The EMEA ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of €5 million or more, shows combined market ACV (including both as-a-service and managed services) in EMEA reached €17.1 billion in 2019.
This was fuelled by a notably strong second half. Managed services ACV, at €10.7 billion, rose eight percent compared with the prior year, while as-a-service values set a new high of €6.4 billion, an increase of 13 percent. As-a-service accounted for 37 percent of the EMEA market in 2019.
Managed services growth was driven by a rebound in business process outsourcing (BPO) ACV, which rose 61 percent compared with much softer performance in 2018.
Large contract awards and strength in facilities management and contact centre services boosted activity. By contrast, information technology outsourcing (ITO) ACV fell three percent as demand for infrastructure deals waned.
ACV in both Software-as-a-Service (SaaS) and Infrastructure-as-a-Service (IaaS) both hit record levels in 2019. The SaaS market climbed 13 percent with broad adoption of SaaS solutions across the region while the IaaS market grew 12 percent.
ISG president Steve Hall said that macroeconomic headwinds blowing across Europe have resulted in an acceleration, rather than a slowing, of the pace of digital change in the region.
“Digital has become the default position for enterprises in today’s technology-driven world. Enterprises are exploring options for cost savings and reinvesting those gains in technologies that will enable them to transform their customer experience and compete with upstart disruptors”, he said.
Combined market ACV in the UK and Ireland rose 13 percent in 2019, reaching €5.5 billion, its best year since 2012. Despite uncertainty over Brexit, clients are considering larger IT investments and focusing on digital transformation and the use of technology to drive productivity and improve customer experience.
Managed services ACV was up 15 percent, to €3.3 billion, versus 2018. ITO values slipped 4 per cent as gains in infrastructure awards were not enough to offset weakness in application development and maintenance (ADM) transactions. BPO ACV climbed markedly, up more than 50 percent, owing to strength in facilities management and industry-specific BPO.
As-a-service ACV exceeded €2 billion for the second year in a row and now accounts for 40 per cent of the combined market in the U.K. and Ireland. Both SaaS and IaaS reached new highs. SaaS rose eight percent and IaaS 10 percent over 2018 totals.