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Global Economy, Sourcing Get ‘Shot in the Arm’ in Q2
Jul 16, 2021, 14:12 PM
Title :Global Economy, Sourcing Get ‘Shot in the Arm’ in Q2
Summary :The global economy got a proverbial shot in the arm in the second quarter as COVID vaccines continue to be administered around the world.
External URL :
Alternate title :
Show date :
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Public date :
Jul 9, 2021, 01:00 AM
The global economy got a proverbial shot in the arm in the second quarter — this time, quite literally — as COVID vaccines continue to be administered around the world and the pandemic begins to recede in many, though not all, places.
With the loosening of lockdowns, economic activity is picking up. Enterprises that invested in digital over the last 15 months—just to keep the wheels of business turning—are now doubling down on digital, as they chase new growth opportunities coming out of the pandemic.
We expected the growth numbers we reported during our Q2 ISG’s Index™ call this week would be eye-popping, given the comparison with the economic standstill of the prior spring. But our data showed emerging strength across markets and technology stacks, even without the benefit of the soft compare.
The annual contract value (ACV) for the global combined market (managed services plus as-a-service) reached a record $19.1 billion in the second quarter, a 32 percent increase from the same period in 2020 and an 11 percent gain from the first quarter of this year. It was the third straight quarter the industry topped itself and set a new record for spending. A $30 billion quarter later this year isn’t out of the question.
Even before the pandemic, cloud adoption and digital transformation were all the rage. COVID fast-forwarded those trends by three to five years. As-a-service ACV topped $11 billion for the first time, a 13 percent increase from the prior quarter. Infrastructure-as-a-service and software-as-a-service each recorded their own personal bests.
Managed services nearly hit $8 billion this quarter. For the past several years, we noticed deal size shrinking, but in this quarter, a majority of contracts were larger, in the $20 million to $40 million range. In the ITO space, ADM made a strong showing, perhaps as a response to the rapid growth in cloud-based applications, data modernization and the digital workplace. The growth of engineering services, fueled by IT/OT integration and smart manufacturing, will continue to shape the future of BPO.
Growth in the Americas historically has been a seesaw pattern of one quarter up, the next down. But this quarter, ACV once again grew by double digits. Combined market ACV surpassed $9 billion for the first time. Both as-a-service and managed service recorded new highs.
EMEA’s combined market ACV edged up 4 percent from the prior quarter. Its quarterly growth seems to be moving sideways, though Q2 showed a strong 31 percent gain from this time last year. The as-a-service market gets credit for bolstering the region’s performance. Its record $2.3 billion quarter marks a 41 percent increase from the prior quarter, and means cloud-based services, now at 46 percent of the combined market, will soon eclipse managed services for market dominance in the region. Infrastructure-as-a-service surged 47 percent sequentially to $2.3 billion. Managed services ACV, meanwhile, declined for the second consecutive quarter.
Not to be outdone, Asia Pacific had its own record-high ACV for the combined market, reaching $3.3 billion, a 59 percent gain over the prior year, and a 35 percent rise from the first quarter. Both as-a-service and managed services ACV set records, and contracting activity was the highest it’s been in three years.
We invite industry experts to our ISG Index™ call each quarter, and this time we took a closer look at the insurance industry. Johanna von Geyr, ISG partner and EMEA lead in BFSI, lent her insights into the opportunities and pitfalls she sees in the sector. CEOs tell her they’ve made progress in their digital transformation, now they want it to work faster. They want to simplify and enhance the customer experience for transactions that, admittedly, hold little excitement for customers. Who looks forward to buying insurance or filing a claim? Private equity investors, particularly in the U.S., are putting more pressure on insurance companies to work at their most cost-efficient level. And the increasing frequency and escalating damage of cybersecurity attacks has pushed the risk-averse insurance industry to come up with new products and improvements.
Stanton Jones, a regular on our ISG Index™ calls, also had cybersecurity as one of the three themes he recapped from his weekly ISG Index Insider email — you can sign up for it on ISG’s website. The prevalence of ransomware attacks has created huge demand for managed security services. He also shared some interesting data on how enterprises make buying decisions — the lowest bidder doesn’t always win. And he praised the resiliency of Indian-heritage IT service providers during the COVID surge.
Looking out on the balance of the year, we’re predicting 9 percent growth in managed services ACV for 2021, and a 21 percent increase in as-a-service, both up over our prior forecasts. Join our Q3 ISG Index™ call, on October 13, to see if we’re on pace..
Before I close, one public service announcement: if you get the opportunity for a vaccine, please take your shot. Do it for yourself, your family, your community and the economy.
To get a fuller picture of current market dynamics, view our 2Q21 Global ISG Index™ webcast replay, presentation slides and press release on our ISG Index™ website.
For a quick video summary, I encourage you to watch the latest edition of “ISG Index™ Headlines” on this page or by clicking here.
Global Economy, Sourcing Get ‘Shot in the Arm’ in Q2
Jul 16, 2021, 14:12 PM
Title :Global Economy, Sourcing Get ‘Shot in the Arm’ in Q2
Summary :The global economy got a proverbial shot in the arm in the second quarter as COVID vaccines continue to be administered around the world.
External URL :
Alternate title :
Show date :
No
Public date :
Jul 9, 2021, 01:00 AM
The global economy got a proverbial shot in the arm in the second quarter — this time, quite literally — as COVID vaccines continue to be administered around the world and the pandemic begins to recede in many, though not all, places.
With the loosening of lockdowns, economic activity is picking up. Enterprises that invested in digital over the last 15 months—just to keep the wheels of business turning—are now doubling down on digital, as they chase new growth opportunities coming out of the pandemic.
We expected the growth numbers we reported during our Q2 ISG’s Index™ call this week would be eye-popping, given the comparison with the economic standstill of the prior spring. But our data showed emerging strength across markets and technology stacks, even without the benefit of the soft compare.
The annual contract value (ACV) for the global combined market (managed services plus as-a-service) reached a record $19.1 billion in the second quarter, a 32 percent increase from the same period in 2020 and an 11 percent gain from the first quarter of this year. It was the third straight quarter the industry topped itself and set a new record for spending. A $30 billion quarter later this year isn’t out of the question.
Even before the pandemic, cloud adoption and digital transformation were all the rage. COVID fast-forwarded those trends by three to five years. As-a-service ACV topped $11 billion for the first time, a 13 percent increase from the prior quarter. Infrastructure-as-a-service and software-as-a-service each recorded their own personal bests.
Managed services nearly hit $8 billion this quarter. For the past several years, we noticed deal size shrinking, but in this quarter, a majority of contracts were larger, in the $20 million to $40 million range. In the ITO space, ADM made a strong showing, perhaps as a response to the rapid growth in cloud-based applications, data modernization and the digital workplace. The growth of engineering services, fueled by IT/OT integration and smart manufacturing, will continue to shape the future of BPO.
Growth in the Americas historically has been a seesaw pattern of one quarter up, the next down. But this quarter, ACV once again grew by double digits. Combined market ACV surpassed $9 billion for the first time. Both as-a-service and managed service recorded new highs.
EMEA’s combined market ACV edged up 4 percent from the prior quarter. Its quarterly growth seems to be moving sideways, though Q2 showed a strong 31 percent gain from this time last year. The as-a-service market gets credit for bolstering the region’s performance. Its record $2.3 billion quarter marks a 41 percent increase from the prior quarter, and means cloud-based services, now at 46 percent of the combined market, will soon eclipse managed services for market dominance in the region. Infrastructure-as-a-service surged 47 percent sequentially to $2.3 billion. Managed services ACV, meanwhile, declined for the second consecutive quarter.
Not to be outdone, Asia Pacific had its own record-high ACV for the combined market, reaching $3.3 billion, a 59 percent gain over the prior year, and a 35 percent rise from the first quarter. Both as-a-service and managed services ACV set records, and contracting activity was the highest it’s been in three years.
We invite industry experts to our ISG Index™ call each quarter, and this time we took a closer look at the insurance industry. Johanna von Geyr, ISG partner and EMEA lead in BFSI, lent her insights into the opportunities and pitfalls she sees in the sector. CEOs tell her they’ve made progress in their digital transformation, now they want it to work faster. They want to simplify and enhance the customer experience for transactions that, admittedly, hold little excitement for customers. Who looks forward to buying insurance or filing a claim? Private equity investors, particularly in the U.S., are putting more pressure on insurance companies to work at their most cost-efficient level. And the increasing frequency and escalating damage of cybersecurity attacks has pushed the risk-averse insurance industry to come up with new products and improvements.
Stanton Jones, a regular on our ISG Index™ calls, also had cybersecurity as one of the three themes he recapped from his weekly ISG Index Insider email — you can sign up for it on ISG’s website. The prevalence of ransomware attacks has created huge demand for managed security services. He also shared some interesting data on how enterprises make buying decisions — the lowest bidder doesn’t always win. And he praised the resiliency of Indian-heritage IT service providers during the COVID surge.
Looking out on the balance of the year, we’re predicting 9 percent growth in managed services ACV for 2021, and a 21 percent increase in as-a-service, both up over our prior forecasts. Join our Q3 ISG Index™ call, on October 13, to see if we’re on pace..
Before I close, one public service announcement: if you get the opportunity for a vaccine, please take your shot. Do it for yourself, your family, your community and the economy.
To get a fuller picture of current market dynamics, view our 2Q21 Global ISG Index™ webcast replay, presentation slides and press release on our ISG Index™ website.
For a quick video summary, I encourage you to watch the latest edition of “ISG Index™ Headlines” on this page or by clicking here.
Understand how enterprises are investing in new digital technologies today and prepare for the services they’ll be buying tomorrow from the authoritative source of marketplace intelligence.
Howard Davies is a Partner with more than 25 years of experience in sourcing, operational management, automation and benchmarking of IT and business services. He is currently responsible for the Retail, CPG, Travel, Transportation, Oil and Gas sectors in the UK.
Jan Erik and his team provide ISG’s advisors and its clients with essential research and insight into the rapidly evolving technology and business process outsourcing landscape, the major players and innovators in those markets and the relative competitive value they deliver. He sees his core role as empowering excellence—in his team, in ISG’s advisors’ knowledge and ability to deliver, in provider solutions and in client relationships and outcomes.
Past achievements for clients
Since spearheading the creation of ISG Provider Lens, one of the firm’s signature research publications, Jan Erik has continuously expanded its geographic and subject matter breadth, listening to both clients and the provider community
to create a truly comprehensive resource.
As a research partner, principal analyst and global head of ISG Provider Lens, Jan Erik has, among his many accomplishments:
Advocated for and built a core team of analysts in India into a global research powerhouse, creating one of the industry's most trusted and sought-after research organizations.
Introduced research solutions specific to the public sector, creating sophisticated and dedicated reporting and insights that deliver the depth and quality of private sector research to local and state governments.
Leveraged his deep interest in living responsibly and sustainably to help ISG become a leader in ESG best practices, and to provide its clients with research to help them do the same across their businesses and provider networks.
John Boccuzzi, Jr. is Partner and Chief Sales Officer, ISG Research, which is the community that brings together buyers and sellers of digital services and technologies, leveraging ISG’s data and market insights.
John runs a dynamic team of professionals that work closely with Service providers to understand their needs and create solutions to drive success. A recognized speaker, blogger and TEDx speaker, John is a passionate thought leader in the area of Customer Experience. In 2018 John’s TEDx talk “I was Seduced by Exceptional Customer Service” was the most popular CX video of year by Omoto. John prides himself on focusing on the client’s needs and then developing unique solutions that will set an organization on the correct path.
Karen Healy is responsible for establishing and growing a global portfolio of ISG thought leadership conferences and events. Karen joined ISG in 2016 and has rapidly developed a portfolio of events that explore, inform and advise on the benefits and productivity gains afforded organizations through digital transformation. An accomplished events executive with a strong track record in leading BtoB conference and events businesses, Ms. Healy has over 30 years’ experience in Technology Research and Advisory businesses. She has a proven track record of innovation, aggressive growth and significant profit contributions as well as extensive experience leading and developing cross-functional teams of employees and outside service providers. Karen holds a MBA in Marketing from the University of New Haven and a BSc in Business and Marketing from Fordham University.
As leader of the entire client experience, including all marketing and communications globally, Paul takes a hands-on approach to the firm’s digital and product marketing, partnerships and alliances, sales enablement and corporate communications. In overseeing ISG research, Paul has strengthened the offering so that it resonates deeply with technology providers and enterprise service providers and is a go-to source for in-depth knowledge of technology trends and advancements. Paul’s purview is underpinned by his steadfast commitment to market technology and how it can be used to grow both ISG’s and clients’ businesses.
Past achievements for clients
Paul’s experience as a brand evangelist, message creator and full-stack marketer position him perfectly to ensure that ISG’s value proposition is well articulated and its brand impact far-reaching. He has managed teams located across the globe, championed memorable communication and developed a talent of looking beyond black-and-white KPIs to determine whether a marketing strategy is actually effective.
Paul Reynolds leads Momentum, a division of ISG that provides research services to help service providers better target, win and retain business. Paul has 25 years of market research experience with specific expertise in methodology development, data analytics and research process design. Having found many service providers’ Advisor Relations functions to lack appropriate analytics, Paul is working to develop innovative new approaches that allow for data-driven programs based on the unique needs of each client. His approach benefits Advisor Relations, go-to-market functions, sales, strategy, marketing, and market/competitive intelligence teams.
Chris Pattacini is a Managing Director at ISG, with more than 30 years of industry experience. As an experienced IT outsourcing and benchmarking consultant, Chris is a recognized industry leader who utilizes state of the art benchmarking tools for project-based support of outsourcing transactions for large corporate clients. Chris’s expertise includes market price intelligence for various business and IT services. He currently manages the ProBenchmark platform.
Sunder Sarangan is focused on the success of the provider ecosystem at ISG. He leads various programs and products as part of the leadership team for ISG Research. Additionally, he is responsible for new products that address the specific needs of niche and specialized providers and their market success.
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