Story image

APAC sourcing market hits all-time high

Increasing demand for cloud-based services and strong traditional sourcing activity propelled the Asia Pacific sourcing market to a new high in 2017, according to the findings of the 4Q17 ISG Index released by Information Services Group (ISG).

Data from the ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of US$5 million or more, reveals fourth-quarter combined ACV in Asia Pacific reached US$1.25 billion, up 16% versus the prior year. 

Traditional sourcing rose 30%, to US$609 million, and as-a-service sourcing reached a record US$635 million, up 6% over the prior year.

For the full year, Asia Pacific's combined market produced a record US$4.88 billion of ACV, up 19%, consisting of US$2.46 billion of as-a-service sourcing, up 21% to an all-time high, and US$2.42 billion of traditional sourcing, up 17% on a record number of contracts.

The rise of as-a-service sourcing was driven by demand for Infrastructure-as-a-Service (IaaS). While Software-as-a-Service (SaaS) ACV of US$475 million was modestly ahead of the prior year, IaaS ACV grew 24% versus 2016, reaching US$1.98 billion. 

Traditional sourcing gains were boosted by record information technology outsourcing (ITO) activity. 

The 157 ITO contracts signed in the region yielded ACV of US$1.94 billion, up a third on the prior year.

By industry, most sectors posted ACV gains in 2017 compared with the prior year. 

Financial services, energy and retail were especially strong. 

Financial services combined ACV of US$1.1 billion was up 54% from the previous period while the energy sector grew 92% on the back of increased contract activity.

 Increased investment in IaaS drove combined ACV in the Retail sector to US$234 million, up 34% for the period.

In contrast, telecom and media, traditionally the largest sourcing sector in Asia Pacific, saw ACV fall 13%, while manufacturing ACV dropped slightly, by 2%, despite an increase in the number of traditional sourcing contracts signed in the region.

Globally, the market also saw a strong final quarter, with ACV for the combined market establishing a new record at US$11.3 billion.

Global trends reflect those in Asia Pacific, with newer technologies continuing to gain momentum. 

For the year, combined global ACV reached US$43.3 billion, another record, boosted again by strong activity in IaaS and ITO.

ISG A/NZ head Lisa Borden comments, “The Asia Pacific sourcing market has never been healthier.

“The demand for all things digital shows no signs of abating, as enterprises embrace these new technologies not only for increased efficiency, but to find new ways to grow and get closer to their customers.”

“The seemingly insatiable digital demand is driving overall market growth, but is not replacing traditional sourcing, which is also growing, thanks in large measure to improving economic conditions."

Three ways to achieve data security whilst enabling BYOD
"A mobility strategy is now more important than ever before, that said, selecting the right one is often no small task."
Mobile Infrastructure market sees fastest growth since 2014
The report from Dell’Oro shows that while the vendor rankings for the top three vendors remained unchanged with Huawei, Ericsson, and Nokia leading.
HPE unveils AI-driven operations for ProLiant, Synergy and Apollo servers
With global learning and predictive analytics capabilities based on real-world operational data, HPE InfoSight supposedly drives down operating costs.
How IoT and hybrid cloud will change in 2019
"Traditional VPN software solutions are obsolete for the new IT reality of hybrid and multi-cloud."
Enterprises to begin closing their data centres
Dan Hushon predicts next year companies will begin bidding farewell (if they haven't already) to their onsite data centres.
Citrix acquires micro app platform Sapho
Sapho’s micro applications improve employee productivity by consolidating access to tools, activities and tasks in a simple and unified work feed.
HPE expands AI-driven operations
HPE InfoSight extends select predictive analytics and recommendation capabilities to HPE servers, enabling smarter, self-monitoring infrastructure.
Dimension Data nabs three Cisco partner awards
Cisco announced the awards, including APJ Partner of the Year, at a global awards reception during its annual partner conference.