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News » Global spending on IT, business services down 7% in Q4 — ISG

Global spending on IT, business services down 7% in Q4 — ISG

CONNECTICUT, UNITED STATES — Global spending on IT and business services dropped by seven per cent to US$22.9 billion in the fourth quarter of 2022, said global technology research and advisory firm Information Services Group (ISG).

Data from the latest ISG Index revealed that this was the lowest combined annual contract value (ACV) in a quarter since Q2 2021 when the market began to emerge from a pandemic-induced slowdown.

“The global market was negatively impacted in the fourth quarter primarily by lower demand for infrastructure-as-a-service, largely the result of lockdowns in China that affected the nation’s large hyperscalers,” said ISG President Steve Hall.

Hall added that economic headwinds are causing a shift in tech spending.

“Some organizations are focusing on cost optimization and limiting discretionary [spending]. We still see major transformation projects in the market, but most need to be self-funded or have a stronger near-term ROI than in past years,” he stated.

Despite this lower figure, ISG reported that the combined market ACV for the full-year 2022 reached a record US$94.6 billion, up 6.5% over 2021 and 39% higher than in 2020.

Managed services ended the year strong, with its ACV up six per cent to a record $37 billion and its contracts growing by 11% to 2,645.

Meanwhile, IT outsourcing (ITO) spending came in at US$25.7 billion, down four per cent for the year. At the same time, Business Process Outsourcing (BPO) spending rose 36% to US$11.3 billion, fueled by industry-specific and engineering services growth.

As for 2023, Hall said that “most foresee improvement in the macro environment by the second half of the year.”

ISG also sees interest rate hikes ending, inflation lessening, China reopening, supply chains beginning to normalize, and the U.S. dollar coming off recent highs through the year.

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