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;}”]

ISG Research Identifies Top Growth Industries for Sourcing

Report spotlights new growth markets for 2018, reviews 2017 industry performance

Insurance, software and services, and business services and supplies are three industries primed for significant outsourcing growth in 2018, according to a new market research report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

Proprietary analysis from the 2018 ISG Momentum® Market Trends & Insights Vertical Report reveals the three industries are strong candidates to experience both significant new outsourcing and increased spending by current clients in 2018.

Insurance, already the third-largest industry vertical for outsourcing based on annual contract value (ACV), earned the nod because of the high number of companies not yet outsourcing and the industry’s relatively high spending profile. Software also is an attractive market because of strong recent growth rates combined with below-average spending per company. And business services and supplies, while the smallest of the three industries pegged by ISG for outsized growth, is in the mix because of rising average company spending and sourcing adoption.

[addthis tool=addthis_horizontal_follow_toolbox]

Some of the largest current markets for outsourcing services are also leaders in growth potential, the ISG report notes. Banking, for example, is the second-largest vertical by ACV but ranks first in market potential because of its sheer number of non-sourcing companies (157, the most of any vertical). Banking is one of four verticals with at least $2.5 billion in additional market potential (technology hardware and equipment, utilities and transportation are the others), and all four ranked in the top nine in 2017 ACV, according to ISG.

In 2017, outsourcing penetration was highest in the telecommunications services sector, where 91 percent outsource, followed by the media industry (88 percent) and aerospace and defense (82 percent). In contrast, only half the companies in banking (51 percent) and technology hardware and equipment (48 percent) were outsourcers. Overall, across the 27 industries profiled, sourcing penetration was 50 percent, on average.

Read More: Insurtech: The New AI Disruption Hitting Insurance

By ACV, the top growth industries in 2017 were software and services (up $603 million, or 50 percent), semiconductors (up $558 million, or 279 percent) and construction (up $176 million, or 27 percent).

Nine of the 27 industries profiled in the report achieved year-over-year ACV growth in 2017. In addition to software, semiconductors and construction, others included transportation; business services and supplies; hotels, restaurants and leisure; trading companies; food retailing, and technology hardware and equipment.

Read More: California Becomes First State To Strengthen Consumer Data Privacy Protections

The ISG report found average annual spending declined in most industries due to falling prices for widely used services, strong competition in most market segments and limited large, new-scope engagements. Cloud services was an outsourcing growth area in many verticals.

Paul Reynolds
Paul Reynolds

“ISG found many examples of how artificial intelligence (AI), cognitive technologies, robotic process automation (RPA) and other emerging technologies are being adapted and included in industry-specific solutions,” said Paul Reynolds, ISG partner and chief research officer. “There are a lot of opportunities for service providers in the current market, but providers need to be creative and committed to innovation to capitalize on the potential.”

Read More: California Becomes First State To Strengthen Consumer Data Privacy Protections

The 2018 ISG Momentum® Market Trends & Insights Vertical Report provides an industry-by-industry look into outsourcing spending patterns, emerging preferences and other trends across 27 Forbes®-classified vertical markets. The analysis, covering Forbes® Global 2000 companies with annual outsourcing spending of $5 million or more, offers perspective into the state of outsourcing in each vertical through interviews with strategists involved in current outsourcing engagements in that industry, along with worldwide spending and market share data showing current levels and up to 10 years of history. Each detailed industry chapter in the 404-page report notes how current events and macroeconomic conditions are shaping each industry.

Read More: Interview With Robert Schwarz, Managing Director ANZ, Nuance Communications

Leave A Reply

Your email address will not be published.