Overall Market Performance:
- Demand for IT and business services in the Americas decreased in the fourth quarter.
- Economic and geopolitical concerns contributed to a 5% YoY decline in the Americas ISG Index™, reaching $11.8 billion in Q4.
Managed Services Segment:
- Managed services ACV in Q4 was $5.2 billion, up 5% YoY but down 13% sequentially.
- Contract restructurings were a significant driver, with ACV reaching $2.5 billion, the highest quarterly level ever.
- ITO ACV rose 23%, driven by strong demand for applications and data center services, while BPO ACV fell 31%.
- A total of 348 contracts were awarded in Q4, driven by contract restructurings.
XaaS Segment:
- ACV for XaaS was down 12% in Q4, totaling $6.5 billion.
- IaaS ACV was down 18% YoY, reaching $4.0 billion, while SaaS saw a 1% increase to $2.5 billion.
- XaaS represents 55% of combined market ACV, down from 61% a year ago.
Full-Year Results:
- For the full year, the Americas combined market generated $47.5 billion of ACV, down 6% YoY.
- Managed services ACV reached $21.3 billion, a record high for full-year ACV in the region.
- Contract restructurings were up 22%, reaching $8.5 billion of ACV.
Market Outlook for 2024:
- ISG anticipates an improvement in the market for IT and business services in 2024.
- Forecasting 4.25% growth for managed services and 15% revenue growth for XaaS in 2024.
- Expects spending for application modernization and business transformation projects led by GenAI to continue at high levels.
Impact of Artificial Intelligence (AI):
- The rise of artificial intelligence is expected to have a massive positive impact on technology spending in the coming years.
- As AI technology matures and new use cases are identified, it is likely to influence the IT and business services and software industries positively.
Industry-Specific Trends:
- Record-high spending in the energy, healthcare/pharma, and telco/media sectors offset declines in other large verticals.
- Financial services industry spending is expected to rebound in 2024.
Global Forecast:
- ISG forecasts 4.25% growth for managed services and 15% revenue growth for XaaS globally in 2024.
- Anticipates increased spending on application modernization and business transformation projects, especially led by GenAI.
- Expects recovery in small discretionary deals and a rebound in Financial Services industry spending.
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