Biggest outsourcers increase dominance in IT services

Wipro is one of the fastest growing IT services firms

The biggest IT outsourcing companies grew their combined market share in Europe last year, as IT services remains a bright spot in the recession-hit technology sector, according to research by IDC.

The study showed that the 50 biggest service providers in Western Europe increased their share of the market by 9.7 per cent in 2008, from 53.4 per cent to 55.5 per cent of the sector – with their combined sales worth $152bn (£92bn).

The total Western European services market grew 5.3 per cent, based on local currencies, boosted by a double-digit increase in business process outsourcing, said IDC.

The figures compare favourably with the hardware and software sectors, both of which have been shown to have shrunk over the past year by a range of different research studies.

IDC also said that it expects there will be further consolidation in the outsourcing market, following on from major acquisitions such as HP’s purchase of EDS.

"With a few exceptions, most of the vendors in the top 50 ranking enjoyed growth driven by increased sales, combined with small acquisitions to strengthen their presence in specific geographies or industries, or to gain global sourcing capabilities," said IDC research manager Laura Converso.

The three fastest growing companies in the sector last year were Italian firm Gruppo Engineering, Steria and Indian outsourcer Wipro, while Tata Consultancy Services (TCS) became the first offshore firm to make it into the top 20 suppliers.

"Pure-play offshore vendors continue to quickly penetrate the European services market. TCS is the first so-called offshore provider to reach the top 20 IT services ranking, marking a symbolic breakthrough," said Converso.