Cloud-based XaaS projects have fuelled a dip in the global IT outsourcing market according to beancounters at ISG.
The annual contract value (ACV) of the commercial outsourcing contracts ISG tracks fell by three per cent to $23.2 billion in the three months to 30 September 2022.
ISG keeps tabs on large managed services, and XaaS deals with an ACV of above $5 million. For those not in the know, this is the first annual fall its index has registered since the final quarter of 2016.
ISG thinks that after Covid forced companies to bring in shedloads of c0loud deals, customers “hit the brakes” on spending in this area during the third quarter.
ISG EMEA president Steve Hall said: “The market has been growing at a quarterly clip of 40 to 50 per cent of late – no surprise, considering how much work shifted to the cloud during the pandemic – but in the third quarter, ACV declined four per cent versus the prior year. It was the first time since the beginning of 2015 we have seen a down quarter for XaaS.”
Although China’s big four hyperscale’s are encountering lower demand for their cloud services amid Covid-related lockdowns, AWS, Azure and Google Cloud are also seeing “growth slow slightly”, Hall noted.
Managed services annual contract value also fell a percent, with IT outsourcing up two percent but business services activity shrinking back.
