ISG sees broad-based market support for
technology services, as enterprises accelerate digital investments
coming out of the pandemic
Americas demand for IT and business services reached a record
high in the second quarter, as the region logged its second
consecutive quarter of double-digit growth coming out of the
pandemic, according to the latest state-of-the-industry report from
Information Services Group (ISG) (Nasdaq: III), a leading global
technology research and advisory firm.
The Americas ISG Index™, which measures commercial outsourcing
contracts with annual contract value (ACV) of $5 million or more,
shows the region delivered a record $9.5 billion of combined market
(both as-a-service and managed services) ACV in Q2, up 25 percent
versus last year, when the market was stalled by the onset of the
pandemic, and up 10 percent sequentially over the first quarter
this year.
Demand for cloud-based services (as-a-service) climbed 33
percent over last year, to a record $5.9 billion of ACV. Within
this segment, infrastructure-as-a-service (IaaS) also rose 33
percent, to $3.9 billion, and software-as-a-service (SaaS) advanced
31 percent, to $1.9 billion, both records. As-a-service now
accounts for 61 percent of the combined market in the Americas.
Managed services advanced 14 percent, to $3.6 billion, in the
second quarter, including $2.6 billion of IT outsourcing (ITO) ACV,
up 5 percent, and $1.1 billion of business process outsourcing
(BPO) ACV, up 44 percent. A total of 246 contracts were awarded
during the quarter, up 6.5 percent from the prior year, including a
record 115 deals in the $10 million to $40 million range.
“The Americas had a stellar quarter in Q2, topping $9 billion in
combined market ACV for the first time ever and recording its best
year-over-year growth since 2018,” said Todd Lavieri, vice chairman
of ISG and president of ISG Americas and Asia Pacific. “Enterprise
demand for all things digital is strong and shows no signs of
slowing down. We see this market momentum continuing in the second
half, reflecting both pent-up demand and a structural shift to more
cloud adoption and digital transformation coming out of the
pandemic.”
For the first half of 2021, the Americas combined market
generated a record $18.1 billion of ACV, up 14 percent.
As-a-service, at a record $11.1 billion, was up 21 percent, and
managed services, at $7.0 billion, was up 5 percent over the prior
year. Within as-a-service, IaaS reached a record $7.4 billion, up
24 percent, and SaaS hit a record $3.7 billion, up 15 percent. On
the managed services side, ITO was $5.1 billion, down 3 percent,
although within ITO, application development and maintenance (ADM)
generated a record $3.1 billion, up 22 percent. BPO reached $1.9
billion, up 39 percent, its best first half since 2009, spurred by
strong demand for industry-specific, finance and accounting, and
engineering and R&D services.
A number of significant deals were reported during the second
quarter. Within the ITO space, Accenture won an ADM contract with a
large pharmaceutical company, and Capgemini secured an ADM and
Infrastructure extension with a large utility. In BPO, WNS signed a
contract with McCain Foods for a finance and accounting
transformation in a competitive takeaway.
In IaaS, Google signed a significant long-term deal with
Univision to tie its cloud offering to other solutions. Google
Cloud also signed a multiyear agreement with HCA and agreed to
expand its collaboration with Whirlpool. In the SaaS arena, key
deals in the quarter include Google migrating its internal
financial software to SAP in a competitive takeaway. Salesforce
contracted with Honeywell for a Sales Cloud engagement, and Xerox
signed with ServiceNow.
2021 Global Forecast
ISG is forecasting the market for cloud-based services (IaaS and
SaaS) will grow 21 percent globally in 2021, up from its 18 percent
growth forecast last quarter. The firm also is raising its forecast
for managed services growth to 9 percent, up from its prior
forecast of 5 percent.
About the ISG Index™
The ISG Index™ is recognized as the authoritative source for
marketplace intelligence on the global technology and business
services industry. For 75 consecutive quarters, it has detailed the
latest industry data and trends for financial analysts, enterprise
buyers, software and service providers, law firms, universities and
the media. In 2016, the ISG Index was expanded to include coverage
of the fast-growing as-a-service market, measuring the significant
impact cloud-based services are having on digital business
transformation. ISG also provides ongoing analysis of automation
and other digital technologies in its quarterly ISG Index
presentations.
For more information about the ISG Index, visit this
webpage.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 700 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including automation, cloud and data analytics; sourcing advisory;
managed governance and risk services; network carrier services;
strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,300
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20210720005711/en/
Press: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com
Erik Arvidson, Matter Communications for ISG +1 617 755 2985
isg@matternow.com
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