Public sector dominates IT outsourcing business

17 July 2013

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18 July 2013 | Will Green

The public sector has grown over the past 10 years to account for almost half of all IT outsourcing business globally, analysts at NelsonHall have revealed.

Over the same period, the commercial IT outsourcing sector has shrunk dramatically, with manufacturing falling from almost a quarter of the market to 17 per cent and financial services from a fifth to just 11 per cent.

Dominque Raviart, research director at NelsonHall, told a webinar: “The opportunity has shifted and this has to do with bookings shifting in the commercial sector and being more resilient in the public sector.”

He said the global outlook for IT outsourcing remains bleak for 2013, with contract bookings during the first half of the year at the second lowest for 12 years. He predicts low single digit growth in spending for the rest of the year.

Commenting on first quarter, he said: “For the first time in 12 years, the total bookings were below $5 billion (£3.2 billion). It was one of the lowest quarters ever.”

IT and professional services outsourcing spending growth in the EU was zero per cent in the first quarter year on year and Raviart said this was due to better than expected growth in the UK of 2 per cent against negative growth in other countries.

“The UK is showing positive growth, which is surprising,” he said. “Why is that surprising? Because the public sector is constrained to contain growth and spend. This is quite a healthy spend in a country where we would expect negative growth.”

Raviart said IBM, HP and Fujitsu continue to dominate the sector in providing IT outsourcing, although Indian firm TCS was becoming a significant player.

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