by: Karen Cayamanda
Wednesday, January 21, 2015 |
According to the Information Services Group (ISG), the global outsourcing industry posted an annual contract value of $5.8 billion in the fourth quarter of 2014, a 27-percent increase compared to 2013's ACV. This double-digit growth made a great ending to one of the best years for outsourcing and was driven by a buyer's market in the Americas, as well as an increase in mega relationships and deal restructuring.
Based on the ISG Outsourcing Index that covers outsourcing deals with ACV of $5 million or more, the number of contracts also increased by six percent. In 2014, the total ACV was up by 16 percent with $23.1 billion, and the number of contracts reached 1,218.
ISG partner and President John Keppel said the double-digit growth was seen through all regions, but was particularly strong in the Americas. Clients took advantage of getting more services at lower costs. They also looked for more flexible deals and lower unit costs.
Information technology outsourcing (ITO) ended 2014 with $17.3 billion, a 19-percent growth for the year and 13 percent for the fourth quarter. On the other hand, business process outsourcing (BPO) posted a strong 4Q to end the year with $5.8 billion. Financial services posted an all-time high with an ACV of $2.1 billion.
EMEA, considered as the largest outsourcing market in the world, had a 19-percent increase in ACV in the last quarter and seven percent in 2014, closing out the year with $11.9 billion. As for Asia-Pacific, it posted a 21-percent increase in ACV in the fourth quarter, and the number of contracts grew by 11 percent.
ISG expects strong activity this year, though it is predicted that the first half will be flat compared to the strong first half of last year. According to Keppel, with digitization and strong growth expected in applications, the industry has huge growth potential.
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