Enterprises embrace managed services amid economic uncertainty
CONNECTICUT, UNITED STATES — A new report from Information Services Group (ISG) revealed that enterprises in the Americas are increasingly using managed services in the third quarter to optimize costs amid economic uncertainty.
The Americas saw record managed services demand, with annual contract value up 25% to $6 billion in Q3 2022. Growth was powered by a 31% rise in new-scope contracts to $3.8 billion and 16% more restructured deals, totaling $2.2 billion.
The report added that around 376 managed services contracts were signed in Q3, the second-highest quarterly amount ever.
ISG Vice Chairman and President of ISG Americas and Asia Pacific Todd Lavieri explained that enterprises now want maximum return on existing cloud solutions rather than new investments.
IT outsourcing contracts jumped 42% to $4.8 billion within managed services, driven by application development and maintenance services.
However, other segments such as Business Process Outsourcing (BPO) fell 16% to $1.2 billion. Similarly, cloud-based as-a-services (XaaS) solutions fell 17% for the third straight quarterly decline to $6.2 billion in contract value.
Infrastructure-as-a-service spending dropped 25% to $3.9 billion, while software-as-a-service rose 3% to $2.4 billion. Defensive sectors like energy and healthcare saw record managed services contract value, but financial services and manufacturing declined.
“From a macroeconomic perspective, we’re seeing slower decision-making, spending being stretched over longer periods of time, and persistent concerns with energy prices and the expectation of a prolonged period of high-interest rates,” Lavieri stated.
Nevertheless, Lavieri added that they expect more business to restructure their IT systems and adopt multi-cloud and hybrid work models.
