Global Market for IT and Business Services Turns in Record 2021, Even as Pace Slows in Q4, ISG Index™ Finds
Global combined ACV reached $84.2 billion in 2021, marking a 29% increase year-over-year, according to ISG. The fourth quarter saw a 32% year-over-year growth to $22.9 billion but exhibited only a 1% increase compared to Q3 2021. Despite challenges from inflation and supply chain issues, ISG forecasts a 20% growth for the XaaS market and a 5.1% growth for managed services in 2022. The XaaS market alone climbed 38% in 2021, while managed services achieved an annual record of $33 billion, up 16%. 2021 also saw record contracting activity exceeding 2,000 deals.
- Global combined ACV reached a record $84.2 billion, up 29% year-over-year.
- XaaS market grew 38% in 2021 to $51.3 billion.
- Managed services segment hit a new annual ACV record of $33 billion, up 16%.
- Record contracting activity exceeded 2,000 deals for the first time.
- Forecast for XaaS growth in 2022 is 20%.
- Fourth-quarter growth showed a slowdown, only increasing by 1% from Q3 2021.
- Forecast indicates a challenging environment for XaaS due to inflation and regulatory pressures.
Global combined ACV hits record
Fourth-quarter global combined ACV, up
ISG forecasts
Data from the ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of
The fourth quarter, however, showed signs of a slowdown compared with the prior quarter. While the combined market, at a record
“Even with the headwinds of the ongoing pandemic, inflation, supply chain disruptions and the Great Resignation, ISG still forecasts healthy growth rates for both managed services and XaaS in 2022,” said
Full-Year Results by Segment
The global XaaS market climbed 38 percent, to a record
The managed services segment also hit a new annual ACV record of
Business process outsourcing (BPO), meanwhile, turned in its second-best year ever, with ACV of
Fourth-Quarter Results by Segment
The global XaaS market climbed 47 percent, to a record
Managed services ACV advanced 13 percent, to
2022 Forecast
ISG is forecasting the global market for cloud-based XaaS (IaaS and SaaS) will grow 20 percent and the global market for managed services will advance 5.1 percent in 2022.
“Inflation and heightened regulatory pressures create a less-than-ideal environment for XaaS going forward, and that will lead to a series of fits and starts on a quarterly basis throughout 2022,” said Hall. “However, companies with secular growth themes and pricing power will continue to flourish and mitigate the effects of these macro forces. Expected growth is still high but will be at the lower end of the 20 percent to 25 percent range we have seen in recent years.”
Commenting on the market for managed services, Hall said: “We continue to see a solid pipeline of managed services deals, especially in digital transformation, cloud, and data and analytics. Clients across all industries are accelerating spending to remain competitive. While our forecast may seem conservative compared with the growth we saw in 2021, it is far higher than the 10-year average of 2 percent we saw during 2010 to 2020 period.”
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 77 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. In 2016, the ISG Index was expanded to include coverage of the fast-growing as-a-service market, measuring the significant impact cloud-based services are having on digital business transformation. ISG also provides ongoing analysis of automation and other digital technologies in its quarterly ISG Index presentations.
The 4Q21 Global ISG Index was presented during a conference call and webcast today. To listen to an audio replay of the call and view presentation slides, visit this webpage.
About ISG
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