The global market for managed IT and business services saw a 7% increase in combined market ACV, reaching $24.8 billion in the best quarter in two years. Cloud XaaS drove the market up by 11%, while managed services saw only a slight increase. ISG predicts a slow growth environment to continue, lowering the 2024 forecast for managed services growth to 2% and XaaS forecast to 14%.
According to Information Services Group (ISG), the industry is facing challenges with discretionary spending under pressure, resulting in slow revenue growth and declining provider margins. The XaaS segment showed promising growth, with infrastructure-as-a-service (IaaS) ACV increasing by 15%. However, software-as-a-service (SaaS) remained steady, while managed services saw a 1.2% increase in ACV.
Despite the challenges, ISG remains optimistic about the future of the industry. The full-year forecast predicts a 2% revenue growth for managed services and a 14% revenue growth for XaaS. The industry continues to focus on cost optimization and AI growth, while navigating through uncertainties in the market.
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