Business Wire

Europe’s IT and Business Services Market Sets New High in Q2, ISG Index™ Finds


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

To view this piece of content from, please give your consent at the top of this page.

Contact information

Will Thoretz, ISG
+1 203 517 3119

Kate Hartley, Carrot Communications for ISG
+44 7714065233

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

Pogust Goodhead and Gramercy Funds Management LLC Announce $552.5 Million Investment Partnership1.10.2023 16:13:00 EEST | Press release

Pogust Goodhead, a global law firm, and Gramercy Funds Management LLC (“Gramercy”), today announced that they have entered into a $552.5 million investment partnership in the form of a secured loan by Gramercy to Pogust Goodhead. This loan is the largest of its kind in a U.K. based law firm. The loan transaction strengthens the firm’s financial power, ensuring Pogust Goodhead has ample funds to continue its litigation across the world and on behalf of environmental victims of corporate giants such as: BHP Group (BHP.AX), BMW (BMWG.DE), Fiat Chrysler (STLAM.MI), Ford (F), Honda (7267.T), Hyundai (005380.KS), Jaguar/Land Rover (JLR), Mazda (7261.T), Mercedes-Benz (MBGn.DE), Peugeot/Citroen (PEUG.PA), Renault Nissan (RENA.PA), Toyota (7203.T), Vauxhall (STLAM.MI), Volkswagen AG (VOWG.DE), and Volvo AB (VOLVb.ST). The loan proceeds will fund the largest action of its kind against two of the biggest mining companies in the world – BHP Group (BHP.AX) and Vale (VALE3.SA) – for their part in t

PUMA Called Ambassadors From All Around the World to Form “Class of 23”1.10.2023 13:00:00 EEST | Press release

Global sports company PUMA launches a beanies campaign, “Class of 23”, to unite ambassadors from across the globe to represent of the close-knit PUMA family. This press release features multimedia. View the full release here: Global sports company PUMA launches a beanies campaign, “Class of 23”, to unite ambassadors from across the globe to represent of the close-knit PUMA family. (Photo: Business Wire) 2023 means a long journey for PUMA, which was made with the remarkable people behind it. ​“Class of 23” is the right way to celebrate the inspiring ambassadors and talents PUMA has collaborated with over the past 75 years. Each talent, from Neymar Jr. and Pamela Reif to Gianmarco Tamberi and Winnie Harlow, was captured in a personalized way, wearing their favorite PUMA beanies from the 2023 collection to show their membership in the grand PUMA family. “Our PUMA family is the heartbeat of our brand, co-created with the brilliance

Optomind and MaxLinear announce collaboration on PAM4 112Gbps OSFP 800Gbps SR8 transceiver solution at ECOC Exhibition 20231.10.2023 09:00:00 EEST | Press release

Optomind and MaxLinear will be demonstrating 800Gbps OSFP active optical cables (AOC) and SR8 optical transceivers at ECOC 2023 Exhibition, in Glasgow, Scotland, October 2-4 (Booth #775, Optomind; #776, MaxLinear). Optomind has developed the best-in-class PAM4 100Gbps/lane SR optical transceivers and AOCs using MaxLinear's 5nm Keystone PAM4 DSP. This press release features multimedia. View the full release here: Advancing data transmission rates to 100Gbps per lane drastically transforms the ecosystem of data centers, especially AI/ML and HPC. Training AI and GPT workloads drive huge and high-density networks utilizing large numbers of servers connected together through rack switches over short reach links. The low-power, high-performance AOCs and transceivers that Optomind and MaxLinear have developed together are ideal for these applications. Optomind selected MaxLinear's 5nm Keystone PAM4 DSP as the best-in-class solution for

Incyte to Present Multiple Studies from Dermatology Portfolio at 2023 European Academy of Dermatology and Venereology (EADV) Congress29.9.2023 20:43:00 EEST | Press release

Incyte (Nasdaq:INCY) today announced multiple abstracts featuring new data from across its dermatology portfolio have been accepted for presentation at the upcoming European Academy of Dermatology and Venereology (EADV) Congress 2023 held October 11-14 in Berlin. “We are pleased to add to the data supporting the use of ruxolitinib cream for patients living with vitiligo and atopic dermatitis (AD) through two late-breaking presentations – one on prolonged use of treatment in vitiligo patients with limited or no initial response, and the full results of our TRuE-AD3 trial in pediatric AD,” said Jim Lee, M.D., Ph.D., Group Vice President, Inflammation & Autoimmunity, Incyte. “Collectively, the data at this year's Congress, which also include new late-breaking data for povorcitinib in vitiligo, emphasize our ongoing efforts to advance treatment options for the Dermatology community." Key abstracts from Incyte-sponsored programs include: Late-breaking Oral Presentations Vitiligo Efficacy an

Q4 Inc. Recognized as one of Canada’s Top Growing Companies by The Globe and Mail29.9.2023 17:30:00 EEST | Press release

Q4 Inc. (TSX: QFOR) (“Q4” or “the Company”), the leading capital markets access platform, is pleased to announce their ranking on the 2023 Report on Business of Canada’s Top Growing Companies. Canada’s Top Growing Companies ranks Canadian companies on three-year revenue growth. Q4 earned its spot with three-year growth of 150%. “We are honored to be recognized as one of Canada’s Top Growing Companies for the fourth consecutive year by The Globe and Mail,” remarked Darrell Heaps, Founder and CEO of Q4. “We are proud of the growth we have achieved as a company and this recognition is a true reflection of our dedication to helping our clients win in the capital markets through innovative technology on the Q4 Platform.” Canada’s Top Growing Companies is an editorial ranking that was launched in 2019. It aims to bring the accomplishments of innovative businesses in Canada to the forefront. In order to qualify for this voluntary program; companies had to complete an in-depth application proc

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