CT-ISG
Europe’s IT and business services market grew only slightly in the second quarter, as slowing demand for managed services largely offset a sharp rise in spending on cloud-based services, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The EMEA ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of US $5 million or more, shows ACV for the combined market (both managed services and cloud-based as-a-service) rose 1 percent, to US $7.7 billion, in the second quarter. Since bottoming out in the third quarter of last year, the combined market has grown sequentially for three straight quarters to reach its second-highest quarterly ACV ever in Q2.
“Having rebounded from the trough of last year’s downturn, the European market is now on a slow growth trajectory, with sluggish demand for managed services impeding overall growth,” said Steve Hall, president, ISG EMEA. “Cost optimization remains the primary driver of managed services demand, while decision-making on new initiatives continues to be slowed by macroeconomic and geopolitical uncertainty.”
Second-Quarter Results by Segment
Managed services ACV in the second quarter dipped 8 percent, to US $4.0 billion, but rose 3 percent sequentially from a weaker first quarter. A total of 295 managed services contracts were signed in the quarter, up 20 percent from the prior year. Among those contracts were four mega deals (ACV of US $100 million or more), compared with five signed in the second quarter last year. The volume of smaller deals under US $10 million rose 38 percent year on year.
Within managed services, IT outsourcing (ITO) rose 7 percent, to US $3.3 billion, driven by strong growth in bundled infrastructure and application development and maintenance (ADM) services, which offset declines in ADM-only and data center services.
Business process outsourcing (BPO), meanwhile, slumped 45 percent, to US $692 million, as all BPO segments showed declines, especially customer engagement and facilities management services.
By industry, managed services ACV was higher in retail (up 71 percent), manufacturing (up 50 percent) and media and telecom (up 41 percent), while BFSI, Europe’s largest industry for outsourcing, dropped 31 percent year on year, reflecting a higher-for-longer interest rate environment.
ACV in the as-a-service (XaaS) segment climbed 14 percent year on year, to US $3.7 billion, and has grown three straight quarters after hitting bottom in the third quarter of 2023.
Within this segment, infrastructure-as-a-service (IaaS) rose 22 percent, to US $2.7 billion, amid signs the cost-optimization cycle for cloud may be over, due in part to rising interest in data-fueled GenAI. Software-as-a-service (SaaS), meanwhile, was off 2 percent, to US $1.0 billion, as enterprises reduced licensing volume.
Geographic Performance
Although down 13 percent year on year, the region’s largest managed services market, the U.K., posted its sixth straight US $1 billion quarter with ACV in Q2 of US $1.3 billion. The DACH market (Germany, Austria and Switzerland), meanwhile, generated US $896 million of ACV, up 20 percent versus the prior year, its best quarter since the fourth quarter of 2022. Both France (down 12 percent) and the Nordics (down 18 percent) pulled back in the quarter.
First-Half Results
For the first half, combined market ACV rose 3 percent, to US $15.2 billion. Managed services, at US $7.9 billion, was down 3 percent, while XaaS, at US $7.3 billion, was up 11 percent versus the first half last year. A record 571 managed services contracts were signed in the half, up 5 percent, including six mega-deals, even with the prior year.
Within managed services, ITO was essentially flat (down 0.1 percent), at US $6.1 billion, while BPO declined 12 percent, to US $1.8 billion. On the cloud side, the IaaS market rose 15 percent, to US $5.2 billion, while the SaaS market rose 1 percent, to US $2.1 billion.
2024 Global Forecast
For the full year, ISG is forecasting 2 percent revenue growth for managed services, down 100 basis points from its April forecast, and 14 percent revenue growth for XaaS, down from its 15 percent growth forecast in April.
“Uncertainty persists in the IT and business services market, with no clear catalyst at the moment to push discretionary spending higher,” Hall said. “Activity in the important BFSI sector remains dampened, due to the higher-for-longer interest rate environment impacting the overall growth of the market. Enterprises in general continue to focus on cost optimization, and AI growth, while strong, is likely masking underlying weakness in the IT and business services industry.”
About the ISG Index™
The ISG Index™ is recognized as the authoritative source for marketplace intelligence on the global technology and business services industry. For 87 consecutive quarters, it has detailed the latest industry data and trends for financial analysts, enterprise buyers, software and service providers, law firms, universities and the media.
The 2Q24 Global ISG Index results were presented during a webcast today. To view a replay of the webcast and download presentation slides, visit this webpage.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.
To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240715801522/en/
About Business Wire
Subscribe to releases from Business Wire
Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Business Wire
AEVEX Achieves AS9100 Certification6.2.2025 16:18:00 CET | Press release
AEVEX Aerospace, a global leader in cutting-edge unmanned systems and services, is proud to announce it has been awarded the prestigious AS9100 certification for its Tampa, Florida facility. This internationally recognized standard provides the framework for developing and implementing quality management systems within the aviation, space, and defense industry. Achieved in just 9 months from official project launch, this certification further demonstrates the AEVEX commitment to delivering world-class products to the aerospace and defense markets. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250206206147/en/ AEVEX Aerospace achieves AS9100 certification, reinforcing its commitment to quality, innovation, and excellence in aerospace and defense. (Graphic: Business Wire) AS9100, an industry-specific enhancement of ISO9001, establishes a set of robust quality management requirements to ensure the reliable delivery of safe, hi
Rimini Street Celebrates the 10th Anniversary of its Corporate Foundation with a $100,000 RMNI LOVE Charitable Grant Giveaway6.2.2025 15:00:00 CET | Press release
Company’s self-funded charitable program invites certified charities in select cities to apply for one of ten $10,000 grants Rimini Street, Inc. (Nasdaq: RMNI), a global provider of end-to-end enterprise software support and innovation solutions, the leading third-party support provider for Oracle, SAP and VMware software, today announced a $100,000 RMNI LOVE Charitable Grant Giveaway, commemorating the 10th anniversary of its self-funded philanthropic program, the Rimini Street Foundation. Registered charities in select cities across the globe, where a concentrated number of Rimini Street employees and clients are represented, are invited to apply for one of ten $10,000 grants, to be awarded throughout 2025 at various in-person gatherings. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250206639812/en/ Rimini Street Celebrates the 10th Anniversary of its Corporate Foundation with a $100,000 RMNI LOVE Charitable Grant Giveaw
A Beloved Classic Just Got Sweeter Than Ever; Candy Crush Solitaire™ Launches Worldwide6.2.2025 14:00:00 CET | Press release
King, the interactive entertainment company behind the world-famous Candy Crush® franchise, today launches Candy Crush Solitaire™on mobile devices worldwide. Candy Crush Solitaire brings a fresh take to the classic card game, combining the timeless fun of solitaire with the vibrant and colorful world of Candy Crush. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250206977362/en/ Candy Crush Solitaire gameplay (Graphic: King) Candy Crush Solitaire offers players a fun, mentally stimulating challenge, combining the familiar gameplay of TriPeaks solitaire with challenging levels, innovative gameplay, and tasty rewards, as they are immersed into the sensory and whimsical Candy Crush universe. Beloved characters join players on a sweet journey around the world, collecting Candified postcards and delicious rewards as they progress through the game, solving puzzles and stacking cards. This new mobile game offering will launch with
Saudi Sports for All Federation Unveils Riyadh Marathon Route, Venues, and Sponsors for Inaugural SFA International Sporting Events6.2.2025 13:41:00 CET | Press release
The Saudi Sports for All Federation (SFA) has announced key details for the inaugural 2025 SFA International Sporting Events, which include the SFA Expo and Riyadh Marathon. The SFA Expo will take place from February 5-7, 2025, at Riyadh’s JAX District, while the Riyadh Marathon is set for Saturday, February 8, 2025. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250206409638/en/ Saudi Sports for All Federation Unveils Riyadh Marathon Route, Venues, and Sponsors for Inaugural SFA International Sporting Events (Photo: AETOSWire) The SFA Expo will serve as the marathon’s bib collection hub and will feature interactive zones focused on sports, health, and fitness, showcasing cutting-edge equipment, wellness activities, and emerging technologies. The event will also include a B2B lounge for industry networking, and workshops on mindfulness and nutrition. Another highlight will be the Primal Race on Friday, February 7, a function
Align Partners Submits Shareholder Proposals at Coway Co., Ltd. to Protect the Interests of Minority Shareholders6.2.2025 13:00:00 CET | Press release
Proposals follow Coway’s failure to respond to governance concerns surrounding how the Board manages conflicts of interest with its largest shareholder, Netmarble.Align submitted shareholder proposals to strengthen the independent oversight mechanism at Coway by nominating an independent governance and capital markets expert.To ensure minority shareholder representation is upheld, and meet market best practice, Align is also proposing Coway to introduce cumulative voting. Align Partners Capital Management Inc. ("Align Partners"), a shareholder of Coway Co., Ltd. ("Coway" or "Company") since 2023, submitted 4 shareholder proposals on February 6, 2025, for the upcoming Annual General Meeting (“AGM”). These proposals aim to ensure that Coway’s governance works for all, and not just its largest shareholder. More specifically, Align Partners will be seeking support to appoint Namuh Rhee, an independent governance and capital markets expert and Chair of the Korea Corporate Governance Forum,
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.
Visit our pressroom