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Cloud services lift IT outsourcing market higher than expected …

Companies signed IT and business process outsourcing deals worth a record $9.5 billion in annual contract value, according to the quarterly outsourcing index produced Information Services Group (ISG). Traditional outsourcing contracts were up 5 percent to $5.8 billion, while the fast-growing as-a-service segment leapt 20 percent to $3.7 billion, according to ISG.

“Most conversations we’re having with clients are cloud-led,” says John Keppel, ISG president, for Europe, Middle East and Africa. “Enterprise customers are first seeking to be more cost efficient so that they can redeploy funds into digital and cloud activities.  But we’re also seeing them pivot quickly to broader digital transformation initiatives that are focused on creating a customer-first environment that is intelligent and mobile. This is a very long game and we are in the early stages at this point.”

[ Related: 10 outsourcing trends to watch in 2016 ]

Based on third quarter results, ISG is revising its annual forecast upward, from a flat market to anticipated gain in the mid-single-digits for traditional outsourcing and well above 30 percent in the as-a-service market.

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