Sourcing market in DACH remains at a high level

How has the sourcing market developed in the DACH region? Here are the five most important facts and trends of the entire year 2019, especially with a view to the markets in Germany, Austria, Switzerland:

1. Sourcing market in DACH shrinks slightly
   In contrast to the sourcing market in EMEA (Europe, Middle East, Africa), which grew by 10 percent, the total annual contract volume in DACH declined by 1 percent to EUR 4.7 billion in 2019. The reasons are economic uncertainties, especially in the manufacturing and energy industries. Despite the slight decline in ACV, DACH recorded its second-best annual performance to date in 2019 as companies align their managed services strategies and digital investments.
2. Above-average growth in cloud and as-a-service solutions in DACH
   In contrast to the slightly shrunken overall market, growth in as-a-service contract volume in DACH was the strongest in 2019 compared with the other major European markets. It rose by 22 percent in 2019 to EUR 1.8 billion. As-as-service now comprises 38 percent of the total market. The growth rates of 22 percent each for both software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) show that enterprises continue to move toward hybrid and multi-cloud environments.
3. Europe-wide, the outsourcing market grew by 10 percent in 2019
   Across EMEA, the value of outsourcing contracts increased by 10 percent in 2019 as companies focused on cost-cutting and investing in digital solutions in the face of economic uncertainty. Total ACV of as-a-service and managed services contracts in EMEA reached €17.1 billion in 2019 - fueled by a remarkably strong second half of the year. Managed services contract volumes increased 8 percent year-on-year to €10.7 billion. As-a-Service values reached a new record level of 6.4 billion euros, an increase of 13 percent. As-a-Service thus accounted for 37 percent of the market in EMEA last year.
4. Record figures in the UK despite Brexit
   Total market volume in the UK and Ireland increased by 13 percent in 2019 to €5.5 billion. This is the highest annual figure since 2012. Despite the ongoing uncertainty due to the Brexit, companies are currently focusing on greater IT investments and are concentrating on digital transformation and the use of technology to increase their productivity and improve their customers' experience. Managed services market volume increased by 15 percent to €3.3 billion compared to 2018. As-a-service market volume now exceeded €2 billion for the second year in a row and now accounts for 40 percent of the total market in the UK and Ireland. Both software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS) reached new highs.
5. Global sourcing business also grew by 10 percent
   Globally, the contract volume of the entire sourcing market in 2019 increased by 10 percent year-on-year, just as in EMEA, to USD 55.7 billion worldwide. The global market was boosted by record demand for as-a-service solutions, which rose 21 percent last year to $28 billion.

Barbara Florschütz, Managing Director of Information Services Group (ISG) Germany, gives the following market forecast: "The macroeconomic headwinds blowing in Europe have meant that the pace of digital transformation in the region has accelerated rather than slowed. Digital technologies have become a default option for businesses in today's technology-driven world. Companies are looking for ways to cut costs and then investing those gains in technologies that can improve their customers' experience and help them stay competitive against new competitors such as startups."

Source: ISG