Half of top 20 IT service providers saw revenue tumble in 2020, research finds

HPE, NCR and DXC Technology among those most impacted by pandemic

Half of the top 20 IT service providers by revenue reported year-on-year revenue decline in 2020, while nine saw a drop in net earnings, according to research from GlobalData.

The firms recorded a 14.6 per cent year-on-year decline in cumulative net earnings, the analyst says, with 40 per cent of the companies reporting double-digit decline in net earnings.

GlobalData puts the drop down to the impact of the pandemic, causing "cost optimisation" measures to be implemented, with customers pushing back previously planned projects.

"Many IT companies have experienced customers delaying IT transformation projects as enterprises struggle to understand what their businesses will look like in terms of new working practices after the pandemic," said Gary Barton, principal analyst for Business Network and IT Services at GlobalData.

"There is an opportunity for IT companies to engage with enterprises and help them build the business models of the future - the IT companies who seize this opportunity will be well placed to grow revenues."

Hewlett Packard Enterprise (HPE) and NCR reported a decline of over 5 per cent in revenue and their net profit decreased more than 110 per cent, GlobalData says.

DXC Technology also reported over 5 per cent decline in its YoY revenue, which GlobalData puts down to "the termination of projects, the disposition of business and completion of projects, besides a decrease in the number of run-rate projects volume".

However, Fiserv, NetEase, Capgemini and Intuit all reported double-digit revenue growth in 2020, with Barton offering an optimistic outlook moving forward for IT providers.

"There is also a lot of faith being put in new technologies such as 5G, IoT and edge networking and compute to generate new IT revenue growth," he added.

"The use cases for these technologies are still being developed, but there are clear rewards for IT companies that can demonstrate clear business and consumer benefits of these technologies.

"Finally, there are signs that smaller businesses are becoming more attuned to the benefits of being more digital. Funding schemes such as NextGenerationEU are providing potentially billions of Euros to help enterprises adopt new technologies and this spending will benefit IT providers."