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Freelance & Outsourcing Industry (view source)

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* Global managed services ACV reached an all-time quarterly high of $9.8 billion in the first quarter, up 1 percent versus the prior year and up 2 percent over the fourth quarter.  
* Global managed services ACV reached an all-time quarterly high of $9.8 billion in the first quarter, up 1 percent versus the prior year and up 2 percent over the fourth quarter.  
* During the first quarter, 703 contracts were signed, down 1.5 percent against record volume in the 2022 first quarter, but up 2 percent sequentially.
* During the first quarter, '''703 contracts were signed, down 1.5 percent against record volume in the 2022 first quarter, but up 2 percent sequentially.'''
* IT outsourcing (ITO) ACV rose 7 percent, to $6.8 billion, fueled by growth in application development and maintenance (ADM) services, which advanced 23 percent in the quarter and now represents more than 65 percent of ITO ACV.  
* '''IT outsourcing (ITO) ACV rose 7 percent, to $6.8 billion''', fueled by growth in application development and maintenance (ADM) services, which advanced 23 percent in the quarter and now represents more than 65 percent of ITO ACV.
* ITO Managed Services pricing continues to fall annually, most deals included Y/Y reductions but typically not in step with market declines.
* ITO Managed Services pricing continues to fall annually, most deals included Y/Y reductions but typically not in step with market declines.
* Business process outsourcing (BPO), at $3.0 billion, declined 10 percent against a record first quarter in 2022.  
* '''Business process outsourcing (BPO), at $3.0 billion, declined 10 percent''' against a record first quarter in 2022.
* Provider revenues continue to show steady growth, but provider margins remain under pressure. Right-sizing activities in the market are occurring to improve margins
* '''Provider revenues continue to show steady growth, but provider margins remain under pressure'''. Right-sizing activities in the market are occurring to improve margins
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* ACV was $14.3 billion, down 13 percent, the fourth consecutive quarter of sequentially declining results following a record first quarter in 2022.  
* ACV was $14.3 billion, down 13 percent, the fourth consecutive quarter of sequentially declining results following a record first quarter in 2022.  
* Infrastructure-as-a-service (IaaS) fell 16 percent, to $10.4 billion, the second straight quarter of declining year-over-year ACV in this segment.  Cloud consumption is slowing
* '''Infrastructure-as-a-service (IaaS) fell 16 percent, to $10.4 billion''', the second straight quarter of declining year-over-year ACV in this segment.  Cloud consumption is slowing
* The Big Three hyperscalers ((AWS, Azure and GCP)  saw their combined ACV drop 12 percent in the quarter, the first time they have experienced declining quarterly ACV versus the prior year.
* The Big Three hyperscalers ((AWS, Azure and GCP)  saw their combined ACV drop 12 percent in the quarter, the first time they have experienced declining quarterly ACV versus the prior year.
* Software-as-a-service (SaaS), likewise, saw a drop in ACV in the first quarter, down 4 percent from the prior year, to $3.9 billion. Sales cycles lengthened with enterprises looking to optimize cloud workloads.  
* '''Software-as-a-service (SaaS), likewise, saw a drop in ACV in the first quarter, down 4 percent from the prior year, to $3.9 billion'''. Sales cycles lengthened with enterprises looking to optimize cloud workloads.
 
===== By Region =====
{| class="wikitable"
!
! colspan="3" |Combined
! colspan="3" |Managed Services
! colspan="3" |XaaS
|-
!Region
!ACV (B)
!Y/Y
!Q/Q
!ACV (B)
!Y/Y
!Q/Q
!ACV (B)
!Y/Y
!Q/Q
|-
!Americas
|$   12.50
| -7%
|0%
|$      5.20
| -1%
|12%
|$      7.30
| -11%
| -7%
|-
!EME
|$      7.40
| -5%
|0%
|$      3.70
| -4%
|4%
|$      3.70
| -6%
|
|-
!Asia Pacific
|$      4.10
| -14%
|4%
|$      0.83
|62%
| -37%
|$      3.30
|23%
| -24%
|}
'''Americas'''
 
* First-quarter ACV for the combined market at $12.5 billion, down 7 percent, the steepest year-over-year drop for the region since ISG began tracking the combined market in 2015.<ref>https://ir.isg-one.com/news-market-information/press-releases/news-details/2023/Americas-Market-for-IT-and-Business-Services-Down-7-in-Q1-ISG-Index-Shows/default.aspx</ref>
* Managed services ACV declined 1 percent versus the prior year, but was up 12 percent against the fourth quarter, to $5.2 billion.
* IT outsourcing, at $3.2 billion of ACV, was flat with the prior year, but up 2 percent versus the fourth quarter, while business process outsourcing, at $2.1 billion, was down 3 percent from the prior year but up 32 percent over the fourth quarter
* Demand for cloud-based XaaS solutions, at $7.3 billion of ACV, declined 11 percent from the prior year, its sharpest quarterly drop ever, and 7 percent versus the fourth quarter.
 
'''EMEA'''
 
* ACV for the combined market at US $7.4 billion in the first quarter, down 5 percent from the prior year, but essentially flat with the fourth quarter.<ref>https://ir.isg-one.com/news-market-information/press-releases/news-details/2023/Europes-IT-and-Business-Services-Market-Shows-Mixed-Results-in-Q1-ISG-Index-Finds/default.aspx</ref>
* Managed services ACV, at US $3.7 billion, was up 4 percent sequentially from the fourth quarter, but down 4 percent from the prior year.
* IT outsourcing (ITO) rose 5 percent year on year, to US $3.0 billion. Business process outsourcing (BPO), meanwhile, slumped 30 percent year on year, to US $750 million.
* Demand for cloud-based services (XaaS) declined 6 percent versus the prior year, to US $3.7 billion, with infrastructure-as-a-service (IaaS) off 10 percent, at US $2.7 billion, even as software-as-a-service (SaaS) rose 6 percent, to US $1.1 billion.
 
'''Asia Pacific'''
 
* First-quarter ACV for the combined market rose 4 percent sequentially from the fourth quarter to US $4.1 billion, but was down 14 percent versus the prior year.<ref>https://ir.isg-one.com/news-market-information/press-releases/news-details/2023/Asia-Pacific-IT-Business-Service-Market-Rebounds-in-Q1-from-Weak-Prior-Quarter-ISG-Index-Finds/default.aspx</ref>
* Managed services, with ACV of $825 million up 62 percent versus the prior year, but down 37 percent from the fourth quarter.
* IT outsourcing in the first quarter soared 74 percent, to US $643 million, and business process outsourcing climbed 32 percent, to US $182 million, both versus the prior year.
* Cloud-based XaaS market grew 24 percent sequentially versus the fourth quarter, to US $3.3 billion, but was down 23 percent from a year ago.


===== '''2023 Forecast''' =====
===== '''2023 Forecast''' =====
ISG lowered its forecast for XaaS revenue growth in 2023 to 15 percent, down 200 basis points from its January forecast, and maintained its growth forecast for managed services at 5 percent.
ISG lowered its forecast for '''XaaS revenue growth in 2023 to 15 percent, down 200 basis''' points from its January forecast, and '''maintained its growth forecast for managed services at 5 percent.'''


“The macro environment remains uncertain, with interest rates, inflation and trouble in the banking sector topping concerns for enterprise clients,” said Hall. “There continues to be more scrutiny on deal signings, especially in  discretionary spending areas. Enterprises are revisiting cost optimization, efficiency gains and vendor consolidation deals.”
“The macro environment remains uncertain, with interest rates, inflation and trouble in the banking sector topping concerns for enterprise clients,” said Hall. “There continues to be more scrutiny on deal signings, especially in  discretionary spending areas. Enterprises are revisiting cost optimization, efficiency gains and vendor consolidation deals.”
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* '''The largest percentage of companies have been renegotiating current contracts to adjust prices and volumes'''. In January 2009, 42 percent of respondents indicated that existing outsourcing contracts attheir companies were unchanged from 12 months earlier.  By September 2009 this was down to 19 percent and by January 2010 it was 16 percent.
* '''The largest percentage of companies have been renegotiating current contracts to adjust prices and volumes'''. In January 2009, 42 percent of respondents indicated that existing outsourcing contracts attheir companies were unchanged from 12 months earlier.  By September 2009 this was down to 19 percent and by January 2010 it was 16 percent.
* '''Trend toward expanding future outsourcing programs in light of the recenteconomic crisis is clear.''' In January 2009, 36 percent of respondents indicated that their companies were expanding their future outsourcing programs.  By September 2009 this number was 47 percent.  By January 2010 it was up to 56 percent.  
* '''Trend toward expanding future outsourcing programs in light of the recent economic crisis is clear.''' In January 2009, 36 percent of respondents indicated that their companies were expanding their future outsourcing programs.  By September 2009 this number was 47 percent.  By January 2010 it was up to 56 percent.
* '''The trend in what’s being outsourced is toward more high-skilled, knowledge-based activities.''' Sixty-one percent say knowledge management is more import than it was a year ago, while only 2 percent say it’s less important.
* '''The trend in what’s being outsourced is toward more high-skilled, knowledge-based activities.''' Sixty-one percent say knowledge management is more import than it was a year ago, while only 2 percent say it’s less important.
* '''Near-term cost savings is always a key driver.''' In January 2009, 25 percent of respondents indicated that these near-term cost saving had become more important over the previous 12 months.  This rose to about 50 percent in September 2009 and stayed at that level in January 2010.
* '''Near-term cost savings is always a key driver.''' In January 2009, 25 percent of respondents indicated that these near-term cost saving had become more important over the previous 12 months.  This rose to about 50 percent in September 2009 and stayed at that level in January 2010.
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