IT Services (Global Market)

Market Segment Materials

• IT Outsourcing (Global Market)
• Data center (global market) Commercial data centers
• Infrastructure as a Service, IaaS
• Storage Services (Global Market)
• PaaS (world market)
• SaaS (world market)
• Information Security Services (Global Market)
• Content Delivery Networks, CDN Content Delivery Network

2020

Market decline in IT and business services by 1.16%, to $1 trillion - IDC

In 2020, the volume of the global market for technology services and business services (business consulting and outsourcing of major business processes) fell by 1.16% compared to 2019, but in absolute terms the figure remained above $1 trillion. Such data are provided in the IDC study .

According to experts, global spending on IT and business services in 2020 did not decrease as much as originally expected. This was due to several reasons, including:

• improving economic prospects;
• growing business confidence;
• the emergence of a new normality in which companies begin to practice longer-term investments in technology and business services.

The report notes that market results in 2020, especially in the third and fourth quarters, were higher than expected.

In Europe, the Middle East and Africa (EMEA), as well as the Asia-Pacific region, large government projects in the field of digital technology and business confidence that the authorities will be able to cope with the economic problems and difficulties of the COVID-19 coronavirus pandemic have had a positive impact on the market of technological and business services .

In 2020, the market for IT and business services decreased by 1.16%

In addition, most manufacturers are confident that the crisis has pushed organizations and consumers to the digital world, which in the long run will have more than a positive impact. The scale of this migration will be higher, and the timing of its implementation will be less than previously expected, the researchers say.

According to analysts, spending on IT and business services in the Americas in 2021 will increase by 2.5%, in the United States, in particular, by 2.4%. Analysts pay attention to the growth of the American business consulting market, due to the fact that the country's economy began to recover faster than expected. In addition, in the United States there was an active introduction of cloud technologies, which favorably affected the segment of managed services.

In Europe, the volume of this market, as calculated by IDC, in 2020 grew by more than 3%. Moreover, in Central and Eastern Europe, the dynamics were higher, although in absolute terms the costs of IT and business services in this region are noticeably lower than in Western Europe.

Forecast of IT and business services dynamics in different regions

In the Asia-Pacific region, the overall growth of the IT and business services market in 2020 remained higher than in other parts of the world. In this regard, short- and medium-term prospects in these countries are expected to be more optimistic than previously mentioned.

The IDC is confident that the problems caused by the coronavirus pandemic create colossal business opportunities for ICT vendors. In particular, they are associated with the development of new digital platforms, contactless payments and technologies for working with (big data Big Data), which allow you to improve government operations.

Other opportunities are related to online health services, as the virus stimulates the acceleration of the digital transformation of healthcare systems. In addition, new opportunities are being created for the introduction of robots, distance learning and e-commerce, as well as the development of smart cities, according to IDC.

Although 2020 was a difficult year for service providers both in terms of supply and demand, the overall service market remained stable, and the main participants report an increase in the number of orders and deliveries, says IDC analyst Xiao-Fei Zhang. - Looking to the future, we can say that recovery will be uneven in developed and emerging markets. The threat of inflation still exists, but a strong recovery is still expected in 2021 and 2022.[1]

Leaders among digital product companies identified

Forrester on July 29, 2020 presented a "rating of the most effective digital product development companies." As part of the comprehensive assessment, all participants were rated according to 29 criteria, 12 providers were included in the top ranking: BCG, Bresslergroup, Cognizant, EPAM, frog, Harman, Huge, Slalom, ThoughtWorks, Virtuusa, WillowTree and Wipro.

As part of the study, special attention is paid to the complex support of providers for the created digital product. Thus, in addition to the quality of the solutions being developed, parameters such as the product development process, testing, delivery time to the market, support for the finished product, customer satisfaction assessment, the formation of sales and product development models and many others are evaluated. One of the conditions for inclusion in the rating was the mandatory launch of at least one new digital product in 2019.

All evaluation criteria were grouped into three high-level groups: quality of supply, strategy and market share.

Forrester defines the development of a digital product as a set of service capabilities necessary to develop, design and market, as well as scale a new digital product, which is then offered by the customer to its customers. For the purposes of this study, only those that can themselves be purchased by the final user are considered as a "digital product." Thus, applications can be considered a digital product only if they need to be paid by the consumer or bought on their basis content that cannot be implemented in another form or through another channel, but not in cases where a particular application expands the pre-existing commercial capabilities of the client company. (For example, the airline application is not a digital product, and the online cinema application is).

2019: IT and business services market increased by 5% - IDC

According to IDC analysts, the volume of the global market for IT services and business services (business consulting and outsourcing of major business processes) in 2019 increased by 5%. Excluding currency fluctuations, the growth was 2.4%.

The free sample for the study, which was published on the IDC website, does not indicate the amount of costs for IT and business services. But, given that earlier experts reported an indicator of slightly more than $1 trillion in 2018, in 2019 there is a market volume of about $1.05 trillion.

According to experts, the market for IT services and business services increases the growth rate for two consecutive years: in 2017 they were measured at 4%, in 2018 - 4.3%. The dynamics are increasing, despite the slowdown in global GDP growth to just over 3% in 2019.

This situation largely in 2019 reflected a healthy environment with corporate IT budgets in companies that were cautious, but still built optimistic business forecasts, analysts say.

The service market in the Americas in 2019 showed a 5.2 percent decline, to $485.6 billion. At the same time, the US government and business in the first quarter of 2020 began to postpone new projects in order to postpone discretionary decisions due to market uncertainty in connection with the COVID-19 coronavirus pandemic. Project-oriented segments of the market in question, such as consulting, user application development, system integration, etc., were more affected by falling revenues.

Spending on technology and business services in Latin America in 2019 increased by 7.2%. In 2020, the situation in this region began to deteriorate due to quarantine in many countries, currency depreciation and weak Chinese demand for local products.

In 2019, the volume of the service market in EMEA countries (Europe, the Middle East, Africa) increased by 4.4%, in the Asia-Pacific region - by 5.5%. In China, the cost of IT and business services increased by 7.6%.

The volume of the global market for IT services and business services (business consulting and outsourcing of major business processes) in 2019 increased by 5%

The main driver of the growth of the Western European market was orders for the development of applications, their maintenance, etc. Digital transformation stimulates the development of new applications, as well as updating old ones, experts say.

In Central and Eastern Europe, spending on IT and business services in 2019 showed growth for the second year in a row. However, analysts warn that due to the COVID-19 coronavirus in 2020, this regional market will sink largely due to Russia. According to researchers, the costs of technological and business services in the Russian market in 2020 will be reduced by 20%, and one of the reasons for this decline will be cheaper oil. Russia accounts for almost a third of sales of IT and business services in Central and Eastern Europe.

The COVID-19 pandemic has come as a shock to the service market worldwide, says Lisa Nagamine, research manager at IDC Worldwide Semiannual Services Tracker. - But it will lead to various problems, as well as to opportunities for different regions, industries, services and for service providers themselves.

Another IDC analyst - Xiao-Fei Zhang - believes that the spread of a new type of coronavirus around the world will have a strong long-term impact on the global supply chain.

When everything settles down, service providers can detect changes in the customer base, as well as in their priorities. They will need to rebuild their digital capabilities in accordance with the new standards, "the expert said[2]

2018: Spending on IT services and business services exceeded $1 trillion - IDC

In 2018, global spending on IT services and business services (business consulting and outsourcing of major business processes) for the first time exceeded $1 trillion. Compared to 2017, they grew by 4.3%, which is more than half a percent more than the dynamics of global GDP growth, according to IDC analysts .

According to their calculations, the volume of the project-oriented services segment (consulting, system integration, application development, etc.) in 2018 reached $380 billion, rising by 5.8% compared to the previous year. 

Growth of IT and Business Services Market vs. Expected IDC

Such an increase was due to business consulting and user application development services, the annual costs of which increased by 8.3% (to $123 billion) and 7.5% (to $46 billion), respectively.

The main driver of the growth of the project-oriented services market is the United States. As traditional American companies and government agencies continue to digitally transform, strategic consulting remains critical in larger projects. Digital transformation also encourages the development of new applications and the updating of old ones. Accelerated growth in costs for software development services corresponds to the restoration of the entire software market, the study says.

World expenses on the operated services (managed services) in 2018 turned out equal $473 billion that is 3.6% more, than the previous year. This corresponds roughly to the growth rate of global GDP.

Sales of services related to applications (cloud and local program management) in 2018 increased by 5.6% to $80 billion. The dynamics were higher than in the segment of business process outsourcing and infrastructure management.

Outsourcing of application development and maintenance has become a means for customers to access new technologies, such as cloud computing, machine learning, analytics, as well as a means of updating outdated software by third-party vendors.  IDC believes that application-related managed services will continue to outperform other outsourcing segments.

Regions with the highest costs for IT and business services

Demand for IT outsourcing continues to decline due to lower or zero growth in spending in developed markets. This regression in 2018 was to some extent offset by a moderate growth in the outsourcing market for horizontal business processes.

The largest market for IT services and business services was the United States, where revenue in 2018 reached $459 billion, an increase of 4.6% compared to 2017. The country has seen a steady increase in both corporate and government spending on information technology, despite political uncertainty and a slight increase in government spending as a whole. Financing new IT projects aimed at developing new capabilities and tools compensates for the ongoing negative pressure on consumer services.

Western Europe remains the second largest service market. Its volume in 2018 reached $266 billion and grew by almost 3% - twice as fast as real GDP in the region. The Western European market has grown largely due to services related to application development and support.^[3]

The growth of the service market in the Asia-Pacific region (excluding Japan) fell slightly to 6.2% (to $110 billion), partially reflecting economic concern about the impending trade war between the United States and China and a slowdown in economic growth in key developed markets such as Australia, New Zealand and South Korea. In Japan, spending on IT services and business services increased slightly in 2018.

2017

IT Services and Business Services Close to $1 Trillion

In 2017, revenue in the global IT services and business services market (business consulting and outsourcing of major business processes) came close to $1 trillion. Such data are given in a study by the analytical company IDC, published May 15, 2018.

Relative to 2016, the market volume in money increased by about 4%. The increase was slightly higher than the growth rate of world GDP, which indicates a strengthening of business confidence. The positive attitude in the business environment is supported by an improvement in the prospects of the global economy, a general understanding of the need for a large-scale digital transformation, as well as the fact that at least in some segments new digital services begin to compensate for the overflow of the traditional services market, say IDC.

Global IT and Business Services Market, Region Data, IDC

An analysis of the dynamics of various subsectors of the market showed that project-oriented services continue to outperform services related to outsourcing, support and training in terms of growth rates. At the end of 2017, the total revenue from project-related services rose by 5% and reached $366 billion. A significant part of this increase was provided by the business consulting segment, where experts registered an increase of 8.2% and revenue of $115 billion.

More than two-thirds of the market for project-oriented services is occupied by IT project services, including software Custom Application Development, CAD IT Consulting and system integration. Although these sectors grew more slowly than the business consulting segment, the dynamics in them significantly improved compared to 2016. As a result, the total revenue in these three areas increased by 3.7% and reached $251 billion.

From a geographical point of view, the United States remains the largest market for IT services and business services, in second place in Western Europe. However, emerging markets in Latin America, Central and Eastern Europe, the Middle East and Africa, as well as the Asia-Pacific region, are showing greater growth.^[4]

Double growth in M & A deals

The IT services market has intensified for M & A transactions. The volume of relevant investments doubled. This was reported in the consulting company Hampleton.

Experts say that the European information technology services industry has always seen an abundance of transactions, which emphasizes the demand for new IT infrastructure from traditional technology companies, cloud players and even international investment funds. However, in the first half of 2017, M & A activity in the sector was on a "seismic take-off."

Mergers and acquisitions in the IT services market doubled

During this period, M & A contracts totaling $21.9 billion were concluded in the global IT services market against $10.75 billion in the second half of 2016. The indicator of the first half of 2017 was the second largest in history after 2011.

Although most of the treaties came from North America, Europe's share in this regard increased to about one third of the total number of transactions. The main market trends were as follows:

• transactions involving private investors are recovering from a global recession and uncertainty over the planned exit Great Britain ; European Union
• major cyber attacks have spurred demand for information security assets;
• a new wave of outsourcing deals has become the main stimulus for the entire M & A market in the IT services sector;
• cloud projects are becoming a priority for investors;
• destabilizing the business of large traditional participants in the IT services market creates new transactions;

According to analysts, while previously mergers and acquisitions in the IT services industry were concluded mainly between companies from the same region, in the first half of 2017, more than half of the 50 largest transactions were international. In July-December 2016, the share did not exceed 40%.^[5]

2016

Data of Gartner

According to Gartner forecasts regarding global information technology spending in 2016-2017, the IT services segment is in second place in terms of growth, second only to the software segment.

In 2016, according to analysts, the global IT services market will grow by 3.9%, to $900 billion, and in 2017 - by 4.8%, to $943 billion.

2014

Data of Gartner

In early June 2015, a list of the largest IT service providers in the world was announced. The leaders in 2014 remained IBM , HP but the incomes of these American vendors in the market fell. The largest revenue rise was demonstrated by Indian and South Korean companies.

According to Gartner data for 2014, IBM had the largest revenue from the sale of IT services - $54.8 billion. Compared to 2013, the company experienced a 3.5 percent decline. Sales of IT services from HP, which follows IBM in the analyst rating, fell even more - by 6.5%.

The following companies took the third to tenth places in the list of companies with the highest revenue indicators in the IT services market:

• Accenture (Aksencher)
• Deloitte
• Fujitsu
• TATA Consultancy Services (TCS)
• Capgemini
• PwC
• NTT DATA
• Oracle

The latter had revenues of $12.7 billion. The South Korean edition of Business Korea draws attention to the entry into the TOP 30 of the local company Samsung SDS. She is in 27th position in 2014 against the 30th a year earlier. In 2014, Samsung SDS earned about $7.5 billion on IT services, which is 16.4% more annually. This rise was almost the largest among all market participants: only the Indian TCS was able to show higher dynamics, measured by 19.1%.

At an event dedicated to the celebration of the 30th anniversary of Samsung SDS (April 2015), company president Jun Dong-soo said that by 2020 Samsung SDS could enter the top ten IT service providers and increase revenue to 20 trillion won ($18 billion).^[6]

There were rumors that Samsung SDS could join another member of the Samsung Group conglomerate - Samsung Electronics Corporation. The latter denied the possibility of merging with a sister IT company.

"The management wants to clarify that we do not plan to merge with Samsung SDS," said Robert Yi, head of investor relations at Samsung Electronics, on June 3, 2015^[7]

2013: Gartner: maximum growth will show IaaS and BPaaS

According to the forecasts of Gartner^[8] from March 2013, the global IT services market will increase by 5.2% in 2013 and continue to grow confidently until 2016. However, growth will be more concentrated in new market segments and concern new service delivery models, although positive dynamics in consulting and implementation segments are not excluded.

Growth in individual segments of the IT services market will be uneven. Thus, the lowest growth dynamics is expected in the hardware and software support segment. It was predicted that the revenue of service providers in the infrastructure segments as a service (IaaS) and business processes as a service (BPaaS) will grow as quickly as possible: here the growth will be 13.1% and 47.3%, respectively, already in 2013.

Convenience, not cost, is becoming a decisive factor for enterprises to implement cloud solutions, Gartner notes. Hybrid IT environments will dominate traditional client-server environments by 2016. Due to the growing role of the new type of IT services, suppliers will need to be convincing to customers and provide the right competencies and quality of service, which is a non-trivial task.

In this regard, Gartner analysts gave three main recommendations to IT service providers for 2013. First, they called for minimizing the number of marketing messages advertising services in a "soft form," as well as establishing pricing that directly depends on the end result of using the services. Secondly, they recommended revising the portfolio of services and leaving only the most competitive in it. Thirdly, they advised to determine what is decisive in the business model of a particular provider - the volume of services or specialization.

2012

Data of Ovum

In 2012, the global IT services market showed the worst results since 2002, according to Ovum researchers. The performance of the fourth quarter of 2012 was relatively comparable to the results of the fourth quarter of 2011, but the results of all 12 months were disappointing: in terms of the volume of transactions and total contract value (TCV), the market achieved the worst parameters for the decade.

Thus, TCV in the fourth quarter of 2012, according to Ovum, amounted to $20.8 billion, which is 34% lower than a year earlier. The number of deals concluded over a comparable period decreased by 17%, and the number of mega-deals decreased significantly (with the value of contracts ranging from $1 billion and higher). TCV for 2012 as a whole showed a decrease in annual terms in both the public and private sectors. At the same time, in the private sector, the TCV indicator was the worst since 1998.

According to Ed Thoma, a leading analyst at Ovum, the ongoing economic uncertainty at that time continues to have a negative impact on the IT services market in both the United States and Europe. That is why, he believes, most enterprises fear large projects, and also plays a role in reducing investment in IT in the public sector.

A decrease in IT services costs among enterprises was noted in all vertical industries without exception, here the number of announced transactions decreased by 50%. In the field of health and finance, the volume of contracts decreased by 39% and 18%, respectively. Activity in terms of concluding contracts increased only in the telecommunications and technology sectors.

From a regional point of view, the activity in the number of private sector transactions was maximum in Europe - it accounted for 45% of the global TCV in 2012. However, here too, the TVC generated by industrial enterprises in 2012 decreased by 31% to $16.7 billion. North America's private sector TCV rose 48% to $10.5 billion in 2012.

Data of PAC

According to a study by Pierre Audoin Consultants (PAC), in 2012, the total volume of IT service transactions concluded decreased by 10%. Analysts monitored all publicly available contracts, including IT outsourcing and business process outsourcing, consulting, and systems integration projects. In total, the value of such contracts in the world in 2012 amounted to 48 billion euros, which is lower than 53 billion euros in 2011.

At the same time, the volume of transactions has been declining for two years in a row: in 2010, for example, it amounted to 85 billion euros. According to PAC experts, in the foreseeable future, the market should not expect any significant surge, as it is becoming more mature. The market at that time formed four main trends.

The first trend is that operating IT budgets remain under pressure. Economic conditions in most regions of the world are not encouraging, so potential customers are not inclined to choose long-term IT service programs. Experienced customers at the same time continue to actively trade with service providers, sometimes seeking a concession in the amount of 30-40% of the original amount of the contract.

Second, supplier offerings became increasingly focused. Then the tendency to split monolithic service programs into slightly smaller ones in scale is quite obvious, due to which more flexibility is achieved. Also during this period, there was a tendency to move to non-traditional models of education, in particular, based on achieving completely concrete results and business costs. An example of such a deal in 2012 is the departure of Rolls Royce from service cooperation with HP and the transition to several providers at the same time, where Capgemini is assigned the role of service integrator.

The cloud market is slowly but surely absorbing the traditional profit streams of service companies. The study noted that clouds will remain one of the main drivers for launching new service projects in 2013, as more companies are interested in creating private cloud services. As an example of such a project, we can recall, for example, the project of BP and T-Systems to transfer 100 thousand mailboxes of an oil company to their own cloud infrastructure.

In addition, offshore delivery becomes standard practice. At least this assertion is entirely true for large commercial entities USA and. In Great Britain particular, Indian service companies remain very attractive. Over the past 12 months, several major offshore service projects have been announced by Apple ING and Shell.

PAC predicts that in 2013, at the peak of demand, there will be more targeted solutions to specific tasks, so IT service providers will have to seriously work on both their applications and their competitive advantages in an increasingly mature market.

Data of IDC

On March 27, 2012, International Data Corporation (IDC) presented two reports in a new form of MarketScape that are designed to assess the weaknesses and strengths of global IT consulting companies. In the first case, we are talking about the architecture of corporate infrastructure, in the second - about the transformation of the data center.

The set of diagrams MarketScape remotely resembled the magic quadrants of Gartner, but IDC infographics were much more sophisticated and, as a result, made it possible to clearly display and evaluate a larger number of parameters. Unfortunately, images and associated tables are only available in paid versions of reports. Actually, they constitute the quintessential results of research in the format of MarketScape.

IDC called Accenture (Aksencher), IBM and HP the "leaders" in the global market for consulting services in the field of transformation, while in the market for services in the field of enterprise infrastructure architecture - Deloitte, IBM and PriceWaterhouseCoopers.

IDC called seven companies "key players" in the transformation consulting services market: Capgemini, CSC, Dell, Deloitte, Infosys, KPMG and PriceWaterhouseCoopers. There are only five key players in the enterprise infrastructure consulting services market: Accenture, Capgemini, CSC, HP and KPMG.

Among the common for both reports among the weakest points of vendors were pricing, sales and distribution, among the most powerful - a high level of expertise, a verified portfolio of offers, a high degree of compliance with customer expectations.

According to Gard Little, Director of IT Consulting and Systems Integration Research, the main drivers of demand for data center transformation services are the need to increase operational efficiency and consolidate computing resources. In turn, with the advent of the cloud model of computing, new types of mobile devices, business intelligence systems and social media, the architecture of the corporate IT infrastructure has undergone many changes, and this again positively affects the demand for consulting services.

Region of EMEA

According to IDC MarketScape: EMEA Business Consulting Services research, the following companies lead the business consulting market in EMEA in 2012 PricewaterhouseCoopers IBM:,,,,,. Deloitte Ernst&Young Accenture (Aksencher) KPMG

IDC, 2012

The second most important group IDC was the companies McKinsey,,,. BCG BearingPoint CSC Only one company fell into the group of applicants - Booz & Company.

2011

The third quarter

In the third quarter of 2011, the global IT services market showed moderate quarter-to-quarter growth by signing new contracts, said research company Ovum. However, the total number of deals and total contract value (TCV) were lower than in the same quarter of 2010.

TVC reached 20.3 billion euros in the third quarter of 2011, which is 43% more in quarterly terms and 9% less in annual terms. As for the number of contracts, it then increased from 384 to 416 quarters by the quarter of 2011, but the third quarter indicator is 12% lower than the same period in 2010.

According to Ovum, TVC growth in the private sector returned to growth in the third quarter, but still it is even lower than it was in 2010. In Europe, TVC in the private sector reached 2.2 billion euros in the third quarter of 2011, more than a third of this amount falls on the UK.

According to Ed [[Thomas Ad|]] Thomas, author of the study and analyst at Ovum, after another disappointing quarter, it may well be that the 2011 TVC will be the lowest in 8 years. "Now the vendors can only hope that the fourth quarter will correct the situation as last year: then the unprecedented number of mega-deals concluded raised TVC in three months to 37.1 billion euros," he said.

The second quarter

According to Ovum, the sum of all contracts for rendering IT services signed in the II quarter 2011 reached $19 billion - the smallest value from I quarter 2003. At the same time it was not recorded not one large deal which amount would be $1 billion and above. Among the largest transactions then noted: a 5-year contract for the supply of computer equipment to the tax inspectorate in Australia, signed with HP ($500 million), and two transactions worth more than $100 million, including a 5-year contract between Indian Tech Mahindra and the Australian branch of Vodafone.

In Q2 2011, the amount of all contracts concluded in the world for the provision of IT services and equipment decreased by 40% compared to the same period in 2010 to the minimum value for the last 8 years, the consulting agency Ovum reports.

In addition, Ovum analysts noted for the fourth time a decrease in the number of contracts: in the second quarter of 2011 year, their number was 384, which is 20% less than in the same period of 2010 year. Thus, transactions become less, and they themselves become cheaper, experts summarize.

Europe accounted for 58% of the private segment of the global IT services market in Q2. This was mainly due to customer activity in Denmark, Finland, Norway and Sweden. For comparison, North America, traditionally considered one of the main markets, accounted for only 15.5% of the private sector during this period, compared to 39% a year earlier.

Notes

See also

IT Services (Russian Market)