More U.S. Companies Embrace Private, Hybrid Clouds as Pandemic Response Increases Demand for Outsourcing
According to a recent report by ISG, U.S. enterprises are increasingly adopting private and hybrid clouds, driven by a rise in IT outsourcing and the need for innovative business solutions amid the COVID-19 crisis. The report highlights that Q1 2021 IaaS spending reached a record $7.2 billion globally, with a 14% increase in the Americas. Companies are prioritizing flexibility in outsourcing partners and favoring fewer vendors for comprehensive solutions. Notable leaders identified in the report include Ensono, IBM, and Rackspace Technology.
- Q1 2021 IaaS spending reached $7.2 billion globally, an 18% increase.
- U.S. enterprises are increasingly adopting private and hybrid cloud solutions.
- Growing trend in IT outsourcing expected to continue among enterprises.
- Companies are focusing on fewer outsourcing vendors to lower costs and risks.
- None.
U.S. enterprises have stepped up their adoption of private and hybrid clouds in the past year, sometimes choosing them over public clouds, according to a new report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
This trend comes as the use of IT outsourcing has grown, with many U.S. enterprises turning to managed services, managed hosting and colocation services as they seek new ways of doing business in response to the COVID-19 crisis, the 2021 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud – Data Center Services & Solutions report for the U.S. finds. ISG expects enterprise use of outsourcing to continue growing.
The ISG Index™ shows first-quarter 2021 spending on infrastructure-as-a-service (IaaS) rose 18 percent to a new global record of
After freezing their outsourcing programs in the first few months of the pandemic, companies started adapting their IT operations to deliver everything virtually, and many that had never used outsourcing before began exploring it this year, the report says.
“Organizations in the U.S. are starting to see that outsourcing IT infrastructure management can help them realign IT with business objectives,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “It can also give them access to IT skills not often found in typical IT departments. We expect companies to continue increasing their use of outsourcing.”
U.S. enterprises are embracing cloud infrastructure and managed services partly because more mature technologies make it easier to take the leap, the report says. Tools for assessment, planning and automation of cloud migrations have become reliable enough for companies to achieve the outcomes they expected. It is also becoming easier to understand the potential benefits of the cloud and to choose which workloads to migrate and which to keep on existing infrastructure.
When choosing outsourcing vendors, many U.S. enterprises are focusing on flexibility, ISG says. They look for providers that can scale resources up and down depending on client needs and restructure teams quickly when necessary. Vendors should be able to accept and adapt to the client’s business ethics and provide offshore developer teams that can easily integrate with the in-house team.
Close partnerships are becoming more important as companies realize the challenges of finding reliable partners and establishing productive relationships, the report says. The recent trend of enterprises outsourcing an infrastructure assignment to multiple vendors is fading in favor of choosing one or two partners for a comprehensive managed services solution to address all infrastructure requirements. This reduces risks and can lower costs, ISG says. In addition, enterprises are favoring providers that have strategic relationships with large technology vendors.
The 2021 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud – Data Center Services & Solutions report for the U.S. evaluates the capabilities of 57 providers across four quadrants: Managed Services for Large Accounts, Managed Services for Midmarket, Managed Hosting and Colocation Services.
The report names Ensono, IBM and Rackspace Technology as Leaders in two quadrants each. It names Accenture, Capgemini, Cognizant, CoreSite, CyrusOne, Cyxtera, DataBank, Digital Realty, DXC Technology, Equinix, HCL, Hexaware, Infosys, Lumen, Mphasis, NTT Ltd., TCS, Unisys, Wipro and Zensar as Leaders in one quadrant each.
In addition, Mindtree, QTS and Rackspace Technology are named as Rising Stars—companies with a “promising portfolio” and “high future potential” by ISG’s definition—in one quadrant each.
A customized version of the report is available from Hexaware.
The 2021 ISG Provider Lens™ Next-Gen Private/Hybrid Cloud – Data Center Services & Solutions report for the U.S. is available to subscribers or for one-time purchase on this webpage.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Germany, Switzerland, the U.K., France, the Nordics, Brazil and Australia/New Zealand, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.
A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 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 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 1,300 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.
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