Demand for Digital Services will see stronger growth in 2019: ISG

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Demand for traditional sourcing will increase in 2019 and there will be even stronger growth for digital services, according to a new market research report released by Information Services Group.

The report forecasts public cloud-based IT and business process services to be one of the strongest segments of the market in 2019, while DevOps and agile business adoption will keep the market strong for application development and maintenance (ADM) services.

Enterprises will continue to put heavy emphasis on automating as much as possible, which will fuel continued demand for robotic process automation (RPA), new IT service management (ITSM) tools and services, artificial intelligence, self-service functions for employees and customers, and other forms of automation, the report said.

"ISG expects traditional outsourcing will increase in 2019 and there will even stronger growth for more digitally driven services," said Paul Reynolds, ISG partner and chief research officer. "We expect this expansion will occur despite macroeconomic headwinds in most major markets. Digital transformation momentum is currently so strong that it will overcome expected obstacles and lead to continued outsourcing expansion."

The report notes there are 1,407 outsourcing contracts due to expire in 2019, collectively worth USD 25 billion. Both figures are down from recent years but represent a significant replacement market opportunity. About a third of the expiring contracts are for ADM services.

Many specialist firms and aggressive midsize providers are well positioned to compete with more established incumbents for these opportunities, the report said.