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."

Survey reveals CX disconnect is risky business
Too much conversation and too little action could lead companies to neglect, lose, and repel their very lifeblood, according to Dimension Data.
Should AI technology determine the necessity for cyber attack responses?
Fujitsu has developed an AI that supposedly automatically determines whether action needs to be taken in response to a cyber attack.
Police making progress into Cryptopia breach
New Zealand Police say they are making ‘good progress’ into the investigation of an alleged cryptocurrency theft from Christchurch-based crypto exchange Cryptopia.
NEC concludes wireless transport SDN proof of concept
"Operation and management of 5G networks are very complicated and require automation and closed-loop control with timely data refinement and quick action."
Trend Micro’s telecom security solution certified as VMware-ready
Certification by VMware allows communications service providers who prefer or have already adopted VMware vCloud NFV to add network security services from Trend Micro.
Top cybersecurity threats of 2019 – Carbon Black
Carbon Black chief cybersecurity officer Tom Kellermann combines his thoughts with those of Carbon Black's threat analysts and security strategists.
Avaya introduces private cloud delivery of its UCaaS solution
Avaya is supposedly taking a flexible hybrid approach to the cloud with these new solutions.
Data growth the growing case for managed colocation
The relentless growth of data could see colocation take on a new importance, says Jon Lucas.