Information Services Group (ISG), a leading technology insights, market intelligence and advisory services company, today released the findings of its 2Q 2016 Asia Pacific ISG Index™, which include, for the first time, a view of the growing As-a-Service market.

The Asia Pacific ISG Index™, which measures commercial outsourcing contracts with an annual contract value (ACV) of US$5 million or more, shows combined second-quarter ACV for the region – representing both traditional and As-a-Service sourcing activity – reached US$1 billion, up 13 percent from the same period in 2015. Traditional sourcing values remained flat year on year while the As-a-Service market, at US$400 million, was up by 42 percent.

Over the first six months of the year, the Asia Pacific market generated a total of US$1.8 billion in ACV, up 7 percent compared with the first half of 2015. This increase was fueled by a 38 percent increase in As-a-Service ACV. Traditional outsourcing value, though remaining within a tight band of US$500 million - US$600 million for the sixth consecutive quarter, fell 7 percent for the period and the 67 contract awards was the lowest number recorded in eight years.

With ACV of US$600 million and just 51 contract awards, Information Technology Outsourcing (ITO) sunk to its lowest point since the first half of 2010. By contrast, Business Process Outsourcing (BPO) activity rose 33 percent compared with the first half of 2015, with ACV reaching US$400 million, as the result of some large awards.

Infrastructure-as-a-Service ACV rose to its highest point ever in Asia Pacific. The US$600 million awarded equaled that of the more established ITO market. Software-as-a-Service values of US$200 million remained largely consistent with the prior-year period.

By sub-region, Australia-New Zealand recorded increases in both value and volume for the half year, whileIndia had its weakest half-year performance in a decade.

By sector, only manufacturing and telecom had ACV growth in the first half of the year. Manufacturing ACV climbed 28 percent year on year to reach its best half-year performance since 2012. Telecom saw a modest 6 percent gain in ACV for the period. The ACV growth in both these sectors was driven by large deal awards, as each saw a reduction in the number of contracts compared with the first half of 2015.

"The Asia Pacific market's remarkable consistency continues," said John Keppel, president, ISG EMEA andAsia. "Contracts above US$20 million have all but disappeared from this region in recent quarters. The steady growth of the As-a-Service market, which now accounts for more than 40 percent of the regional total, is encouraging and we expect that percentage to grow in the future."