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Tech & Sourcing @ Morgan Lewis


The 2019 ISG Momentum Market Trends & Insights Geography Report was recently released and contains valuable insights on how the outsourcing industry is growing and transforming around the world. The report, which was published on December 27, 2019, is authored by Paul Reynolds, partner and chief research officer at ISG.

One of the key highlights of the report focuses on annual contract value, or “ACV.” The report finds that the “number of outsourcing contracts signed continues to rise each year, but the cumulative annual contract value (ACV) of those deals continues to fall.” The report attributes the decline in ACV, which fell for the sixth consecutive year in 2018, to the following three factors: (1) falling prices from commoditized service lines, (2) aggressive pricing policies from new market entrants, and (3) the increasing volume of proofs of concept and other small-scale projects that are often related to emerging technologies.

From a global perspective, the report concludes that every major region in the world “had a year-over-year ACV decline in 2018 and no region produced growth.” Europe suffered a significant drop in ACV with a decline of 12%, while North America saw a decline of only 1.7%. However, in 2018 the Middle East and Africa matched their ACV totals from the prior year. Although the numbers for ACV in 2019 are not yet finalized, the report finds that if growth in the fourth quarter continued on pace with the first three quarters of the year, most regions would see an increase in ACV over 2018 numbers.

We encourage you to review the full report for yourself, available at the link above.