ISG Finds Global Outsourcing Market in Decline
The volume of outsourcing business has declined since 2014, along with the value of contracts dropping due to an industry price war. 2014 was a ‘near-record’ year in terms of outsourcing business value, volume and industry growth.
ISG is a leading technology insights, market intelligence and advisory services company – the Outsourcing Index is a quarterly study which measures commercial outsourcing contracts with an annual contract value (ACV) of $5 million or more.
The report found that the global ACV of outsourcing stands at $5.1 billion for this quarter. This is well below the average of $6 billion seen in first quarters since 2006, and 18 per cent less than the first quarter of 2014.
‘The slow pace of the quarter is not a surprise, based on the activity we noted at the year’s end, but we don’t view it as a portent of things to come,’ said John Keppel, partner and president of ISG. ‘Smaller deals continue to flow, and value and volume for the trailing 12 months remains in positive territory.
‘Still, what goes up must come down, especially against the strength of last quarter and the vigorous start the industry had in the first quarter of 2014. Across markets this quarter, we found examples of value increasingly being challenged while volume remained strong as clients sought out great deals in a buyer’s market.”
The ISG has suggested that the lull in Europe could also be due to the UK’s up-coming General Election causing business uncertainty, as well a slight decline of sourcing in France after an all-time peak in 2014.
The Americas represent a ‘lone bright spot’ with ACV up 10 per cent to $2.1 billion – this is the fourth consecutive quarter where the Americas have reached an ACV higher than $2 billion.
For further information, see ISG’s full press release regarding the Outsourcing Index.
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