Combined market climbs 38 percent, to record $12.4 billion, in first quarter

Demand for both cloud and managed services up double digits

Demand for IT and business services in the Americas rose by double digits in the first quarter, eclipsing $12 billion of annualized spending for the first time ever, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The Americas ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows first-quarter ACV for the combined market—including both as-a-service (XaaS) and managed services—reached a record $12.4 billion, up 38 percent from a year ago, and up 10 percent sequentially from the fourth quarter.

“The Americas market is off to a very strong start in 2022,” said Todd Lavieri, vice chairman and president of ISG Americas and Asia Pacific. “The market is being driven by continued investment, especially in improving customer experiences and optimizing costs to help offset higher inflation.”

Lavieri noted the region has generated an additional $3.5 billion of ACV compared with the first quarter last year and is back on a sequential growth trajectory after two comparatively even quarters to close out last year.

The Americas market continues to be fueled by strong demand for cloud-based XaaS solutions. ACV in this segment soared 50 percent over last year, to a record $8.0 billion, equal to $2.6 billion of incremental ACV, and was up 13 percent over the fourth quarter.

Within this segment, Infrastructure-as-a-Service (IaaS) ACV surged by 63 percent over last year, to a record $5.5 billion, and was up 17 percent from the fourth quarter, as enterprises continue to flock to the public cloud. Software-as-a-Service (SaaS) rose 26 percent year over year, to $2.5 billion.

Managed services ACV jumped 22 percent, to $4.4 billion, the region’s fourth straight quarter with ACV of more than $4 billion and more than 20 percent year-over-year growth. IT outsourcing (ITO) ACV fell by 4 percent, to $2.6 billion, as growth in application development and maintenance services (ADM) was not enough to offset a decline in infrastructure services. Business process outsourcing (BPO), meanwhile, nearly doubled, up 95 percent, to $1.8 billion, with strong growth in industry-specific BPO, facilities and contact center services.

During the quarter, enterprises in the Americas awarded 301 contracts, the second highest volume ever, up 9.5 percent over last year. Of those, 172 were in the $5 million to $10 million range, the smallest band measured by the ISG Index. The region saw a higher-than-normal level of contract restructuring in the quarter, with 104 contracts, worth $1.8 billion of ACV, restructured – up 28 percent and 57 percent, respectively, over last year.

2022 Global Forecast

ISG is forecasting the global market for cloud-based XaaS (IaaS and SaaS) will grow 22 percent for the year, up from its 20 percent forecast last quarter, while the global market for managed services is expected to grow 5.1 percent, unchanged from last quarter’s forecast.

About the ISG Index™

The ISG Index™ is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 78 consecutive quarters, it has detailed the latest industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, universities and the media. In 2016, the ISG Index was expanded to include coverage of the fast-growing as-a-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.

For more information about the ISG Index, visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 800 clients, including more than 75 of the world’s top 100 enterprises, 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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