As-a-service ACV reaches record $5.2
billion; managed services produces mixed results
Americas demand for cloud-based services reached a record high
during the first quarter even as the market for traditional managed
services produced mixed results, 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 Americas ISG Index™, which measures commercial outsourcing
contracts with annual contract value (ACV) of $5 million or more,
shows the region delivered a record $5.2 billion of cloud-based
as-a-service ACV in the first quarter, up 11 percent from the prior
year and 10 percent over the fourth quarter. Growth was fueled by
strong demand for infrastructure-as-a-service (IaaS), which rose 14
percent versus the prior year, to a new high of $3.5 billion, along
with 5 percent growth in software-as-a-service (SaaS), to $1.7
billion.
“Enterprise demand for cloud-based services continues to rise,”
said Todd Lavieri, vice chairman of ISG and president of ISG
Americas and Asia Pacific. “If anything, the pandemic has served as
a catalyst for growth. Over the last year, companies have
accelerated their cloud adoption to enable remote working and
improve digital customer experience, while also seeking efficiency
and cost savings so they can reinvest in other areas, such as
cybersecurity, that are critical to their overall digital journey.
This year, we see digital transformation picking up even more steam
as global economies begin to rebound.”
The managed services segment, meanwhile, dipped 1 percent from
last year, to $3.4 billion, but was up 32 percent from the fourth
quarter, helped by 11 awards with ACV in excess of $40 million. IT
outsourcing (ITO), at $2.5 billion, was down 8 percent from last
year, but soared 51 percent from the fourth quarter, while business
process outsourcing (BPO) rose 33 percent from the prior year, to
$830 million.
At $8.6 billion of ACV, the Americas combined market
(as-a-service and managed services) was up 6 percent from the prior
year and up 18 percent from the fourth quarter.
A number of significant deals were reported during the first
quarter. Within the IaaS space, the public cloud hyperscalers
battled for market share in the automotive sector, as Ford inked a
six-year deal with Google Cloud Platform to support in-vehicle
connectivity, while Microsoft invested in Cruise, GM’s driverless
car startup, which will use Microsoft’s Azure cloud.
On the SaaS side, key deals included ServiceNow’s multiyear,
multi-product contract with AT&T, along with other signings at
BP, USAA and Booking.com. Adobe, meanwhile, had notable customer
wins for its Experience Platform, including at Abbott Labs,
Coca-Cola, FedEx and Mondelez.
Among notable ITO deals, Kaiser Permanente signed a multiyear
ADM deal with Accenture to re-platform digital assets on Azure, and
Infosys inked a five-year deal with Newmont Mining to leverage AI.
On the infrastructure side, DXC won a sizable deal with Molson
Coors across multiple layers of the enterprise technology
stack.
The BPO market was fueled by industry-specific services and
engineering and R&D services. Infosys signed a $500 million
deal with Google to provide customer experience and engineering
support. Contact Center services, a distressed sector last year,
began to rebound, as evidenced by TTEC’s agreement with Schwan’s
Home Delivery to quickly deliver a virtual customer engagement
center.
2021 Global Forecast
ISG is forecasting the global market for cloud-based services
(IaaS and SaaS) will grow 18 percent in 2021, down slightly from
its 20 percent forecast at the start of the year. ISG, meanwhile,
has raised its growth forecast for managed services to 5 percent,
up from 3 percent at the start of the year.
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 74 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 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/20210420005823/en/
Will Thoretz, ISG +1 203 517 3119 will.thoretz@isg-one.com
Cait Buckley, Matter Communications for ISG +1 617 874 5214
isg@matternow.com
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