New research from Information Services Group (ISG) has revealed that global spending on IT and business process outsourcing (BPO) services fell by 8% in the first quarter of 2023.

The data showed that spending on cloud-based as-a-service offerings during the period was particularly impacted, with a drop of 13% from the same period in 2022. In contrast, traditional IT services or managed services increased by 1%.

The report highlighted that there were 703 managed services contracts signed during Q1, with eight deals worth over $100m per year and 237 restructured contracts worth a record $4bn.

ISG President Steve Hall explained that this is “a tale of two markets” with the managed services sector recording a record-high actual contract value, while cloud services have seen their growth slow considerably.

Hall said the decline in cloud contracts is expected to continue through Q2, with demand picking up again in the second half of the year.

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