ITMS and BPO Contract Analysis Q3 2018

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 during the most recent seven quarters (Q1 2017 to Q3 2018), 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

• Falling outsourcing contracts: The number of ITMS-BPO contracts decreased by 4% in Q3 2018 compared to the previous quarter. The total contract value (TCV) and annual contract value (ACV) in Q3 2018 have decreased by 31% and 22% respectively over Q3 2017. The decline in the number of ITMS-BPO contracts over the past four quarters is largely due to increased industry transformation, changes in traditional outsourcing models to include more volume-based pricing, a shift in perception of traditional outsourcing’s value proposition within enterprises, and new deals and renewals being signed at lower price points due to reduced operational costs.

• Decreasing ITMS contracts: ITMS contracts for Q3 2018 increased by 37% over the previous quarter; however, there was a decline of 6% year over year (YoY). In Q3 2018, the TCV of application development and management (ADM) contracts declined by 38% compared to the same period in the previous year.

• US has the lion’s share of large ITMS deals: In terms of ITMS total contract value (TCV), US and EMEA remains the key outsourcing market with an average of 56% and 33% respectively, over the last seven quarters. However, in Q3 2018, the total contract value in EMEA region declined by 60% YoY, whereas in APAC region increased by 101% YoY. In both US and EMEA, the public sector and BFS sector had the higher number of ITMS deals, because of digital adoption and legacy replacements. BPO contract announcements were very strong in EMEA during Q3 2018, the TCV grew by 273% YoY, because of consistent rise in contracts in EMEA over the last four quarters.

• Rise in number of digital contracts: Cloud continues to drive digital services; on average it contributed 42% of the digital contracts seen over the last seven quarters. Around 50% of the ITMS services deals signed included a specific digital technology component; the trend only is expected to increase in the near future.

• Five-year tenure contracts were the most frequently signed contracts in both ITMS and BPO services. The number of contracts longer than five years continued to grow in recent quarters, mainly because of the public sector’s long-term contracts.

WHO SHOULD READ THIS REPORT

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