Size isn't everything in services, analyst claims
Datamonitor report reveals that hard work by smaller services players is paying off against the big boys
Smaller channel players are exerting more pressure on the global top 50 IT service providers, according to analyst firm Datamonitor.
The Global IT Services Top 50 Rankings report discovered that the value of the global IT services market was an estimated $513bn in 2005, with the 50 largest players controlling a combined 51 per cent share of the market.
However, the report also discovered that the combined sales rate of the top 50, led by IBM Global Services with a turnover of $47bn, grew at an annual rate of 1.9 per cent, while the overall market grew at a combined rate of eight per cent.
Nick Mayes, research analyst at Datamonitor, told CRN said that even with a combined turnover reaching into billions of dollars, the top 50 service firms do not control the market.
"SME providers want to work with local end-users with more basic requirements and the top 50 vendors haven't really cracked this market yet," he said.
"We will soon see more specialised SME service providers opening up, perhaps run by the managers of previous IT resellers, for example in the niche of sub-contracting or disaster recovery," he said.
Stuart Muirhead, business development director at services SME Phoenix IT, told CRN that consolidation could become a feature of the IT services market in the future.
"Everyone is trying to get into services, especially as margins are decreasing on both hardware and software.
"For standard services, such as maintenance contracts, the market is very competitive in the SME space, but in the more specialist services market it's not so competitive yet," he said.
Paul Silvey, head of operations at VAR Damovo, said: "End-users are considering specialists in niche areas and managed services contracts are becoming larger too, perhaps even ones covering all an end-user's needs.
"SME's are attempting to break into the larger contracts, but with limited success. However, SME's do tend to have more services agility than the larger services vendors," he said.
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