The worldwide application management (AM) market is growing at 7.2 percent according to a study by NelsonHall the independent analyst firm.

Dominique Raviart, Research Manager at NelsonHall, commented, "Application management has undergone a lot of changes in the past years, moving away from T&M to SLA-based provisioning and overall becoming much more industrialized than in the past".

Raviart added, "Clients are now awarding much larger standalone contracts than in the past".

Key findings revealed in the NelsonHall research report include:

• Spending in AM on a worldwide basis will be growing by 7.2 percent. Volume will be up by c.9 percent while price reductions will impact overall spending by c. 2 percent.

• Clients are turning to multi-sourcing and are awarding standalone AM contracts. Simultaneously, the size of those contracts is increasing, including in the past two years several deals above the $1bn landmark.

• Offshore and nearshore sourcing represents almost 30percent of AM spending worldwide. While spending in onshore services will be flat until 2012, client demand for offshore and nearshore growing by 14 percent on average each year. Despite this growth, the delivery of AM services located offshore and nearshore will only account for 38 percent of AM spending by 2012 or around 60 percent in terms of headcount

• The potential for offshoring remains high. Yet it is constrained by public sector reluctance to offshore.

More details of the report can be found here: Nelson Hall AM Research