Demand for Cloud Services Boosts Asia Pacific Sourcing Market

(Eds: Disclaimer: The following press release comes to you under an arrangement with PR Newswire. PTI takes no editorial responsibility for the same.) Strong growth underpinned by demand for ITO and as-a-serviceDemand for digital services pushes as-a-service ACV past the US$1 billion mark SYDNEY, April 29, 2019 /PRNewswire/ -- Continuing strong demand for cloud services boosted the Asia Pacific sourcing market in the first quarter, with contract value reaching US$2 billion, the region's second-best quarter ever, according to the latest state-of-the industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm. Data from the ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of US$5 million or more, show first-quarter ACV for the Asia Pacific market (both as-a-service and traditional sourcing) climbed 33 percent versus the same period last year. Growth in ACV was recorded across all sub regions, with only China posting a decline in value, down 84 percent year on year. Activity in Australia/New Zealand (ANZ), South Asia and Japan drove the market. Traditional sourcing was up 34 percent for the period, to US$631 million, with IT outsourcing (ITO) ACV climbing more than 70 percent, driven by large infrastructure and network services awards. Business process outsourcing (BPO), however, dropped 38 percent due to the impact of uneven contract flow, which is normal in this region. Contract volume, although down 9 percent, was paced by larger contract values. As-a-service ACV advanced 33 percent, to a quarterly record of US$1.35 billion, as more work is moved to the cloud. Infrastructure-as-a-Service (IaaS) growth accelerated, up 37 percent, to just over US$1.16 billion, while Software-as-a-Service (SaaS), rose 14 percent, to US$190 million. On a trailing 12-month basis, all industry sectors, except for Telecom and Media, posted growth. ACV in the Retail sector jumped 66 percent for the period, fueled by a number of large traditional sourcing deals and a 52 percent uptick in as-a-service values. Combined ACV for the Energy and Business Services Industries each grew more than 50 percent, while the regional powerhouses, Financial Services and Manufacturing, posted growth of 31 percent and 25 percent, respectively. Lisa Borden, partner and head of ISG Australia and New Zealand (ANZ), said: "The drive for digital transformation shows no signs of slowing. Businesses across Asia Pacific are investing in their future, despite concerns of a broader, global slow-down. Much of the regional growth is being fueled by a robust IaaS market, with hybrid and multi-cloud emerging as the architecture of choice. On the traditional side, ITO remains robust, as enterprises continue to focus on application and architecture modernization." Globally, first-quarter ACV grew 12 percent, to US$13.5 billion. As-a-service ACV was up 26 percent, exceeding the US$6 billion mark for the first time, while traditional sourcing inched up 2 percent. About the ISG Index Now in its 66th consecutive quarter, the ISG Index provides a quarterly review of the latest sourcing industry data and trends for clients, service and technology providers, analysts and the media. For more than 16 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. 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 70 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; 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 countriesa 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 Logo - PWRPWR