UK managed services market enjoying 'sustained rebound'

But sector still below pre-2017 peak, according to market watcher ISG

The UK managed services market is enjoying a "sustained rebound" but remains below its pre-2017 peak, according to a market watcher which tracks large deals.

Research and advisory firm ISG's EMEA index measures commercial outsourcing contacts with an annual contract value (ACV) of $5m or more across the region.

It splits the market into cloud-based as-a-service deals and managed services (ie IT outsourcing and business process outsourcing).

Both categories enjoyed a resurgence across the region Q1, it said, with EMEA-wide as-a-service ACV up 16 per cent year on year to $2.5bn, managed services ACV rising 23 per cent to $3.5bn and total ACV up 20 per cent to $6bn .

In the UK, managed services ACV reached $866m, a 20 per cent annual hike. It was the fourth consecutive quarter the UK generated managed services ACV in excess of $800m.

Although this represents a "sustained rebound" for the UK market, that figure is still below the $1bn quarters that "were typical prior to 2017 and the onset of Brexit uncertainty", ISG said.

The wider EMEA market continues to recover from its pandemic low last year, ISG said.

"EMEA has produced two consecutive quarters with $6bn or more of ACV, adding more than $1.4bn from its pandemic low," said Steve Hall, president, ISG EMEA. "Importantly, the region is seeing strength in both the as-a-service segment, as more and more enterprises adopt a public or hybrid cloud strategy, and on the managed services side, which is experiencing a resurgence."

Four ‘mega deals' with an ACV of over $100m were inked in Q1, bringing the two-quarter running total to eight.

"You have to go back to early 2017 to find a two-quarter period in EMEA that had more mega-deals awarded," Hall said.