US market drives services revenue to $1tn mark

Western European services market grew three per cent to $266bn, according to IDC

Worldwide services revenue reached the $1tn mark in 2018, according to data from IDC.

The analyst stated that revenue outstripped worldwide GDP growth by a half a percentage point, reflecting a healthy overall spend by "cautious yet optimistic" enterprise companies.

Revenues for project-orientated services such as consultancy, integration and application development grew by nearly six per cent to $380bn (£291bn) in 2018. IDC stated that this was primarily led by the business consulting and application development markets, which each saw sustained growth last year.

Business consulting grew over eight per cent to $123bn, while customer application development (CAD) grew seven and a half per cent to $46bn.

The research house attributed this global growth to US enterprises and government agencies undergoing digital transformation, with strategic consulting playing a key part in large projects.

"Steady growth in the services markets are driven by continued demand for digital solutions across the regions, with the Americas continuing to contribute to the bulk of the revenue growth," said Lisa Nagamine, research manager at IDC's Worldwide Semiannual Services Tracker.

"2018 surpassed the $1tn mark, as we had forecasted at the end of 2017. We expect future growth in many geographies worldwide in the coming years."

Managed services revenues grew over three per cent to $473m for 2018.

The application-related managed services segment grew over five and a half per cent to $80bn, and the analyst expects this market to continue outperforming other outsourcing segments.

The largest services market continues to be the US, with revenue hitting $459m last year due to robust corporate spending.

Western Europe grew almost three per cent to $266bn last year, fuelled by application-related demands in the region, including CAD and application outsourcing.

Xiao-Fei Zhang, programme director, global services markets and trends, stated: "More sustained US economic growth, at least compared with other mature economies, allowed large government agencies and traditional businesses to spend more on new projects in recent years.

"Additionally, digital disruption and global competition have stoked their digital fear - go digital or go broke."