Asia-Pacific IT Services Market Sees Surge in Managed Services Demand, Q2 ISG Index Reveals

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The Asia-Pacific IT and business services market experienced significant growth in Q2 2023, driven by strong demand for managed services. The ISG Indexâ„¢ report highlights a 30% year-over-year increase in annual contract value for managed services.

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Strong Growth in Managed Services

The Asia-Pacific IT and business services market demonstrated robust performance in the second quarter of 2023, according to the latest ISG Indexâ„¢ report. The market saw a substantial 30% year-over-year increase in annual contract value (ACV) for managed services, reaching US$3.0 billion

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. This growth was primarily fueled by a surge in demand for managed services across the region.

Record-Breaking Performance

The combined market, which includes both managed services and cloud-based as-a-service spending, achieved a record-breaking ACV of US$5.8 billion in Q2. This represents a 9% increase compared to the same period last year and a 13% rise from the previous quarter

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. The strong performance indicates a positive trend in the Asia-Pacific IT services sector.

Managed Services Sector Analysis

Within the managed services segment, IT outsourcing (ITO) experienced significant growth, with ACV rising by 37% to reach US$2.5 billion. This increase was driven by large infrastructure and network services deals

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. Business process outsourcing (BPO) also saw a notable uptick, with ACV growing by 5% to US$457 million, boosted by industry-specific services and facilities management agreements.

As-a-Service Market Developments

The as-a-service market, while showing signs of stabilization, faced some challenges. The segment's ACV declined by 3% year-over-year to US$2.9 billion. However, it did show a 6% improvement compared to the first quarter of 2023

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. Within this category, Infrastructure-as-a-Service (IaaS) experienced a 5% decrease to US$2.4 billion, while Software-as-a-Service (SaaS) grew by 8% to US$468 million.

Geographic Performance

Australia and New Zealand (ANZ) emerged as standout performers in the region. The ANZ market saw its ACV more than double to US$924 million, marking the third consecutive quarter of growth

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. This impressive performance was attributed to strong demand across various sectors, including energy and utilities, banking, financial services and insurance (BFSI), and manufacturing.

Market Outlook

Despite global economic uncertainties, the Asia-Pacific IT and business services market has shown resilience and growth. Scott Bertsch, partner and regional leader for ISG Asia Pacific, expressed optimism about the market's future. He noted that while some enterprises are cautious about spending, others are investing in digital transformation to drive efficiency and competitiveness

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The ISG Indexâ„¢ report provides valuable insights into the state of the IT and business services market in the Asia-Pacific region. As organizations continue to adapt to changing business landscapes, the demand for managed services and cloud-based solutions is expected to play a crucial role in shaping the future of the industry.

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