Asia Pacific Sourcing Paced By Record Demand For Cloud Services In Q3, ISG Index™ Finds - GADGET-INNOVATIONS

Asia Pacific Sourcing Paced By Record Demand For Cloud Services In Q3, ISG Index™ Finds

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Combined Market Hits $2 Billion For Third Quarter In A Row

Paced by record demand for cloud services in the third quarter, the Asia Pacific outsourcing market hit US$2 billion for the third quarter in a row, 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 ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of US$5 million or more, found the combined market (managed services and cloud-based as-a-service) reached US$2.04 billion, up 20 percent over a weak third quarter last year. Compared with the record-setting second quarter this year, however, the market was down 15 percent sequentially.

Demand for as-a-service solutions continued to pace the Asia Pacific market, with ACV at a record US$1.4 billion, up 14 percent. It was the seventh quarter in a row that as-a-service has surpassed the US$1 billion mark.

Managed services ACV, at $632 million, was up 35 percent against last year's weak performance, although it too was down sequentially against the record second quarter this year. IT outsourcing (ITO) was particularly strong, up 46 percent over last year.

Results were driven by strong gains in China and India, which offset weaker results in AustraliaNew Zealand and Southeast Asia.

Year to date, the combined market in Asia Pacific reached $6.5 billion, up 23 percent, with strong growth in both the as-a-service (up 20 percent) and managed services (up 31 percent) segments.

"Effectively, the Asia Pacific sourcing market has more than doubled since 2016," said Scott Bertsch, ISG partner and regional leader for Asia Pacific. "As-a-service ACV is growing north of 20 percent and now accounts for nearly 65 percent of total ACV. Just three years ago, it accounted for only 47 percent of the market. The managed services sector has been equally strong this year, turning in its best year-to-date performance since 2014."

Within managed services, ITO is up 36 percent year to date, boosted by strong demand for application development and maintenance (ADM) and infrastructure services, up 33 percent and 38 percent, respectively.

Global Forecast
ISG is projecting as-a-service growth of 22 percent globally for 2019, and 2.6 percent growth overall for global IT and business services. The latter forecast is down slightly from last quarter, taking into consideration FX headwinds due to the strong U.S. dollar, and possible top-line softness by a few of the largest providers in the sector.

ISG Index™
Now in its 68th consecutive quarter, the ISG Index™ provides a quarterly review of the latest sourcing industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, academia and the media. For 17 years, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance. In 2016, the ISG Index™ was expanded to include coverage of the fast-growing as-as-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.

SYDNEY, Oct. 24, 2019