Asia Pacific BPO deals jump 281% as AI drives record quarter: ISG
- Asia Pacific combined ACV rose 80% to a record $10.0 billion in Q3.
- BPO ACV jumped 281% to $209 million.
- Australia and New Zealand were flat, while India fell 10%.
- Managed services rose 16% to just over $1.0 billion.
SYDNEY, AUSTRALIA — Spending on large technology and business services contracts in Asia Pacific passed $10 billion in a single quarter for the first time, as AI demand pushed growth to the region’s highest rate ever. Business process outsourcing was the standout among traditional services, nearly quadrupling from a year earlier.
Cloud does the heavy lifting
The Asia Pacific ISG Index, which tracks commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, showed combined ACV up 80% to a record $10.0 billion in the third quarter, according to the latest report from Information Services Group. Cloud-based services climbed 92% to a record $9.0 billion, with infrastructure-as-a-service up 99% to $8.3 billion and software-as-a-service up 37% to $681 million.
“AI is rocket fuel for the Asia Pacific market,” said Michael Gale, partner and regional leader at ISG Asia Pacific. “Traditional managed services also is seeing strong growth as a lever to lower costs and free up funds for AI investment.”
BPO surges, engineering slumps
Traditional managed services rose 16% to just over $1.0 billion, the second straight quarter above that mark. BPO ACV skyrocketed 281% to $209 million, driven by fivefold growth in industry-specific services, while IT outsourcing climbed 41% to $785 million.
Engineering, research and development services fell 82% to $52 million, as AI hit demand for software engineering work. Only 55 managed services contracts were awarded, down 8% from a year earlier, as small discretionary deals faltered.
Australia flat, India down
The region’s smaller markets supplied the growth, with Southeast Asia up 16% and Korea up 10 times on the prior year. Australia and New Zealand, the region’s largest market, was flat, while India declined 10%.
Year to date, combined ACV is up 50% to $25.0 billion and BPO has advanced 37% to $470 million. ISG kept its global managed services growth forecast for 2026 at 2.1% while raising its cloud forecast to 60% from 30%.
For buyers, AI budgets are flowing mostly to infrastructure, while business process outsourcing (BPO) grows from a small base in industry-specific work. Companies in Australia weighing managed services contracts are dealing with providers in a flat home market, and can compare options on the top BPO companies in Australia list.
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Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
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