Information Services Group, Inc. (III) Earnings Call Transcript & Summary

Good day, and welcome to the Fourth Quarter 2020 Global ISG Index. This call is being recorded. At this time, I'd like to turn the presentation over to the Index host this quarter, Bryan Bergin, Managing Director of Cowen and Company. Please go ahead, sir.

All right. Thank you, operator. I hope ever anyone is well. Happy New Year. I'm Bryan Bergin, Cowen's IT, business services and HCM analyst, and I'm very pleased to be hosting the ISG Index call this quarter. ISG's role as a top adviser and influencer in global sourcing offers a unique view on the state of the outsourcing and as-a-service markets. This is the 73rd quarterly call. The company has been hosting Index for over 18 years and it evolves with the industry. Its position between enterprise buyers and solution provider contracting enables it to key in on leading trends and it often provides independent insight ahead of the quarterly earnings season. The format of the call will be a presentation of 4Q contracting data and key trends into 2021 by the ISG team for around 35 minutes, and then we'll open the call for Q&A. I'll now pass it over to Kathy Rudy, Chief Data and Analytics Officer for ISG, to intro the team. Kathy?

Thank you, Bryan. And welcome, everyone, to the ISG's Global Index Conference Call. As Bryan said, I'm Kathy Rudy. With me today is Steve Hall, Partner and Global Leader for the ISG Index; Owen Wheatley, ISG's Lead Partner for Banking and Financial Services; and Stanton Jones, Research Director and Principal Analyst. This is our 73rd quarterly Index call and what a year the world's providers and buyers adapted and deals closed. Here at ISG, we took the opportunity and adapted as well. You will notice, we've made several changes to the way we present the data. Our presentation will be graphics-focused and less wordy, allowing us to pick up the pace in some areas and give us time to highlight the most important information. In our call today, Owen will share what he expects we'll see in the banking and financial services. Stanton will share his insights on the impact of the pandemic and what's to come in 2021. And we'll tell you how to sign up for our new quarterly ISG -- I'm sorry, our new weekly ISG briefings. Now Steve will give us the headlines.

So let's start off right away with some great news. The global combined market closed out the year with its best quarter ever. I don't think any of us saw that coming at the beginning of the year. Q4 ACV rose to $16 billion, up 13% on a year-over-year basis. Managed services ACV of $7.2 billion was up 3% from the same period in 2019, really bolstered by several mega deals signed in the last few weeks of the quarter. So as Kathy noted, the deal flow continued to be strong, though the number of large deals for the quarter was flat. On a full year basis, we saw a 40% decline in the number of mega deals, which is directly related to the pandemic. Again, despite the great news with the vaccines, optimism and spend in Q4 was suppressed as many economies dealt with more lockdowns because of the record number of infections, hospitalizations and, unfortunately, deaths still. Our clients continue to work from home and are managing ongoing supply chain disruptions and spending caps, which continue to impact the overall combined market. On a full year basis, the managed services ACV was over $26.6 billion, so down 4% on a year-over-year basis. The as-a-service market propelled by hyperscalers grew 24% in Q4. In the Americas, the 4Q '20 combined market of $7.2 billion came in 4% higher year-over-year. Credit really goes to the strength of the as-a-service market. The managed service market was down 17% on a year-over-year basis and ended the year down 4.4%. The deal flow in Americas remained healthy but there were delays in large signings in the America, which was the primary culprit for the year-over-year decline. EMEA's combined market of $6.2 billion of ACV was up 18% year-over-year. Both managed services and as-a-service grew by double digits in EMEA and 5 mega deals resulted in a record high for both segments. The combined market ACV of $2.6 billion in Asia Pacific increased 35% year-over-year. Managed services had its strongest quarter of the year rising 55%, as-a-service came in 30% higher year-over-year, and Software-as-a-Service and Infrastructure-as-a-Service both showed double-digit gains. On a full year basis, though, Asia Pacific managed services business was down almost 27% as the market continued to adopt as-a-service technologies. The global combined market started and finished the year strong with ACV above $15 billion in both the first and fourth quarters. Its full year performance rose 6.6% despite the impact of the pandemic in quarters 2 and 3. Managed services, which, as we know, includes traditional ITO and BPO outsourcing services, had a good start and end to the year. The fourth quarter ACV edged up slightly from a year ago. Again, activity was robust and the number of mega deals held steady, so they were all in Europe this quarter. The annual contract value of those mega deals was also the best since first quarter of '17. So we did see some good activity there, though the lack of mega deals across the rest of the globe and in Q2 and Q3 really impacted the overall year leading to a 4% drop in ACV compared to 2019. This aligned well to our forecast if we would have normalized for the mega deals that we didn't expect to be signed in Q4. The as-a-service ACV grew by double digits, both quarter-over-quarter and year-over-year. Infrastructure-as-a-service generated its best quarter ever. Software-as-a-Service ACV also amassed its Q1 record. And after initial hit from the pandemic, the as-a-service ACV accelerated as year went on. Its full year ACV showed a 17% increase over the prior year. And as-a-service now comprises 56% of the combined market ACV. The full year ACV by function shows that IPO increased only slightly over the prior year, but still set a record high, beating its previous high from 2018. The sector had robust activity but the deals were smaller. Deal volume was up almost 10% on a year-over-year basis and up 8% on the 5-year average. The growth was led by applications outsourcing and refactoring with a number of ADM deals up 8% on a full year basis and the ACV of 2%. Infrastructure-only deal volume, though, was down 5%, and the infrastructure-only ACV was down over 20%. This really highlights the continued shift from traditional data center outsourcing to the hyperscalers. The pandemic negatively impacted the wide domain of BPO services, particularly in the facilities management and contact center space. The BPO market had almost $6.4 billion of ACV signings in 2020, which was down almost 23%. The highlight, though, is over $1.5 billion of that dropped ACV was in the facilities management space, which was just ravaged by the pandemic. Finance and accounting and HR were significantly up for the year and were up compared to the 5-year averages. What we believe is SaaS and analytics solutions are providing a needed boost to the traditional BPO sector providers as organizations sit on mountains of data that could help them with planning, forecasting, particularly in some of the supply chain disruptions. The full year ACV of Infrastructure-as-a-Service again displayed double-digit growth of almost 23% for the year. Enterprises across the industry continue to rely on hyperscalers for elastic compute, variable pricing models and access to a host of new services, such as analytics and automation to accelerate technology adoption. Globally, the Software-as-a-Service ACV grew by less than 4% in 2020. Decisions were delayed on multiple SaaS deals, and there was a decline in larger SaaS deals in the markets. Firms delayed making decisions on scope and scale and held off on larger projects until the pandemic is abated. We noticed some co-innovation, though, with major SaaS providers, and this was really demonstrated by SAP's recent agreement with Siemens, Honeywell and Bosch. Now let's take a look at the global provider leaderboard. The retail leaderboards can be found at the end of the deck or downloaded from ISG's website. Revenue is based on awards made during the trailing 12 months and companies new to the list are denoted by an asterisk. The Big 15 list encompasses many large multinational corporations and typically has very little turnover. This quarter, several were busy signing major deals. Let's start. Infosys remained on the Big 15 list, led by multiple large signings, including a contract for engineering and R&D work with Rolls-Royce's Civil Aerospace business. TCS closed the deal with Kingfisher, a U.K.-based home improvement business under the BQ brand for application maintenance and infrastructure support. And as you can imagine, the service providers remained active in the acquisition market. Accenture made 8 acquisitions, TCS acquired Postbank and Prudential's IT operations, and Salesforce acquired Slack for over $27 billion, one of the largest buys in the software industry, and this was really surpassed only by Microsoft's acquisition of LinkedIn in 2017 and IBM's acquisition of Red Hat in 2019. So the Salesforce acquisition was a really big deal to the market. The Building 15 focuses on firms with revenue between $3 billion and $10 billion. Nearly 1/3 of these firms turned over in The Building 15 this quarter. Wipro signed a mega deal with Olympus and the Finnish energy company Fortum and acquired digital design firm Eximius Design. Tech Mahindra formed a joint venture agreement with Sumitomo in Japan for engineering services in the automotive sector, and Workday had a huge management -- had a big human capital management wins at NOVARTIS and Draft Kings and financial management wins with Fifth Third Bank and The New York Times. With revenues between $1 billion and $3 billion, The Breakthrough 15 has an equal mix of managed services and as-a-service firms. This quarter, 20% of the names turned over. Successes included Mindtree, which signed a 5-year contract with the Nordics group to modernize the wind turbine makers IP landscape and EPAM Systems agreed to revamp the Bacardi's digital marketing technology. Among the as-a-service firms, Autodesk closed several large transactions, including with Morgan Sindall, a construction company in the U.K., and Daiwa House, a Japanese homebuilder. Rackspace also won a notable deal with Teva Pharmaceuticals. The Booming 15 had less turnover than usual this quarter. Only 3 names are new, including Globant, which won a strategic mobile development project with the Gap and into deal with SoFi to integrate technology into one of its new acquisitions. L&T technology Services closed the deal with Tenneco and were selected by similar elevator companies to provide digital engineering services. Among the as-a-service companies, Zoom Video continued its expansion into the enterprise space with wins at Peloton and Rakuten in Japan. And next up, let's do an overview of the regions, and we'll start with Kathy on the Americas.

Thanks, Steve. Overall, the Americas combined market held up well, though it was not immune to the political turmoil in the U.S. The fourth quarter combined market ACV fell 11% in the quarter, but was up 4% from the prior year. Full year ACV came in nearly 8% higher than 2019. Managed services had its lightest quarter in years. Its ACV plummeted 31% from Q3 '20 and 17% from a year ago. The large deals we saw last quarter were largely absent this quarter. ACV for the full year dropped 4% from 2019, even though the number of deals increased about 4%. As-a-service ACV continued to rise. In this quarter, Infrastructure-as-a-Service drove the growth. On a year-on-year comparison, Infrastructure-as-a-Service shot up 30%. Software-as-a-service accelerated, too, but at a slower pace of 4% both quarter-on-quarter and year-on-year. For the full year, ACV climbed 18% from 2019. As-a-service now accounts for nearly 60% of the combined market ACV. Here, we see the full year performance of the tech sector broken out by function. And the ACV for ITO dropped 8% from last quarter, in large part because its fourth quarter was the lightest quarter since 2016. A number of deals increased, but contract size shrunk. Notable deals included Accenture working to accelerate digital supply chain transformation and a multiyear agreement between Verizon business and Walgreen Foods to deploy a Network-as-a-Service platform at its drug store throughout the U.S. BPO's full year ACV jumped 7% in the Americas, the only region where it showed a gain. This despite contract centers and facilities management falling markedly. F&A and R&D engineering hit record highs and included L&T Technology Services winning a multiyear, $100 million contract in the oil and gas sector to the engineering partner for a refinery and chemical plant in the U.S. Infrastructure-as-a-Service ACV for the full year spiked nearly 25% over 2019. AWS is making strong inroads in media and entertainment as highlighted by the recent wins with MGM and Viacom. PepsiCo migrated its mission-critical SAP workloads to Azure, and Tapestry migrated its SAP S/4HANA solution to Google Cloud. The annual number of Software-as-a-Service ACV was 7.5% this year, the annual growth. Some key deals pushed up the bar. ServiceNow contracted with Dell for the Now platform. SAP closed deals with HP and Juniper. Salesforce inked agreements with NBC Universal, and Oracle signed a contract with Equinix to implement Oracle Fusion Cloud. Asia Pacific, the smallest region, showed its typical volatility. Combined market ACV this quarter showed 30% over the prior quarter and even higher compared to the fourth quarter of 2019. But for the full year, its growth was more tempered, rising a modest 2%. Managed services ACV ended this year strong with a fourth quarter 90% higher than the prior quarter and up 55% from a year ago. Australia and New Zealand had its best quarter in 2 years as did the BFSI industry. However, the full year ACV revealed a change of fortune, plunging nearly 27% from last year. For the first time since 2001, Asia Pacific had no mega deals in the entire year. As-a-service ACV continues to take up even greater portion of the combined market and is now 77% of the total market, far and away, the highest percentage in any of the 3 regions. Its fourth quarter ACV rebounded to a record high, nearly reaching $2 billion for the first time. Infrastructure-as-a-Service drove the success with a new record and Software-as-a-Service followed close behind. For the full year, as-a-service ACV increased 15.6% over last year. This chart shows ACV by function. ITO took a dive from last year hitting -- took a 26% dive from last year, hitting a low not seen since 2016. Both infrastructure and ADM had double-digit declines and suffered from a lack of large deals. A bright spot medium was the 9-year contract side by Hindustan Aeronautics and Tech Mahindra for the ERP implementation and TCS working to modernize the application of state of AGL Energy. DBS secured a 7-year deal with IBM to simplify its IT infrastructure. And Tech Mahindra contracted to provide managed IT, security and network services to Rakuten Mobile. The much smaller BPO sector took a 30% ACV, most of the activity came from industry-specific awards. Infrastructure-as-a-Service surged 19%. Public cloud providers extended their reach into select markets to increase share. AWS announced plans to open a second infrastructure cloud region in India. Organizations moving workloads to AWS include RBL Bank, Axis Bank and the Mahindra Electric Mobility. Software-as-a-service ACV for the full year dipped slightly. Now I'm going to turn it back over to Steve and he's going to talk about EMEA.

Great, thanks, and buckle up for more record-breaking components. The EMEA's combined market had its best quarter ever, breaking through the $6 billion ACV ceiling for the very first time. ACV was up 35% growth over the prior quarter, an 18% increase from a year ago. This was really led by 5 mega deals previously discussed, and we did not anticipate this level of ACV on an ongoing basis. In the full year, though, ACV came in nearly 7% higher than 2019. Managed services ACV of $4 billion per quarter is the first in 5 years and recorded double-digit gains for the second consecutive quarter. All 5 of the managed services mega deals awarded globally came from EMEA. Mega deals in manufacturing led the way with large deals announced with Siemens and Daimler. The surge of mega deals also led to DACH's best quarterly ACV in the history of the index. In the full year comparison, managed services edged up only 2%, but a really respectable gain given how COVID impacted the middle quarters. After the midyear slump we discussed, the as-a-service bounced back with a record-breaking quarter. Infrastructure-as-a-Service reached a new high. Software-as-a-Service rose 14% quarter-over-quarter but was down 3% for the year. Overall, the as-a-service showed 15% growth from last year, and this is twice the growth percentage posted in 2019. As-a-service now makes up 41% of the combined market ACV in [Audio Gap] spiked 21% over last year. Several large deals closed at the end of the year. Infosys won an 8-year mega deal with Daimler for an infrastructure overhaul. Wipro had still a mega deal with German wholesaler, Metro AG, to launch a digital innovation hub in Düsseldorf, which will also use to support other clients in the region. The BPO market fell markedly down 50% against the tough 2019 compare. And as in the other regions, facility management and contact centers were down significantly. Infrastructure-as-a-service rose 20% with really vigorous activity. And as we discussed earlier, EMEA is a battleground really for the G 2000, and providers are signing multiple-year deals. Nokia secured a 5-year deal with Google to replace IP infrastructure contact centers with Google Cloud, AWS inked a 5-year agreement with Standard Chartered Bank, and Microsoft Azure signed a 7-year cloud services deal with Deutsche Telekom. The only sector really to pull back in ACV was Software-as-a-Service, which dipped 3%. Even so, many of the SaaS providers are winning sizable deals, such as SAP's contract with Rabobank for S/4HANA deal, Oracle closed the deal at Aegon for Fusion Cloud ERP, and Salesforce signed agreement with Bentley Motors in the U.K. This year demonstrated that firms that had started their digital transformation before the pandemic weathered COVID better than those that didn't. We've also seen the resiliency of clients in adopting new business models. This line of arrow is pointing up on the as-a-service road past to the widespread enthusiasm for incorporating technology. Oil and gas, air transportation and hotel industries that have been hardest hit by negative demand shocks that likely will remain in place for the foreseeable future have turned to managed services to leverage cost takeout and enable business continuity. Today, we're going to take a closer look at manufacturing and then health care and pharma industries that have been the front lines of the demand changes. Manufacturing's combined market ACV had a record year. In our last call, you may recall that Dave Lewis talked about some of the trends in that vertical. And as a result of several large transactions, such as Daimler and Siemens deals in the fourth quarter, manufacturing added more than $10 billion in awards this year, a 22% increase over last year. Manufacturing enterprises have responded to the pressure of the pandemic by accelerating their digital transformation and focusing on repurposed and more flexible supply chain management, digital manufacturing and capabilities to work remotely. Tech spend in automotive has also picked up with electric vehicle platforms and component EV charging and infotainment and autonomous driving technologies. I think we'll see a lot of that rollout at CES this week, and we'll certainly hear more about infotainment and the EV changes. Healthcare is another industry undergoing massive change. This sector covers everything from pharmaceuticals and biotech firms to healthcare providers and payers. The life sciences industry received significant monetary investments this year to develop vaccines and treatments for COVID. The healthcare providers suffered the pain of a cutback in elective procedures. That in turn led to a retrenchment and furloughs in the payer segment. 2020 marks the first year that over half of the ACV awarded in this vertical was in the as-a-service space and that segment rose 18% over 2019. Today, Owen Wheatley joins us to really discuss the trends and predictions in banking and financial services. But let me give a few metrics just to set the stage. So first, the BFSI combined market generated nearly $12 billion in ACV awards, an all-time high for this vertical. The full year ACV was up almost 4% from 2019. The Americas combined market was up 20% based on a number of key factors to include a heavier mix of investment banks in the U.S., which due to a more diversified set of income sources was not as badly affected by the virus as retail banks and, therefore, could press on with third-party contracting and digital transformation. The total as-a-service market in BFSI was up over 22% in 2020. SaaS and IaaS were up double digits in all geographies with Infrastructure-as-a-Service up 25% globally. So let's turn it over to Owen and hear about the key trends.

So let's begin by reflecting on an extraordinarily volatile and chaotic last 12 months, which has, in many cases, been an existential threat to business survival. There's no doubt that 2020 was an unprecedented challenge for most financial institutions in terms of revenue, profit and stock price. The crisis caused panic across the market. For example, Wells Fargo, Citi Group and Comerica Stock all fell by around 60% during the worst of the pandemic. Despite these stocks making partial recovery since, there's still a lot of ground to be made up. Indeed, Wells Fargo's stock remains 45% below its January 2020 value. The broader macroeconomic picture was equally bleak as global GDP fell by 5%, U.S. unemployment went from 3.5% in February to almost 15% by April, and U.S. federal debt increased by $4.5 trillion in July, that's 20% compared with the year earlier. Let's consider how this tumultuous year impacted financial institutions in particular. Of course, individual businesses have been affected differently according to their specific situation. For example, their degree of exposure to interest rates for income. But there were some common themes. We saw almost all firms scrambling to a range and fund remote working for employees at very short notice. This requirement came with significant challenges, including the logistics of equipping workers with the right technology, deploying appropriate collaboration tools and ensuring security of data. Those with offshore delivery centers struggled to ensure business continuity as these changes became necessary. And those leveraging third parties anxiously waited to see if their traditional ecosystem was up to the task. Service providers for their parts had to rapidly adapt their standard operating models, train resources to work effectively from remote locations and clearly demonstrate continuity of services. In some cases, they were forced to seek forgiveness and financial institutions for known breaches of key performance indicators and service levels, and regulators around the world watched with interest to ensure compliance standards were maintained. Interest rates of almost 0, combined with reduced consumer spending and an enormous spike in provisions for future losses and a serious negative impact on revenue and margin for banks around the world, and those exposed to high-risk sectors, such as hospitality and travel were fairly even worse. Other impacts reflect the changing behavior of employees and customers. With restrictions on travel and everyone operating their daily lives from home, 2020 saw a rapid increase in customer engagement via digital channels, placing greater emphasis on mobile application functionality, online experience and contact center effectiveness. From an employee perspective, remote working has forced executives to focus on the future as it relates to corporate real estate. What should the role of branches be in the new world? And how many are needed? And in terms of corporate headquarters, when the CEO of Barclays says the days of thousands of people working together in the London office are over, we know it's a serious cultural shift. To summarize, 2020 was a year of extraordinary disruption in financial services. But out of the chaos come reasons for optimism. In many cases, the shock of a global pandemic and all its myriad implications have served to accelerate the speed of transformation, much of which was already underway, albeit at a slower pace. Whether intelligent automation, next-generation analytics, cloud migration, enterprise agility or something else, expediting these large transformation programs can only be a good thing for customers, employees and the firms themselves. A Nobel laureate once said, prediction is very difficult, especially if it's about the future, but I'm going to ignore that and give you my 7 predictions for 2021. Of course, this comes with a flashing health warning in such uncertain times, but these are my thoughts on how the financial services industry will evolve over the next 12 months. First, I predict the continued shakeout of challenger bank start-ups and scale-ups in the next 12 months. Despite the attraction of new logos and better customer experience, many consumers are creatures of habit. We're simply not switching full banking services to new firms quickly enough. In fact, the average balance in the digital bank account is likely $350. These challenger banks have another major problem, most of them don't make a profit. Investors recognize this and in normal times are prepared to wait for the expected returns. But in a volatile market, patience wears thin and funding is harder to secure. This is prompting many new entrants to articulate business strategies to show an early profit or at least a plan to get there, such as Dutch start-up Bunk's subscription-based fee model. Second, I expect to see a resurgence of the merger and acquisition spike we saw in 2018 and '19, especially among U.S. firms. In uncertain chaotic times, scale is your friend and so is synergistic cost reduction. So I predict more examples like Truist, Franklin Templeton Legg Mason and Charles Schwab TD Ameritrade. In fact, we're already seeing evidence of this upturn, such as S&P Global's announcement that it will acquire IHS Markit for $44 billion. Third, I believe we will see further disintermediation in the industry caused by firms acting as a financial services broker or concierge, offering customers a best-of-breed experience with established institutions reduced to competing on price in the background, much as we've seen in the utilities sector. This reshaping of the industry will be exacerbated by the continued encroachment into financial services of the big tech companies like Apple and Google. Next, I predict further divergence in global regulation as the more centralized U.S. bodies concentrate on new challenges like digital currencies, and Europe provides slower, more considered regulation to a deeper financial shock and wrestles with a lack of coordinated alignment across the continent. I also see an acceleration in the adoption of platforms, such as Mambu, 10x, and the FIS Google modern banking platform, to drive end-to-end process effectiveness and increase speed to market. This will go hand-in-hand with a push towards newly evolving ecosystems where financial institutions will partner with or acquire fintechs and insurtechs to enhance their customer propositions while embracing third-party providers of services in the middle and back offices. Focusing internally on things considered differentiators and engaging experts in all other areas will be the prevalent business model. A trend that will continue to gather momentum in 2021 is laser focus on the customer employee access, both in terms of productivity and driving higher revenues, enabling employees to leverage insightful data and creating a seamless experience for customers who, in turn, buy more products and services is the holy grail for all financial institutions. This quest is perhaps most acutely felt in the ways to design the contact center of the future, which will act as a crucible for all these important elements. Finally, finding the right use cases for the multitude of automation technologies, such as machine learning and AI will become even more of a pressing challenge for financial institutions in 2021. As to drive customer intimacy and engagement, combat financial crime and make better use of data are just 3 of the areas we've seen so far, but I fully expect many more to emerge in a new calendar year. Stanton Jones has some thoughts about the pandemic and what we see coming in 2021. So Stanton, let's hear it.

So as we talked about over the past couple of quarters, the resiliency of the technology services industry has been really unprecedented. Now they're almost a year into the pandemic and initial firefighting is over, I think it's a good time to step back and reflect on some of the big changes in our industry. So today, we're going to spend a few minutes talking about some of those changes and then where we believe enterprises will focus as they move into the vaccine field recovery base. So let's spend a few minutes recapping some of the big changes we saw take place in 2020, and we'll do this within the context of the big 3 phases of managed services: sales, transition and delivery. On the sales front, there was an initial slowdown in sales cycles and decision-making in Q2, but things started to return to near pre-pandemic norms in Q3 and through Q4, and this was evidenced by the nearly $20 billion in managed services bookings across those 3 quarters. And while we're likely to move back to some in-person sales negotiations and due diligence in the first half of the year, the expectation has been set that sales can happen and buying decisions made virtually. So we expect remote relationship-building to continue throughout 2021. We also saw transition planning and execution happening remotely in 2020, something that was just unthinkable before the pandemic. The key difference now is that enterprises want to know how providers will mitigate transition risks, given the fact that a large percentage of the work will take place remotely, and enterprises are expecting providers to mitigate this risk without any additional cost and with minimal changes in service level agreements. So the bar has definitely been raised here for providers. And finally, in terms of delivery, after the initial shock of Q2, in Q3 last year, we started to see enterprises expecting their providers to already have pivoted to a virtual model without any impact on productivity. So for example, if you look at a really high-touch area like end-user support, in the past, senior client executives were accustomed to VIP-type services. Last year, the people actually providing those services were no longer on site, which limited the ability to tap a person on the shoulder to get something fixed. And in our view, senior client execs over the past couple of quarters have started to become accustomed to this new normal in the way IT services are delivered virtually. So the main message here is that sales transition and delivery all looked remotely last year. And while we certainly think that some of these will go back to pre-pandemic norms after vaccination rates rise, we also think that the pandemic has proven out that these things can happen faster, cheaper and sometimes even with better quality remotely. So now that we know how the work will be delivered, let's spend a few minutes talking about where spending will go and what priorities will look like this year. So we asked over 70 of our advisers who are out working with large enterprises every day, where they believe their clients will direct their spending in 2021. Over 70% said cybersecurity spending would increase this year and over 60% said their clients' public cloud spending would increase. SaaS and automation also showed strong growth. As an aside, the only category that showed a double-digit decrease in spending this year was work-from-home technology, which makes sense because so much investment was made this year into making virtual worker reality. We also looked into spending at a provider level. On the managed services side, the majority felt spending would stay the same in 2021. The story was different for as-a-service, however. More than 50% send that spending would increase with their top technology vendors like Adobe, AWS and SAP. So now that we know where spending will be in 2021, let's take a look at what we believe the key priorities will be for enterprises as they work to accelerate out of the pandemic. So first, the ability to rationalize and modernize legacy applications using a cloud delivery model and using a commercial model that will eventually create cost savings is becoming one of the key drivers for buying decisions today. This is one of the key drivers behind the almost 10% increase in ADM deals in 2020. And on the sell side, this is also why having such a strong hyperscale cloud practice as well as practice focused on the leading SaaS platforms is so important as most of the rationalized applications will go to a cloud delivery model. Second, as we talked about on the Q3 call, cybersecurity is becoming a boardroom discussion with many of our clients. The recent solar wins breach, combined with the disruption in the pandemic, is only accelerating these discussions. So given the inevitability of a breach, enterprises we think will start to search out providers that can help them put into place the technology, the operating model and the talent to help ensure that breaches stay within risk tolerance levels. This is really a big change from today and represents a big opportunity for providers in our view. As Owen just talked about, we believe we're going to see accelerating platform adoption in the banking sector. But we're going to see this in other sectors as well. So for example, in health care, we're seeing strong demand for platform-based solutions from regional payers and in life sciences for integrated clinical, regulatory, quality and safety platforms. So these platforms combine infrastructure, software and business processes and deliver them in a commercial model that enables buyers to scale up and down, one of the key components of creating a resilient business model, one that can withstand the pressure of a global payday. So the ability to provide or partner with industry-specific platforms is going to be critical in 2021. Fourth, engaging customers on digital channels is going to require investments into rethinking customer journeys, which starts with understanding what customers need and how they want to buy. So we think this is going to create the need for -- an increased need for analytics services to help customers rethink their entire operating models around customer acquisition and retention. So providers that have nurtured their analytics practices and have paired them up with their recent design agency acquisitions we think are set to capitalize on this opportunity this year. And finally, we think that the environmental, social and governance, or ESG, movement will start to touch the IT sector in a big way in 2021. We're seeing enterprises put significantly more focus on this area over the past year. HR organizations are now becoming much bigger stakeholders in sourcing decisions in areas like cultural fit and ensuring the well-being of rebadged employees. We're also seeing companies looking to beef up the governance of their third and fourth-party relationships. So transparency into services supply chains is becoming increasingly important. So providers that have a strong ESG culture not only stand to win more work, we think they can actually then use this as an opportunity to help their clients with their ESG initiatives. So as we close out 2020 and start the reopening phase here in 2021, we think it's important to remember that the global delivery model delivered in a big way last year. It's also important to remember that sales transition and delivery took place virtually last year, and we think that, that will continue in a big way this year. And as enterprises are putting to place their plans to accelerate growth this year, we think this will lead to increased spending with the top as-a-service vendors, flat to slightly increasing managed services spending and we think that application modernization, cybersecurity, industry-specific platforms, customer experience and ESG will be big in 2021. So before I hand the call back over to Steve, I'd like to let you know about new briefing that I'll be publishing with a few of my colleagues each week. We're calling it the ISG Index Insider. So each week, we'll focus on the important deals, M&A activity and geopolitical events that impact our industry, and we'll also be including some cool data from time to time. So we'd love to have you as a subscriber. So you can see the link here or you can just go to ISG's website, and you'll see a link to sign up on the homepage. So with that, Steve, I'll turn it back over to you.

Great. Thanks, Stanton. And Owen, thank you as well for a great overview on banking. Before I get started on the summary, I just did want to highlight something that Kathy and Stanton did -- both said, and it's really just how great our industry did, meeting client demands really over the last year. I think service providers as-a-service, SaaS, IaaS, the entire industry really stepped up to a huge challenge. I mean the promise of cloud, elastic compute, realize at scale, network providers and collaboration software rose to the challenge and really provided a robust and secure environment for millions of us have got ourselves working from home through most of the year. So we talk a lot of records. There's been a lot of good things. It's been an extremely difficult 2020. But I think the whole industry deserves like a congratulations for stepping up in the way that they did. So just a thank you from ISG for that and everything that's meant to the entire investor. So now on to the summary. So on our last call, we alerted you to the potential for 4Q '20 to outperform our expectations in managed services due to several large mega deals that were in the pipeline that could sign in the quarter. And as we mentioned, that's exactly what happened. So we had 5 mega deals in Europe that really pushed up the ACV. So for the full year in 2020, the global combined market finished up 6.6% higher than 2019 and really was the strength in EMEA compensated for some lighter growth in Asia Pacific. The global market managed services ACV declined by 4% with varying results by region. The ITO business ended up 2% higher, while BPO and several of its larger functional areas never really regained momentum after the pandemic arrived. And again, we highlighted that, that a lot of that had to do with the facilities management space. The 4% decline overall in ACV was 200 basis points better than our forecast. Again, it was primarily driven by those large deals in Europe that came in, in the last couple of weeks of the quarter. Overall, the as-a-service market finished strong, led by Infrastructure-as-a-Service growth of nearly 20% across all 3 regions. Growth in Software-as-a-Service was lighter because of pullback in EMEA and Asia Pacific impinged on the success of the Americas. The managed service market is in recovery mode. Customers and providers alike are adjusting to the new reality of technology and the impact on demand and supply chain. In 2021, the first and fourth quarters will have difficult compares to beat but the middle 2 quarters should be pretty easy to beat. Managed service providers have focused on cost savings during the pandemic, which freed up them to pursue larger deals aggressively without drastically impacting their margins. So the forecast. We forecast a 3% growth in managed services for 2021. We believe the as-a-service market will continue to expand by more than 20% in the coming year as large Infrastructure-as-a-Service providers continue to push into the enterprise space with longer-term agreements, a trend we've already seen in Q4. An interesting metric to watch will be the contract backlogs at each of these main providers' feature. This will represent a sustainable stream of revenue for many years down the line, which will also enable more successful firms to venture into new and unpenetrated markets around the world. So at this point, thank you, everybody, and I'd like to hand the call back over to the operator to start the Q&A session.

[Operator Instructions] Mr. Bergin, we will start with your questions of ISG.

All right. Why don't we start at a high level here. So it's 2021 enterprise budget. So based on what you're seeing here in the contracting data and your forecast for contracting in 2021, how are you thinking about the outlook for average 2021 IT services spending? And as far as the most visible areas that customers are really emphasizing and deemphasizing.

Yes, absolutely. Stan, why don't you take that first one since you kind of talked about the spend trends? Summarize that, and then I'll talk about the overall summary that we see for the market.

Sure. Bryan, so -- yes, Bryan, as we just talked about, so I would say there's probably 2 really, really strong areas that we think are going to significantly increase this year, and that's around cyber and public cloud. So as we just talked about, the -- definitely seeing a sea change in the way that enterprises think about their cybersecurity profile and that's sort of shifting from a technology-centric model into more of a risk-based model. You may have heard this model called Zero Trust, so basically nothing within the -- within or outside the network is trusted. That's going to require a complete rethinking of the way organizations secure not only their assets but their data. So I think we're going to see a significant amount of spending increase on cyber, both on technology and on managed services and no surprise, public cloud. So we've talked about this, and you can see the growth rates on the Infrastructure-as-a-Service ACV growth rates. So just a really, really significant push towards, and I still think that this has a long, long tail behind it in terms of getting these enterprise workflows moved to a cloud deployment model. So I think that, that's where we're going to continue to see significant increases in spending. And as I said on the -- in my part, you can see that, I think, in the number of the deals, ADM-related deals increasing year-over-year. And then finally, just kind of just if you think about sort of the way that CIOs are thinking through this problem, for many years, it was an infrastructure-led problem, right? I'm going to bring somebody in to either transform my infrastructure or to take over my infrastructure. And that's just really rapidly moving to more of an application-led decision, right? I need to refactor or rationalize my applications or create new applications. And most of the time, I'm going to do that on a SaaS platform or out on the public cloud, and that's really what we think is going to drive the increased spending there.

Yes. That helped on the spending, Bryan. Then I think overall, on the managed services side, again, I think we're going to -- we're projecting we're going to see growth in 2021. The pipeline looks pretty healthy, though, it's at the smaller end of the deal size. But as we saw with the mega deals in Q4, we do think that there's going to continue to be some fairly large deals for acquiring IT ops, some of the captive optimization things that we talked about in Q2 and Q3 will continue. And that's likely to continue to drive the market. So it's pretty consistent what we've really seen over the last 6 weeks on how the pipeline is shaping up for Q1, Q2 and how we think that business is going to go.

Okay. And then on that pipeline, so Europe clearly stood out much stronger than you would have thought here in 4Q. How are you thinking about the deal flow sources in 2021? Is it still a European story? Do you think it shifts back to the U.S.? And then just excluding those mega deals, how would you characterize overall services contracting appetite?

Yes. I would say that I think it's going to shift back to the U.S. for the first part of the question, really Q1, Q2. Again, when we look at the pipeline, in the U.S., there was a lot of large deals that have just been delayed and pushed out a bit, but those are still very active. We'll expect those closings in Q1 and early Q2. So I still think there's a lot of activity there. The U.S. is adopting, as we've talked about for some time, Infrastructure-as-a-Service and SaaS at a much faster rate. I think we said it's 56% of the market. But on the traditional side, all of the really strong service providers continue to provide digital capabilities that are supporting that. So whether it's application refactoring to move apps to the cloud, whether it's cloud management platforms to really help manage the complexity of a multi-cloud environment, we're seeing a lot of synergies now between the hyperscalers and the traditional service providers, which is really going to help foster that growth and make it more of a seamless transition, quite frankly, for our clients.

Okay. One more for you before we open up. So Stan, virtual delivery models, you did a great overview here. Curious, in your research, did the virtual delivery result in any impact to client satisfaction in a material life versus pre-COVID? And it sounds like you believe more clients will be willing to engage in this model post-pandemic. So really, how are you thinking about that in -- with respect to how virtual delivery impacts pricing or any other notable contract terms? And as this mix evolves, are there particular subsets of service providers that are disproportionately helped or hurt by this trend?

Sure. So yes, I would say, I guess, that may impact the quality and the customer satisfaction one. One of the things I didn't mention in my section is we kind of do these pulse surveys, we're sort of trying to get a sense of what the -- what our clients are feeling. And one of the things we did look at is ask that question around over the past -- since the beginning of the pandemic has sort of service quality increased, decreased, stayed the same. And almost 75% said that it had stayed the same. And kind of is consistent. When we talked about -- if you recall back in Q2, we did another pulse about sort of on a 1-5 scale, what's been the disposition of providers and 1 being terrible, 5 being really good. That was a floor back in Q2. So that stayed pretty consistent. So again, I don't want to -- we're going to -- Steve mentioned this earlier, the ability of these service providers to move hundreds of thousands of employees to a completely new operating model, new technology and continue to deliver service and not significantly decrease that customer satisfaction is pretty extraordinary. And are there cases, I won't talk about in a few cases where are there situations where clients are not happy with the service or the service providers following down? Of course, there are. But on the whole, our view is that customer satisfaction has stayed the same throughout the pandemic. So to the second question around kind of the commercial side. I would say, on the whole, of course, there are going to be exceptions here, but on the whole, if you think about like what's actually changed, when we talked about the virtual sales transition and delivery. On the whole, the contracting side has not significantly changed, like the way organizations contract during the pandemic. I'd tell you what has changed is kind of the commercial side around it. So for example, if you look at things like payment terms, and we kind of talked about this on the Q2 call. Normal payment terms sort of in the 45- to 60-day range. Now I think it's much more common to see 90 days in industries that are -- have been significantly impacted by the pandemic of retail and travel, transportation, hospitality, energy. In some cases, you've actually seen like 120-day payment terms in those industries. So for those industries, I think those payment terms are going to continue to stay extended. Also for those industries, seeing some -- obviously, a lot of focus on cash flow, seeing some clients within those industries looking to, for example, roll like transition and transformation costs, which can be significant on the managed services side into those run costs in order to amortize those costs. Actually, we don't recommend clients doing that because it has a long-term impact. But -- so I would say, on the contracting side, not a significant change, on the commercial side, really more focused on those industries that have been most impacted and really more focused on cash flow and payment terms.

Okay. Operator, can we open up the line?

And we'll take our first question from Sudheer Guntupalli from ICIC.

My first question is on the as-a-service ACVs. We have been talking about COVID-led acceleration in as-a-service ACV over the previous 9 months. Especially in this quarter, we are talking about the best mega deal ACV. I'm assuming a significant part of these mega deals would have also been structured around as-a-service component. But if you look at as-a-service absolute ACV over the previous 4 quarters, it averaged mostly around $8.5 billion. So how do we reconcile this data?

I caught most of it. Can you just repeat the last half of it? So is it really about the growth on the ACV for the as-a-service providers?

So what I'm asking, if you look at as-a-service absolute ACV over the previous 4 quarters, it averaged mostly around $8.5 billion, while we have been expecting good amount of COVID-led acceleration over the previous 9 months. So maybe there is not a material change before and after COVID. So that's what I'm trying to understand.

Yes. So if you go back, so when I look at the as-a-service total through 2018 and 2019, sort of the average through that period was, call it, $6.2 billion to $6.5 billion during that period. And through most of 2019, the average for the as-a-service, the average was about $7 billion, right? $7 billion a quarter. So I think that, yes, it was right at $7 billion. Now we're seeing the average through the first 4 quarters or through 2020 really being -- you're pushing the average now $8.3 billion, almost $9 billion per quarter on the as-a-service space. So we're seeing really strong growth and really strong signings with all the major hyperscalers and all the major SaaS providers. Now we did see, as I mentioned, a little bit of pullback on the SaaS side and that was primarily associated with the larger deals. But again, the common players, Salesforce, ServiceNow, Workday, we continue to see a lot of growth in those firms. Maybe on this one, what we should do is get with Stanton maybe after the call, and we'll go through some of the numbers on really what's driving that growth and sort of the whole uptick on as-a-service.

Sure. And the second question is on the outlook in the service segment. The as-a-service ACV increased around 17% on a year-on-year basis in CY '20 versus our initial expectation of 24% a year ago. For CY '21, we are expecting 20% year-on-year growth, which again is not a material acceleration considering that CY '20 basic self is very favorable. In fact, your outlook is in such a deceleration compared to pre-COVID expectations. So if you can throw further color on this, it will be helpful.

Yes. That's a really great question because it really talks to the size of the market. And we were certainly seeing higher growth rates earlier but obviously, the as-a-service is now, what I say, 56% of the total ACV, so we're just talking about a much larger number. But most of that, as we've gone through, you're still -- and I mentioned this a little bit, we're still seeing this shift away from traditional data centers to the hyperscalers. But the apps piece, base book and SaaS is still a big chunk of -- a big percentage of IT spend within organizations. And that's not moving as fast. So though you see the traditional moving to hyperscalers, you're seeing the hyperscaler growth. It's on a larger number. We think it was 17% this year. We expect 20% next year. But it certainly is off a larger number, which I think may be some of what you're seeing now. It's -- also remember that it's on ACV for us, annual contract value. So it's not necessarily directly related yet to how Amazon is reporting or how Google is reporting, right, because these are their bookings and their annual contract value.

We take our next question from Mike Vizard from Smarter MSP.

It would seem like conventional wisdom withhold during a pandemic organizations would rely more on external help and managed service providers. And yet, it looks like that's not happening, and it looks like MSPs may account for still less than, what, 20% of the total consumption of IT. So what's your sense of what the resistance factor is? Or why does that number continue to stubbornly be less than a quarter of all IT?

Yes. Thanks, Mike, and happy New Year to you. It's -- part of the challenge is during the pandemic, all of us were working from home. If you think about the complexities with an MSP and putting deals together, it's about trust. And trust is about sitting down together and understanding each other and growing. So new deals were really hard to do and large new deals were even harder. We did see growth in existing accounts. We did see growth in new things. But the other headwind that you have on the MSP is the whole digital transformation component, right? We know that hyperscalers are going to grow faster, as we've just discussed. We know that's a better model moving forward with resiliency with the elasticity, all the things that we discuss with it. So there continues to be just some natural headwinds in the business for the MSPs. And clearly, the pandemic just made it harder to do large deals. We had the 5 in Europe in Q4. But if you look at Q2, Q3, they were almost nonexistent. And so the industry is learning to do it. But there just wasn't -- you just got to have that trust to be able to do those. I think more than anything, that's what we saw. And that's clearly not a issue or not as a big concern as we look at really Q1, Q2. Kathy, do you want to add anything to that from Americas perspective?

I think you're really spot on, Steve. I think the big deals depend on really companies coming together and understanding each other and having the pandemic and just a different mode of doing business, cycle them a bit. But it's really been a pivot and looking at where you're going with your organization and what your strategy is and as you define that strategy, you're thinking more about that as-a-service market. Again, agree with you that where there were relationships, there was growth and the ability to support really well as we see everyone through a lot of turmoil and change. But I agree with what you said basically in general for the Americas as well.

Owen, any thoughts from a banking perspective?

Yes. Thanks, Steve, we were saying the same thing. Yes, so from a financial services perspective, and I agree with the Board first of what you and Kathy have just said. I'd say that obviously, financial services is a very mature market when it comes to managed services. And so there isn't a huge amount of mega deals that remain out there to be done unless it's shifting from one provider to another, it's not necessarily about finding new scope. So I would expect it and that's exactly what we've seen is the traditional outsourcing down in both ITO and BPO. But we've seen big increases in SaaS and Infrastructure-as-a-Service. And that's because a lot of the banks and other financial institutions who hit pause during the worst part of the pandemic last summer on large transformation projects, that pent-up demand is now coming back to the market. And so we're seeing huge interest, for example, in core banking and parallel platforms and different ways to engage with new customer segments, we're seeing great interest in. We've seen a lot of design work on contact center in the future, and that will turn into large third-party relationships and contact centers. This year, we see a lot of movement in the payment space, people looking again at their credit card operations. All of these are going to turn into third-party arrangements with some description in 2021. But from a financial services perspective, it was very much get through the summer, focus internally on the cost base and then think about how you're going to optimize those ecosystems that I talked about in my segment in 2021.

Yes. I would just add one more thing, guys, on the broader MSP piece, especially as it relates to the IT outsourcing market. There has been this shift to ADM and all things apps. A lot of that is driven by the refactoring and what it takes to move apps to a hyperscaler and all of the changes associated with that, but also just bespoke development still was growing. So just from a data point perspective, ADM is up 13% against its 5-year average. So we're really seeing growth on the ADM side, which doesn't directly include product engineering, which is separate on the R&D, which is also up but it does give us a really good indication of what enterprises are doing. Infrastructure, especially data center infrastructure-only deals, is down 24% against its 5-year average and down. So we are seeing this continued pressure on the infrastructure business. Now full ITO, which is network, workplace services, collaboration experience, data center, ADM, et cetera, is up significantly. But that's primarily, again, because of the influence on collaboration software and workplace of the future and the apps piece. And so you're seeing a change for MSPs that are heavy on infrastructure have a lot more downward pressure than MSPs or service providers that have more balanced portfolio or really lead with apps. So that will continue to be a trend, I think, as we go into 2021. That helped, Mike?

Yes, that was great, guys.

Lots of data on that one. Operator, next question.

We'll take our next question from Rahul Singhai from BMC Software.

Steve, my question is on this cloud computing that's impacting the IT managed service providers, especially what we have seen a huge investment going from these service providers, including Atos spending EUR 2 billion on the Atos OneCloud, TCS spending a lot of money on their [O-Tone], which is one data one network kind of an approach. Do you see that these kind of impact that's coming from AWS as your GCP will be impacting more to the service provider to start spending more on the cloud computing part or will they be leveraging these providers in the future?

Rahul, interesting because I think we've seen some of this movie play a little bit before. So I'll let Stanton kind of talk about this as well. I think we've seen big investments, especially early on in the cloud base, where whether it was DXC or Atos or Cap or IBM, many of them invested really heavily on their own cloud platforms, especially with hybrid cloud compute. And that still is probably the most prevalent solution for most organizations. I think the challenge is, is the capital that's being poured into the hyperscalers, again, U.S., AWS, Azure, Google GCP, across Asia, Tencent, Alibaba. There's so much capital being poured into that and so many rapid changes and so many adoptions that it's not just about the price point anymore. It's really about almost being on that platform to be able to have access to those capabilities. So I think when I look at Atos and potentially Atos DXC combination on the cloud, when I look at some of the other pure SPs, my sense is that we're still going to see a vibrant market for cloud management platforms, which will include absolutely a hybrid private-public cloud consumption model in there. But I think we'll see less investment on SPs trying to build out their own competitive cloud solutions. Even if I look at IBM and Red Hat, there's a lot of collaboration with the major hyperscalers and a different type of solution there as we go forward. But Stanton, any thoughts from you on this one?

Sure. Rahul, so as Steve said, really what's happening here is that those investments that you see, for example, from an Optimus on one cloud, that's not them trying to go build a hyperscale cloud like AWS, Microsoft and GCP, Alibaba, I mean that horse has left the barn, right? Nobody is going to catch the massive scale providers. So what Atos and others are doing are building packaged offering and accelerators and building up expertise and talent around helping companies, rethink the way that they work and move those applications to the right cloud. And then it also is why we talk about nearly every quarter now, there is such an opportunity there for the managed service providers because we're not just talking about picking up an application and moving it to AWS. This is not traditional outsourcing. It requires a rethink of the application estate, it requires moving or decommissioning or rebuilding or building new applications on those clouds, and it may be on multiple clouds. It may be an application on AWS, an application on Azure and an application on GCP. Then it requires the orchestration of those applications, the security and management of those applications across multiple clouds. And then finally, the whole way the IT organization works and the finance organization works and just about everybody else has to rework the way that they do business inside the company. So that's what we call an operating model change. So there is a huge opportunity here on the managed services side, and that's why we are watching very closely the degree to which managed service providers are building up core capabilities and doing M&A activity against the hyperscale cloud. So we continue to think a massive opportunity there. But at the same time, most, in our view, for providers have recognized that they're not going to go build a cloud to compete with one of the hyperscale providers.

Rahul, did we answer your question?

Yes. It did sort of. Why I did I ask this question is because 80% of the deals that I generally work on is either the service provider is trying to tell them to move to our data centers or generally the first preference is to get them to their own data center and the second is AWS and Amazon, and et cetera. So you're right, it could be leveraging both when they are building these kind of portfolios.

Operator next?

[Operator Instructions] It looks like Leslie [ Leslie Sheffield ] from Capgemini has joined.

Can you hear me? Just want to make sure.

We can, [ Leslie ].

Good. Great. Well, my question is very specific. It is in regard to life sciences. And I know you touched upon it a little bit in the presentation, but I'd love to hear your view on the trends for life sciences for 2021 and how it pertains to the 5 demand drivers you mentioned about turbocharge app modernization, focus on cybersecurity, how you look at that industry-specific solution adoption, focused on customer experience and diversity and environmental, social and governance.

All right. [ Leslie ], well, we're going to point a little bit about this because we have a whole group of [indiscernible] we rely on. But Stanton, why don't you -- no worries. Our life sciences team is absolutely superb. So I'm going to take the question off-line with them to get to. But Stanton, why don't you take the first part and really kind of lay out how we see the 5 trends sort of across life sciences? And maybe, Kathy, you can give a perspective as well on what we see there.

Sure. [ Leslie ], and Steve's pointing to me. So I'm certainly not a life sciences expert and we have a phenomenally strong team in this space. So I'd love to make that introduction for you to Jen and her team if you haven't already met them. So that said, I think probably the one that is -- I actually specifically called this out in my section. I think it's really, really interesting if you start to look at the platform side of things and I specifically called out the platform-type adoption in life sciences across quality and safety. And I think that -- I think, given the opportunity and the pressure that the -- many of those organizations are under right now, I think that ability to scale up and scale down, I think, is going to become so important over the next 24 months. And that's really why we see strong demand and why I put it into there, into that top 5 strong demand for platform-based -- industry-specific platform-based solutions because of that commercial model because it does enable organizations to respond to these kind of spikes and demands or respond to reduction in demand like in energy or travel or in retail. So I think we're going to continue to see a strong demand there on the life sciences side for those platform-based solutions. And I just said, would love to get you in touch with Jen and her team who can go into more detail.

[ Leslie ], the last thing that I would add on this one that I think is important is I think there are going to be some really interesting blockchain solutions coming out of pharma. Certainly, if you look at life sciences and the pandemic, understanding immunization, immunization records, getting a definite understanding of sort of what a safe workplace is just screens for technology. Not only in the workplace for that, but I think a lot of it is going to be led by life sciences. And we're already working with a couple of really small clients that have some blockchain solutions that can really help think through this. I think what we're doing on the RNA modeling, for example, what the vaccine is going to do is going to open up some tremendous doors on how we look at other viruses, certainly not just COVID, so I think we'll see some really interesting solution. But again, I think I'd love to get you in touch with Jen Stein and Bob Krohn, who are just gurus in this that really helped us out think through it.

Yes, I was just going to say that we've seen such a big change. I mean, for the first time ever, they said at the beginning of COVID, it's going to take years to bring a vaccine to market. So just for me, thinking about that and the ability to bring this vaccine to market so quickly, how will that impact other drugs coming to market and what platforms will life sciences clients use for that as well as how are we going to track bringing drugs to market now, how quickly will they come to market, and how will this just impact the entire industry. Because we've done something we've never done before. They've done something we've never done before. So just the thought that I had.

Good. Thank you, [ Leslie ]. So operator, any more questions in the queue?

It doesn't look like there's any questions.

Okay. Well, with that, let me just thank everybody for attending. Great Q&A session. As always, if you have any questions, reach out to us. And Kathy, any closing remarks from you?

l do. Special thanks to Bryan Bergin and the team at Cowen and Company for hosting today's call and for everybody for making time to join us and all the really insightful questions. The ISG Index call to analyze the first quarter of 2021 will be on April 7, mark your calendars. We will be in touch with you about registering for it. And while the vaccines are on a slow role across the globe, remember to stay safe, just a little while longer, and we'll see you in April.

Thank you. And that does conclude today's call. You may now disconnect.