Value of IT service contract signings fell in 2012

Latest research from Pierre Audoin Consultants claims value of deals fell for the second year running

The value of IT services contract signings dropped 10 per cent in 2012, according to analyst Pierre Audoin Consultants (PAC).

PAC's Deal Tracker, which records all publicly disclosed IT services contracts, recorded €48bn of deals in 2012, a drop from the €53bn (£33bn) logged the previous year.

This is the second year running that the value of deals has fallen, the analyst claimed.

And to pile on more gloom, PAC believes there is unlikely to be a major uptick as IT services becomes an increasingly mature market shaped by four trends: IT budgets remaining under pressure; tough economic conditions; experienced buyers negotiating more favourable rates from suppliers; and more focused deals.

The cloud is slowly cannibalising traditional revenue streams, PAC warned, with some organisations replacing onsite infrastructure and applications with public or hybrid cloud delivery models, which could increasingly marginalise the role of the traditional outsourcer.

Nick Mayes, research director at PAC, said: "There will certainly continue to be a level of demand for big ‘your mess for less' traditional infrastructure and legacy applications outsourcing deals, which play to the strengths of the tier-one suppliers.

"But we expect clients to look for more point solutions to address specific challenges such as upgrading from Windows XP, FATCA compliance, insurance policy administration platform consolidation and SAP upgrade testing."