NEEDHAM, Mass.--(BUSINESS WIRE)--According to the International Data Corporation (IDC) Services Contracts Database, more than 1,700 managed services deals were signed in 2022 worth more than $125 billion in contract value. The total number of deals declined compared to 2021, but the average deal size increased by more than 22%.
Despite indications of a global economic slowdown, IT spending across organizations seems to be steadily increasing. There was an increase in larger deal signings (total contract value (TCV) above $100 million) in 2022 compared to 2021. As technology is increasingly becoming the backbone of organizational growth strategies, we are seeing more and more organizations upgrading their IT infrastructure leveraging cloud, artificial intelligence (AI), and security. The pandemic also forced organizations to become digital first. The after effect of this paradigm shift is evident in the increased IT spending trend observed in 2022.
More than 60% of the total TCV was signed in the USA, which is almost 8% higher than 2021. This growth was mainly driven by many large deals awarded to hyperscalers involving higher level cloud implementation. Some notable deals include the one between Snap and Google estimated to be more than $700 million, and one between Boeing and AWS estimated to be around $400 million. Western Europe accounted for 28% of the TCV in 2022, which is almost 6% less than 2021. Due to high inflation, skill shortages, and disruption in the supply chain due to geo-political reasons, this slowdown is expected to continue over a few quarters. Notable deals in the region include the one between the London Stock Exchange and Microsoft worth $2.8 billion and between UBS and Microsoft estimated to be around $750 million.
Many credible sources have provided a pessimistic outlook for 2023 due to the economic slowdown. Overall spending by organizations is expected to decline due to the economic headwinds. However, IT spending is not expected to be affected as much. The Services Contracts Database lists more than 2,300 managed services deals, worth more than an estimated US$122 billion, coming up for renewal in 2023. This includes about 130 deals above TCV of $100 million. We expect many more large cloud transformation contracts to be signed in 2023 which will be instrumental in driving growth and sustainability.
IDC's Services Contracts Database: Worldwide provides a comprehensive tool for sales enablement and competitive intelligence in the enterprise services and software market. The database is updated in real time with the most recent services contract signings for each country. The database includes IT and business services contracts by deal size and run rate (in USD), by buyer industry, geography, and size, and by solution and technology.
For more information about IDC's Services Contracts Database: Worldwide, please contact Supriya Kamath at skamath@idc.com.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world's leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.