Both cloud-based and traditional managed
services at record quarterly highs
Asia Pacific’s spending on IT and business services surpassed US
$3 billion for the first time in a quarter, with record levels of
spending in Q2 for both cloud-based and traditional 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 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 $3.4 billion in
combined-market ACV in the second quarter, up 59 percent against a
soft quarter last year at the outset of the pandemic, and up 35
percent from the first quarter.
ACV for cloud-based services (as-a-service) came in at a record
$2.4 billion, up 50 percent over last year, on 52 percent growth in
infrastructure-as-a-service (IaaS), to a record $2.1 billion, and
38 percent growth in software-as-a-service (SaaS), to a record $312
million.
Managed services, meanwhile, turned in its best quarter in two
years, with ACV soaring 87 percent, to a record $929 million. IT
outsourcing (ITO) reached a record $800.1 million, up 80 percent,
and business process outsourcing (BPO) rocketed 148 percent, to
$129 million. Contract activity was at its highest level in the
region in three years. Among the 62 deals signed during the
quarter, 12 were valued at more than US $30 million of ACV – more
of this size than were signed in all of 2020.
Within the region, most markets delivered sizeable
year-over-year growth in managed services, including Australia-New
Zealand (ANZ), China, Japan and South Asia, with only Korea
declining versus the prior year.
“The second quarter was a real standout for the Asia Pacific
region, with record demand in virtually every segment and strong
growth across the board,” said Scott Bertsch, partner and regional
leader, ISG Asia Pacific. “The results in ANZ, the region’s largest
managed services market, were particularly encouraging. With more
than $300 million of ACV this quarter, ANZ delivered its best
performance since the end of 2018.”
For the first half of 2021, the combined market generated a
record US $5.8 billion of ACV, up 32 percent. As-a-service, at a
record US $4.5 billion, was up 33 percent, and managed services, at
US $1.3 billion, was up 28.5 percent.
Within as-a-service, IaaS reached a record US $3.9 billion, up
34 percent, and SaaS hit a record US $614 million, up 23 percent.
The battle for hyperscale cloud supremacy in the region continues,
with Chinese providers adding to the competition. During the
quarter, BMW Group opened a joint innovation base with Alibaba
Cloud in Shanghai, and global mining firm BHP, based in Australia,
signed cloud deals with both AWS and Microsoft Azure.
Competition is also heating up in the cloud-based ERP software
space. In Japan, Sumitomo Mitsui Financial Group recently selected
Oracle Fusion Cloud ERP to consolidate accounting functions,
Toshiba chose SAP to replace its legacy financial systems, and
Adobe remained active in the region by leveraging its digital media
business and signing new clients such as Toyota and Bytedance.
On the managed services side, ITO reached US $1.1 billion, up
21.5 percent, on 77 transactions, with strength in application
development and maintenance (ADM) services, even as infrastructure
services declined. A notable ADM award was Accenture’s deal with
Japanese telecom company KDDI. One of the larger awards this
quarter was HCL winning a multi-tower IT transaction with a
diversified financial firm.
BPO reached US $237 million, up 75 percent, spurred by
industry-specific BPO and engineering and R&D services. Neusoft
clinched a sizable ER&D agreement to supply Geely Smart Cars
with infotainment systems, and Globant won a deal with Nissan’s
customer service team.
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, 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/20210726005821/en/
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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