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IT services market takes severe hit

by on05 September 2011

Contract levels fall say Ovum
Analysts at Ovum have added up the numbers and divided by their shoe size and worked out that the IT services market suffered a severe hit in the second quarter of 2011. Ovum beancounters say that the value of new contract signings falling to its lowest level in more than eight years.

The analyst states that the total contract value (TCV) of deals announced in Q2 2011 was just $19 billion, down 40 per cent on the same period last year and the lowest quarterly figure since Q1 2003. Ovum found that the number of deals recorded also slumped for the fourth consecutive quarter, to just 384. Not only was this down more than 20
per cent on the number tracked during the second quarter of 2010, but it was also the lowest number of deals recorded by Ovum in a single quarter  since Q4 2007.

Ed Thomas, Ovum analyst and author of the report said that after a disappointing start to the year, things went from bad to worse in the second quarter of 2011 with this very weak performance in contract signings. He said that there was a lack of large deals on offer was a major  contributing factor, combined with the on-going lack of demand from
private sector firms, particularly in the US.

“In previous quarters, the buoyancy of the public sector outsourcing market has gone some way toward offsetting the lacklustre returns from enterprise clients. However, on this occasion government spending on IT services projects also took a hit, with a notable lack of large-scale projects on offer,” Thomas added.

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