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IT services market down by 40 per cent, says Ovum

Mighty mega-deals of old now well-nigh extinct

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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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