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2Q23 INDEX PREVIEW
Demand for managed services remained strong in the second quarter. However, cloud spending continues to be under pressure as enterprises focus on cost optimization in the face of an uncertain macroeconomic picture.
Questions We’ll Address on the Call
- What’s driving the strong demand for outsourcing? We continue to see very strong demand for cost optimization – both in the awards ISG is advising and in the broader market data we’re analyzing. Within this context, extension and renewal activity continue to be very robust, and mega deal activity came in strong in the second quarter as well.
- Why does demand for cloud continue to be soft? Growth in IaaS and SaaS remains under pressure due to the macroeconomic situation. Enterprises are focused on using what they already committed to in their IaaS contracts and are delaying discretionary SaaS projects.
- What’s driving the renewed demand for captive centers? Historically, captive operations have been focused on using labor arbitrage to deliver internal support services. That’s changing. Enterprises are increasingly using captives to build internal capabilities, especially in areas like product engineering.
- How will generative AI impact the IT and business services industry? While the market is announcing dozens of new generative AI offerings, we believe the near-term impact on outsourcing agreements will primarily be improved productivity, especially in areas like application development and contact center operations.
Register for the Call
I hope you can join Steve, Kathy, Namratha and me on the 2Q23 ISG Index call next Thursday, April 13 at 9:00 AM ET, where we’ll review these key questions and discuss our forecast for the balance of the year. You can register here.
About the authors
Stanton Jones
Stanton leads ISG's Index research, helping providers, investors and ISG clients make sense of the global IT services sector. Stanton’s weekly newsletter, the Index Insider, is read by thousands of market stakeholders each week. An ISG Digital Fellow, Stanton has been quoted in Fast Company, Forbes and CIO.com, and has appeared on national cable news.
Steve Hall
As the leader of ISG’s business in EMEA and an Executive Board Member, Steve provides strategic insight and advice to help ISG’s clients solve their most critical business challenges, helping them adopt and optimize the technology and operating models they need to compete successfully. In particular, he uses his long experience and broad expertise to challenge and inspire them to think about their risks and opportunities in new and unexpected ways.
Past achievements for clients
Steve leads his team’s engagement with clients with an industry-recognized and highly valued perspective on the most important trends in business and technology. He asks and answers the big questions: Why do you need to transform? What’s your best way forward? What do you need to accelerate? And where should you invest your technology dollars to make it all happen?
Among his many client success stories, his ability to take in the big picture, define the problem and connect the dots to the right solutions helped one legacy postal and shipping giant transform itself into a modern logistics powerhouse. He also guided a global energy industry leader through a complex operating model and IT provider transition, helping them see past the obvious cost cutting measures to identify the root causes of their challenges—and delivering savings far beyond what they had imagined.
