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IT SERVICES

Covid-19 legacy drives IT spending

L

Low RISK for entreprises

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

Updated in July 2021.
  • High value added, high margins in IT consulting, software, cloud computing
  • Significant share of recurring revenues
  • Broad customer base (industries, retail, banking, insurance, transport, etc.)
  • Powerful long term growth drivers (digitization of the economy)
  • Positive legacy of the Covid-19 outbreak on future IT investment
  • Low barriers to entry
  • Sensitivity to cuts in corporate IT investment
Updated in July 2021.
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What to watch ? 

  • IT content of stimulus packages in Europe and North America
  • Positive fallout of the pandemic on demand for remote, cloud-based professional solutions
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The global IT services industry generated about USD2,150bn in revenue in 2020, down -1% amid lower economic growth and IT spending across most major markets.The Covid-19 outbreak has had a generally adverse but mixed impact on the industry, driving demand for software and services catering to specific needs (communications, collaborative work etc.) while cuts and delays in projects among large corporate clients have been announced.

IT spending picked up markedly in late 2020 and early 2021. For 2021, consultancy Gartner expects IT services spending to grow +9%, software spending +11% and data center spending +8%, with growth cooling down slightly in 2022. The sector will benefit from the improvement of the wider macroeconomic environment and the necessity for businesses and administrations to adapt to a more IT-driven post-Covid environment. From a sector point of view, healthcare, government and retail clients are expected to accelerate significantly their transitions to digital solutions. Across sectors, mobility, security and automation solutions should see the strongest increase in demand.
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The industry can be divided into five main subsegments - companies generally operate across many segments. While IT consulting and programming is a fragmented activity , the managed services, software and data processing segments are far more concentrated with regional and global players.
- Consulting is about helping organisations make the best possible use of digital technologies to operate more efficiently.
- Programming is about developing custom digital tools to help organisations reach their business objectives.
- Managed services is about outsourcing the management of the IT infrastructure to a third-party company.
- Software are complex, generic programmes that can are made available to a variety of corporate customers.
- Data processing, including cloud computing, is about collecting and treating large quantities of data for corporate customers.

Key players

Country Role Sector risk
United States

#1 market by revenue
A

Low risk

UK

#2 market by revenue
B

Medium risk
Japan

#3 market by revenue
A

Low risk
Germany

#4 market by revenue
B

Medium risk
China

#5 market by revenue
A

Low risk

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