Artificial Intelligence | News | Insights | AiThority
[bsfp-cryptocurrency style=”widget-18″ align=”marquee” columns=”6″ coins=”selected” coins-count=”6″ coins-selected=”BTC,ETH,XRP,LTC,EOS,ADA,XLM,NEO,LTC,EOS,XEM,DASH,USDT,BNB,QTUM,XVG,ONT,ZEC,STEEM” currency=”USD” title=”Cryptocurrency Widget” show_title=”0″ icon=”” scheme=”light” bs-show-desktop=”1″ bs-show-tablet=”1″ bs-show-phone=”1″ custom-css-class=”” custom-id=”” css=”.vc_custom_1523079266073{margin-bottom: 0px !important;padding-top: 0px !important;padding-bottom: 0px !important;}”]

Europe’s IT and Business Services Market Remains Strong, Amid Signs of Slowing in Q2, ISG Index Finds

EMEA’s Q2 combined ACV up 18 percent year on year, but down slightly from Q1
Managed services remains on growth trend, even as XaaS momentum slows

Europe’s IT and business services market delivered strong year-on-year growth in the second quarter, but showed signs of slowing amid rising economic concerns, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

Recommended AI News: Appalachian Regional Healthcare Selects Biofourmis Tech for Home Hospital Programs, Including Rural Healthcare Study

The EMEA ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows ACV for the combined market (both managed services and cloud-based XaaS) eclipsed US $7 billion for the third straight quarter, coming in at US $7.6 billion, up 18 percent year over year, but down slightly (0.5 percent) from the first quarter.

“Demand for cloud computing and other technology services remains strong in Europe, as companies in the region continue to expand their digital transformation initiatives,” said Steve Hall, president of ISG EMEA. “The slight dip from the first quarter may signal some concerns about inflation and other economic pressures, but ebbs and flows in this market are not uncommon.”

During the second quarter, regional demand for XaaS topped US $3.5 billion for the fourth consecutive quarter – reaching US $3.8 billion, up 27 percent from the prior year, but down 3 percent from the first quarter. Within this segment, infrastructure-as-a-service (IaaS) advanced 30 percent, to US $2.8 billion, and software-as-a-service (SaaS) grew 19 percent, to US $962 million, although both were down quarter on quarter – by 3 percent and 4 percent, respectively.

“This was a noticeable step down from the 40 percent to 50 percent year-on-year XaaS growth we’ve been seeing the last several quarters, and the weakest quarter-on-quarter performance we’ve seen since the midst of the pandemic in 2020,” Hall said.

Managed services ACV, meanwhile, continued its growth trend, reaching US $3.9 billion, up 10 percent year on year and 3 percent quarter on quarter. It was the fifth quarter in the last seven managed services generated ACV greater than US $3.5 billion. Within this segment, IT outsourcing (ITO), at US $2.9 billion, was up 1 percent year on year, and up 4 percent from the first quarter. In particular, there was strong demand for application development and maintenance (ADM) services, up 17 percent year over year and 29 percent from the first quarter. Business process outsourcing (BPO) soared 47 percent, to US $968 million, on the strength of industry-specific services, but was down 1 percent quarter on quarter.

Related Posts
1 of 30,325

Contracting activity was ‘vigorous,” Hall said. “Six mega-deals [contracts worth US $100 million or more] were inked this quarter, the most in a quarter in more than five years.”

Overall, 243 managed services contracts were awarded in the second quarter, up 7 percent from the prior year, but down a like amount from the first quarter. It was the second-best quarter ever for deal activity in EMEA, surpassed only by the first quarter this year. ACV of new-scope contracts was up 8 percent from last year, the most new-scope ACV awarded since the first quarter of 2012.

Recommended AI News: AB Tasty and Mixpanel Announce Two New Integrations to Accelerate Digital Product Innovation

From a geographic perspective, Benelux, France and Southern Europe posted double-digit managed services growth year over year, while DACH and the Nordics declined. The U.K. also was down but still generated more than US $1 billion of ACV for the third consecutive quarter. This level of ACV, until recently, had been a once-a-year occurrence since Brexit, but the U.K. is now seeing a more sustained level of contracting.

First-Half Results

EMEA’s combined market reached a record US $15.2 billion of ACV in the first half, up 20 percent over the prior year. XaaS advanced 35 percent, to a record US $7.6 billion, accounting for slightly more than 50 percent of the combined market. Managed services also generated a record US $7.6 billion of ACV, up 8 percent, on record volume of 506 contracts, up 13 percent versus the prior year.

2022 Global Forecast

With the potential for continued economic uncertainty, ISG lowered its 2022 global growth forecast for cloud-based XaaS (IaaS and SaaS) to 18 percent, from 22 percent a quarter ago, and reduced its global growth forecast for managed services to 3.5 percent, from 5.1 percent in the first quarter.

Recommended AI News: Darktrace Adds Early Warning System to Antigena Email

[To share your insights with us, please write to sghosh@martechseries.com]

Comments are closed.