DALLAS, March 18, 2021 /PRNewswire-PRWeb/ -- Everyone likes to end the regular season with a win. According to Everest Group, the global outsourcing industry managed to eke out a few scores to close out a year dampened by the COVID-19 pandemic.
Although overall transaction activity (i.e., number of deals signed) decreased slightly from 438 in Q3 2020 to 422 in Q4, the total reported annual contract value (ACV) of outsourcing transactions increased from US$2.5 billion in Q3 to $2.8 billion during the final quarter of the year. In addition, service providers reported improved financials as the impact of COVID-19 continued to diminish. A majority of the providers reported a sequential rise in their revenue as well as improved margins.
Digital services continued to dominate transaction activity and experienced a slight increase in Q4 2020, rising to 56% of all outsourcing transactions from 54% in Q3. Cloud remained the most prevalent digital component of outsourcing deals (53%), with advanced automation (19%)—including artificial intelligence (AI), machine learning (ML) and cognitive technologies—edging out Robotic Process Automation (RPA) and analytics, 13% and 12% respectively.
These findings and more are shared in Everest Group's Market Vista: Q12021 report. The Market Vista™ report highlights the key trends and developments in the fast-evolving global offshoring and outsourcing market. The study captures the key developments across outsourcing transaction trends, health of Global Business Services (GBS) centers, location risks and opportunities, and service provider developments.
Highlights from the Market Vista: Q1 2021 Report
- As enterprises are trying to rationalize and consolidate their IT portfolios, the market is witnessing an increase in the number of mega deals, thereby causing an increase in the overall Total Contract Value (TCV) for deals. (Everest Group defines mega deals as those with TCV greater than US$50 million.)
- Mergers and acquisitions (M&A) and alliances activity witnessed a significant rise in Q4 2020. Among M&As, cloud, advanced automation and analytics led the list of key digital focus areas, in that order. Since analytics has become relatively mature, companies are now focusing more on advanced automation than analytics.
- New setups and expansions of GBS centers in Q4 2020 (58) remained in line with those of the previous quarter (59).
- North America continued to dominate GBS activity in onshore locations and accounted for 46% of the total new center setups, followed by Western Europe, accounting for 42% of total new setups.
- Nearshore and Eastern Europe witnessed growth in activity both in terms of new GBS center setups and surge in number of deals, primarily led by the Banking, Financial Services and Insurance (BFSI) vertical.
- Technology & communication remained the most active sector in offshore/nearshore locations and accounted for 44% of the total GBS center setups in Q4 2020. GBS activity in the manufacturing sector increased substantially to 10 new setups in Q4 2020, up from six in Q3.
***Download a complimentary abstract of the report here.***
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/
Media Contact
Andrea Riffle, Everest Group, 9548018474, [email protected]
Jennifer Fowler, Cathey Communications, 8654056380, [email protected]
SOURCE Everest Group
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