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IT services spending on the up

Sector sees a 3.1% spending increase in 2010 over 2009

IT services spending on the up
IT services spending is on the rise, according to Gartner.

End-users spent $793m on IT services in 2010, a 3.1% increase from 2009, according to Gartner.

"There is little doubt that the effects of the global recession of 2008 and 2009 are still very much being felt, but the market for IT services bounced back in 2010 after a 5.1% revenue decline in 2009," said Kathryn Hale, research vice president at Gartner.

The number one company in IT services by market share in 2010 is IBM, with a revenue of $56.4bn, an increase of 2.6% over 2009. The company holds a 7.1% market share.

The weakest revenue performance in the top five IT companies was HP, which grew its IT services revenue by under $100m or 0.3% in 2010. HP holds a 4.5% market share and is positioned second on the leader table.

Third is Fujitsu, who has had a solid year with a 3.5% annual growth in IT services and a revenue of $24.1bn.

Accenture, in fourth on the leaderboard had the best IT services growth figures in 2010, growing revenue by $1.3bn to $22.2bn, a 6.1% increase.

Last in the top five was CSC, whose growth was under market levels at 0.6%. This low growth rate was partly due to long delays in contract signings in both federal and commercial sectors and the impact of a challenging US federal government business.

"Among the more than 300 vendors tracked, acquisitions affected more than 10% of total revenue, in a market where no provider has more than 7% market share," said Dean Blackmore, senior research analyst at Gartner.

According to Blackmore, India-based vendors showed the largest growth rates.

"Although global sourcing makes the location of a provider's headquarters increasingly less relevant, we found that India-based vendors continue to grow above the market average and, therefore, continue to gain market share," Blackmore said. "In a market that grew 3.1% in 2010, India-based vendors collectively grew 18.9%, increasing their market share from 4.8% in 2009 to 5.5% in 2010."

Software support showed the highest growth rates at 6.6%, while process management and hardware support showed weaker results growing 1% less than expected results.

Both consulting and development/integration services came in above expectations as organisations began investing again in 2010.

The government and education verticals showed the slowest growth rate in 2010 at 1.6% as governments were forced to cut budgets.

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