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Asset pacific it surges: business services market expands, yet slows post-q2.

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The combined market grew 12% versus prior year, with cloud-based XaaS growing 15% and managed services growing 9%.

Market Trends and Growth

The third-quarter ACV (Annual Contract Value) for the combined market of cloud-based XaaS (Software as a Service) and managed services has shown a significant increase of 10% compared to the same period last year. This growth is a testament to the ongoing demand for these services, which are crucial for businesses to stay competitive in today’s digital landscape. Key statistics: + Cloud-based XaaS grew 15% in the third quarter + Managed services grew 9% in the third quarter + Combined market grew 12% in the third quarter + Managed services grew 43% less than the second quarter Despite the growth, managed services still experienced a decline of 43% compared to the second quarter. This decline can be attributed to various factors, including increased competition and the shift towards cloud-based services.

Cloud Services Market Sees Significant Growth Amid Increasing Adoption and Scalability Needs.

Cloud Services Market Growth

The cloud services market has experienced significant growth in recent years, driven by the increasing adoption of cloud-based technologies among businesses and individuals. According to the latest data, the demand for cloud-based services has grown by 8 percent, reaching US $3.8 billion in the first quarter of the year. This represents a substantial increase from the previous quarter, with a 10 percent sequential growth.

Key Statistics

  • Managed services contracts awarded: 57
  • Year-over-year growth: 36 percent
  • Quarter-over-quarter decline: 30 percent

    • Drivers of Growth

    Several factors have contributed to the growth of the cloud services market. These include:

  • Increased adoption of cloud-based technologies: More businesses and individuals are turning to cloud-based services to reduce costs, improve efficiency, and enhance collaboration. Growing need for scalability and flexibility: Cloud-based services offer businesses the ability to scale up or down quickly, making them an attractive option for companies with fluctuating workloads. Advancements in cloud infrastructure: Improvements in cloud infrastructure have made it easier for businesses to deploy and manage cloud-based services, leading to increased adoption. ### Challenges and Opportunities**

    • Challenges and Opportunities

    While the cloud services market has experienced significant growth, there are also challenges and opportunities that need to be addressed. These include:

  • Security concerns: Cloud-based services can be vulnerable to security threats, which can compromise sensitive data. Competition and pricing: The cloud services market is highly competitive, with many providers offering similar services at different price points. Regulatory compliance: Businesses must ensure that they are complying with relevant regulations and laws when using cloud-based services. ### Future Outlook**

    • Future Outlook

    Looking ahead, the cloud services market is expected to continue growing, driven by increasing demand for cloud-based technologies and services.

    IT Outsourcing Market Trends

    The IT outsourcing market has experienced significant growth in recent years, driven by the increasing need for organizations to outsource non-core functions to focus on core business activities. This trend is expected to continue, with the global IT outsourcing market projected to reach $1.4 trillion by 2025.

    Key Drivers of Growth

    Several factors have contributed to the growth of the IT outsourcing market:

  • Increasing demand for digital transformation: The rapid pace of technological change has created a need for organizations to adapt and transform their businesses to remain competitive. Cost savings: Outsourcing non-core functions can help organizations reduce costs and improve efficiency. Access to specialized skills: IT outsourcing providers have access to specialized skills and expertise that organizations may not have in-house. * Scalability: Outsourcing allows organizations to scale their operations quickly and easily. ### Emerging Trends**

    • Emerging Trends

    The IT outsourcing market is also experiencing several emerging trends:

  • Cloud computing: The increasing adoption of cloud computing has created new opportunities for IT outsourcing providers. Artificial intelligence and machine learning: The growing use of AI and ML has created a need for organizations to outsource these services to specialized providers. Cybersecurity: The increasing threat of cyber attacks has created a need for organizations to outsource their cybersecurity services to specialized providers. ### Regional Analysis**

    • Regional Analysis

    The IT outsourcing market is also experiencing regional growth:

  • Asia-Pacific: The Asia-Pacific region is expected to drive growth in the IT outsourcing market, driven by the increasing demand for digital transformation and cloud computing. Europe: The European region is also experiencing growth, driven by the increasing demand for cybersecurity and AI services.

    Managed Services in Asia: A Growing Trend in the Digital Economy.

    The Rise of Managed Services in Asia

    The demand for managed services in Asia has been on the rise, driven by the growing need for businesses to outsource non-core functions and focus on core competencies. This trend is evident in the significant increase in demand for managed services in China, Japan, and South Korea.

    Key Drivers of Demand

  • Growing need for IT infrastructure: The rapid growth of the digital economy in Asia has led to an increased demand for IT infrastructure, including cloud computing, data analytics, and cybersecurity. Outsourcing of non-core functions: Many Asian businesses are looking to outsource non-core functions, such as HR, finance, and customer service, to focus on their core competencies. Increasing complexity of IT operations: The increasing complexity of IT operations, including the need for 24/7 monitoring and support, has led to a growing demand for managed services.

    The Asia Pacific Market: A Growing Hub for Digital Marketing Services

    The Asia Pacific region has emerged as a significant hub for digital marketing services, with a combined market value of ACV (Advertising, Consumer Goods, and Promotions) reaching US $14.2 billion in 2022. This growth can be attributed to the increasing demand for digital marketing solutions across various industries, including e-commerce, retail, and finance.

    Key Drivers of Growth

    Several factors have contributed to the growth of the Asia Pacific market:

  • Rising consumer spending: The region’s growing middle class has led to an increase in consumer spending, driving demand for digital marketing services. E-commerce boom: The rise of e-commerce has created new opportunities for businesses to reach their target audience, resulting in increased demand for digital marketing services.

    The IT Services Market: A Growing Industry

    The IT services market has experienced significant growth in recent years, driven by the increasing demand for technology solutions across various industries. According to ISG, the market is expected to continue growing, with a forecast of 2 percent revenue growth for managed services for the full year. However, the firm is more optimistic about the market’s prospects for 2025, predicting stronger growth.

    Key Drivers of Growth

    Several factors are contributing to the growth of the IT services market. Some of the key drivers include:

  • Increased adoption of cloud computing: Cloud computing has become increasingly popular in recent years, and this trend is expected to continue. As more businesses move their operations to the cloud, they will require IT services to manage and maintain their cloud infrastructure. Growing demand for cybersecurity: Cybersecurity is becoming an increasingly important concern for businesses, and this demand is expected to drive growth in the IT services market. Rise of artificial intelligence and machine learning: The increasing adoption of AI and machine learning technologies is expected to drive growth in the IT services market, as businesses seek to implement these technologies to improve their operations. ### Impact of Central Bank Rate Cuts*

    • Impact of Central Bank Rate Cuts

    Recent rate cuts by the Federal Reserve and European Central Bank are expected to boost IT spending. The rate cuts are intended to stimulate economic growth, and this is likely to have a positive impact on the IT services market.

    The Importance of the ISG Index

    The ISG Index is more than just a source of industry data; it provides a comprehensive understanding of the global technology and business services industry.

    View source version on businesswire.com: https://www.businesswire.com/news/home/20241020256748/en/

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