Digital-focused deals up 3x during Apr 2016 and Mar2017

IT deals

Global services providers witnessed sluggish revenue growth in their legacy businesses, while their digital businesses grew remarkably between April 2016 and March 2017, Everest Group said.

In a report, the group also noted that digital-focused deals increased nearly threefold during this period. Cloud application and analytics formed a major portion of digital deals.

However, while there is increased focus on next-generation technologies and cloud services, deal volumes in traditional business processes and legacy infrastructure services remained stagnant for many of the leading service providers.

The report says this trend was evident in Q1 2017 as well. Activity in the global services market witnessed a notable increase in Q1 2017 compared to Q4 2016 (383 deals to 367 deals, respectively), owing to a significant rise in ITO deals, while BPO transactions declined.

“There is increasing demand from enterprises for next-generation services given need to improve customer satisfaction and increase efficiency and effectiveness of service delivery. Service providers are accordingly making digital investments to adapt to changing market dynamics,” said Salil Dani, vice president at Everest Group.

Between April of 2016 and March of this year, the group witnessed 40 acquisitions to expand digital capabilities, 140 alliances between providers and technology providers or startups, and the setup of 35 new centers and digital pods to help clients rethink their digital strategies.

“Unfortunately, this robust activity cannibalized traditional business services investments and resulted in a deceleration of service providers’ overall revenue growth to a compound annual growth rate of between 0 and 5 percent,” says Dani.

Related News

Latest News

Latest News