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. Despite this, the market continues to show resilience, with cloud-based services on the rise. The second-quarter results reveal positive growth in the XaaS segment, particularly in infrastructure-as-a-service (IaaS), which saw a 15% increase.
The managed services segment also showed growth, with second-quarter ACV reaching $10.1 billion, up 1.2% from the previous year. Notably, there were 723 managed services contracts awarded during the quarter, including 10 mega-deals. IT outsourcing (ITO) generated $7.7 billion of ACV, up 2% from the previous year.
Looking ahead, ISG forecasts a 2% revenue growth for managed services and a 14% revenue growth for XaaS for the full year. The industry remains focused on cost optimization and digital transformation, with AI growth playing a significant role in driving innovation.
For more information on the latest industry trends and data, visit ISG’s website at www.isg-one.com.