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U.S. Retakes Top Spot in Annual ISG Rankings of Sourcing Opportunity

Beats out Germany, which falls to number two in ISG Outsourcing Viability Index®; Four of top five markets for delivery are in Asia, including number-one India; Sourcing penetration among Forbes® Global 2000 reaches record 57%

February 1, 2020 11:23 AM EST

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STAMFORD, Conn., Jan. 31, 2020 (GLOBE NEWSWIRE) -- The United States reclaimed the number-one spot as the world’s top outsourcing market in 2019 after ceding that position to Germany the previous year, according to a new market analysis from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The U.S. was ranked first in market opportunity, based on data from the ISG Outsourcing Viability Index® (OVI), a proprietary methodology that ranks markets for both growth potential (opportunity) and delivery maturity. The findings were published in the annual ISG Momentum® Market Trends & Insights Geography Report, released earlier this month.

Germany, which took the top spot for opportunity in 2018, fell to number two, while the United Kingdom, Australia and Japan, in order, rounded out the top five. The opportunity rankings of the top 28 markets are based on a mix of data reflecting outsourcing spending level, penetration, number of large companies and overall GDP, among other factors.

The OVI opportunity rankings for 2019 were relatively stable with the prior year; Switzerland was the only market to change more than two positions, improving from tenth to seventh on the strength of increased spending by many current customers, along with new outsourcing adoption. Six of the top 11 markets for opportunity (Spain and the Netherlands were tied for tenth) are in Europe.

Asia Pacific is home to the three markets most difficult to penetrate for service providers: China, South Korea and Japan. The three, in order, ranked lowest in the market competitiveness dimension of the OVI.

Delivery Maturity

Perennial leader India once again topped the OVI rankings for delivery maturity, despite finishing next to last for infrastructure. India earned the top spot by finishing first in business environment, and number two in both the cost and people dimensions of the OVI.

Four of the top five countries for service delivery are in the Asia Pacific region, with Russia, at number four, the lone exception. Malaysia moved up one position to second, while the Philippines advanced two positions to third in the 2019 rankings. China fell from second in 2018 to fifth in 2019, primarily because of rising costs. China ranks in the bottom five in the real estate, salary and currency components of the OVI cost dimension. Mexico also fell in the rankings, from seventh to 11th. The country improved its position on the infrastructure and business environment dimensions but was hurt by workforce issues.

Ireland, ranked sixth for delivery maturity, is the highest-cost country among the 22 evaluated. The country offsets its cost disadvantage with top-six rankings on two other dimensions, including the top spot for infrastructure.

Among the up-and-comers, Poland moved up to seventh from ninth place the prior year, while Costa Rica broke through the top 10 at number nine after finishing 17th two years earlier. With the Czech Republic also making the top 10, and with Mexico and Indonesia dropping out, markets outside of Asia now hold five of the top 10 slots for delivery maturity.

“Countries are trying to attract centers of excellence and other investments by tech companies, encourage home-grown startups and prepare their citizens with next-generation work skills. These efforts are making more countries viable for outsourcing service delivery,” said Paul Reynolds, partner and chief research officer of ISG. “India is still the leader, but it has plenty of competition.”

Meanwhile, on the demand side, the desire to become more digital continues to drive many outsourcing engagements. “Enterprise customers want to share risks and rewards with their service providers to encourage innovation, and they are actively seeking ways to shift funds from the ‘run’ portion of their operations to the ‘build’ side to quicken the pace of digitization,” said Reynolds.

Outsourcing Penetration

The 2019 ISG Momentum® Market Trends & Insights Geography Report also found the outsourcing penetration rate among Forbes® Global 2000 companies reached a record 57 percent, up two percentage points from 2018. Outsourcing penetration among the G-2000 was highest in Europe, at 73 percent, followed by North America at 66 percent, and Asia Pacific at 39 percent.

The full, 434-page report provides global, regional, sub-regional and country-level data about outsourcing spending, penetration rates and other key metrics. The report also includes in-depth profiles of nearly 50 countries that are large markets for outsourcing services and/or leading locations for service delivery. Market data is presented in more than 400 charts, tables and other graphics and country profiles include firsthand observations about local outsourcing trends, client preferences and provider activity reported by ISG professionals working in those countries.

To view an executive summary of 2019 ISG Momentum® Market Trends & Insights Geography Report, click here.

The latest ISG Momentum® report is part of an ongoing series of market research reports that focus on outsourcing activity by service line, vertical industry and geographic location. To learn about these or other ISG Momentum® services and information products, please visit the ISG Momentum® Research page on the ISG website.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including more than 70 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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Will Thoretz
Information Services Group, Inc.
+1 203 517 3119
[email protected]

Jim Baptiste
Matter Communications for ISG
+1 978 518 4527
[email protected]

Source: Information Services Group, Inc.


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