Region produces second consecutive quarter
with ACV of US $6 billion or more
Combined market ACV up 20% versus prior
year
Both cloud-based services and managed
services showing strength
The European market for IT and business services remains robust,
with record demand for cloud-based services in the first quarter
and continued strength in managed services, 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 EMEA ISG Index™, which measures commercial outsourcing
contracts with annual contract value (ACV) of US $5 million or
more, shows ACV for the combined market, which includes both
as-a-service and managed services, reached US $6.0 billion, up 20
percent year on year, but off 5 percent from a record fourth
quarter.
Cloud-based as-a-service ACV reached a quarterly record of US
$2.5 billion, up 16 percent versus the prior year. Within this
segment, infrastructure-as-a-service (IaaS) climbed 19 percent, to
a record US $1.8 billion, while software-as-a-service (SaaS) rose 9
percent, to a record US $658 million.
Managed services, meanwhile, produced its second straight strong
quarter, with ACV of US $3.5 billion, up 23 percent year on year,
fueled by growth in both IT outsourcing (ITO) and business process
outsourcing (BPO) and strong results in the UK, France and DACH.
ITO was up 17 percent year on year, to US $3.0 billion, on strength
in both ADM and infrastructure services, while BPO surged 66
percent, to US $521 million, on strong demand for
industry-specific, finance and accounting, and engineering and
R&D services.
“EMEA has produced two consecutive quarters with US $6 billion
or more of ACV, adding more than US $1.4 billion from its pandemic
low,” said Steve Hall, president, ISG EMEA. “Importantly, the
region is seeing strength in both the as-a-service segment, as more
and more enterprises adopt a public or hybrid cloud strategy, and
on the managed services side, which is experiencing a
resurgence.”
Hall pointed out that three of the four mega-deals (those with
ACV of US $100 million or more) in the first quarter were awarded
in the EMEA region. “That brings the total to eight mega-deals over
the last two quarters; you have to go back to early 2017 to find a
two-quarter period in EMEA that had more mega-deals awarded.”
Among significant IT awards in the first quarter, Mphasis
contracted with Ardonagh Group, the U.K. independent insurance
broker, to support its digital transformation. On the
infrastructure side, Atos won a large digital workplace contract
with telecom company Wind Tre in Italy, and HCL inked a five-year
digital workplace services agreement with Airbus, the European
aerospace manufacturer.
Within the BPO space, KPIT signed significant engineering
services deals with BMW and automotive technology company Veoneer
to support work on autonomous driving and intelligent mobility. ISS
Group, meanwhile, secured an eight-year extension with Barclays in
the U.K. to provide integrated facility and workplace services
across the bank’s operations in 30 countries.
With the automotive sector becoming a battleground for major
public cloud providers, BMW Group announced it is migrating
workloads to AWS, joining automakers Renault and Volkswagen on AWS.
In the travel sector, ISG advised on one of the biggest cloud deals
in the region this quarter with the signed agreement between global
travel technology company Amadeus and Microsoft Azure.
In the SaaS segment, Microsoft signed deals this quarter with
Daimler, GlaxoSmithKline and IKEA, while Oracle secured contracts
with NatWest Group to standardize its various banks on Oracle
Fusion in the cloud.
Market Insights
The DACH market generated more than US $1 billion of managed
services ACV in the first quarter, up 13 percent over the prior
year. It was the second consecutive quarter DACH ACV was above US
$1 billion mark—about a third higher than its historic norm. DACH
now accounts for nearly 30 percent of managed services ACV in the
EMEA region.
Managed services ACV in the UK reached US $866 million, up 20
percent over the prior year. It was the fourth consecutive quarter
the UK generated managed services ACV in excess of US $800 million,
represented a sustained rebound for the market, but still below the
US $1 billion quarters that were typical prior to 2017 and the
onset of Brexit uncertainty.
France, meanwhile, had its best ACV quarter since 2014, with
managed services ACV of US $595 million, up nearly 2.5 times from
US $243 million in the prior year, with nearly 40 deals reached in
the quarter.
2021 Global Forecast
ISG is forecasting the global market for cloud-based services
(IaaS and SaaS) will grow 18 percent in 2021, down slightly from
its 20 percent forecast at the start of the year. ISG, meanwhile,
has raised its growth forecast for managed services to 5 percent,
up from 3 percent at the start of the year.
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 74 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210413005463/en/
Press: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com
Kate Hartley, Carrot Communications for ISG +44 7714065233
kate.hartley@carrotcomms.co.uk
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