
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
3.90
3.83
3.02
3.00
2.90
2.88
2.65
2.65
2.58
2.54
2.43
2.38
2.11
2.07
1.88
1.88
1.81
1.80
1.80
1.72
1.67
1.67
1.54
1.52
1.52
1.49
1Q14 Avera ge = 2.12
1Q14 Sta ndard Deviation = 0.75
1Q14
4Q13
Average
1.36
1.20
1.13
0.81
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
52 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
SOURCE: TBR AND COMPANY DATA.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
BACKLOG/REVENUE
Financial Metrics
TBR
Productivity/Resource Metrics — Delivery
SERVICE VENDORS' ONSHORE AND OFFSHORE HEADCOUNT, 1Q14
TBR
60%
64.5%
300,000
50%
250,000
40%
200,000
8.8%
100,000
10.6%
50,000
9.8%
-2.7%
0.2%
6.0% 6.9%
7.8% -0.8%
11.1%
6.8%
0.6%
4.2%
-0.2%
-0.6%
-0.3%
-0.4%
-2.8%
-8.4%
0%
-3.0%
-10%
-13.8%
Onshore Headcount
Nearshore + Offshore Headcount
EMC SVCS
CIBER
SAP SVCS
UNISYS
CISCO SVCS
FUJITSU
CAPITA
BT SVCS
AON HEWITT
ORACLE SVCS
T-SYSTEMS
CGI
ERICSSON
ATOS
EXL
DELL SVCS
WNS
CSC
CONVERGYS
XEROX
GENPACT
-20%
HCLT
WIPRO
INFOSYS
IBM GS
COGNIZANT
ACCENTURE
TCS
-
20%
10%
2.7%
-0.5%
0.0% -1.8%
5.9%-3.4%
2.4%
CAPGEMINI
150,000
30%
33.0%
Services Headcount Growth
YTY
70%
HP SVCS
Total Services Headcount
350,000
Total Headcount YTY Growth
SOURCE: TBR AND COMPANY DATA
•
Convergys expanded its headcount 64.5% year-to-year in 1Q14 due to its acquisition of Stream Global, which added more
than 42,000 employees to its operations, and the acquisition of Datacom’s Malaysian and Philippines locations, which added
1,000 employees. TBR believes Convergys will continue to expand its headcount in 2Q14 as it scales its operations as part of
its ambition to become the leading customer management services provider globally.
•
Capita continued to add resources through inorganic investments. The firm has added roughly 1,000 people since January,
expanding its capabilities in fields such as IT security, residential mortgage services and legal services, and verticals such as
transportation. We expect Capita will continue to scout for strategic fit discounted opportunities throughout the U.K.,
further expanding its resource base. In addition, the firm will pursue organic investments to strengthen its capabilities in IT
managed services, as the recently launched CMITS entity announced plans to hire 400 professionals in Northern Ireland.
53 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
COMPANY
CISCO SVCS
ORACLE SVCS
TCS
INFOSYS
HCLT
WIPRO
COGNIZANT
DELL SVCS
IBM GS
GENPACT
ACCENTURE
EXL
WNS
CGI
EMC SVCS
FUJITSU
CAPITA
CSC
XEROX
CAPGEMINI
BT SVCS
AON HEWITT
HP SVCS
ERICSSON
ATOS
CONVERGYS
CIBER
SAP SVCS
UNISYS
T-SYSTEMS
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
40.3%
31.7%
29.1%
25.5%
24.6%
24.5%
19.0%
15.7%
14.3%
13.9%
13.3%
12.7%
12.2%
11.7%
11.0%
9.1%
9.1%
8.8%
8.6%
7.4%
7.2%
6.9%
6.2%
5.1%
4.6%
3.6%
3.2%
2.7%
1.9%
SOURCE: TBR AND COMPANY DATA.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
OPERATING MARGIN
TBR SCORE
TOP 3 COMPANIES
7.87
6.97
6.70
6.32
6.22
6.21
5.63
N/A
5.13
5.10
5.04
4.97
4.92
4.86
4.79
4.59
4.59
4.56
4.54
4.41
4.39
4.36
4.28
4.17
4.12
4.01
3.97
3.91
3.83
3.62
1Q14 Avera ge = 12.8%
1Q14 Standard Deviation = 9.8%
1Q14
4Q13
Average
-0.1%
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR.
54 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
TBR SCORE
TOP 3 COMPANIES
6.66
6.41
6.27
6.22
6.09
6.09
6.03
6.00
5.66
5.54
5.44
5.31
5.13
5.13
4.99
4.94
4.52
4.50
4.37
4.34
4.13
3.88
3.84
3.81
3.54
3.48
3.27
2.06
1.40
COMPANY
CISCO*
ORACLE*
CGI
WNS
ACCENTURE
IBM*
DEUTSCHE TELEKOM AG*
HP*
XEROX CORPORATE*
BT*
EXL
INFOSYS
FUJITSU LIMITED*
COGNIZANT
WIPRO
UNISYS
CSC
ATOS
CIBER
TCS
HCLT
CAPITA
GENPACT
AON HEWITT
CAPGEMINI
SAP*
EMC*
ERICSSON
CONVERGYS
0
20
40
60
34.64
39.40
42.00
80
100
120
1Q14
1Q14
Average
Standard Deviation
140
1Q14 Average = 69.5
69.53
69.53
42.83
45.29
45.36
46.42
47.09
53.29
55.60
57.44
1Q14 Avera ge = 69.5
1Q14 Standard Deviation = 24.3
1Q14
4Q13
Average
59.97
63.26
63.30
65.95
66.75
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
DAYS SALES OUTSTANDING
74.59
75.11
77.49
77.98
81.98
86.66
87.45
87.95
93.02
94.14
97.93
120.57
132.99
*Indicates metrics for corporate parents.
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR and the firm is removed from the Operations/Investment Metrics graphs.
55 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
COMPANY
INFOSYS
COGNIZANT
EXL
TCS
CISCO*
ORACLE*
GENPACT
WIPRO
HCLT
ERICSSON
CIBER
CSC
CONVERGYS
EMC*
ACCENTURE
UNISYS
CAPGEMINI
WNS
XEROX CORPORATE*
FUJITSU LIMITED*
ATOS
IBM*
HP*
AON HEWITT
DEUTSCHE TELEKOM AG*
CAPITA
SAP*
CGI
BT*
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1Q14
1Q14
4.0
Average
Standard Deviation
4.5
5.0
4.71
4.19
4.09
3.88
3.47
3.39
3.06
2.60
2.35
2.10
1.83
1.63
1.61
1.52
1.46
1.44
1.40
1.37
1.28
1.28
1.19
1.17
1.15
1.04
0.95
0.91
0.83
0.80
0.74
1Q14 Avera ge = 2.0
1Q14 Sta ndard Deviation = 1.2
1Q14
4Q13
Average
*Indicates metrics for corporate parents.
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR and the firm is removed from the Operations/Investment Metrics graphs.
56 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
CURRENT RATIO
TBR SCORE
TOP 3 COMPANIES
7.51
7.04
6.96
6.76
6.39
6.32
6.02
5.60
5.38
5.15
4.90
4.72
4.70
4.62
4.57
4.55
4.52
4.49
4.41
4.40
4.32
4.30
4.29
4.19
4.10
4.07
3.99
3.97
3.92
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
COMPANY
INFOSYS
EXL
TCS
COGNIZANT
WIPRO
CIBER
HCLT
WNS
SAP*
CISCO*
EMC*
ERICSSON
GENPACT
ORACLE*
CONVERGYS
CAPGEMINI
XEROX CORPORATE*
ATOS
CGI
ACCENTURE
CSC
DEUTSCHE TELEKOM AG*
HP*
AON HEWITT
CAPITA
FUJITSU LIMITED*
IBM*
BT*
UNISYS
DEBT/ASSET RATIO
0.0
0.2
0.4
0.6
0.8
0.17
1.0
1Q14
1Q14
0.17
1.2
1.4
Average
Standard Deviation
0.19
0.20
0.32
0.33
0.36
0.40
0.43
0.45
0.46
1Q14 Avera ge = 0.55
1Q14 Standard Deviation = 0.26
0.47
0.47
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
TBR SCORE
TOP 3 COMPANIES
6.41
6.38
6.34
6.29
5.88
5.84
5.75
5.60
5.47
5.41
5.40
5.36
5.34
5.32
5.11
5.03
5.03
4.92
4.91
4.73
4.70
4.47
4.45
4.42
4.17
4.14
3.97
3.40
2.52
1Q14
4Q13
Average
0.48
0.54
0.56
0.56
0.59
0.59
0.65
0.65
0.72
0.73
0.73
0.81
0.81
0.86
1.02
1.27
*Indicates metrics for corporate parents.
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR and the firm is removed from the Operations/Investment Metrics graphs.
57 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
TBR SCORE
TOP 3 COMPANIES
7.85
6.78
6.49
6.16
6.10
5.98
5.61
5.61
5.43
5.32
5.04
4.98
4.95
4.93
4.76
4.70
4.60
4.59
4.54
4.52
4.51
4.48
4.44
4.43
4.43
4.35
4.18
4.14
3.66
COMPANY
TCS
HCLT
INFOSYS
ACCENTURE
COGNIZANT
WIPRO
ORACLE*
IBM*
SAP*
EXL
GENPACT
BT*
WNS
CISCO*
CGI
CSC
HP*
EMC*
ERICSSON
CAPGEMINI
CONVERGYS
ATOS
CAPITA
AON HEWITT
XEROX CORPORATE*
UNISYS
DEUTSCHE TELEKOM AG*
FUJITSU LIMITED*
CIBER
-5%
0%
5%
10%
15%
20%
1Q14
1Q14
25%
30%
Average
20.2%
35%
31.0%
22.5%
Standard Deviation
17.6%
17.1%
16.2%
13.2%
13.2%
11.9%
10.9%
8.7%
8.3%
8.0%
7.9%
6.5%
6.1%
5.2%
5.2%
4.8%
4.6%
4.5%
4.3%
4.0%
3.9%
3.9%
3.3%
1.9%
1.6%
1Q14 Avera ge = 9.1%
1Q14 Sta ndard Deviation = 7.3%
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
RETURN ON ASSETS
-2.2%
*Indicates metrics for corporate parents.
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR and the firm is removed from the Operations/Investment Metrics graphs.
58 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Financial Metrics
TBR
Operations/Investment Metrics
TBR
RANKING
COMPANY
-150%
-600%
IBM*
ACCENTURE
TCS
HCLT
ORACLE*
WIPRO
INFOSYS
COGNIZANT
SAP*
HP*
CAPITA
CSC
GENPACT
CGI
AON HEWITT
WNS
CISCO*
EXL
CAPGEMINI
ATOS
XEROX CORPORATE*
EMC*
ERICSSON
CONVERGYS
DEUTSCHE TELEKOM AG*
FUJITSU LIMITED*
CIBER
UNISYS
BT*
-100%
-500%
-50%
0%
1Q14
1Q14
50%
Average
Standard Deviation 51.2%
100%
81.7%
39.5%
35.8%
25.0%
24.3%
24.2%
22.3%
21.7%
20.1%
19.8%
19.5%
18.2%
17.7%
15.1%
14.2%
13.7%
13.5%
10.6%
10.2%
9.5%
9.4%
9.3%
7.3%
6.9%
5.9%
1Q14 Avera ge = 2.3%
1Q14 Sta ndard Deviation = 26.3%
1Q14
4Q13
Average
SOURCE: TBR AND COMPANY DATA
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
RETURN ON EQUITY
TBR SCORE
TOP 3 COMPANIES
5.39
5.27
5.23
5.21
5.17
5.17
5.17
5.16
5.16
5.15
5.15
5.15
5.15
5.14
5.13
5.13
5.13
5.13
5.12
5.11
5.11
5.11
5.11
5.10
5.10
5.10
5.06
5.05
3.25
-3.5%
-6.5%
-470.8%
*Indicates metrics for corporate parents.
Note: Metrics for Dell Services are TBR estimates due to Dell's move to a private organization. As a result, Dell's performance
is not scored by TBR and the firm is removed from the Operations/Investment Metrics graphs.
59 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Appendix: IT Services Segment Definitions
IT Services Definitions
TBR
Category
TBR
TBR Definition
Consulting and Systems Integration (C&SI)
Business Consulting
Advisory services such as strategy consulting, M&A, process improvements, change
management, capacity planning, ops assessments, etc.
IT Consulting
Advisory services around information technology, applications portfolio optimization,
package (SAP, Oracle) consulting and IT governance consulting, systems engineering
and technical assistance, digital, mobile, analytics and cloud
Systems Integration
Processes that include planning, design, implementation and project management of
a solution; these may involve development of systems and custom apps, as well as
integration of enterprise packaged software (SAP, Oracle, Siebel, etc.)
Outsourcing
Business Process
Outsourcing (BPO)
BPO involves the transfer of management and execution of one or more complete
business processes or entire business functions to an external service provider. This
can be further segmented into HR, F&A, SCM, CRM, etc.
Information Technology
Outsourcing (ITO)
Server, network, desktop outsourcing (either on-site or remote), cloud computing,
infrastructure management, security, compliance and continuity; this can be further
segmented into server and data center, network, desktop, disaster recovery, hosting,
etc.
Applications Outsourcing
(AO)
AO includes support and maintenance of enterprise applications.
60 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
Appendix: IT Services Vendor Benchmark Coverage
TBR
Vendor Coverage in the 1Q14 IT Services Vendor Benchmark
Accenture
Dell Services
TCS
Aon Hewitt
EMC Services
T-Systems
Atos
Ericsson
Unisys
BT Services
EXL
Wipro
Capgemini
Fujitsu
WNS
Capita
Genpact
Xerox
CGI
HCLT
Ciber
HP Services
Cisco Services
IBM GS
Cognizant
Infosys
Convergys
Oracle Services
CSC
SAP Services
61 1Q14 IT Services Vendor Benchmark | Professional Services Business Quarterly
©2014 Technology Business Research, Inc.
TBR Quarterly and Semiannual Industry Coverage
Networking &
Mobility
Computing, Storage & Devices
Software
Professional IT Services
12 Vendors Covered
Acer*
HP
Apple
IBM
Asus*
Intel
Dell
Lenovo
EMC
NetApp
Fujitsu
Samsung*
11 Vendors
Covered
CA Technologies
Dell Software*
HP Software
IBM Software
Microsoft
Oracle
Red Hat
SAP AG
SAS Institute*
Symantec
VMware
23 Vendors Covered
Accenture
Wipro IT Services
Atos
Xerox
Bain & Co.*
Booz & Co.*
Public Sector IT
Services
Boston Consulting
Group*
10 Vendors Covered
Capgemini
Booz Allen Hamilton*
CGI*
CACI International*
Cisco Services
General Dynamics
Cognizant
IS&T*
CSC
L-3 Communications*
Dell Services
Leidos*
Deloitte
Lockheed Martin
Consulting*
IS&GS*
Fujitsu
ManTech*
HCL Technologies
Northrop Grumman
HP Services
IS&TS*
IBM Global
Raytheon Intelligence,
Services
Information &
Services*
Infosys
SAIC*
McKinsey & Co.*
PwC*
Healthcare IT
T-Systems
Services
Tata Consultancy
Services
5 Vendors Covered
Unisys
Accenture HITS*
Corporate IT Buying Behavior
& Satisfaction Studies
Apple Enterprise
PCs*
Cisco UCS*
Desktops
Notebooks
Services & Support
x86-based Servers
Cloud
23 Vendors Covered
Accenture Cloud*
Amazon Web Services
Atos Cloud*
Capgemini Cloud*
Cognizant Cloud*
CSC Cloud*
Dell Cloud*
Deloitte Cloud*
Fujitsu Cloud*
Google Cloud*
HP Cloud*
IBM Cloud*
www.tbri.com
Infosys Cloud*
Microsoft Cloud*
Oracle Cloud*
Rackspace*
Salesforce.com
SAP Cloud*
ServiceNow*
TCS Cloud*
Verizon Cloud*
Wipro Cloud*
Workday
CSC HITS*
Dell HITS*
HP HITS*
IBM HITS*
*Semiannual publication
TBR
12 Vendors Covered
Alcatel-Lucent
Cisco Systems
Ericsson
Google
Hewlett-Packard Telecom & Mobility*
Huawei*
IBM Telecom & Mobility*
Juniper Networks
Microsoft Telecom & Internet*
Nokia Networks
Samsung Networks*
ZTE*
5 Enterprise Operators Covered
AT&T Business Solutions*
BT Global Services*
Orange Business Services*
Verizon Enterprise Solutions*
Vodafone Enterprise Services*
6 Operators Covered
AT&T
T-Mobile USA
Comcast*
Time Warner Cable*
Sprint
Verizon
SourceIT
SourceIT Business Applications
4 Segment Views Covered
SourceIT Consulting and Systems
Integration for Business Applications
4 Segment Views Covered
©2014 Technology Business Research, Inc.
TBR Quarterly and Semiannual Industry Benchmark Coverage
Computing, Storage
& Devices
Computing Devices Benchmark
— Benchmark XLS Data
19 Vendors Covered
Data Center Benchmark
— Benchmark XLS Data
17 Vendors Covered
Data Center Addressable Market Forecast
— XLS Data
Devices Addressable Market Forecast
— XLS Data
Cloud
Professional IT Services
IT Services Vendor Benchmark
— Benchmark XLS Data
30 Vendors Covered
Public Sector IT Services Benchmark
— Benchmark XLS Data
21 Vendors Covered
Healthcare IT Services Benchmark
— Benchmark XLS Data
18 Vendors Covered
Management Consulting Benchmark*
— Benchmark XLS Data
16 Vendors Covered
Carrier Cloud Benchmark*
— Benchmark XLS Data
Global Delivery Benchmark*
— Benchmark XLS Data
14 Vendors Covered
Cloud Benchmark
— Benchmark XLS Data
50 Vendors Covered
Business Intelligence Services Vendor Benchmark*
— Benchmark XLS Data
Managed Private & Professional Services
Cloud Benchmark*
— Benchmark XLS Data
29 Vendors Covered
IT Services Addressable Market Forecast
— XLS Data
Cloud Components Benchmark*
— Benchmark XLS Data
11 Vendors Covered
Cloud Addressable Market Forecast
— XLS Data
Customer Research Program
Business Intelligence Software Customer Research*
Business Intelligence Services Customer Research*
Private Cloud Customer Research*
Hybrid Cloud Customer Research*
Professional Services Cloud Customer Research*
www.tbri.com
Software
Software Vendor Benchmark
— Benchmark XLS Data
30 Vendors Covered
Business Intelligence Software Vendor
Benchmark*
— Benchmark XLS Data
31 Vendors Covered
Business Intelligence Addressable
Market Forecast
— XLS Data
*Semiannual publication
Networking & Mobility
TBR
Telecom Vendor
Telecom Vendor Benchmark
— Benchmark XLS Data
11 Vendors Covered
Telecom Infrastructure Services Benchmark
— Benchmark XLS Data
39 Vendors Covered
Expanded Telecom Infrastructure Services Benchmark
— Benchmark XLS Data
39 Vendors Covered
Telecom Infrastructure Services Margin Benchmark
— Benchmark XLS Data
5 Vendors Covered
Telecom Infrastructure Services Global Addressable
Market Forecast
— XLS Data
Telecom Infrastructure Services North America
Addressable Market Forecast
— XLS Data
Enterprise Networking
Enterprise Network Vendor Benchmark*
— Benchmark XLS Data
15 Vendors Covered
Enterprise Networking Addressable Market Forecast
— XLS Data
Network Infrastructure Services Addressable Market
Forecast
— XLS Data
Network Infrastructure Services Benchmark
— Benchmark XLS Data
13 Vendors Covered
Operator
U.S. & Canada Mobile Operator Benchmark
— Benchmark XLS Data
10 Vendors Covered
©2014 Technology Business Research, Inc.
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Contact Us
Technology Business Research, Inc. is a leading independent technology
market research and consulting firm specializing in the business and financial
analyses of hardware, software, professional services, telecom and
enterprise network vendors, and operators.
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[email protected]
www.tbri.com
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Hampton, NH 03842
USA
Serving a global clientele, TBR provides timely and actionable market
research and business intelligence in formats that are tailored to clients’
needs. Our analysts are available to further address client-specific issues or
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