SYDNEY, Aug. 8, 2019 /PRNewswire/ -- The Asia Pacific outsourcing market reached a record high in the second quarter, boosted by strong demand for managed services, 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 second-quarter ACV for the combined Asia Pacific market (both managed services and as-a-service) reached an all-time high of US$2.2 billion, up 6 percent. It was the region's third straight quarter with ACV above US$2 billion, and the fourth in the last five quarters above that mark.
Overall growth was powered by a surging managed services segment, which climbed 15 percent, to US$967 million, its best quarterly result in five years. In all, enterprise buyers signed 10 managed services contracts each worth more than US$20 million in ACV, double the number of the year-ago quarter. Demand was particularly strong in China, South Korea and India, offsetting some weakness in Japan and in the Australia-New Zealand market. Despite the surge in large contract awards, overall deal volume was down 18 percent for the quarter.
Demand for cloud-based solutions, long the driver of the region's growth, produced as-a-service ACV of US$1.3 billion in the second quarter, flat with prior year. It was the sixth straight quarter the region surpassed US$1 billion in as-a-service ACV, but the first time in 11 straight quarters that as-a-service ACV did not establish a new quarterly record. Sluggish results for infrastructure-as-a-service (IaaS) in China pushed regional IaaS ACV down 3 percent, to US$1.1 billion, for the quarter. Software-as-a-service (SaaS), meanwhile, rose 18 percent, to US$206 million.
For the first six months of 2019, Asia Pacific's combined market generated ACV of US$4.3 billion, up 19 percent. Managed services ACV climbed 22 percent in the half, to US$1.6 billion, driven by strong demand from the manufacturing and telecommunications industries, which offset weaker results in the region's largest sourcing industry, banking, financial services and insurance (BFSI). As-a-service ACV for the half reached US$2.7 billion, up 17 percent over the prior year.
"Effectively, the combined sourcing market in Asia Pacific has doubled since 2016," said Scott Bertsch, ISG partner and regional head of Asia Pacific. "Enterprises are modernizing and rationalizing their entire IT estate, with cloud migration, open APIs and infrastructure platforming being used to increase efficiency, drive growth and enhance the digital experiences of customers."
About the ISG Index™
Now in its 67th consecutive quarter, the ISG Index™ provides a quarterly review of the latest sourcing industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, academia and the media. For nearly 17 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.
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 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.