STAMFORD, Conn., July 16, 2018 /PRNewswire/ -- Insurance,
software and services, and business services and supplies are three
industries primed for significant outsourcing growth in 2018,
according to a new market research report from Information Services
Group (ISG) (Nasdaq: III), a leading global technology
research and advisory firm.
Proprietary analysis from the 2018 ISG Momentum® Market Trends
& Insights Vertical Report reveals the three industries
are strong candidates to experience both significant new
outsourcing and increased spending by current clients in 2018.
Insurance, already the third-largest industry vertical for
outsourcing based on annual contract value (ACV), earned the nod
because of the high number of companies not yet outsourcing and the
industry's relatively high spending profile. Software also is an
attractive market because of strong recent growth rates combined
with below-average spending per company. And business services and
supplies, while the smallest of the three industries pegged by ISG
for outsized growth, is in the mix because of rising average
company spending and sourcing adoption.
Some of the largest current markets for outsourcing services are
also leaders in growth potential, the ISG report notes. Banking,
for example, is the second-largest vertical by ACV but ranks first
in market potential because of its sheer number of non-sourcing
companies (157, the most of any vertical). Banking is one of four
verticals with at least $2.5 billion
in additional market potential (technology hardware and equipment,
utilities and transportation are the others), and all four ranked
in the top nine in 2017 ACV, according to ISG.
In 2017, outsourcing penetration was highest in the
telecommunications services sector, where 91 percent outsource,
followed by the media industry (88 percent) and aerospace and
defense (82 percent). In contrast, only half the companies in
banking (51 percent) and technology hardware and equipment (48
percent) were outsourcers. Overall, across the 27 industries
profiled, sourcing penetration was 50 percent, on average.
By ACV, the top growth industries in 2017 were software and
services (up $603 million, or 50
percent), semiconductors (up $558
million, or 279 percent) and construction (up $176 million, or 27 percent).
Nine of the 27 industries profiled in the report achieved
year-over-year ACV growth in 2017. In addition to software,
semiconductors and construction, others included transportation;
business services and supplies; hotels, restaurants and leisure;
trading companies; food retailing, and technology hardware and
equipment.
The ISG report found average annual spending declined in most
industries due to falling prices for widely used services, strong
competition in most market segments and limited large, new-scope
engagements. Cloud services was an outsourcing growth area in many
verticals.
"ISG found many examples of how artificial intelligence (AI),
cognitive technologies, robotic process automation (RPA) and other
emerging technologies are being adapted and included in
industry-specific solutions," said Paul
Reynolds, ISG partner and chief research officer. "There are
a lot of opportunities for service providers in the current market,
but providers need to be creative and committed to innovation to
capitalize on the potential."
The 2018 ISG Momentum® Market Trends & Insights Vertical
Report provides an industry-by-industry look into outsourcing
spending patterns, emerging preferences and other trends across 27
Forbes®-classified vertical markets. The analysis, covering Forbes®
Global 2000 companies with annual outsourcing spending of
$5 million or more, offers
perspective into the state of outsourcing in each vertical through
interviews with strategists involved in current outsourcing
engagements in that industry, along with worldwide spending and
market share data showing current levels and up to 10 years of
history. Each detailed industry chapter in the 404-page report
notes how current events and macroeconomic conditions are shaping
each industry.
To download the executive summary, please visit this
webpage.
The latest ISG Momentum® report is part of an ongoing series of
market research reports that focus on outsourcing activity by
service line, vertical industry and geographic location. To learn
more about these and other ISG Momentum® services and information
products, please visit the ISG Momentum® Research page on
the ISG website or contact ISG.
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 75 of the top 100
enterprises in the world, 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; technology
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 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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SOURCE Information Services Group, Inc.