IT Services

Covid-19 legacy drives IT spending

Low RISK for entreprises

Fragmentation
Internationalization
Capital Intensity
Profitability

Fragmentation
Internationalization
Capital Intensity
Profitability

Updated in December 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

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What to watch ?

Positive fallout of the pandemic on demand for remote, cloud-based professional solutions
Labor shortages for highly skilled IT professionals

The global IT services and software industry generated about USD1,790bn in sales in 2021, up +12% from 2020. The sector has benefited 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 have significantly increased their investment to accelerate significantly their transitions to digital solutions. Across sectors, mobility, security and automation solutions are seeing the strongest increase in demand.

Looking forward to 2022, we anticipate the risk environment to remain generally favorable:

Spending on IT services and software will remain strong and should grow by a high-single-digit rate, according to Gartner.
Labor shortages may put a lid on growth potential while increasing labor costs.

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