IT services spending recovery to get renewals boost in 2022

IT services and BPO deals worth $18.5bn globally up for renewal next year, adding fuel to already-expected high growth

Global spending on IT and business process services will receive a massive injection from the large volume of contracts up for renewal next year.

According to figures from ISG, contracts worth a total of $18.5bn (£14bn) are due to expire in 2022, adding fuel to an already rapidly growing market.

In the latest financial quarter, ISG revealed that enterprises spent a record $21.8bn on IT and IT-enabled business services in the third quarter of 2021. This followed the reopening of economies after the slow-down brought by the Covid-19 pandemic.

About three-quarters of the renewals due this year are IT outsourcing contracts, with the remainder business process outsourcing agreements, said ISG.

About half of the renewals are due in the Americas and 38% in Europe, the Middle East and Africa.

ISG said there is a trend for renewals to go to incumbents with additional services requests. Stanton Jones, director and principal analyst at the company, said: “We’re keeping a close eye on these renewals because of a new pattern we’ve seen emerge this year: enterprises are doubling down on incumbents.”

He added that organisations are inviting providers that they already have managed services agreements with to bid on new scope. “This has had an impact in 2021 and could have a significant impact on [which suppliers] win – and [which] lose – these renewals in 2022.”

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One area where new scope in demand exists in the UK is intelligent automation.

During the pandemic, where face-to-face contact was severely limited for long periods and workers were forced to work from home, the technology was used for customer interactions as well as document processing.

According to ISG UK, organisations continued to invest more in automation technologies, despite a fall in overall IT spending.

“Labour shortages, supply chain issues and energy costs give companies more reason to use intelligent business automation,” said James Ewing, UK director for ISG Automation. “Over the next several years, British enterprises are likely to seek more automation solutions and services to become more efficient and reach customers through new channels.”

ISG also said UK organisations are increasingly using artificial intelligence to ensure the smooth functioning of IT systems.

“The pandemic led many organisations to see automation’s full potential to transform ways of working, producing and consuming. In place of episodic, piecemeal initiatives, enterprises are seeking holistic hyper-automation solutions that allow them to completely reimagine their processes, operating models and work modes,” said ISG.

According to ISG, as part of this low-code development, platforms are being used to enable non-technical staff to automate processes.

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