IT services market down by 40 per cent, says Ovum
Mighty mega-deals of old now well-nigh extinct
Posted in Management, 5th September 2011 14:58 GMT
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Disappearing mega-deals saw the global IT services market slump to an eight-year low in the second quarter, according to Ovum.
Stats from the beancounter show that total contract values (TCV) dived 40 per cent year-on-year to $19bn as the number of agreements penned fell by a fifth to 384.
The market went from "bad to worse" in Q2 following a lacklustre opening quarter in 2011, said Ovum analyst Ed Thomas.
"The distinct lack of large deals on offer was a major contributing factor, combined with the ongoing lack of demand from private sector firms, particularly in the US," he said.
The lack of heavy-duty agreements was also apparent in the government space, which had for the past few years been a boon for IT services provider to cling to as commercial organisations reeled in their budgets.
TCV in the private sector were hit most in North America, accounting for just 15.5 per cent of the market worldwide compared to nearly 40 per cent a year ago.
But Europe was responsible for 58 per cent of TCVs among commercial organisations, with a healthy amount of contracts inked in Scandinavia.
The UK software and services market is predicted to hop along for several more years according to the veteran analysts at TechMarketView, who claimed the sector will keep shrinking until 2013. ®
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COMMENTS
Good thinking HP
Good thing HP decided to switch their entire company to only focus on the IT Services market.
Pure genius.
Downturn in mega deals not a down turn in it spending
Customers are learning that they can save money and improve quality by blending services with in-house staff. Mega deals don't reduce risk nor do the meet their cost savings objectives. (Note this a generalization.)
Large outsourcing deals lead to offshoring due to negotiated discounts in price of services. The large deals have reduced margins so the GSIs turn to offshoring as a way to keep margins... Unfortunately for the GSI, customers renegotiate new deals because of the off shoring and lower quality of services, along with an increase in cost of delivering the off shored services.
The bottom line is that GSIs fail to deliver quality and customers are shifting how they are doing ITprojects ....
Apotheker good at what?
Just another conartist from Antwerp, or a genius, at what? The Bloomberg article says he managed to halve the value of SAP by the time he left. He's not as good as Hewlett and Packard at hardware, in fact he knows nothing of hardware. Its a sign of a clever conartist to be CEO of something you're ignorant about.
The cronies at Autonomy must be very happy. Of all the inside search companies around, this is most looking overpriced and underwhelming in prospects as European business crashes into recession. Good time for them to sell!
If you can't name 10 better companies to buy than Autonomy then you haven't been reading the reg.
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