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Worldwide IT Services revenue declined 5.3% to US$763 billion in 2009, says Gartner

May 4, 2010 Worldwide IT services revenue totaled $763 billion in 2009, a 5.3 percent decline from 2008 revenue of $805 billion, according to Gartner, Inc.

"2009 was a year like no other before it for IT services providers," said Kathryn Hale, research vice president for Gartner's worldwide IT services group. "Their priorities changed and their business focus rushed from aggressive sales or tactical revenue acquisition to strategies designed to simply maintain revenue levels, keep a handle on costs and manage profitability."

Each of the five largest IT services providers in 2009 declined in revenue, with HP and Accenture reporting the largest declines at 10.4 percent and 11.8 percent, respectively. The top 20 vendors as a group gained ground slightly over their smaller competitors in 2009, with the group accounting for 37.5 percent of the market, up marginally from 37.3 percent in 2008.

While global sourcing makes the location of a provider's headquarters increasingly less relevant, Gartner tracks this information for more than 300 vendors, which collectively account for more than 70 percent of end-user spending worldwide.

India-based vendors grew only 3.6 percent, in terms of U.S. dollars in 2009, down from 15.4 percent growth in 2008. India-based vendors were impacted early in the economic downturn. This would be expected, as these providers sell especially heavily to the financial sector and typically lead with offshore application development services, which are relatively easy to delay in tough times.

The economic uncertainties and the crisis in industries have had negative implications on the worldwide consulting market in 2009, and many providers' revenue growth rates were negatively impacted. However, business outcome-focused providers of consulting services with established business relationships were often successful in growing their market share better than the market average.

Suppliers with a broad range of advisory services were attractive to buyers (for example, if they could provide assistance on how to migrate financial risks of an underperforming complex business operation). Some providers were also able to capitalize from already recovering economies by selectively co-investing with buyers for innovative and growth-focused projects as a source to increase their consulting services market share.

"2010 will be a year of focused readjustment for IT services providers," said Ms. Hale. "The discipline exercised in 2009 leaves the industry profitable and relatively nimble. But investors will expect to see revenue growth and managing those expectations, while maintaining margins will be more challenging than the comparatively unambiguous goals of 2009, a year in which expectations were modest."

(Extract from Gartner press release)





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