ITMS and BPO Contract Analysis—Q3 2019

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 2019), 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

Plunging outsourcing contract numbers:

In Q3 2019, the number of contracts increased by 2% YoY and decreased by 7% compared to Q2 2019. The total contract value (TCV) and annual contract value (ACV) in Q3 2019 increased by 37% and 38% respectively over Q2 2019. However, the contract values are lower YoY by 25% (TCV) and 32% (ACV) respectively. After a steady decrease of ITMS-BPO contract announcements, there was a surge in contracts signed in Q2 and Q3 2019. Despite the political instability in Europe and the ongoing US-China trade war, the industry managed to sign moderate number of contracts in Q3 2019. The trend continued with increased transformation activities within IT and changes in traditional outsourcing models to include more digital and intelligent modes of operation. The growth continue to increase; 44% (registered 33% growth in the previous quarter) of the digital others* contracts were digital transformation projects.

Steady growth in ITMS contracts: ITMS contract value for Q3 2019 increased by 36% over the previous quarter, and it declined by 35% YoY. Compared with previous quarterly analysis, we observed slow and steady growth QoQ and similarly slow recovery for YoY growth. However, the number of ITMS contracts decreased by 6% compared to Q2 2019. The complexity and scope of ITMS managed services and outsourcing contracts is increasing, particularly those that pass the threshold required to be included in this list.

Complex ITMS and infrastructure contracts in vogue: In the latest quarter, we saw a surge in multi-ITMS (contracts covering multiple infrastructure types) (112%) and infrastructure (106%) contracts. This was mainly driven by workplace transformation contracts. We foresee a huge demand in coming quarters for digital transformation and workplace contracts, largely as workforce enablement becomes an important component of broader digital requirements. Public sector leads the pack in Q3 2019: Despite political instability in Europe (Brexit) and the US-China trade war in the IT services market, in Q3 2019, the number of public sector contracts increased by 24% compared to the previous quarter. TCV increased by 45% in Q3 2019 compared to the last quarter. The telecom sector stood out as the second contributor in this space, increasing by 303% QoQ. The public sector remained a major target market for outsourcing in both the ITMS and BPO services spaces, even after excluding indefinite delivery/indefinite quantity (IDIQ) contracts from the analysis, it remained the biggest. US bounced back to lead ITMS contracts: US ITMS contract values declined for almost seven quarters, except for Q3 2018. In Q2 2019, the US market started to recover, and last quarter it bounced back, growing 120% QoQ. APAC region registered a steady growth (2%) in the latest quarter.

WHO SHOULD READ THIS REPORT

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