Services growth hits double digits

IBM still leads the way

Worldwide IT services revenue totalled $US748 billion in 2007, a 10.5 per cent increase from 2006 revenue of $US677 billion, according to Gartner.

In Australia, IT services revenue reached $A16.9 billion in 2006, a 14.8 per cent increase from 2006 revenue of $A14.7 billion.

"This strong growth, combined with strong first quarter results for market leaders, runs counter to the gloomy and widespread economic concerns arising in the United States," said Kathryn Hale, research vice president for Gartner's worldwide IT services group. "Many providers are successfully selling buyer value propositions that external spending on IT services and solutions can help customers save money and be more productive, even in a profoundly uncertain economic climate."

Across all IT services, IBM continued to be the worldwide market leader, with 7.2 per cent of the market. IBM and Accenture delivered strong growth rates of 12.2 per cent and 19.7 per cent, respectively, and were the only companies in the top six that experienced revenue growth rates above the overall market average.

While global sourcing makes the location of a provider's headquarters increasingly less relevant, Gartner tracks this information for more than 360 vendors who collectively account for more than 70 per cent of end-user spending worldwide. While India-based vendors' IT services revenue grew 38 per cent in 2007, these companies earned only 4.1 per cent of revenue tracked, and US-based vendors dominated the IT services market with 55.4 per cent of that total.

"To build on their success in 2007, service providers should focus on selling services that will deliver visible return in 2008, either in cost, speed to market, or business impact," said Hale. "They should also focus on growing sales in emerging markets that enjoy faster-growing economies and high growth rates in IT services."

Len Rust is publisher of

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