Europe’s IT and Business Services Market Sets New High in Q2, ISG Index™ Finds
17.7.2023 11:00:00 EEST | Business Wire | Press release
Europe’s demand for IT and business services reached an all-time high in the second quarter after declining the previous two quarters, 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 services (XaaS) – at a record US $7.8 billion in second quarter, up 3.5 percent from the prior year, and up 9 percent versus the first quarter of 2023.
“Europe rebounded in the second quarter, reversing a two-quarter losing streak on the strength of double-digit growth in the managed services sector,” said Steve Hall, president, EMEA, for ISG. “Growing demand for managed services reflects the role outsourcing plays as a lever for cost optimization, especially in the face of weak economic conditions.”
Managed services ACV reached a record US $4.5 billion, up 15 percent from a year ago. A total of 283 managed services contracts were awarded in the second quarter, the region’s third-highest quarterly deal volume ever. The awards including five mega-deals (contracts with annual value of more than US $100 million) worth more than a combined US $1 billion. The volume of restructured contracts jumped 76 percent over the prior year, reflecting the cost-control measures of buyers.
Within managed services, IT outsourcing (ITO) rose 11 percent, to US $3.3 billion, driven by year-on-year growth in application development and maintenance (ADM) and data center services. Business process outsourcing (BPO), meanwhile, rose 25 percent, to US $1.3 billion, fueled by strong growth in contact center, facilities management, engineering and industry-specific services.
In line with the global trend, demand for cloud services in Europe declined 9 percent versus the prior year, to US $3.3 billion, with infrastructure-as-a-service (IaaS) off 13 percent, at US $2.2 billion, and software-as-a-service (SaaS) flat at US $1.1 billion.
“Even though Europe’s drop in XaaS demand is not as steep as in other regions, it nevertheless indicates EMEA is not immune to the market malaise affecting the global XaaS sector,” Hall noted. “The slowdown we’ve been seeing in China’s hyperscaler market is now spreading to the big three [AWS, Microsoft Azure and Google Cloud]. Enterprises that scaled up quickly during the pandemic are now rationalizing their cloud costs.”
Geographic Performance
The U.K., the largest geographic market in Europe for IT and business services, generated US $1.5 billion of managed services ACV in the second quarter, up 50 percent year on year. The UK saw strong demand for ITO services overall, and from the FMCG/retail, energy and telco sectors.
The next largest market, DACH (Germany, Austria and Switzerland), also posted double-digit growth, with managed services ACV of US $894 million, up 16 percent. Demand was up for ITO, with particularly strong growth in ADM services; in BPO, especially for contact center and engineering and R&D services, and in the banking, financial services and insurance (BFSI) and manufacturing sectors.
France, on the other hand, saw a 20 percent decline in managed services ACV, to US $393 million, due to weakness in both ITO and BPO and in the telco industry. Despite the decline, Hall said France remains a robust market, with more than US $1 billion of ACV awarded in the first half – continuing a string of four consecutive half-year periods above that mark.
Elsewhere, Southern Europe (Spain, Portugal and Italy) rose 17 percent, to US $717 million of ACV, with growth in contact center BPO and in the energy and telco/media industries.
First-Half Results
EMEA’s combined market fell 2 percent versus the prior year, to US $14.9 billion, the first time since 2016 the region had a down first half. Managed services rose 5 percent, to US $8.3 billion, on 576 contract awards, the most ever in the first half – including six mega-deals. Within managed services, ITO advanced 8 percent, to US $6.3 billion, while BPO retreated 3 percent, to US $2.0 billion.
XaaS spending in the first half fell 10 percent, to US $6.6 billion, as IaaS slumped 14 percent, to US $4.5 billion, and SaaS remained flat, at US $2.1 billion.
2023 Global Forecast
ISG lowered its forecast for XaaS revenue growth in 2023 to 11.5 percent, down 350 basis points from its March forecast, and maintained its growth forecast for managed services at 5 percent.
“In determining our forecast, we considered macro uncertainties that have delayed decision-making and tightened discretionary spending, thus slowing movement in the pipeline,” said Hall. “Digital transformation is not discretionary spending, but enterprises are more cautious about investments.
“We also noted that interest rates have risen more in the past year than in the previous 30, which may dampen big infrastructure investments. But the difficult comps will soon be behind us, and excitement is growing around generative AI. That could provide a much-needed tailwind for cloud services.”
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 83 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/20230717579553/en/
Contact information
Press:
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
REV Ocean Appoints Paul Baribault as CEO Ahead of 2027 Global Operations29.10.2026 16:45:00 EET | Press release
REV Ocean has appointed Paul Baribault as Chief Executive Officer as the organization moves towards the international debut of its 195-metre research vessel in Rio de Janeiro in April 2027, alongside the UN Ocean Decade Conference. One of the world's largest privately owned research and exploration vessels, REV represents a major philanthropic investment in ocean science. With nine laboratories, advanced deep-sea exploration vehicles and dedicated collaboration facilities, it is designed to give scientists access to world-class research infrastructure and connect their discoveries with the people and institutions able to drive ocean protection. Baribault joins as REV Ocean moves from a decade of engineering and construction into international operations. His mandate will be to build the international partnerships, funding base and organization needed to turn REV Ocean’s scientific capabilities into lasting ocean impact. An experienced conservation and nonprofit leader, Baribault served
Holder Partners Launches Strategic Communications Practice and Appoints Ali Ponte as Director and Practice Lead29.10.2026 16:15:00 EET | Press release
Holder Partners, a multidisciplinary consulting and advisory firm, today announced the launch of its Strategic Communications practice and the appointment of Ali Ponte as Director and Practice Lead. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20261027701219/en/ Ali Ponte, Director and Practice Lead of Holder Partners’ Strategic Communications practice. The practice advises leading companies and institutions, their boards, senior executives and counsel on communications, reputation and stakeholder considerations in complex matters and periods of significant change or opportunity. Each engagement is tailored to the client’s objectives and, where relevant, draws on Holder Partners’ broader advisory capabilities. Its strategic counsel, informed by research and analysis, helps clients assess the implications of a matter, anticipate stakeholder responses and communicate clearly and effectively. That work includes crisis preparedn
Accertify Formalizes Partner Ecosystem as Fraud, Payments, and Chargebacks Converge Into a Single Risk Surface29.10.2026 16:00:00 EET | Press release
Accertify, a leading fraud decisioning provider whose Predictive Yes Platform helps merchants say yes to more good customers, more revenue, and more growth, today announced the launch of the Accertify Partner Program, a formalized partnership ecosystem connecting payment providers, orchestrators, commerce platforms, and consultancies to Accertify’s network-powered fraud intelligence. Partners can join through two tracks. The Referral track lets partners make a single introduction while Accertify handles the sale, implementation, and support. The Reseller track lets partners sell Accertify on their own contract and own the client relationship and margin. Partners that integrate with Accertify follow a defined certification path, so clients get a tested, supported connection from day one. Every client a partner brings joins a consortium where good customers verified anywhere in the network get through faster everywhere, and bad actors seen anywhere are stopped everywhere. In 2025, Accert
Draslovka to Acquire ex-Natron Energy Battery IP, Completing a Vertically Integrated Western Sodium-Ion Value Chain29.10.2026 15:30:00 EET | Press release
Draslovka’s US-based subsidiary, COVORO MINING SOLUTIONS LLC (Covoro), the operator of one of the largest solid sodium cyanide plants in the world, today announced that it has agreed to acquire the intellectual property portfolio in Prussian Blue Analogue (PBA) and Prussian White Analogue (PWA) sodium-ion battery technology originally developed by Natron Energy. Prussian Blue and Prussian White Analogues are not a single material but a tunable family of framework materials, and the portfolio protects that family across the whole stack — active-material synthesis, electrodes, electrolytes, cell design and manufacturing, as well as complete battery systems — through issued and pending patents, trademarks, and manufacturing know-how, with protection extending into the mid-2040s. The agreement covers intellectual property and intangible assets only and was subject to review by the Committee on Foreign Investment in the United States (CFIUS), which granted clearance as a condition to closin
Veracode Finds First Meaningful Gain in AI Code Security Since 2025 as Average Pass Rate Hits 62%29.10.2026 15:27:00 EET | Press release
Veracode, the global leader in application risk management, today announced a jump from 56 percent to 62 percent in overall AI-generated code security, alongside a drop in vulnerabilities from 44 percent to 38 percent — the most significant improvement since the GenAI Code Security Report series began in July 2025. Anthropic's Claude Opus 5.5 and OpenAI's GPT-6-Sol co-lead the rankings at 73 percent, surpassing the previous high of 68 percent set by GPT-5.5 in July 2026. “We’ve been analysing code generated by multiple LLMs for more than a year. Until now, we have not seen a marked improvement in AI code security, despite consistently near-perfect functionality,” said Chris Wysopal, Co-founder & Chief Security Evangelist at Veracode. “This is the first time since running our study that we’ve been able to report a meaningful move on the security dial. Ten models now clear 60 percent, up from four in the last report, and the overall average has jumped six percentage points. With around h
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