IT services contracts spiked in final quarter of 2010

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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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