Market activity saw a recovery in offshore/nearshore setups driven by Asia.
As the economic impact of the COVID-19 pandemic recedes, several key demand themes are gaining prominence in the sourcing industry, driving deal growth and deal wins for service providers. According to Everest Group, the uptick in global sourcing transactions in Q1 2021 over Q4 2020 was driven by demand for cloud services, cybersecurity, digital engineering and support for the modern workplace.
Demand for system integration services witnessed an increase in recent quarters. One of the major contributors to this trend is the adoption of advanced technologies such as big data, cloud-based services, Software-as-a-Service and numerous others.
These findings and more are shared in Everest Group’s recently published Market Vista: Q2 2021 report. The Market Vista™ report highlights the key trends and developments in the fast-evolving global outsourcing and offshoring market. The study captures the key developments across outsourcing transaction trends, the health of Global Business Services (GBS) centers, location risks and opportunities, and service provider developments.
Highlights from the Market Vista: Q2 2021 Report
- Outsourcing demand witnessed an increase quarter on quarter, with 436 outsourcing transactions completed in Q1 2021 compared to 422 in Q4 2020.
- Deals for government and Banking, Financial Services and Insurance (BFSI) were the highest among all industry verticals, although BFSI saw a decline quarter on quarter due to fewer deals across banking and capital markets.
- The share of digital services in these transactions increased significantly as well, with 59% of Q1 2021 deals have digital components whereas only 54% of Q4 2020 deals featured digital components.
- Digital services continued to dominate transaction activity, driven by an increase in cloud-based deals. Cloud-based services were a component of 50% of all outsourcing transactions completed in the last year (Q2 2020 to Q1 2021).
- Advanced automation—including artificial intelligence (AI), machine learning (ML) and cognitive technologies—were included in 16% of those deals, robotic process automation (RPA) in 13% and analytics in 11%.
- Offshore center setup activity (comprising both service provider and GBS) increased from Q4 2020 (41 setups and expansions) to Q1 2021 (59), but onshore setups declined (from 37 to 26).
- Total center setups in Asia jumped from 19 in Q4 2020 to 28 in Q1 2021.
- On average, the 30 service providers profiled in the report witnessed an increase in revenues on a sequential basis but a decline in operating margins.
***Download a complimentary abstract of the report here.***
About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global companies, service providers, and investors. Clients use our services to guide 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
