Second-quarter combined ACV grows 23 percent year-on-year to
€3.7 billion
Traditional sourcing ACV reaches €2.5 billion, reversing a
downward trend
As-a-Service growth accelerates, up 50 percent to €1.2
billion
LONDON, July 17, 2018 /PRNewswire/ -- The sourcing
market in Europe, Middle East and Africa (EMEA) rebounded in the second quarter
of 2018 as European businesses focused their attention on building
their digital backbone, 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 EMEA ISG Index™, which measures commercial outsourcing
contracts with an annual contract value (ACV) of €4 million or
more, shows that the EMEA market posted a combined second-quarter
ACV of €3.7 billion, up 23 percent over the prior year.
Traditional sourcing grew 11 percent to €2.5 billion, bucking a
four-quarter downward trend. As-a-service ACV in the region surged,
rising 50 percent, to €1.2 billion. Both
Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS)
gained record highs and contributed equally to the growth.
Steve Hall, partner and president
of ISG, said: "The EMEA sourcing market rebounded strongly in the
second quarter despite an economic environment focused on GDPR
preparation and issues around BREXIT. Companies are now investing
in technology to build their digital backbone. In the context of
EMEA's uncertain economic and political times, it's encouraging
that businesses are recognizing the strength that a strong digital
backbone provides in allowing them to be agile enough to adapt with
the times."
Globally, second-quarter ACV for the combined global market
advanced 31 percent to a record €9.9 billion. Demand for technology
and business services continued to accelerate, with traditional
sourcing ACV reaching €5.6 billion, up 19 percent, and as-a-service
ACV up 51 percent to €4.3 billion. ACV in this space has almost
doubled in the last two years, powered by new highs in both SaaS
and IaaS.
Market Insights
Second-quarter traditional sourcing ACV in the UK rose 11
percent year-on-year. Despite this uptick, first half ACV in the UK
finished down more than 50 percent compared with 2017's
exceptionally strong results. The number of UK contracts signed
remained consistent at 112 but lacked the unusually large deals
which lifted the market in the first half of 2017.
Traditional sourcing in DACH rebounded in the second quarter,
following a notably slow start to the year, with ACV rising 70
percent compared to the previous quarter. Despite this rise, DACH
ACV remained flat year-on-year, with the number of contracts
reaching just under half of their total 12 months ago.
Traditional sourcing ACV in France grew 58 percent compared to the
previous quarter, despite a sharp drop in the number of contracts
signed. For the half year, France
saw a decline in contract numbers and ACV, both down around 25
percent year-on-year.
The Nordics region showed robust growth in the first half of
2018, with ACV up 47 percent year-on-year and a 17 percent increase
in the number of contracts. The smaller EMEA markets also showed
strength with gains in Southern
Europe, Russia/Eastern Europe and Africa/Middle
East.
Sector Breakdown
As-a-service ACV grew substantially across all business sectors
in EMEA, compared to the same period in 2017. The business
services, financial services and telecom & media sectors all
posted as-a-service ACV gains in excess of 50 percent.
The retail sector was the only vertical to show growth in both
traditional sourcing and as-a-service, with combined ACV surging 90
percent compared to the first half of 2017. While traditional
sourcing ACV in the manufacturing sector held steady, all other
industries posted a decline.
About the ISG Index™
Now in its 63rd consecutive
quarter, the ISG Index™ provides a quarterly review of the latest
sourcing industry data and trends for clients, providers, analysts
and the media. For more than 15 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-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.
The Q2 2018 EMEA ISG Index™ was presented during a conference
call and webcast for media and analysts on July 16, 2018.
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.
Logo - https://mma.prnewswire.com/media/454165/ISG_Logo.jpg