UK organisations increasing IT services investment

Spending on IT services in the UK looks set to see a significant increase this year following a spate of mega-deals

Spending on IT services in the UK looks set to see a significant increase this year following a spate of mega-deals, according to analyst firm Ovum.

Following IT services spend increases of 1.5% in 2011 and 2% in 2012, where the total spent was $12.8bn, 2013 looks set to exceed this.

Some $7.2bn has already been spent in the first five months of 2013, according to Ovum. Three deals worth over $1bn, known as mega-deals, are included.

These included one deal, worth over £1bn, which saw Capita take over the management of O2’s customer service centres in May. Another large deal the same month came when the treasury-backed National Savings and Investments (NS&I) awarded Atos a seven-year IT outsourcing contract.

“The total contract value [TCV] announced so far this year suggests that 2013 should surpass the $12.8bn announced in 2012 with relative ease,” said Ovum.

Ed Thomas, IT services analyst at Ovum, said despite the optimism, market conditions in the UK continue to be challenging.  

“The slow rate of economic recovery means that many enterprises will still be wary of investing in IT projects. However, the recession has also ensured that cost-cutting remains one of the top priorities for the majority of companies. This should provide opportunities for IT services vendors, although they will need to offer more than just a cheap service to win business in the mature UK market,” he said.

Separately, Gartner said the worldwide IT outsourcing market will be worth $288bn in 2013, a 2.8% increase on last year. Gartner expects all IT outsourcing segments to grow slower than it initially expected in 2013.

"We continue to see overall market growth being constrained by near-term market factors, such as evolving IT outsourcing delivery models; economic, political and labour conditions; and service provider financial performance," said Bryan Britz, research vice-president at Gartner. 

"Mature Asia/Pacific and Western Europe are the regions where the outlook is most tempered, partly due to currency, but also reflective of our view that 2013 is likely to be similar to 2012 in these regions," he added.

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