Spending on cloud services in the Asia-Pacific region fell in the fourth quarter, according to ISG’s report.
The Asia Pacific ISG Index showed that the integrated market (managed services and cloud-based XaaS) had a 33% decline in Q4 ACV to US$3.4 billion.
This was attributed to a particular weakness in infrastructure as a service (IaaS) spending due to lockdowns and technology regulations in China that impacted the country’s large hyperscale providers.
Compared to the third quarter, total market increased 14%. According to the ISG report, this was “the highest consecutive growth among the three regions measured by the ISG index.”
|
|
“China’s technology sector continues to have a tremendous impact across Asia Pacific. Excluding China, Asia Pacific’s total market ACV would have increased by 10% year-on-year this quarter. ISG Asia Pacific Partner and Regional Leader Scott Bertsch.
The managed services sector outperformed the overall market in the fourth quarter, with ACV up 21% to US$1.3 billion and 96 contracts signed in the quarter, up 52% year-on-year.
Within managed services, IT outsourcing (ITO) grew 19% (US$877 million) and business process outsourcing (BPO) grew 26% (US$437 million). Overall managed services spend increased 76% compared to Q3.
“Our managed services quarter was our second strongest quarter ever, following the second quarter of 2012,” said Bertsch. “The region has seen strong demand for infrastructure and managed network services as well as industry-specific his BPO services and facility management. This is a new record.”
Meanwhile, Q4 XaaS spending was US$2.1 billion, down 48% year over year. IaaS spending fell 53% (US$1.7 billion), while software as a service (SaaS) spending fell 9% to US$412 million.
Full-year results
The Asia-Pacific combined market generated an ACV of USD 13.8 billion, down 21% compared to 2021. This is the steepest decline since ISG began measuring his combined markets in 2015.
XaaS ACV decreased 27.5% to US$10.4 billion, while managed services increased 9% to US$3.4 billion. In 2022, he signed 273 managed services contracts, a 24% year-on-year increase.
Within the XaaS segment, IaaS decreased 31% to US$8.8 billion, while SaaS increased slightly, up 0.1% to US$1.6 billion.
In managed services, ITO rose 4% to US$2.4 billion and BPO rose 27% to US$989 million.
geographic performance
For the full year, Australia/New Zealand (ANZ), the region’s largest market, had managed services ACV of US$1.1 billion, down 14% year-on-year. ACV is US$469 million.
Southeast Asia, the region’s second-largest market, generated $795 million in managed services ACV for the year, up 74%, with Q4 2022 ACV up 46% year-on-year to 344 million It was US dollars.
India, one of the region’s top profit earners, also finished the year with managed services ACV up 52% to US$612 million.
Global forecast for 2023
The ISG sees several potential positive developments in the market heading into 2023, including the end of rate hikes, easing inflation, the reopening of China, the start of normalization of supply chains, and the breakthrough of the US dollar’s recent highs. I see that there is
ISG analysts say XaaS providers are still dealing with “tech overkill” and are compensating for softening demand by shrinking their workforces after hiring heavily in the past few years. says.
With this in mind, ISG forecasts annual ACV growth of 17% for the XaaS market in 2023, which is lower than ever before.
As for managed services, the shift to cost optimization “should provide a favorable tailwind for this market,” ISG analysts note.
ISG expects managed services ACV to grow 5% in 2023.
This was first published in the subscription newsletter CommsWire on January 23, 2023.
