IT Services Market Falls to Lowest Level Since 2002

According to research firm Ovum, the economic downturn continues to have a negative impact on the IT services market. They said that in 2012 the IT outsourcing industry fell to a ten-year low.

InformationAge’s Kane Fulton reported, “The global market for IT outsourcing services fell to its lowest point in a decade last year, according to new figures from analyst company Ovum. Ovum found that the total value of IT services contracts signed during the year (TCV) was $96.8 billion, down 14% from 2011 and the lowest figure since 2002, when TCV was $85.4 billion.”

Chris Gonsalves with Channelnomics added, “The number of deals, meanwhile, fell 17 percent in the same period and there [were] no ‘megadeals,’ defined by Ovum as contracts valued above $1 billion.”

Doug Tsuruoka with Investor’s Business Daily noted, “Ovum said the the sharpest fall in IT services deals was in the services sector, where the number of deals announced fell by half. In health care and financial services, contract volumes were down 39% and 18%, respectively. The only industries seeing a rise were telecom and technology, Ovum said.”

Nathan Eddy with eWeek quoted Ovum’s Ed Thomas, who said, “The ongoing economic uncertainty afflicting key markets for IT services such as the U.S. and Europe was a major factor behind the weak performance of the industry in 2012. Our research suggests that many enterprises remain wary of committing to major projects, with issues such as the Eurozone crisis having a particularly significant impact. In addition, public sector activity has reduced as many governments come under pressure to cut public spending in the face of high debt levels, leading to a general reluctance to get involved in large-scale IT services deals.”