European infrastructure cloud deals grow, as contract sizes shrink

The combined value of outsourcing contracts in the UK has halved since 2017, due to organisations signing smaller deals, according to advisory service Information Services Group (ISG).

Infrastructure as a service offerings experienced the biggest increase, growing from $0.8bn to $2.1bn since the first half of 2017. The value of software as a service contracts rose slightly from $0.5bn in the first half 2017 to $0.7bn in the first half of 2018.

The average contract value of traditional sourcing for the second-quarter rose 11% year-on-year, but ISG said these contracts lacked the unusually large deals which lifted the market in the first half of 2017.

The Emea (Europe, Middle East and Africa) ISG Index, which measures commercial outsourcing contracts with an annual contract value (ACV) of €4m or more, reported that the Emea market posted a combined second-quarter ACV of €3bn, up 23% over the prior year. Traditional sourcing grew 11% to €2.5bn, bucking a four-quarter downward trend.

As-a-service ACV in the region surged, rising 50%, to €1.2bn. According to ISG, infrastructure as a service (IaaS) and SaaS gained record highs and contributed equally to the growth.

“The Emea sourcing market rebounded strongly in the second quarter despite an economic environment focused on GDPR preparation and issues around Brexit,” said Steve Hall, partner and president of ISG.

“Companies are now investing in technology to build their digital backbone. In the context of Emea’s uncertain economic and political times, it’s encouraging that businesses are recognising the strength that a strong digital backbone provides in allowing them to be agile enough to adapt with the times.”

ISG’s figures show the value of products delivered as a service has more than doubled since H1 2016 from $1.3bn to $2.8bn, while in traditional sourcing, contract value declined by $0.2bn.

Globally, ISG forecast that the growth of public cloud is accelerating and will exceed a 45% growth rate through the rest of the year.  .... .... ... .. . .. ....