The global IT services market experienced an unexpected boom at the end of 2010, recording its highest-grossing quarter in terms of total contract value (TCV) in seven years, according to analyst firm Ovum.
In a report entitled IT services contracts quarterly analysis, Q4 2010, the analyst firm said that the TCV for the last quarter of 2010 rose to more than $49bn (£30bn), up 66 per cent on the previous three months. It explained this was the result of a series of mega deals announced during the fourth quarter.
Ed Thomas, Ovum analyst and author of the report, said: "The fourth quarter saw a remarkable turnaround for the sector which, after a sluggish first three quarters, was forecast to hit its lowest TCV level for five years. However, rather than enduring another stagnant quarter, a string of large deals meant that the IT services market exploded into life."
Thanks to these megadeals, which included an agreement between Atos Origin and Siemens valued at more than $7bn, TCV for 2010 actually increased by over six per cent compared with the previous year.
Thomas said that it remains to be seen whether the spectacular end to the year is simply a blip or a sign of better times to come for the IT services industry in 2011.
Other analysts, however, believe the chances of a sustained boom are slim.
Speaking at an Intellect conference in London last week, Stephen Minton, vice-president of IDC worldwide IT markets, said IT services would remain the most sluggish of all IT sectors in 2011. Services spend would be lower than that on PCs, servers, storage, printers, networks and software, he predicted, but would grow more than in 2010 – up 3.75 per cent compared with a 1.9 per cent rise in 2010. This compares with predicted growth for spend in networks – likely to be the highest in terms of sector spends – of 5.5 per cent.
Similarly, he said that the indicators for the services market were fluid, but if the economy remains stable they will firm up and improve in 2012.