Global Digital Spend Pegged at over $470 Bn in 2017

It is likely to rise to $1.1-$1.2 Tn by 2022; major contribution by third-party digital service providers

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Zinnov, a leading management consulting firm, announced the release of its annual rating ‘Zinnov Zones for Digital Services 2017'. Based on a proprietary framework, the ranking aims at helping digital transformation stakeholders and decision makers in enterprises identify the top Service Providers in the digital domain.

Zinnov defines digital investments as spending on digital infrastructure, engineering of digital applications and products, investment in modern technologies, industrial and consumer IOT implementations, and digital managed services, to achieve better customer experience, derive higher operational efficiencies, and create newer digital products.

The study estimates that enterprises worldwide will spend over $470 Bn on digital in 2017 and digital spending is likely to increase at a CAGR of over 20 percent to reach $1.1-$1.2 Tn by 2022. Enterprises in Banking, Financial Services and Insurance, Retail, Manufacturing, Hi-Tech and Telecom continue to be the top spenders jointly contributing over 60 percent of the total global digital spending. Today, over 5.5 Mn people are employed in job roles as a result of digital investments of enterprises.

Startup investments in areas such as IoT, AI, Blockchain, and Robotic Automation have increased significantly in the last 24 months, with an estimated $25 Bn worth of funding across these technologies. This is in addition to over $30 Bn invested in acquisitions focused on AI and IoT competencies.

Zinnov’s study analyzed 27 global Digital Service Providers on their Digital Prowess & Scalability to position them in Zinnov Zones (“Nurture Zone,” “Breakout Zone,” “Execution Zone,” and “Leadership Zone”). Apart from overall Digital Services ratings, the report also provides a relative positioning of Service Providers across nine key digital service lines of Digital Consulting, Experience & Design, Digital Application Engineering, Digital Integration Services, Data Management & Analytics, Digital Infrastructure, Digital Risk & Security, Digital Operations, and Digital Workplaces.

The spend on externally-sourced digital services is estimated to be $31 Bn in 2017. The same is expected to surpass $75 Bn over the next five years. Digital Application Engineering, Data Management and Analytics, Digital Integration Services, and Experience & Design account for over 75 percent of the total services spend with such providers. Indian Service Providers currently hold an estimated 16 percent share in the total outsourced digital services.

The Zinnov Zones study noted the shift towards new age revenue models, with 8-10 percent of Service Providers’ deals having outcome-linked components. The study also brings forth the focus of Service Providers in building design capabilities with about 25 percent of digital-oriented acquisitions occurring in this area.

Organizational structures of Service Providers are witnessing a shift from traditional pyramid to a middle-heavy structure, catering to enterprise requirements of smaller teams with end-to-end capabilities.

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