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Ovum: Utilities and government drive IT services spending

Ovum: Utilities and government drive IT services spending

Analyst group forecasts a solid and optimistic 2010 for A/NZ driven by select vertical market spending

The Australian IT services market will see modest growth this year, driven by an uptick in public sector and utilities sector spending, an analyst claims.

According to figures from Ovum’s A/NZ Market Trends 2009: IT Services forecast, IT services growth will exceed 4.5 per cent in 2010, putting it in a healthy position for pre-recessionary growth levels in 2011. Ovum analyst, Jens Butler, was optimistic about the market this year and said public sector spending would drive significant services growth as Federal Government agencies looked to act on the Gershon report.

Although state governments aren’t as affluent, a push towards e-health and education will also present opportunities for IT providers, Butler said. Meanwhile, the utilities vertical would be a major IT services spender this year, buoyed not only by environmental considerations but also the push for smarter systems and infrastructure, he said.

Several large-scale outsourcing contracts in the financial services sector, which are up for renewal this year, will also see new investment in IT platforms, Butler said. And while corporates were cutting back capital expenditure to combat the economic downturn last year, Butler saw the launch of Windows 7 as a key catalyst for hardware refreshes in 2010.

“Windows 7 is a compelling event to drive substantial operating system upgrades, and the hardware associate with that,” he said. “In the datacentre space, we’ve seen a lot of vendors investing in datacentre space recently, which will mean hosting and cloud services become more prominent plays.”

At a broader level, cloud computing adoption, virtualisation and systems consolidation would continue to keep datacentre and broader infrastructure spending strong. An ongoing focus around select outsourcing and alliances, rather than ad-hoc procurement, would also influence partnerships between customers and their IT services providers, Butler said.

“There’s pressure on to drive more annuity revenue rather than consulting and project work,” he added. This would force several organisations such as ASG and Oakton, to increase the ratio of annuity services they provide.

Ovum’s research analysis covers infrastructure outsourcing, applications outsourcing and BPO. The analyst group predicts the A/NZ IT services market will be worth more than $14 billion by 2013 and is leading the pack across Asia-Pacific in terms of economic performance.

Top 5 vendors by marketshare:

  • IBM
  • HP/EDS
  • CSC
  • Fujitsu
  • Accenture

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