STAMFORD, Conn., Oct. 14, 2019 /PRNewswire/ -- Enterprises seeking
specialized support to rapidly introduce automation and artificial
intelligence into their operations are driving record-setting
levels of outsourcing activity in 2019, according to new market
research from Information Services Group (ISG) (Nasdaq: III), a
leading global technology research and advisory firm.
The 2019 ISG Momentum® Market Trends & Insights Service Line
Report found strong demand among enterprises to accelerate the
adoption of artificial intelligence and automation is driving
record-setting levels of contracting activity in both the business
process outsourcing (BPO) and information technology outsourcing
(ITO) service lines. There also is widespread demand for data
analytics as part of business process solutions, the report
found.
An average of nearly 10 outsourcing contracts were signed each
day during the first six months of 2019, building on the strong
performance of 2018, when contract volume increased in both ITO and
BPO and was at its highest level ever for ITO.
"Enterprises increasingly are interested in analytics to better
understand and serve their customers, and are looking for
specialized support to quickly introduce modernizing technologies,"
said Paul Reynolds, ISG partner and
chief research officer. "As a result, we see tremendous
opportunities for service providers with data science expertise,
specialized offerings, and the ability to strategize and scale
disparate tools and platforms."
Contracting activity for application development and maintenance
(ADM) services through the first half of 2019 puts ADM on pace to
set a new volume record this year, continuing a 2018 trend that saw
ADM as one of the industry's fastest-growing service lines. ADM as
a distinct service line has surpassed full ITO (data center
management bundled with other IT services) among service lines for
the greatest share of active annual contract value (ACV). ADM now
represents one-third of all active ACV compared with 19 percent for
full ITO engagements. In 2018, ADM and full ITO accounted for
nearly equal shares of total ITO ACV.
Managed network services and infrastructure-only ACV also are
nearly on par with the active ACV of full ITO contracts in 2019,
pointing to a trend away from large, multi-tower commitments with a
single service provider toward smaller contracts with multiple
providers. In the managed network services category, enterprises
are updating their networks to meet changing business needs and are
paying close attention to 5G development. The report found
significant demand for software-defined network (SDN)
technology.
"Clients need a lot of help preparing applications for modern
architectures, most notably in migrating or redeveloping apps for
the cloud," Reynolds said. "Expertise in DevOps, test automation
and AI is in strong demand, but the current shortage of
high-quality AI professionals is the single biggest hurdle
enterprises face in achieving the level of AI implementation they
wish to attain. Expert providers are filling this need."
The report also found that every region of the world was ahead
of its 2018 pace for contract volume in the first six months of
2019. The Americas produced 69 percent of its total 2018 volume;
Europe, Middle East and Africa 66 percent, and Asia Pacific 63 percent through the first half
of 2019. The Americas also had the highest percentage
year-over-year increase in contract awards in 2018, rising 10
percent, to 637. The Americas has produced the most ITO contracts
each of the past three years and is on pace to do so again in
2019.
The 2019 ISG Momentum® Market Trends & Insights Service Line
Report takes an in-depth look at seven leading ITO and BPO service
lines: application development and maintenance (ADM), managed
network services (MNS), data center, workplace services, human
resources outsourcing (HRO), procurement, and finance and
accounting (F&A). The report also includes a snapshot look at
how outsourcing spending is being divided among traditional managed
services delivery and cloud-based as-a-service offerings.
To download the executive summary, visit this webpage.
The ISG Momentum® 2019 Market Trends & Insights Service Line
Report is part of an ongoing series of quarterly reports that focus
on outsourcing activity by geography, vertical industry and service
line. To learn more about these and other ISG Momentum® services
and information products, please visit the ISG Momentum® Research
page on the ISG website or contact ISG.
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 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.
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SOURCE Information Services Group, Inc.