Services sales flatten across Europe

Mergers and acquisition contracts are likely to provide a source of services revenue in 2009, says IDC

Market analyst IDC has reduced its forecast for growth in Western European demand for IT services to 0.6 per cent, down from 2.6 per cent.

Laura Converso, European software and services research manager at IDC, said organisations across all Western Europe are cash-strapped.

“Many projects will be delayed, reduced in scope, or chopped into smaller pieces, but so far we do not expect many projects to be cancelled,” she said.

“Projects aimed at risk management, M&A integration, and further cost efficiencies are more likely to be approved.”

Demand for manpower-based IT services is expected to slow this year.

Another bright spot, though, is outsourcing.

“Although we expect pricing pressure to be high in outsourcing as well, this is less cyclical than systems integration and consulting, and we anticipate 4.4 per cent growth in this segment.”

The total Western European IT services market will experience a compounded annual growth rate of 3.7 per cent from 2009 to 2013 – with 2.2 per cent growth to be achieved in the second half of 2010.

Post-crisis, SaaS offerings, cloud platforms, and global sourcing models will win.