The value of global IT services sales plummeted 40% in the second quarter of 2011 compared to the same period in 2010.
Ovum revealed the total value of deals was just over $19bn in the quarter, with a lack of big deals in the public sector exacerbating a drop in private sector contracts.
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"After a disappointing start to the year, things went from bad to worse in the second quarter of 2011 with this very weak performance in contract signings," said Ovum analyst Ed Thomas.
The findings from Ovum revealed there were no deals worth more than $1bn signed in the three-month period. The number of deals slumped 20% compared to the previous year. "The distinct lack of large deals on offer was a major contributing factor," said Thomas.
He said private sector caution has been offset by public sector spending in recent quarters but the last quarter was different: "In previous quarters, the buoyancy of the public sector outsourcing market has gone some way toward offsetting the lacklustre returns from enterprise clients. However, on this occasion government spending on IT services projects also took a hit, with a notable lack of large-scale projects on offer."
North America, the most mature outsourcing market in the world, had the biggest falls. Europe, led by Scandinavia, generated 58% of total global private sector value.
In June Ovum revealed its latest predictions for IT services spending, with annual global growth expected to be 4.4% between 2010 and 2015. It expects healthy spending growth of over 4.5% to return in 2013.