ISG Index™: Asia Pacific Sourcing Market Reaches Three-Year High
Asia Pacific Combined Market has generated ACV in excess of US$1 billion for four consecutive quarters
As-a-Service accounts for more than two-thirds of the regional spend
SYDNEY, May 1, 2017 /PRNewswire/ -- The Asia Pacific sourcing market, boosted by growing demand for cloud-based services, had its strongest performance in three years, according to the findings of the 1Q17 ISG Index™ released by Information Services Group (ISG) (NASDAQ: III), a leading global technology research and advisory firm.
The ISG Index™, which measures commercial and public sector sourcing contracts with an annual contract value (ACV) of US$5 million or more, shows that the combined commercial market in Asia Pacific reached US$1.08 billion in the first quarter of 2017, up marginally from the fourth quarter of 2016 and 16 percent year on year. This was the region's strongest quarter for ACV since the beginning of 2014 and marked the fourth consecutive quarter it generated values in excess of US$1 billion, a record run for the region.
The jump in combined ACV was propelled by rapid as-a-service growth, up 59 percent year on year. In the first quarter, the region's as-a-service segment accounted for more than two-thirds of the combined market value while traditional sourcing ACV sunk to its lowest level in a decade.
From a trailing-12-month perspective, the Infrastructure-as-a-Service (IaaS) market soared 77 percent, while the Software-as-a-Service (SaaS) market declined 6 percent. In the traditional sourcing space, Information Technology Outsourcing (ITO) continued its climb out of the 2016 trough, up 8 percent in the trailing 12 months, while Business Process Outsourcing (BPO) slid by 48 percent, due to the absence of a megadeal that drove performance in the previous 12-month period.
The region's largest sourcing industry, Telecom and Media, saw robust growth in the trailing 12 months, with as-a-service up 60 percent and traditional sourcing up 17 percent. Similarly, Financial Services also grew sharply, with as-a-service up 49 percent and traditional sourcing up 10 percent. Manufacturing, meanwhile, was off sharply from the prior 12-month period, as even a 43 percent increase in as-a-service could not offset a 49 percent drop in traditional sourcing.
Public sector combined ACV reached US$3.3 billion in the trailing 12 months, a jump of 23 percent compared with the previous period. Much of this contract value was signed in Australia/New Zealand, which, along with the Americas and the U.K., is one of the most active regions for public sector sourcing.
Globally, ACV for the combined commercial and public sector market stood at US$23.4 billion for this quarter. While this performance was up 15 percent from the fourth quarter of 2016, it fell short of the US$25.5 billion benchmark reached in the first quarter of 2016. Global as-a-service ACV increased by US$1.3 billion, or 38 percent, in the first quarter of 2017 compared with the same period last year.
About the ISG Index™
Now in its 58th 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 nearly 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.
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.
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