Digital Driving Demand for IT, Business Process Outsourcing, ISG Momentum® Report Finds

STAMFORD, Conn., Sept. 28, 2017 /PRNewswire/ -- The digital revolution is creating widespread demand for outsourcing services as enterprises seek to upgrade their technology infrastructure and modernize many types of business processes, putting 2017 on pace to set a new record for contract awards, according to the 2017 ISG Momentum® Market Trends & Insights Service Line Report published this week by Information Services Group (ISG) (NASDAQ: III), a leading global technology research and advisory firm.

Enterprises are eager to apply more automation to their IT operations and business processes, which is driving demand to outsource, particularly to gain access to robotic process automation (RPA) solutions. According to ISG Research, nearly half of enterprises expect to have an RPA system in production by 2019.

Demand also is growing for analytics, artificial intelligence (AI) and cognitive technologies, all of which are maturing and becoming applicable to new business use cases. Transitioning to the cloud also remains a strong outsourcing driver. Approximately one in six outsourcing contracts has a significant cloud component, the highest level on record, according to ISG Research.

These developments are driving heavy outsourcing contract volume, the ISG Momentum® report found. Based on first-half results, 2017 is on pace to set a new record for the total number of information technology outsourcing (ITO) and business process outsourcing (BPO) contracts awarded in a single year, according to ISG Research.

The ISG Momentum® Service Lines report, which provides in-depth analysis of the performance of seven leading service lines over the last 10 years, found strong current demand for many ITO and BPO services.

The application development and maintenance (ADM) service line produced the most outsourcing contracts in 2016 and expanded strongly in the first half of 2017. Enterprise clients want their outsourcing service providers to help them create DevOps environments in which automated processes between software development and IT teams enable software to be built, tested, and released faster and more reliably. Clients also want their providers to take more responsibility for application maintenance.

Data center was another strong ITO service line, with client demand for colocation and cloud services motivating expanded outsourcing. RPA demand also was a common theme among BPO service lines. Clients are looking to service providers to help them apply RPA for human resources, procurement, finance and accounting and other operations.

"Whether it is their IT operations or business processes, enterprises want to change how things are done and are turning to outsourcing service providers to help them make the changes," said Paul Reynolds, ISG partner and chief research officer. "Desire for process improvements and access to new technologies are strong demand drivers for many ITO and BPO service lines."

For traditional providers, new technologies are creating both competition and opportunity. "Although cloud and automation technologies are increasing competition and margin pressure for traditional service providers," Reynolds said, "they are also creating a lot of opportunity by motivating outsourcing. Markets for many traditional services remain strong, which is contributing to heavy contract volumes."

The 2017 ISG Momentum® Market Trends & Insights Service Line Report takes an in-depth look at seven leading ITO and BPO service lines: application development and maintenance (ADM), managed network services (MNS), data center, workplace services (formerly referred to as end-user computing, or EUC), human resources outsourcing (HRO), procurement, and finance and accounting (F&A). The service line analysis includes contract volume, spending level and service provider market share data broken out by region and client-size segment, with analysis from ISG advisors and thought leaders active in each discipline.

The report also includes separate coverage that examines the state of the market for engineering services outsourcing (ESO), a section that documents how outsourcing spending is being allocated between traditional and as-a-service delivery, and a chapter that examines the role automation is playing in the market with analysis from the ISG Automation Index™.

To view an executive summary of the 2017 ISG Momentum® Market Trends & Insights Service Line Report, click here.

The latest ISG Momentum® report is part of an ongoing series of quarterly reports that focus on outsourcing activity by service line, vertical industry and geographic location. To learn about these or other ISG Momentum® services and information products, please visit the ISG Momentum® Research page on the ISG website.

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.

SOURCE Information Services Group, Inc.

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