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With Covid-19 accelerating digital transformation and the move to the Cloud, global demand for technology and business services in the June quarter reached a new record for the third straight quarter, according to Information Services Group (ISG), a global technology research and advisory firm.
The global combined Annual Contract Value (ACV) – deals $5 million and above – reached a record $19.1 billion. Cloud-based as-a-service spend reached a record $11.2 billion, up 38 per cent and managed services also reached a new quarterly high of $7.9 billion, up 24 per cent. The ISG has raised its 2021 forecasts for both as-a-service and managed services.
Within Cloud-based ‘as-a-service’, Infrastructure-as-a-service climbed to a record $8.2 billion, up 41 per cent year-over-year and 15 per cent quarter-over quarter. Software-as-a-service at $3 billion, also established a new quarterly high, up 31 per cent versus last year and up 8 per cent versus the prior quarter.
The growth in managed services was fuelled by a record 525 contracts signed during the second quarter, including four mega-deals exceeding $100 million of ACV. IT outsourcing (ITO) reached a record $6.1 billion, up 17 per cent from last year and 5 percent over Q1, while business process outsourcing (BPO), at $1.8 billion, soared 52 per cent over last year, and 23 per cent sequentially, the report said.
According to ISG, the top managed service providers are Accenture, Atos, Capgemini, Cognizant, DXC Technology, HCL, IBM Global Services, Infosys and Tata Consultancy Services.
Top ‘as- a-service’ providers are Adobe, Alibaba, Amazon Web Services, Google, Microsoft and Salesforce, the report said.
The Americas region – that gives the bulk of the business to Indian IT companies – saw its combined ACV grow by double digits for the second straight quarter with a record $9.5 billion, up 25 per cent versus last year and 10 per cent over the prior quarter. The Europe, Middle East and Africa combined market reached $6.3 billion, up 31 per cent from the prior year and 4 percent from the first quarter.
Asia Pacific surpassed combined-market ACV of $3 billion for the first time, climbing 59 per cent over the prior year and 35 per cent quarter-over-quarter, to a record $3.4 billion.
2021 forecast
ISG is forecasting the market for Cloud-based services will grow 21 per cent globally in 2021, up slightly from its 18 per cent growth forecast last quarter. The firm also is raising its forecast for managed services growth to 9 per cent, up from its prior forecast of 5 percent.
Steve Hall, President of ISG said that the demand environment and associated technology spend is robust and shows no signs of slowing down. Right now, Cloud is central to virtually every one of client conversations. The debate is whether these are major structural shifts or Covid-related shifts.
“We believe the surge goes beyond pent-up demand and could signal the early stages of a longer-term cycle, with continuing strong investment in 5G, data centre, compute, Cloud provisioning and other business-transforming technologies,” he said.
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