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Gartner: Worst year so far for IT services industry

The IT services market suffered its first decline last year, despite record interest in outsourcing, according to Gartner.

The IT services market suffered its first decline last year, despite record interest in outsourcing, according to Gartner.

Preliminary results from Gartner show that global end-user spending on IT services in 2002 totalled $536bn (£333bn), a 0.6% decline from 2001.

"Project-based services, consulting and development and integration, performed the worst, while managed services, such as outsourcing and process management, enjoyed the highest growth rate," said Kathryn Hale, principal analyst for Gartner's worldwide IT services group.

"Many organisations are still seeing outsourcing as the best way to minimise costs in an economy of prolonged uncertainty in which very tight budgets are the norm.

Project-based services suffered because users avoided large or technologically challenging projects, and because of price pressure on commodity-like work, which was further driven by growth in offshore services."

IBM remained number one with 7.5% of worldwide IT services revenue in 2002, though the poor performance of PwC Consulting, which it acquired in 2002, hit its growth rate.

EDS ranked second, posting 3.9% growth, followed by Fujitsu. Hewlett-Packard joined Gartner's top-five suppliers as the company's revenue roughly doubled when it merged with Compaq.

IT services revenue for western Europe slipped 0.1%, compared with a 1.1% decline in North America.

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