Demand for IT and business services in the Americas was down in the fourth quarter, as economic and geopolitical concerns continued to weigh on the market, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The Americas ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, shows fourth-quarter ACV for the combined market—including both managed services and cloud-based as-a-service (XaaS)—came in at $11.8 billion, down 5 percent from a year ago, and off 4 percent sequentially from the third quarter. It was the fourth time in the last six quarters the region’s growth fell into negative territory.
“Economic and geopolitical concerns continued to impact the market, as enterprises delayed the start of new projects and stretched out spending over longer time periods,” said Todd Lavieri, vice chairman and president of ISG Americas and Asia Pacific. “Enterprises are still focused on optimizing their existing investments in the cloud and other tech spending.”
Lavieri said ISG expects the market for IT and business services to improve in 2024. “Conditions are right for a rebound. Inflation is cooling and central banks are discussing interest rate cuts. Deferred investments from 2023 have put pressure on enterprises to deliver in 2024. That should create a more positive environment for enterprise spending and capital deployment this year even as companies continue to optimize their total spending.”