Outsourcing main revenue generator for IT vendors

31 Aug 2007

The top 10 IT services companies account for almost a quarter of service revenues worldwide, IDC has revealed. IBM leads the pack with US$49.3bn (€36bn) in services revenue generated in 2006.

The next biggest vendor, EDS, earned US$19.9bn in services revenue in 2006, while Accenture was in third place with US$16.6bn.
Outsourcing was the dominant revenue-generating service for the year for many of the top 10 firms, including IBM, Fujitsu, CSC and Northrop Grumman.

Project-oriented services were the leading services business for four of the top 10 companies: Accenture, Lockheed Martin, Capgemini and Hitachi.

In the support/training services segment, the leading vendors were IBM and HP. Both IBM and HP experienced relatively flat growth rates in this segment for 2006, -0.6% and -0.2% respectively, which was better than the collective -1.2% growth rate in this segment for the top 10 providers combined, IDC found.

“Providers are taking numerous strategic steps to improve revenue growth and profitability because service revenue growth rates for the top 35 providers have been declining for the past two calendar years,” said Gard Little, program manager for IDC’s Worldwide Services and Emerging Services Opportunities research programs. “We are predicting that this decline in the revenue growth rate will start to level off, with worldwide IT services spending producing a compound annual growth rate of about 6% over the next five years.”

By Niall Byrne