Asia Pacific sees double-digit growth in sourcing market
The technology and business services market in the Asia Pacific region achieved a record high in the fourth quarter of 2020, according to the latest state-of-the-industry report from
Information Services Group (ISG), a leading global technology re search and advisory firm.
The region generated a record US$2.6 billion in combined-market ACV in the last quarter of 2020, up 35% over the prior year, with all market segments up by double digits, and managed services witnessing a 90% growth quarter-over-quarter.
Region setting sourcing sights for growth
This recent report shows the Asia Pacific market for technology and business services appears to be shrugging off the worst effects of the pandemic and is turning its sights to post-pandemic recovery and growth.
Such a strong fourth quarter followed a difficult previous three quarters of 2020 with the managed services market in Asia Pacific falling in the third quarter to its lowest level in 14 years, as buyers held back over pandemic uncertainty.
According to Scott Bertsch, partner and regional leader, ISG Asia Pacific, the strong finish in 2020 “belies the overall weakness in 2020 brought on by the pandemic” as for the first time since 2001 “the region did not have any mega-deals”.
Despite this, for all of 2020, Asia Pacific produced a record US$9 billion of ACV, up 2%, across the combined market of technology and business services, with the success of the as-a-service segment boosting the overall figures.
Cloud-based services demand skyrockets
While some market areas took a dip, both in Q4 and throughout 2020, the as-a-service market showed great growth, witnessing a record US$6.9 billion ACV for 2020, up 16% from 2019, with cloud-based services in particular surging.
While Cloud-based services (as-a-service) were up 30%, to US$1.9 billion, in the fourth quarter, infrastructure-as-a-service (IaaS) climbed 33%, to a record US$1.7 billion, and software-as-a-service (SaaS) advanced 12% to US$257 million.
This means that while SaaS ACV dipped slightly during the entire year of 2020, IaaS surged 19% as public cloud providers extended their reach and increased share. AWS, for example, has announced plans to open a second infrastructure cloud region in India, and attracted customers including RBL Bank, Axis Bank and Mahindra Electric Mobility.
Bertsch points out that the Asia Pacific market continues to be dominated by the as-a-service sector, which accounted for 77% of the region’s combined results for 2020, the highest share for cloud-based services of any region.
Managed services soar in Q4 after slump of 2020
Managed services, against a soft quarter a year ago, did end the year on a high note, soaring 55% to US$641 million in the fourth quarter of 2020, with IT outsourcing (ITO) up 76% and business process outsourcing (BPO) up 16%. In fact, Australia and New Zealand and the BFSI sector turning in their best quarterly performance in two years,” states Bertsch.
However, in 2020, the sector took a 26% dive, to US%2 billion, hitting a low not seen since 2016, with infrastructure and application development and maintenance (ADM) services witnessing double-digit declines due to a lack of large deals.
Among notable infrastructure deals of 2020, Singapore’s DBS Bank signed a seven-year outsourcing contract with IBM to simplify its IT infrastructure, and Japan’s Rakuten Mobile inked an agreement with Tech Mahindra for managed IT, security and network services.
Rainmaking + ESG Launch Supply Chain Resilience Accelerator
Rainmaking, one of the world’s leading corporate innovation and venture development firms that create, accelerate and scale new business, has partnered with Enterprise Singapore (ESG), a government agency that champions enterprise development, to launch Singapore’s first ‘Supply Chain Resilience Accelerator’.
The new programme will unite startups and enterprises to boost scalable technology solutions that help fuel supply chain resilience by addressing pain points in transport and logistics.
Over the last 13 years, Rainmaking has launched 30 ventures totalling US$2bn, including Startupbootcamp. Having invested in over 900 startups that have raised more than US$1bn, Startupbootcamp is one of the world’s most active global investors and accelerators.
The new programme looks to help build more resilient supply chains for Singapore’s burgeoning network of startups by leveraging its advantageous position as a global trade and connectivity hub. As part of the Supply Chain Resilience Accelerator programme, no less than 20 startups with high-growth potential will have the opportunity to become a part of Singapore’s vibrant ecosystem of startups.
Calling Supply Chain Solution Startups!
The programme will kick off with an open call for startups who specialise in supply chain solutions for end-to-end visibility, analytics, automation and sustainability.
Applicants will then be shortlisted and receive nurturing from Rainmaking, fostering valuable engagements with corporates to drive scalable pilots with the aim to stimulate investment opportunities.
“Covid-19 exposed the fragility of global trade, and the Supply Chain Resilience Accelerator is our opportunity to spot weak links and build back better. Piloting outside tech can be an incredibly efficient way to test viable solutions to big problems, provided you de-risk and design for scale. Our programme does precisely this by helping corporate decision-makers and startups to work on compelling business opportunities, anticipate operational risks, and ultimately co-create solutions fit for wider industry adoption,” said Angela Noronha, Director for Open Innovation at Rainmaking.
Pilots will run from Singapore, with the objective that relevant organisations may adopt successful solutions globally. To that end, Rainmaking is currently engaging with enterprises specialising in varying industry verticals and have expressed interest in partnering.
“Even as we continue to work with startups and corporations all over the globe, we are so pleased to be anchoring this program out of Singapore. With a perfect storm of tech talent, corporate innovators, and robust institutional support, it’s the ideal launchpad for testing new solutions that have the potential to change entire industries. We look forward to driving the transformation with the ecosystem,” added Angela Noronha.
One of the first selected corporate partners is Cargill, a leader in innovating and decarbonising food supply chains.
"Cargill is constantly exploring ways to improve the way we work and service our customers. Sustainability, smart manufacturing and supply chain optimisation are key areas of focus for us; exploring these from Singapore, where so many key players are already innovating, will help us form valuable partnerships from day one. We look forward to joining Rainmaking and ESG on this journey to work with, support, and grow the startup community by keeping them connected to industry needs,” said Dirk Robers, Cargill Digital Labs.
In order to raise awareness on the importance of building resilience and how technology can be leveraged to mitigate risks of disruption, industry outreach efforts will include fireside chats, discussions and demo days.
In July, Rainmaking will host a virtual insight sharing event for innovation partners as well as a ‘Deal Friday’ session that connects businesses, investors, and selected startups with investment and partnership opportunities.
Programme events will also benefit Institutes of Higher Learning by offering exposure to how advanced practitioners leverage new technologies to transform traditional supply chain management and share real-world case studies and lessons learned, better equipping next-gen supply chain leaders.
“As an advocate of market-oriented open innovation, we welcome programmes like the Supply Chain Resilience Accelerator, which aims to help companies resolve operational pain points, strengthen supply chain resilience and spur growth in a post-pandemic world. With a strong track record in driving open innovation initiatives for the transport and supply chain industry, we believe that Rainmaking’s in-depth knowledge of the ecosystem and network of global partners can complement Singapore’s efforts in accelerating our business community’s adoption of tech-enabled tools, to better manage future disruptions and capture opportunities arising from shifts in global supply chains. This will in turn help to strengthen our local ecosystem and Singapore’s status as a global hub for trade and connectivity,” said Law Chung Ming, Executive Director for Transport and Logistics, Enterprise Singapore.