The global IT and business processing services market has failed to grow quarter-on-quarter for the first time in six quarters, in a sign of slowing demand.
According to figures from ISG’s
latest outsourcing tracker, the second quarter of 2022 saw a total of $22.8bn
spent globally on IT Outsourcing Services . This was 9% higher
than the equivalent period last year, but a fall of 7% compared to the previous
quarter.
Tech research and advisory company
ISG measures IT and business process outsourcing (BPO) contracts signed for
more than $5m.
The latest figures showed that
spending on cloud-based as-a-service contracts reached just over $14bn, but
this was 11% less than the previous quarter and represented a sudden drop
compared with the previous six quarters, which on average saw 44% increases in
spending compared with the previous quarter.
Of the cloud-based service spending,
infrastructure-as-a-service totalled $10.2bn, down 14% on the previous quarter.
Organisations invested $3.9m in software-as-a-service, a 1% reduction on the
previous quarter.
Traditional IT Outsourcing
Services spending was $8.8bn, 2%
higher than the previous quarter.
Steve Hall, president at ISG,
said the past 18 months have seen rapid take-up of OIT services, but ISG
expects slower growth and more volatility over the next six months.
“We have been through an 18-month
period of sustained high demand that has pushed the global market to new
heights as companies accelerated their digital investments,” said Hall. “With
fears of a potential recession on the horizon, we saw a slowdown in the second
quarter and expect the market to be more volatile in the second half of the
year.”
He said demand remains high as
companies continue to embrace cloud computing and leverage technology to
improve productivity, reduce costs and get closer to customers to drive revenue
growth. “Yet the market faces headwinds, including rising interest rates, lingering
supply chain issues, a tight labour market and higher energy prices,” he added.