Country-by-Country Look at Sourcing Finds Global Trends & Local Opportunities

Global outsourcing penetration jumped to a new high in 2018 as enterprises look for help modernizing their environments and, more specifically, moving workloads to the cloud. This is according to the 2018 ISG Momentum® Geography Report, which found growing outsourcing adoption worldwide and promising developments in many major markets. Because of public and private investments in infrastructure and workforce development in many countries around the world, enterprise clients today have more viable options to choose from for service delivery locations.

Germany is the top-ranked country for outsourcing spending growth potential in 2019, according to ISG’s proprietary Outsourcing Viability Index (OVI) for Market Opportunity. Ending the United States’ two-year reign as the top-ranked market, Germany is one of six European countries to rank in the top 10 of the 2019 OVI. The report provides detailed outsourcing contract data and analysis for Germany and 27 other major country markets. Canada made the largest one-year improvement in the rankings, rising six positions to seventh place. The U.S. remains the largest market for outsourcing spending. The U.K. and several other European countries appear to be delaying outsourcing decision-making due to Brexit and associated political uncertainty.

The report also includes the Outsourcing Viability Index for Delivery Center Maturity, which analyzes 22 countries’ ability to support outsourcing service delivery. India again ranked highest in delivery maturity, with China and Malaysia following and second and third positions respectively. Costa Rica made the biggest improvement of any country in 2018, finishing just outside the top 10 (in 11th place) for service delivery attractiveness. Costa Rica was one of only a few countries that was able to grow its labor pool for outsourcing services work, as many established locations are experiencing increased competition for limited talent.

The full report provides an in-depth, country-by-country look at the leading markets for outsourcing service sales and locations for service delivery, including profiles of nearly four dozen countries. Here are some of the highlights:

  • The U.S. and Canada are achieving economic growth despite trade policy uncertainty over NAFTA and tariffs. The outsourcing outlook is improving in the region; annual contract value (ACV) was up in 2018, and we expect more growth in 2019. Digital transformation is the strongest sourcing and tech investment driver for enterprises in the U.S. While the Canadian market is more reliant on traditional outsourcing, ISG is seeing rising demand among Canadian companies to adopt new technologies, which service providers must be prepared to support if they are to remain competitive in the market.
  • Europe has been a hotbed for engagements involving Internet of Things (IoT), robotic process automation (RPA), analytics, other advanced technologies and new software development approaches. European-based clients support a range of traditional and emerging services while the highly mature data center segment continues to innovate and expand. Europe placed six countries in the top 15 for service delivery maturity, giving clients on the continent several high-quality nearshore options.
  • Asia is the leading region for offshore service delivery, and produced modest outsourcing ACV growth in 2017, led by increased demand in India. China’s market was also expanding, while outsourcing ACV in the major Australian market has been down. Outsourcing sales in Asia will likely continue to be uneven with much untapped potential, while it maintains its strong reputation for service delivery that in several countries is being helped by targeted government investments.

Outsourcing data presented is from ISG’s databases of outsourcing contract activity. ISG sourcing and technology experts working in many countries worldwide contribute to the analysis. The macroeconomic data comes from dozens of sources, including the Organization for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), the World Bank, the U.S. Central Intelligence Agency (CIA) and the World Economic Forum (WEF).

To learn more about the 2018 ISG Momentum® Geography Report and get free access to the executive summary, visit

About the authors

Aparna has over ten years of experience researching and writing on the impact of digital transformation on customer experience, operations, people and culture. Her work has involved conducting in-depth research and data analysis focused on identifying future trends, key challenges and building business cases to develop differentiated frameworks that help clients profitably grow their businesses.

Randy has global responsibility for ISG’s Provider Services product portfolio.  In this capacity, Randy is tasked with achieving the product family revenue targets; driving the strategy, roadmap and product feature definition to deliver client value and keep the portfolio current, competitive; and, managing the product lifecycle.