Worldwide IT services returns to growth in 2010

Worldwide end-user spending on IT services totalled $793 billion in 2010, a 3.1% increase from the previous calendar year revenue of $769 billion, according to IT research and advisory firm 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.

IBM retained its number one market share position in IT services in 2010, with a revenue increase of 2.6%, returning $56.4 billion in revenue and accounting for 7.1% of the market. With arguably the weakest revenue performance in the top five, HP grew its IT services revenue less than $100 million, or 0.3%, in 2010.

Fujitsu, at 3.5% annual growth in IT services and revenue of $24.1 billion, had a solid year in 2010 in US 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%.

CSC's growth in the past year was positive, but it was below market growth levels (at 0.6%) due to, in part, an abnormally high level of delays in contract signings in both the federal and commercial sectors, as well as the impact of a challenging US federal government business (where CSC generated 39% of its revenue).

"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.

"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," he added.

Software support showed the highest growth in 2010 at 6.6%. Weaker performances came from process management and hardware support, both of which grew approximately 1% less than expected growth.

Consulting and development/integration services came in slightly above expectations as organisations that had put investments on hold began investing again in 2010, particularly in the second half of the year, Gartner said.

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