The £14bn UK IT infrastructure services market is facing several years of decline as cuts to public sector spending affect growth.
According to a report released this week by analyst TechMarketView, the market for infrastructure services in this country will be worth a little under £13.85bn this year, down from £13.95bn in 2012. Between 2011 and 2016, the compound annual rate of decline will be 0.4 per cent, with growth finally returning in 2016, albeit at a very modest 0.2 per cent rate.
Declines will be somewhat greater in real terms as inflation helps the market to maintain an appearance of stability. Next year is set to be the market's toughest year, with a headline decline of 0.8 per cent.
The operations market, which currently accounts for 43 per cent of the wider total, will suffer worst in the coming years, with more than £1bn wiped off the market value by 2016, with compounded annual declines forecast to stand at 3.8 per cent. Support and maintenance sales, currently 13 per cent of the overall market, will suffer declines of between two and four per cent in each of the coming years.
The provisioning market, currently accounting for 12 per cent of the total, will grow more strongly than any other segment in the next few years, and will be enjoying annual growth rates in the double digits by 2016. Consulting (currently eight per cent of the total) and installation and integration (24 per cent) will both grow between zero and three per cent in each of the next four years.
The report's introduction predicts that the large outsourced services providers will face a tough time in the coming years as big-ticket government contracts are disassembled and smaller private sector firms shun bigger players.
"There is a significant opportunity among mid-sized enterprises that are growing and – more to the point – growing out of their current IT function. However, this is a broad, fragmented and complex marketplace, making it difficult for larger players to successfully target," says the report.
"The public sector infrastructure services market is entering a very tough period on the back of plans to significantly reduce spend and carve up the numerous large contracts that are due to be renewed in 2014-2015."
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