Market Analysis


Plunging outsourcing contract numbers overall: In Q1 2019, the number of contracts decreased by 33% YoY and 14% compared to Q4 2018. The total contract value (TCV) and annual contract value (ACV) in Q1 2019 decreased by 38% and 45% respectively over Q1 2018. The number of ITMS-BPO contract announcements has continuously decreased over the last five quarters.

Stabilizing ITMS contracts: ITMS contract value for Q1 2019 increased by 4% over the previous quarter, and it declined by 31% year over year (YoY). Fewer IT contracts were signed in the Q1 2019, but a couple of major contracts for digital transformation in the banking sector did some heavy lifting in Europe and contributed to the overall contract value increase.

Growing ADM market: Besides, digital service contracts, application development, and management (ADM) services hold a major share of the ITMS contracts, followed by infrastructure services. In a recently published report, we briefly discussed the growing ADM market; ADM services registered continuous growth over the last two quarters, supporting our projection.
An uplift in BPO contracts: Although ITMS contracts hold a major share of the outsourcing market, in Q1 2019, BPO contract value (TCV) increased by 19% compared to the previous quarter. This is mainly because of a major HRO contract signed by the Australian government.
Consistent growth in cloud contracts: SaaS, PaaS, and IaaS remain major elements in digital services contract volume. In Q1 2019, cloud-related services accounted for 55% of the share, with an average of 46% share of overall digital contracts over the last four quarters. The growth is not just driven by the adoption of cloud computing; it’s also driven by a rise in the use of the public cloud and newer variants such as serverless and containers.

Five-year tenure contracts were the most frequently signed contracts in both ITMS and BPO services; the trend remained similar in Q1 2019, but the contract value declined by 41% YoY. We have seen a slight resurgence in the number of contracts longer than five years in Q1 2019 compared to previous quarters, mainly because of public sector contracts. In general, five-year deals remained the most popular across IT and BPO services.    

Also in Market Analysis

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...

Market Index Q2 2020

This report provides: A look at the key events and activities that impacted the market over the last three months, including contracts/M&A. A list of major M&A activity for the quarter. Quarterly contracting signing analysis. A rundown of the quarterly...

Join thousands of other users
already using HFS Research