Combined market climbs 21% in Q2, but is
down 2% sequentially from Q1
ISG lowers 2022 global growth forecast amid
rising economic concerns
Demand for IT and business services in the Americas continues to
be strong, but growth appears to be slowing amid rising economic
concerns, the latest state-of-the-industry report from Information
Services Group (ISG) (Nasdaq: III), a leading global technology
research and advisory firm, finds.
The Americas ISG Index™, which measures commercial outsourcing
contracts with annual contract value (ACV) of $5 million or more,
shows second-quarter ACV for the combined market—including both
as-a-service (XaaS) and managed services—reached $12.2 billion, up
21 percent from a year ago, but down 2 percent sequentially from
the first quarter.
“The Americas surpassed $12 billion in ACV for the first time
ever in the first quarter, and the market remained above that lofty
level in Q2,” said Todd Lavieri, vice chairman and president of ISG
Americas and Asia Pacific. “Demand remains strong, as companies
continue to invest in multiple IT products and services to drive
digital transformation and customer engagement.”
Lavieri said the use of technology to optimize costs and improve
operating efficiency will also continue to be a focus. “Amid
concerns over a potential recession, companies are looking for cost
savings in many areas, from IT and business processes to software,
cloud and network spending, as they prepare for the possibility of
a softer second half.”
The Americas market continues to be driven by strong demand for
cloud-based XaaS solutions. ACV in this segment climbed 36 percent
to reach $8.1 billion in the second quarter, topping $8 billion for
the first time ever. Compared with the first quarter, however, ACV
was up only 2 percent, the slowest quarterly growth rate since the
pandemic-impacted third quarter of 2020.
Within the XaaS segment, infrastructure-as-a-service (IaaS) rose
44 percent, to $5.6 billion, but was up only 2 percent
sequentially. Software-as-a-service (SaaS) was up 21 percent, to
$2.5 billion, but rose only 1 percent against the prior
quarter.
The managed services market, meanwhile, was flat with the prior
year, at $4.1 billion, and down 9 percent from a robust first
quarter. It was the segment’s lowest growth rate since the fourth
quarter of 2020, after which it averaged 25 percent quarterly
growth through the first quarter of 2022. Nonetheless, it was the
fifth straight quarter that managed services exceeded $4 billion of
ACV.
Within this segment, IT outsourcing (ITO) slumped 11 percent, to
$2.5 billion, and was down 3 percent against the first quarter.
Business process outsourcing (BPO), however, rose 25 percent year
over year, to $1.6 billion, but was down 17 percent against an
above-average first quarter.
A total of 281 managed services contracts were awarded in the
second quarter, up 1 percent from the prior year, but down 11
percent from the first quarter. The agreements signed during the
quarter including three mega-deals (contracts with ACV of $100
million or more). New scope awards were up 12 percent over last
year, while contract restructurings were down 22 percent.
First-Half Results
Benefiting from a strong first quarter, the Americas combined
market generated $24.7 billion of ACV in the first half, up 29
percent over the like period last year—the region’s best first-half
growth since 2018. Managed services ACV rose 11 percent, to $8.6
billion, on 596 awards, the most ever in a first half. XaaS soared
42 percent, to $16.1 billion, the largest first-half growth rate
ever recorded.
2022 Global Forecast
With the potential for continued economic uncertainty, ISG
lowered its 2022 global growth forecast for cloud-based XaaS (IaaS
and SaaS) to 18 percent, from 22 percent a quarter ago, and reduced
its global growth forecast for managed services to 3.5 percent,
from 5.1 percent in the first quarter.
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 79 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 800 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/20220719005434/en/
Press: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978-518-4520
isg@matternow.com
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