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Organisations in Europe, the Middle East and Africa (Emea) spent over €1bn on cloud-based IT services in the first three months of this year, according to research.
In a study of deals signed in the first quarter of 2017, ISG found €3.5bn was spent on IT services, a 19% rise on the same period in 2016.
Emea spending on cloud-based “as-a-service” contracts was 48% higher in the quarter, compared with the same period last year, at about €1bn. These contracts include software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS).
Spending on traditional outsourcing – where a supplier takes on responsibility for an IT service and brings its own people in to run it, or develops and supports software – reached €2.5bn, the highest it has been for over 12 months, according to ISG.
But public sector spending on IT services was down by half at €6.3bn, which ISG put down to political uncertainty in Europe. But it said it expects this to recover.
Read more about ISG outsourcing research
- Traditional outsourcing contracts reduce in number and are being replaced by cloud-based services.
- Sales of IT as a service growth in Europe helped offset a huge fall in the total value of traditional IT and business process outsourcing contracts.
- The IT services sector across the globe will be hit by the uncertainty around the UK’s future relationship with the EU, but a spending freeze will eventually thaw.
ISG president John Keppel said there was reason to be positive, with the Emea market showing strength in both traditional sourcing and as-a-service contracts.
“After a slow start, as-a-service continues to go from strength to strength. As a result of this, and some robust activity in traditional sourcing, we expect high single-digit gains in the Emea market for the rest of 2017,” he said.
Globally, €18.7bn was spent on IT services in the quarter. This was 15% more than the preceding quarter, but below the €20.5bn reached in the same quarter last year.
Global spending on cloud-based as-a-service contracts increased by over €1bn, or 38%, in the first quarter of 2017, compared with the same period last year.
In the UK, the €1.4bn worth of contracts awarded was the highest ever for a quarter and came after three consecutive weak quarters.
The largest spending sector was financial services, where cloud-based as-a-service spending has increased by 43% over the past 12 months.