ISG Momentum® Market Trends and Insights 2019 Vertical Report
ISG identified approximately $83 billion in outsourcing spending — measured by annual contract value (ACV) — across 27 vertical industries in 2018, with most industries producing between $1 billion and $3 billion in ACV. Four verticals produced more than $5 billion in ACV, including Telecommunications Services, whose total is inflated by the service agreements signed among carriers. The top two verticals, Telecommunications Services and Banking, produced approximately as much as the next eight combined, and the top four verticals accounted for more than half the total ACV in the market. Outsourcing growth was relative in 2018, as year-over-year ACV fell in most verticals but penetration was generally rising.
While most verticals produced less ACV in 2018 than the year before, 15 of the 27 were within $200 million of their prior-year level (see Figure 2). Transportation was down $114 million in 2018, which placed it in the middle, as 13 verticals did better and 13 did worse. The seven verticals that produced year-over-year increases in outsourcing ACV include several that are heavily consumer-facing, including Health Care Equipment & Services, Retailing, Food Markets and Media.
While 2018 was a down year for most verticals, analysis of their three-year compound annual growth rates (CAGR) shows more stratification (Figure 3). The longer view shows more growth industries and more moderate declines in most others. Several of the verticals that had the highest percentage growth in ACV in the last three years were among the smallest in overall ACV. Of the three-year CAGR leaders, only Media currently ranks in the top half of all verticals for annual ACV.