With COVID-19 accelerating digital transformation and the move to the cloud, global demand for technology and business services has reached a new record for the third straight quarter, the latest state-of-the industry report from Information Services Group (ISG) , a leading global technology research and advisory firm, finds.
Read More: Mitel Extends Partner First Commitment with Enhanced Global Partner Program
“Business has clearly shifted, and if you’re lagging in your own strategy change, you may not be competitive much longer.”
Data from the ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, show second-quarter ACV for the combined global market (both as-a-service and managed services) reached a record $19.1 billion, up 32 percent versus a soft quarter last year, when demand was sharply lower amid the onset of the pandemic. Global ACV this quarter was up 11 percent versus Q1, which, like the quarter before it, established a record high for the global IT and business services market.
“The global market today is driven by two mega-trends: the move to the cloud and digital transformation. COVID accelerated those moves by three to five years,” said Steve Hall, partner and president of ISG. “Business has clearly shifted, and if you’re lagging in your own strategy change, you may not be competitive much longer.”
The cloud-based as-a-service market reached a record $11.2 billion in the second quarter, up 38 percent off a soft compare, but with sequential growth of 13 percent. Infrastructure-as-a-service (IaaS) climbed to a record $8.2 billion, up 41 percent year-over-year and 15 percent quarter-over quarter. Software-as-a-service, at $3.0 billion, also establish a new quarterly high, up 31 percent versus last year and up 8 percent versus the prior quarter.
Read More: SalesTechStar Interview with Mariya George, Co-Founder and President at Cleareye.ai
Managed services topped out at $7.9 billion, a new record, up 24 percent from last year and 8 percent from last quarter, fueled by a record 525 contracts signed during the second quarter, including four mega-deals exceeding $100 million of ACV. IT outsourcing (ITO) reached a record $6.1 billion, up 17 percent from last year and 5 percent over Q1, while business process outsourcing (BPO), at $1.8 billion, soared 52 percent over last year, and 23 percent sequentially.
For the first half of 2021, the combined global market generated a record $36.3 billion of ACV, up 20 percent. As-a-service, at a record $21.0 billion, was up 25 percent, and managed services, at a record $15.3 billion, was up 15 percent. Within as-a-service, IaaS reached a record $15.3 billion, up 28.5 percent, and SaaS hit a record $5.7 billion, up 15 percent. On the managed services side, ITO was at a record $12.0 billion, up 8 percent, and BPO reached $3.3 billion, up 48 percent.
Read More: The Hidden Fees of Fraud
