|By PR Newswire||
|February 10, 2014 06:21 PM EST||
BANGALORE, India, Feb. 10, 2014 /PRNewswire/ -- Information Services Group (ISG) (NASDAQ: III), a leading technology insights, market intelligence and advisory services company, said today the number of outsourcing contracts awarded in the Asia Pacific region rose in the second half of 2013, but annual contract value remained flat with the first half, suggesting a trend toward smaller deals, a pattern consistent with activity globally and in other regions.
According to the ISG Outsourcing Index for Asia Pacific, which measures commercial contracts with an annual contract value (ACV) of $5 million or more, ACV totaled $1 billion for the second half, same as the $1 billion recorded in the first half. Full-year ACV of $2 billion was down 80 percent from the standout year of 2012, but consistent with prior years.
Similarly, the total number of contracts for the year, 126, was down from 2012 but broadly in line with the volume of contracts in the 2009-2011 period. The volume of activity did, however, pick up in the second half of 2013, as the number of deals rose 7 percent compared with the first six months of the year.
The steep decline in the ACV was due principally to a sharp drop in the number of large-scale contracts awarded in 2013. Last year, only three contracts valued at between $40 million and $99 million were awarded, compared with 12 in 2012. Most Asia Pacific contracts fell into the $5-million-to-$39-million range, but the number of those contracts, like that of the large-scale deals, was down for the year.
"The year 2012 was the best ever for outsourcing in Asia Pacific, but it looks now to be an aberration, rather than the beginning of a new era," said Sid Pai, partner and president, ISG Asia Pacific. "Although 2013 pales in comparison, it was more truly representative of the long-term trend in the region. Indeed, the value of both mega deals and sub-$40 million contracts in 2013 were in line with their five-year averages."
Pai pointed out that the number of contracts awarded in the last decade has grown by 50 percent, while ACV has remained remarkably consistent. "Clearly, deal value is getting smaller, as clients take advantage of lower service costs and increased competition, while moving toward multi-sourcing environments. The work that was awarded to a single vendor in the past is now being split up among multiple service providers offering specialized capabilities."
From an industry standpoint, the best performing sectors were Travel, Transport and Leisure and Healthcare and Pharmaceuticals, both of which saw an increase in ACV for the year that put them near their five-year averages. On the other hand, Asia Pacific's historically strongest sector, Media and Telecommunications, had its worst year ever, down almost 80 percent from 2012, due to a sharp falloff in mega relationships. Financial Services also was down, as the number of contracts signed dropped to its lowest level since 2008, as was Manufacturing, even though the sector returned to historical levels.
Among the sub-regions, the only one to show growth was Japan. Although contract numbers declined slightly, ACV in Japan reached $380 million, its highest level since 2007.
India, the region's largest sub-region, was also its biggest underperformer, as ACV tumbled from $1.4 billion in 2012 to only $400 million last year, with the large business process outsourcing (BPO) contracts of 2012 essentially disappearing. Contract counts also fell to a six-year low, as economic and political uncertainties caused companies to delay outsourcing decisions until after the April elections.
Election considerations also were a major factor in the Australia-New Zealand sub-region, where ACV declined for a second consecutive year despite a steady volume of deals. Now in the slower summer months, soft conditions should persistent there through mid-2014.
In terms of deal scope, information technology outsourcing (ITO) saw a 24 percent jump in ACV in the second half, compared with the first six months of the year. That strong performance meant full-year ACV was down only 5 percent, and within historical range. Correspondingly, activity in the second half was at all-time high for a half-year period, with 56 ITO contracts awarded, up 47 percent. Infrastructure and Network Services were the big drivers.
The story was quite different on the BPO side, which saw a steep drop in value that accounted for the overall decline in Asia Pacific. Less than $100 million in ACV was awarded in the second half, the lowest award value since 2005.
For the full year, ACV in BPO was down almost 80 percent and contract counts fell 42 percent, as the lack of large contracts, fewer and smaller deals overall, and the virtual disappearance of research-and-development and knowledge-process outsourcing work after a record 2012 combined to crater the market.
The longer-term picture looks brighter than the 2013 numbers would suggest, said Pai. He noted that the region's annualized revenue from active outsourcing contracts – revenue now in the pipeline from both current-year and previous-year deals – has continued to rise, with a five-year compound annual growth rate (CAGR) of 4 percent. The number of active contracts over that same period has risen at a CAGR of 10 percent.
"This measure smoothes out the bumpiness of the annual business cycle and reveals the true, long-term growth potential of this region," said Pai.
Now in its 45th consecutive quarter, the ISG Outsourcing Index (formerly the TPI Index) provides a quarterly review of the latest sourcing industry data and trends for clients, service providers, analysts and the media. For more than a decade, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance.
The Second-Half Asia Pacific ISG Outsourcing Index was presented during a conference call and webcast for media and analysts today. To listen to an audio replay of the call and view presentation slides, please visit http://www.isg-one.com/web/research-insights/isg-outsourcing-index/.
About Information Services Group
Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 800 employees and operates in 21 countries.
For additional information, visit www.isg-one.com.
Follow us on Twitter: https://twitter.com/ISG_News
Follow us on LinkedIn: http://www.linkedin.com/company/information-services-group
Follow us on Google Plus: https://plus.google.com/b/118326392175795521009/118326392175795521009/posts
SOURCE Information Services Group
In their Live Hack” presentation at 17th Cloud Expo, Stephen Coty and Paul Fletcher, Chief Security Evangelists at Alert Logic, will provide the audience with a chance to see a live demonstration of the common tools cyber attackers use to attack cloud and traditional IT systems. This “Live Hack” uses open source attack tools that are free and available for download by anybody. Attendees will learn where to find and how to operate these tools for the purpose of testing their own IT infrastructu...
Sep. 4, 2015 09:30 PM EDT Reads: 527
DevOps Summit, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development...
Sep. 4, 2015 07:00 PM EDT Reads: 1,662
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Sep. 4, 2015 06:45 PM EDT Reads: 454
Whether you like it or not, DevOps is on track for a remarkable alliance with security. The SEC didn’t approve the merger. And your boss hasn’t heard anything about it. Yet, this unruly triumvirate will soon dominate and deliver DevSecOps faster, cheaper, better, and on an unprecedented scale. In his session at DevOps Summit, Frank Bunger, VP of Customer Success at ScriptRock, will discuss how this cathartic moment will propel the DevOps movement from such stuff as dreams are made on to a prac...
Sep. 4, 2015 06:00 PM EDT Reads: 282
SYS-CON Events announced today that DataClear Inc. will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. The DataClear ‘BlackBox’ is the only solution that moves your PC, browsing and data out of the United States and away from prying (and spying) eyes. Its solution automatically builds you a clean, on-demand, virus free, new virtual cloud based PC outside of the United States, and wipes it clean...
Sep. 4, 2015 05:30 PM EDT Reads: 505
With the proliferation of connected devices underpinning new Internet of Things systems, Brandon Schulz, Director of Luxoft IoT – Retail, will be looking at the transformation of the retail customer experience in brick and mortar stores in his session at @ThingsExpo. Questions he will address include: Will beacons drop to the wayside like QR codes, or be a proximity-based profit driver? How will the customer experience change in stores of all types when everything can be instrumented and a...
Sep. 4, 2015 04:15 PM EDT Reads: 533
Contrary to mainstream media attention, the multiple possibilities of how consumer IoT will transform our everyday lives aren’t the only angle of this headline-gaining trend. There’s a huge opportunity for “industrial IoT” and “Smart Cities” to impact the world in the same capacity – especially during critical situations. For example, a community water dam that needs to release water can leverage embedded critical communications logic to alert the appropriate individuals, on the right device, as...
Sep. 4, 2015 04:00 PM EDT
Manufacturing connected IoT versions of traditional products requires more than multiple deep technology skills. It also requires a shift in mindset, to realize that connected, sensor-enabled “things” act more like services than what we usually think of as products. In his session at @ThingsExpo, David Friedman, CEO and co-founder of Ayla Networks, will discuss how when sensors start generating detailed real-world data about products and how they’re being used, smart manufacturers can use the ...
Sep. 4, 2015 04:00 PM EDT
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, will introduce the technologies required for implementing thes...
Sep. 4, 2015 03:45 PM EDT Reads: 148
Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is designed for their business. In 2015, organizations such as United Airlines, Sony...
Sep. 4, 2015 03:30 PM EDT Reads: 545
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Sep. 4, 2015 03:30 PM EDT Reads: 979
Any Ops team trying to support a company in today’s cloud-connected world knows that a new way of thinking is required – one just as dramatic than the shift from Ops to DevOps. The diversity of modern operations requires teams to focus their impact on breadth vs. depth. In his session at DevOps Summit, Adam Serediuk, Director of Operations at xMatters, Inc., will discuss the strategic requirements of evolving from Ops to DevOps, and why modern Operations has begun leveraging the “NoOps” approa...
Sep. 4, 2015 03:30 PM EDT Reads: 469
While many app developers are comfortable building apps for the smartphone, there is a whole new world out there. In his session at @ThingsExpo, Narayan Sainaney, Co-founder and CTO of Mojio, will discuss how the business case for connected car apps is growing and, with open platform companies having already done the heavy lifting, there really is no barrier to entry.
Sep. 4, 2015 03:00 PM EDT Reads: 228
To assist customers with legacy Windows Server 2003 that is no longer supported by Microsoft, Racemi has introduced fixed price packages for upgrading and migrating Windows Server 2003 servers to either Windows 2008 R2 or Windows 2012 R2 and the choice of Amazon Web Services (AWS) or SoftLayer cloud. "We're extending a lifeline by upgrading the legacy servers to more modern Windows Server platforms while taking advantage of cloud computing," said James Strayer, vice president of product managem...
Sep. 4, 2015 02:12 PM EDT
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Learn what is going on, contribute to the discussions, and e...
Sep. 4, 2015 02:00 PM EDT Reads: 238