ITMS and BPO Contract Analysis—Q3 2020

This report analyses publicly announced ITMS and BPO contracts in Q3 2020 by region, service types, key verticals, main vendors and digital services.

WHAT THIS MARKET ANALYSIS REPORT COVERS

This quarterly analysis report provides a detailed study of information technology management services (ITMS) and business process outsourcing (BPO) contracts signed since Jun 2017, including estimated total contract value (TCV) and annual contract value (ACV), which sectors consume most of these services, ITMS-BPO service breakups, service providers’ performance in these markets, and digital services by type.

WHAT YOU’LL KNOW AFTER READING

Readers will gain insight into:

• ITMS Contracts Analysis by Region

• ITMS Contracts Analysis by Service Type

• ITMS Contracts Analysis by Key Verticals

• ITMS Contracts Analysis by Main Vendors

• BPO Contracts Analysis by Region

KEY MARKET DYNAMICS

Surging outsourcing contract numbers and values: In Q3 2020, the number of contracts increased by 6% and 32% YoY and QoQ, respectively. The total contract value (TCV) and annual contract value (ACV) in Q3 2020 increased by 116% and 100%, respectively, over Q2 2020. Similarly, contract values increased YoY by 10% (TCV) and declined by 1% (ACV). Deal values declined drastically in Q1 and Q2 2020. As discussed last quarter, the industry touched bottom in Q2, but this quarter, the market has started to recover strongly.

IT services contracts bounced back: ITMS contract value for Q3 2020 increased by 84% over the previous quarter and 16% YoY. There was a surge in ADM contracts for both QoQ (41%) and YoY (30%). Multi-ITMS contracts grew 268% QoQ and 92% YoY, mainly because enterprises re-energized their focus on new priorities in Q3. In other words, the market is resuming its original flow. However, in November and December, many countries expect a second wave of COVID-19, and European countries have initiated lockdowns like the ones in March and April of 2020. We have to wait to see the full impact of the new lockdowns in the next quarter.

Rising complex IT managed services and ADM contracts: Last year (Q2, Q3, and Q4 2019), we saw a surge in multi-ITMS contracts (contracts covering multiple infrastructure types). However, in Q1 and Q2 2020, the value declined, and infrastructure contracts fell compared to previous quarters. In Q3 2020, multi-ITMS (268%) and ADM (41%) showed significant QoQ growth. We expect the upward trend to continue, and we foresee a huge demand for digital transformation contracts in the coming quarters as the pandemic continues to accelerate the transformation process.

Surge in BPO contract values: In Q3 2020, BPO TCV increased by 38% compared to the previous quarter but declined by 36% YoY. Like IT services, after two consecutive quarters, BPO contracts gained some traction. BPO services were affected much more severely than IT services due to this pandemic; however, now that the dust has settled, the market looks optimistic. In Q3 2020, new contracts signed plus service providers’ quarterly performance created a market uptrend; other than in the travel, transport, and hospitality sectors, we hope to see progress in the remaining industries. We foresee some significant improvement in the coming quarters.

The cloud holds more than 50% of the share of digital contracts: The cloud is fundamental to IT operations, and its importance has continuously increased during the COVID-19 pandemic. SaaS, PaaS, and IaaS remain major elements in digital services contract volume.

WHO SHOULD READ THIS REPORT

Executive leaders and business unit leaders, technology leaders, advisors and outsourcing managers in the ITMS and BPO industry.

SERVICE PROVIDERS WE DISCUSS

Accenture, Atos, HCL, IBM, TCS, and Wipro.