Outsourcing market shows growth through first quarter

Increased customer demand for cloud services has helped the MSP market enjoy a decent first quarter.

Figures from the EMEA ISG Index, which tracks commercial outsourcing contracts with an annual contract value of $5m or more, showed that the sector, which includes as-a-service and managed services, reached $6bn, a 20% year-on-year improvement.

Cloud-based as a service deals were up by 16% year with IaaS a hot spot in that segment. SaaS also benefited from the increased demand with deals on that front also improving by 9% year-on-year.

On the managed services front Q1 came on the back of a strong Q4 with ACV values up by 23% as customers reached out for both business process and general IT outsourcing. ISG noted that there was a decent performance in the UK market, along with France and DACH.

Managed services ACV in the UK reached $866m, a 20% percent climb over 2020. It marked the fourth consecutive quarter that the managed services deals came in above the $800m mark.

Despite all the talk of growth there is still some way for the UK managed services market to get back to the levels it enjoyed in 2017, when £1bn quarters were a regular occurrence. ISG hinted that the onset after that point of Brexit uncertainty was largely to blame for the changes in the market.

“EMEA has produced two consecutive quarters with US $6bn or more of ACV, adding more than US $1.4bn from its pandemic low,” said Steve Hall, president, ISG EMEA. “Importantly, the region is seeing strength in both the as-a-service segment, as more and more enterprises adopt a public or hybrid cloud strategy, and on the managed services side, which is experiencing a resurgence.”