STAMFORD, Conn., Oct. 14, 2019 /PRNewswire/ — Enterprises seeking specialized support to rapidly introduce automation and artificial intelligence into their operations are driving record-setting levels of outsourcing activity in 2019, according to new market research from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2019 ISG Momentum® Market Trends & Insights Service Line Report found strong demand among enterprises to accelerate the adoption of artificial intelligence and automation is driving record-setting levels of contracting activity in both the business process outsourcing (BPO) and information technology outsourcing (ITO) service lines. There also is widespread demand for data analytics as part of business process solutions, the report found.

An average of nearly 10 outsourcing contracts were signed each day during the first six months of 2019, building on the strong performance of 2018, when contract volume increased in both ITO and BPO and was at its highest level ever for ITO.

“Enterprises increasingly are interested in analytics to better understand and serve their customers, and are looking for specialized support to quickly introduce modernizing technologies,” said Paul Reynolds, ISG partner and chief research officer. “As a result, we see tremendous opportunities for service providers with data science expertise, specialized offerings, and the ability to strategize and scale disparate tools and platforms.”

Contracting activity for application development and maintenance (ADM) services through the first half of 2019 puts ADM on pace to set a new volume record this year, continuing a 2018 trend that saw ADM as one of the industry’s fastest-growing service lines. ADM as a distinct service line has surpassed full ITO (data center management bundled with other IT services) among service lines for the greatest share of active annual contract value (ACV). ADM now represents one-third of all active ACV compared with 19 percent for full ITO engagements. In 2018, ADM and full ITO accounted for nearly equal shares of total ITO ACV.

Managed network services and infrastructure-only ACV also are nearly on par with the active ACV of full ITO contracts in 2019, pointing to a trend away from large, multi-tower commitments with a single service provider toward smaller contracts with multiple providers. In the managed network services category, enterprises are updating their networks to meet changing business needs and are paying close attention to 5G development. The report found significant demand for software-defined network (SDN) technology.

“Clients need a lot of help preparing applications for modern architectures, most notably in migrating or redeveloping apps for the cloud,” Reynolds said. “Expertise in DevOps, test automation and AI is in strong demand, but the current shortage of high-quality AI professionals is the single biggest hurdle enterprises face in achieving the level of AI implementation they wish to attain. Expert providers are filling this need.”

The report also found that every region of the world was ahead of its 2018 pace for contract volume in the first six months of 2019. The Americas produced 69 percent of its total 2018 volume; Europe, Middle East and Africa 66 percent, and Asia Pacific 63 percent through the first half of 2019. The Americas also had the highest percentage year-over-year increase in contract awards in 2018, rising 10 percent, to 637. The Americas has produced the most ITO contracts each of the past three years and is on pace to do so again in 2019.

The 2019 ISG Momentum® Market Trends & Insights Service Line Report takes an in-depth look at seven leading ITO and BPO service lines: application development and maintenance (ADM), managed network services (MNS), data center, workplace services, human resources outsourcing (HRO), procurement, and finance and accounting (F&A). The report also includes a snapshot look at how outsourcing spending is being divided among traditional managed services delivery and cloud-based as-a-service offerings.

To download the executive summary, visit this webpage.

The ISG Momentum® 2019 Market Trends & Insights Service Line Report is part of an ongoing series of quarterly reports that focus on outsourcing activity by geography, vertical industry and service line. To learn more about these and other ISG Momentum® services and information products, please visit the ISG Momentum® Research page on the ISG website or contact ISG.

About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including more than 70 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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SOURCE Information Services Group, Inc.