SYDNEY, Oct. 24, 2017 /PRNewswire/ -- Asia Pacific's sourcing market soared to a new high in the third quarter, propelled by record as-a-service spending and a traditional sourcing market that was at its highest level in more than three years, according to the findings of the 3Q17 Asia Pacific ISG Index™ released by Information Services Group (ISG) (NASDAQ: III), a leading global technology research and advisory firm.
The ISG Index™, which measures commercial sourcing contracts with annual contract value (ACV) of US$5 million or more, shows the combined commercial market in Asia Pacific (including both as-a-service and traditional sourcing) reached US$1.5 billion in the second quarter, up 43 percent over the prior year. It was the sixth successive quarter in which the region's ACV exceeded US$1 billion, a sign of a continuing robust market for sourcing services.
As-a-service ACV reached a record $689 million, up 37 percent, while traditional sourcing ACV rose 49 percent, to $783 million, its highest level since the second quarter of 2014.
For the first nine months, combined ACV rose 25 percent, to $3.7 billion, with the as-a-service market climbing 39 percent, to a record $1.9 billion, and the traditional market advancing 13 percent, to $1.8 billion.
Year to date, as-a-service sourcing was fueled by a robust Infrastructure-as-a-Service (IaaS) market, which reached a record US$1.6 billion, up 44 percent. Software-as-a-Service (SaaS), rose 19 percent to US$345 million. Traditional sourcing was paced by Information Technology Outsourcing (ITO) spending of US$1.4 billion, up 32 percent. A record 116 ITO contracts have been signed year to date, with Application Design and Maintenance (ADM) driving a significant share of both contract volume and value. Business Process Outsourcing (BPO), meanwhile, fell 27 percent, to US$381 million.
By industry, financial services (ACV of US$807 million, up 47 percent), business services (ACV of US$657 million, up 32 percent) and manufacturing (ACV of US$637 million, up 20 percent) were among the year-to-date growth leaders. Telecom and media, long the largest sourcing sector in Asia Pacific, was off 21 percent, to US$521 million in ACV, despite 21 percent growth in as-a-service sourcing, as the industry goes through a round of consolidation and retrenched spending.
Asia Pacific's robust performance mirrors that of the global market. Global ACV reached US$10.7 billion in the third quarter, up 16 percent over the prior year. As-a-service sourcing continued its rapid growth, reaching a record high of US$4.7 billion in the quarter, up 43 percent. Traditional sourcing, meanwhile, had modest growth, nudging up 2 percent year over year, to US$6.0 billion.
"Asia Pacific continues to embrace cloud-based solutions to a greater extent than other regions, with as-a-service sourcing accounting for 52 percent of the region's ACV through the first nine months of 2017. That's not to say the region is abandoning traditional sourcing; quite the contrary, the past two quarters have seen traditional sourcing ACV at among its highest levels ever, particularly in the ANZ and ASEAN sub-regions," said Lisa Borden, partner and head of ISG Australia and New Zealand (ANZ). "Going forward, we see continued strength in the as-a-service market, especially, through 2018."
About the ISG Index™
Now in its 60th consecutive quarter, the ISG Index™ provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media. For the last 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.
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.