The outsourcing market in Europe, Middle East and Africa (EMEA) slumped in the first quarter of 2018 as European enterprises focused attention and discretionary spending on preparations for the EU’s General Data Protection Regulation (GDPR), set to take effect May 25, according to the 1Q18 EMEA ISG Index, released by global technology research and advisory firm, Information Services Group (ISG).
Data from the EMEA ISG Index, which measures commercial outsourcing contracts with annual contract value (ACV) of €4 million or more, revealed that EMEA’s first-quarter combined market ACV of €3 billion was down 20 percent compared with the same period last year. The decline was driven by a sharp fall in traditional sourcing values, which dropped 40 percent compared with the notably strong first quarter of 2017, despite just a three percent drop in the number of contracts signed.
While traditional sourcing stumbled, as-a-service soared, rising 40 percent over last year. As-a-service ACV of €1.4 billion was the highest recorded in the region and represented 46 percent of the combined regional market.
The increase in as-a-service sourcing was driven by demand for Infrastructure-as-a-Service (IaaS). Over the trailing 12 months, IaaS ACV increased 48 percent on the prior period and easily outpaced the 13 percent rise in Software-as-a-Service (SaaS).
Globally, the combined market reached a record high of €9.8 billion in the first quarter of 2018, driven by 40 percent growth in the as-a-service sector, which reached €4.7 billion of ACV. The new quarterly high for as-a-service is far beyond the €3 billion – €3.5 billion range in three of the last four quarters, and nearly double the typical ACV of just two years ago.
Steve Hall, partner and president, ISG EMEA, commented: “There is a degree of uncertainty in the European market that continues to depress demand for outsourcing. The focus on preparations for the sweeping GDPR data-privacy regulation and the impact this will have on business relationships is front of mind for many organisations and has led to a shift in priorities. The recent demise of Carillion and the financial uncertainty of some high-profile outsourcing companies has been extensively reported and has added a new degree of caution in the market.”
Looking at the remainder of the year, Hall added: “While traditional sourcing may have a bumpy ride in coming quarters, the trend toward as-a-service will continue to accelerate across Europe through 2018.”
2018 Protecting and managing your assets has never been as important as it has been in recent times, and is a vital part of a successful business, economy and country.
For three days only join more than 11,000 of your FM colleagues and gain access to over 300 suppliers, for career development, training, networking, complimentary CPD workshops and so much more between 19th – 21st June.
Don’t miss out – secure your space at Facilities Show today.