TECH SUPPLIER May 2020 - Market Presentation - Doc # US46265820

Worldwide and U.S. Outsourcing Contract Analysis: 2015–2019 Managed Services Deal Signings and 2020–2021 Renewals

By: Xiao-Fei ZhangResearch Director, IDC Global Services Markets and Trends, Veronica HernandezManager, Contract Services Data Base, Latin America

On-line Presentation

Abstract

This IDC Market Presentation provides an overview analysis of outsourcing managed services deals in 2019 and a five-year trending analysis of deals signed in the 2015–2019 period. It also includes analysis of outsourcing deals coming up for renewal this and next year, given the current situation. Specifically, it explores the likely potential impact of the COVID-19 pandemic and the accompanying economic malaises, both immediate and midterm to long term, on outsourcing deal renewals.

"Commercial-side signings were robust and stable for the past two years," said Xiao-Fei Zhang, program director, Services Contracts Analysis and Services Tracker Team at IDC. "Even very large vendors have been reporting book-to-bill ratios above 1 for the past few consecutive quarters and finding their way back to growth. Services firms were finding enough digital opportunities to offset the cannibalization of cloud and automation."

"However, under the current and unexpected situation — the COVID-19 pandemic and shutdowns," said Xiao-Fei Zhang, "outsourcing renewals in 2020 and 2021 will be anything but 'business as usual.' We expect that the demand-shock will have a bigger impact in the near term, as buyers may renegotiate price, scope, and terms to preserve cash. But more importantly, this crisis will greatly accelerate the ongoing structural shifts in our global supply chain, which will have a wider and deeper impact on IT services. Black swan events like COVID-19 do not bend history — they speed it up."


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