IT services contracts spiked in final quarter of 2010


IT services contracts spiked in final quarter of 2010

Karl Flinders

The total value of worldwide IT services contracts signed in the final three months of 2010 was 66% higher than the previous three months, according to research from Ovum.

UK government deals might be a thing of the past, but global corporations continue spending heavily on IT services deals.

At $49bn, the total value of contracts was the highest quarterly amount for over four years and the highest fourth quarter total value since 2003.

The last-minute explosion in spending was the result of a number of mega-deals. More mega-deals were signed in the last three months of the year than in the previous nine months.

"2010 went out with a bang thanks to a number of mega-deals announced during the fourth quarter," said Ovum analyst Ed Thomas. "It was a remarkable turnaround for the sector which, after a sluggish first three quarters, was forecast to hit its lowest annual TCV level for five years. However, rather than enduring another stagnant quarter, a string of large deals meant that the IT services market exploded into life."

The nature of the services contracts came as a surprise to many who predicted businesses would sideline the mega-deal in favour of flexible outsourcing.

Ovum said the total value of contracts for the previous nine months, $96.4bn, was 9% lower than the same period a year before, and the worst for three quarters since 2005.

"It remains to be seen whether the spectacular end to the year is simply a blip or a sign of better times to come for the IT services industry in 2011," added Ed Thomas.

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