Europe’s IT and Business Services Market Shows Mixed Results in Q1, ISG Index™ Finds
First-quarter demand for IT and business services in Europe fell 5 percent from a record first quarter last year, continuing a string of four straight quarters of sequential declines, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
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 as-a-service) at US $7.4 billion in the first quarter, down 5 percent from the prior year, but essentially flat with the fourth quarter.
“The broader market in EMEA saw mixed results in the first quarter,” said Steve Hall, president, EMEA, for ISG. “The managed services market had a relatively stable performance in Q1, with ACV up sequentially on strong restructuring activity and a record number of contracts awarded. Cloud services ACV, though, was down only for the second time year on year, registering its largest quarterly decline ever at minus 6 percent.”
Managed services ACV, at US $3.7 billion, was up 4 percent sequentially from the fourth quarter, but down 4 percent from the prior year. Organizations in the region inked a record 292 contracts during the quarter, up 14 percent against the previous quarter and up 5 percent versus the prior year.
Within managed services, IT outsourcing (ITO) rose 5 percent year on year, to US $3.0 billion, with strength in application development and maintenance services, up 38 percent, to US $1.9 billion, bolstering the market. Business process outsourcing (BPO), meanwhile, slumped 30 percent year on year, to US $750 million. The BPO segments that grew for the quarter were engineering services, finance and accounting services and facilities management services.
Demand for cloud-based services (XaaS) declined 6 percent versus the prior year, to US $3.7 billion, with infrastructure-as-a-service (IaaS) off 10 percent, at US $2.7 billion, even as software-as-a-service (SaaS) rose 6 percent, to US $1.1 billion.
Geographic Performance
The U.K. remains the largest geographic market in EMEA, with managed services ACV of US $1.2 billion in the first quarter, down 2 percent year on year but up 36 percent from the fourth quarter.
The DACH (Germany, Austria and Switzerland) market got off to sluggish start in 2023, with ACV of US $730 million down 21 percent versus the prior year and off 20 percent versus the fourth quarter. This was due primarily to an absence of large deals in the market, even though overall deal flow was up 38 percent year on year.
Southern Europe, Middle East and Africa (SEMEA), led by France, continued its strong performance in the first quarter. The SEMEA market saw more than 90 managed services deals, valued at more than US $1.2 billion of ACV, awarded in the quarter. France alone generated US $635 million of managed services ACV in the quarter, up 27 percent year on year.
2023 Global Forecast
ISG lowered its forecast for global XaaS growth in 2023 to 15 percent, down 200 basis points from its January forecast, and maintained its global growth forecast for managed services at 5 percent.
“The macro environment remains uncertain, with interest rates, inflation and trouble in the banking sector topping concerns for enterprise clients,” said Hall. “There continues to be more scrutiny on deal signings, especially in discretionary spending areas. Enterprises are revisiting cost optimization, efficiency gains and vendor consolidation deals.”
Hall said attrition has stabilized and ISG expects hiring to improve in the back half of the year. The decline in XaaS bookings is expected to last through the second quarter, with demand picking up again in the second half, he said.
About the ISG Index™
The ISG Index™ is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 82 consecutive quarters, it has detailed the latest industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, universities and the media. For more information about the ISG Index, visit this webpage.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, 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; 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 1,600 digital-ready 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.
To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230417005177/en/
Contact information
Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com
Kate Hartley, Carrot Communications for ISG
+44 7714065233
kate.hartley@carrotcomms.co.uk
About Business Wire
For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.
Subscribe to releases from Business Wire
Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Business Wire
Lattice Introduces Industry’s First Small Embedded Vision FPGA with Integrated USB26.9.2023 23:00:00 EEST | Press release
Lattice Semiconductor (NASDAQ: LSCC), the low power programmable leader, today announced the Lattice CrossLinkU™-NX FPGA family, the industry’s first FPGAs with integrated USB device functionality in their class. CrossLinkU-NX FPGAs help accelerate USB-equipped system designs and simplify thermal management through a combination of a hardened USB controller and physical layer (PHY), a unique low power standby mode, and a complete set of reference designs. Extending Lattice’s embedded vision sensor bridging leadership with USB host interfaces, CrossLinkU-NX FPGAs are designed to meet growing customer needs to simplify USB-based design for applications across the Computing, Industrial, Automotive, and Consumer markets. “Reducing power consumption, total cost of ownership, and design footprint are critical for expanding the potential of AI and vision applications,” said Dan Mansur, Vice President, Product Marketing, Lattice Semiconductor. “Lattice CrossLinkU-NX FPGAs are optimized to addr
Demand Increases for Project Professionals with AI Skills, Yet PMI Research Finds Only 18% Have Practical Experience26.9.2023 18:00:00 EEST | Press release
Project Management Institute (PMI), the world's leading organization for the project management profession, is empowering millions of global project professionals worldwide to adopt, embrace, and leverage artificial intelligence (AI), machine learning (ML), and generative AI (GenAI). PMI is developing the tools, resources, and learning opportunities – including a free, introductory online course entitled “Generative AI Overview for Project Managers” – project professionals need to leverage AI powered technology while preserving the human touch in project management. According to McKinsey, GenAI and other technologies have the potential to automate work activities that absorb 60 to 70 percent of employees’ time today. But tools cannot automate interpersonal skills, the invaluable and very necessary skills project managers bring to projects. Communication, problem-solving, collaborative leadership, and strategic thinking – skills PMI calls “power skills” – will continue to be crucial to
Aktana Announces New Strategy Suite to Give Biopharma Leaders Unprecedented Visibility and Control Over Omnichannel Campaign Effectiveness26.9.2023 18:00:00 EEST | Press release
Today, at the inaugural Aktana Innovation Exchange (AIx) event, Aktana, Inc., the leader in intelligent customer engagement for the global life sciences industry, announced three new products that transform customer engagement programs by dynamically tightening the connection between strategy, tactical execution and time to impact. AIx is a collaborative event hosting executives from more than 35 life sciences and technology companies with the sole mission of improving the rate of innovation in applying AI and machine learning to commercial and medical programs. In recent research conducted by Aktana with 20 biopharma companies, more than 75% of respondents cited a severe challenge in achieving direct line of sight of how strategies are being executed in the field and knowing when tactics should be modified. The gap between strategy and delivering precision execution of pharmaceutical commercial campaigns is a constant hurdle across the industry, with new drug launches failing to meet
Improbable ventures into new worlds, unveils robust financial performance, underpinned by exciting innovation developments and standout progress made through recent sports events26.9.2023 17:30:00 EEST | Press release
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230926212157/en/ (Graphic: Business Wire) Highlights With a combination of gaming technology, new AI capabilities and metaverse infrastructure, the metaverse is delivering more interesting, exciting and useful experiences, boosted by the creator economy. For instance, sports has taken the lead in investments and ambitious projects, driven by the appetite of current and new fans for exclusive, fun content that enables them to consume their sport in a unique fashion with their community, and allowing rights owners new and innovative ways to monetize their content. Having completed its transformation, Improbable is now clarifying its brand mission as a venture builder, creating new ventures based upon its own backbone technology. The company has reorganized and now has three primary areas of activities: Metaverse technology development Metaverse and metaversal experiences developme
ClickHouse Announces ClickPipes: A Continuous Data Ingestion Service for ClickHouse Cloud26.9.2023 17:16:00 EEST | Press release
ClickHouse Inc., creator of the popular open-source columnar database designed for real-time analytics, today announces the general availability of ClickPipes, which connects external data sources directly into ClickHouse Cloud. ClickPipes allows users to set up continuous data pipelines in just a few clicks and launches with integrations for Confluent Cloud, Amazon MSK and Apache Kafka, with plans to add more. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230926621382/en/ ClickPipes powers seamless data ingestion for real-time analytics (Graphic: Business Wire) “Setting up reliable data pipelines can be a tedious task. By providing a user-friendly continuous ingestion experience for ClickHouse Cloud, users can now focus on what really matters: extracting insights from their data,” says Aaron Katz, Co-founder and CEO of ClickHouse, Inc. “Besides its existing connectors, ClickPipes also represents the foundation of a serverl
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.
Visit our pressroom