IT services market is emerging: Ovum

IT services market is emerging: Ovum

Claims it is boosted by public sector megadeals in Q2, 2012

After a slow start to the year, there were signs in the second quarter of 2012 that the IT services market is finally emerging from its recent inactivity, according to global analyst firm, Ovum.

In its new research, IT Services Contracts Quarterly Analysis, 2Q12, it stated that the total contract value (TCV) of deals announced in Q2, 2012 was $US34.8 billion, up 82 per cent since the same period last year and the highest quarterly figure since Q4 2010.

Ovum claimed the market was bolstered by a number of megadeals valued at $US1 billion or more, including two significant awards by US defence agencies.

All up, there were six megadeals recorded during the quarter, one more than in the previous four quarters combined.

Ovum analyst and author of the report, Ed Thomas, said that although the growth in TCV was driven by public sector deals, there was also significant activity in the private sector.

North America dominated public sector contract activity, with 90 per cent of quarterly TCV derived from the region. In comparison, Europe and Asia-Pacific contributed six per cent and four per cent respectively.

Conversely, Europe led the way in the private sector with a 38 per cent share of TCV in Q2 2012, with North America accounting for 33 per cent, South and Central America 18 per cent, Asia-Pacific 10 per cent and Middle East and Africa one per cent.

"The spike in the number of megadeals tracked in the second quarter of 2012 might suggest that bigger contracts are on the way back, and it is interesting to note that the size of the average contract in the first half of 2012 was 20 per cent higher than in the same period of the previous year.

“However, Ovum’s data shows that there were actually fewer megadeals tracked in the first half of 2012 than in the first six months of both 2010 and 2011," Thomas said.

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