Outsourcing Deals Jump 11% in USA Thanks to Growing Economy

Outsourcing deals in the United States grew 11% in the first fiscal quarter of 2018, with cloud, automation, and analytics accounting for 65% of outsourcing activity.

There were 115 deals in 1Q18, compared to 103 recorded in 4Q17, according to market analyst firm Everest Group.

The increase in outsourcing transactions was largely due to improved business sentiment in the US as well as the growing demand for service providers in healthcare and manufacturing sectors.

For the first time, the number of new global innovation centers (GIC) supporting digital skills surpassed centers supporting only traditional services, according to Everest.

“New GIC setups, which reached an all-time high in Q4 2017, declined slightly, but GIC expansions are at a seven-year high,” said H. Karthik, Partner at Everest Group.

“All-in-all, Q1 was a good quarter for service providers—both global as well as offshore-heritage service providers—with most reporting sequential growth in revenue and an increase in operating margins.”

Among global services transactions overall, digital services continued to dominate the outsourcing activity in Q1, similar to the previous quarter. The share of digital-focused transactions increased from 61% in Q4 2017 to 65% in Q1 2018, an indication that there is a declining demand for pure traditional services.

Among all outsourcing deals, Cloud accounted for 50% of transactions, automation 21%, analytics 14%,  mobility 13%.