|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
Developing software for the Internet of Things (IoT) comes with its own set of challenges. Security, privacy, and unified standards are a few key issues. In addition, each IoT product is comprised of (at least) three separate application components: the software embedded in the device, the back-end service, and the mobile application for the end user’s controls. Each component is developed by a different team, using different technologies and practices, and deployed to a different stack/target –...
Sep. 30, 2016 11:15 AM EDT Reads: 1,563
What does it look like when you have access to cloud infrastructure and platform under the same roof? Let’s talk about the different layers of Technology as a Service: who cares, what runs where, and how does it all fit together. In his session at 18th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, an IBM company, spoke about the picture being painted by IBM Cloud and how the tools being crafted can help fill the gaps in your IT infrastructure.
Sep. 30, 2016 11:15 AM EDT Reads: 3,081
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
Sep. 30, 2016 11:00 AM EDT Reads: 491
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
Sep. 30, 2016 11:00 AM EDT Reads: 537
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Sep. 30, 2016 11:00 AM EDT Reads: 3,987
Ask someone to architect an Internet of Things (IoT) solution and you are guaranteed to see a reference to the cloud. This would lead you to believe that IoT requires the cloud to exist. However, there are many IoT use cases where the cloud is not feasible or desirable. In his session at @ThingsExpo, Dave McCarthy, Director of Products at Bsquare Corporation, will discuss the strategies that exist to extend intelligence directly to IoT devices and sensors, freeing them from the constraints of ...
Sep. 30, 2016 10:45 AM EDT Reads: 2,760
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, discussed how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved efficienc...
Sep. 30, 2016 10:45 AM EDT Reads: 3,618
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
Sep. 30, 2016 10:45 AM EDT Reads: 458
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Sep. 30, 2016 10:45 AM EDT Reads: 4,478
Complete Internet of Things (IoT) embedded device security is not just about the device but involves the entire product’s identity, data and control integrity, and services traversing the cloud. A device can no longer be looked at as an island; it is a part of a system. In fact, given the cross-domain interactions enabled by IoT it could be a part of many systems. Also, depending on where the device is deployed, for example, in the office building versus a factory floor or oil field, security ha...
Sep. 30, 2016 10:45 AM EDT Reads: 758
SYS-CON Events announced today that CDS Global Cloud, an Infrastructure as a Service provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. CDS Global Cloud is an IaaS (Infrastructure as a Service) provider specializing in solutions for e-commerce, internet gaming, online education and other internet applications. With a growing number of data centers and network points around the world, ...
Sep. 30, 2016 10:30 AM EDT Reads: 3,027
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Sep. 30, 2016 10:30 AM EDT Reads: 572
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Sep. 30, 2016 10:30 AM EDT Reads: 241
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Sep. 30, 2016 10:30 AM EDT Reads: 246
Technology vendors and analysts are eager to paint a rosy picture of how wonderful IoT is and why your deployment will be great with the use of their products and services. While it is easy to showcase successful IoT solutions, identifying IoT systems that missed the mark or failed can often provide more in the way of key lessons learned. In his session at @ThingsExpo, Peter Vanderminden, Principal Industry Analyst for IoT & Digital Supply Chain to Flatiron Strategies, will focus on how IoT de...
Sep. 30, 2016 10:15 AM EDT Reads: 1,296