Gartner Says Worldwide IT Services Revenue Returned to Growth in 2010

Worldwide end-user spending on IT services totaled $793 billion in 2010, a 3.1 percent increase from 2009 revenue of $769 billion, according to Gartner, Inc.

"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 percent revenue decline in 2009," said Kathryn Hale, research vice president at Gartner.

IBM retained its No. 1 market share position in IT services in 2010, with a revenue increase of 2.6 percent returning $56.4 billion in revenue and accounting for 7.1 percent of the market (see Table 1). With arguably the weakest revenue performance in the top five, HP grew its IT services revenue less than $100 million, or 0.3 percent, in 2010.

Fujitsu, at 3.5 percent annual growth in IT services and revenue of $24.1 billion had a solid year in 2010 in U.S. dollar terms. Accenture returned perhaps the strongest numbers within the top 10 in 2010, growing revenue $1.3 billion to $22.2 billion, a growth rate of 6.1 percent. CSC's growth in the past year was positive, but it was below market growth levels (at 0.6 percent) due, in part, to an abnormally high level of delays in contract signings in both the federal and commercial sectors, as well as the impact of a challenging U.S. federal government business (where CSC generated 39 percent of its revenue).

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

"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," Mr. Blackmore said. "In a market that grew 3.1 percent in 2010, India-based vendors collectively grew 18.9 percent, increasing their market share from 4.8 percent in 2009 to 5.5 percent in 2010."

Software support showed the highest growth in 2010 at 6.6 percent. Weaker performances came from process management and hardware support, both of which grew approximately 1 percent less than expected growth. Consulting and development/integration services came in slightly above expectations as organizations that had put investments on hold began investing again in 2010, particularly in the second half of the year.

From a vertical services perspective, the government vertical showed the lowest growth rate in 2010 (tied with the education sector at 1.6 percent) as governments around the world implement budget cuts aimed at reducing deficits.
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