IaaS and SaaS now at a record 85% of
region’s IT and business services market
Spending on cloud-based services reached a record 85 percent of
the Asia Pacific technology and business services market in the
first quarter, as demand for IaaS and SaaS services rose by double
digits even as demand for traditional managed services slumped,
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 Asia Pacific ISG Index™, which measures commercial
outsourcing contracts with annual contract value (ACV) of US $5
million or more, shows the region generated US $2.6 billion in
combined-market ACV in the first quarter, up 11 percent over the
prior year, but down 9 percent from a record high in the fourth
quarter.
Growth was propelled by the as-a-service segment, which rose 22
percent year on year, to US $2.2 billion, on strength in both
infrastructure-as-a-service (IaaS), up 24 percent, to US $1.9
billion, and software-as-a-service (SaaS), up 12 percent, to US
$292 million.
Meanwhile, managed services slumped 25 percent from the prior
year, to $390 million, as IT outsourcing (ITO) slid 36 percent, to
US $282 million, offsetting 29 percent growth in business process
outsourcing (BPO), to US $108 million.
Managed services grew overall in China, Japan and South Korea,
but fell 19 percent in the region’s largest market, Australia/New
Zealand (ANZ). Contract activity was at its lowest level in five
years and large deals have all but disappeared. In the past 18
months, Asia Pacific has had only seven deals over US $40
million.
“The Asia Pacific market continues to be driven by demand for
cloud-based services,” said Scott Bertsch, partner and regional
leader, ISG Asia Pacific. “On the managed services side, the market
for traditional ITO services is struggling, especially
infrastructure, while the much smaller BPO segment typically
produces uneven results quarter to quarter. Meantime, we are seeing
an escalating battle for market share among the hyperscalers,
particularly in the financial services sector.”
Among the notable hyperscaler agreements in financial services
during the first quarter, ANZ-based financial services company AMP
announced it will migrate all its on-premises workload to Amazon
Web Services cloud by 2022, while Kyobo Life Insurance in South
Korea announced it will transfer its big data system to AWS.
Microsoft, meanwhile, signed an agreement with Bank of New Zealand
to migrate a thousand applications to Azure in a project dubbed
M1K.
In the SaaS space, significant deals included Kawasaki Engines
signing with Salesforce for its manufacturing cloud, and PUMA
India, an arm of the Germany-based athletic and casual footwear and
apparel maker, leveraging Salesforce’s commerce cloud to improve
online user experience. New Zealand’s Zespri International, the
world’s largest marketer of kiwifruit, signed to become one of the
first SAP customers in the region to use the SAP S/4HANA private
cloud edition. BHP, meanwhile, is using Microsoft Dynamics to keep
rural Australia mining employees safe.
Within the ITO segment, two application development and
maintenance (ADM) awards stood out: Accenture will implement a
cloud-based system for Shiseido, the Japan-based cosmetic and
personal care multinational, and Mitsubishi Motors extended its IT
infrastructure contract with IBM Japan for another five years.
Global Forecast
ISG is forecasting the market for cloud-based services (IaaS and
SaaS) will grow 18 percent globally 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, 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/20210427006070/en/
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Cait Buckley, Matter Communications for ISG +1 617 874 5214
isg@matternow.com
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