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Services market in fragile state

Growth in the UK IT services market is set to stall next year to just 2%, down from 2.4% in 2010, said analyst firm Ovum.

Jessica Hawkins, analyst at the firm, said the industry will have a difficult year ahead. "The slow recovery and drastic public sector cuts have crushed any hopes of a return to better days and 2011 will be extremely tough," she said.

Public sector IT spend is likely to be affected by the spending review on 20 October, which is expected to deliver cuts of between 25% and 40%. "Suppliers [in this sector] should only expect single digit growth for the next few years," added Hawkins.

However, Hawkins predicts that providers of business process outsourcing (BPO) stand to benefit significantly from the austerity measures.

"We expect BPO to be largely resilient to this tough environment as public sector departments try to deal with the cuts. It will therefore remain the fastest-growing sector of the UK IT services market through to 2015, growing at a rate of 6.5 %," she said.


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