Drive to Digitize, Automate Fueling Strong Outsourcing Demand, ISG Momentum® Report Finds

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STAMFORD, Conn., Sept. 27, 2018 /PRNewswire/ — The relentless drive to digitize and automate has 2018 on pace to be one of the strongest years ever for outsourcing contract awards, according to new market research from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2018 ISG Momentum® Market Trends & Insights Service Line Report, which examines contracting trends in seven key service lines, found almost all business process outsourcing (BPO) and information technology outsourcing (ITO) services are benefiting from strong enterprise demand for digital transformation and automation support. Indeed, through the first half of 2018, the number of outsourcing contracts awarded for most service lines was on pace to meet or exceed 2017 totals, when the ITO segment produced its best year-over-year contract award growth rate in a decade, and the BPO segment saw the fourth-highest number of contracts awarded in a single year.

“Increasingly sophisticated enterprise attitudes about outsourcing are driving sustained growth over the last three years,” said Paul Reynolds, ISG partner and chief research officer. “There is a distinct focus on the strategic use of outsourcing to help a business run better and become future ready. Clients are contracting with technology and service providers to take advantage of their process expertise and gain access to new technologies.”

Among the services lines analyzed by ISG, perhaps none is in greater demand than application development and maintenance (ADM). Data through the first half of 2018 show ADM contract volume significantly ahead of the pace of 2017, which produced 29 percent more ADM contracts than 2016. The cumulative value of ADM-only contracts is now almost equal to that of full ITO contracts, one indicator of ADM’s market importance. Many new ADM engagements, ISG found, are related to redeveloping or migrating enterprise applications to run in hosted environments, enabling apps and services with artificial intelligence, and automating application testing and support.

ISG found that in response to market demand for innovation, providers are taking a more consultative approach to their engagements and embedding new capabilities into their offerings.

Examples include new levels of automation and predictive maintenance in data center services; new workplace services that encourage enterprise collaboration; expanded use of software-defined network (SDN), network function virtualization (NFV) and enhanced security in managed network services (MNS); and the use of blockchain in finance and accounting and other transaction-oriented services. Analytics and robotic process automation are now being included in many business process- and industry-specific service offerings.

“Enterprise IT and business leaders are teaming with outsourcing providers to win the race to innovate,” Reynolds said. “Providers have been making significant investments to make their services more functional, more digital and more strategic, which is right in line with what the market wants.”

The 2018 ISG Momentum Market Trends & Insights Service Line Report takes an in-depth look at seven leading ITO and BPO service lines: application development & maintenance (ADM), managed network services (MNS), data center services, workplace services, human resources outsourcing (HRO), procurement, and finance & accounting (F&A). The report also includes a snapshot look at how outsourcing spending is being divided between traditional service delivery and cloud-based, as-a-service offerings, plus separate coverage that examines the state of the engineering services outsourcing (ESO) market. To view the executive summary, please visit this webpage.

The latest ISG Momentum report is part of an ongoing series of market research reports that focus on outsourcing activity by service line, vertical industry and geographic location. 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 75 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; technology 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 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.