IT market emerging from torpor: analysts

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IT market emerging from torpor: analysts

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An independent technology analysis firm says that the IT services boosted in second quarter of 2012.

19 September,2012 06:49 pm

After a slow start to the year, there were signs in the second quarter of 2012 that the IT services market is finally emerging from its recent torpor, says global analyst firm, Ovum.In new research, the independent technology analyst firm states that the total contract value (TCV) of deals announced in 2Q12 was USD$34.8bn, up 82 percent on the same period last year and the highest quarterly figure since 4Q10. The market was bolstered by a number of megadeals (contracts valued at USD$1bn or more), including two significant awards by US defence agencies.In all, six megadeals were recorded during the quarter, one more than in the previous four quarters combined.Ed Thomas, Ovum analyst and author of the report, comments: Although the growth in TCV was driven by public sector megadeals, there was also significant activity in the private sector, with the key North American market building on its improved performance in 1Q12.Despite two large deals involving Brazilian companies, the IT services industry remains heavily dependent on its two most mature markets: the US and UK. Between them, these two countries accounted for more than 80 percent of quarterly TCV in the three months to the end of June.Thomas says, North America once again dominated public sector contract activity, with 90 percent of quarterly TCV derived from the region.” In comparison, Europe and Asia Pacific contributed six percent and four percent respectively. Conversely, Europe led the way in the private sector with a 38 percent share of TCV in 2Q12, with North America accounting for 33 percent, South and Central America 18 percent, Asia Pacific 10 percent and MEA one percent.He concludes, The spike in the number of megadeals tracked in the second quarter of 2012 might suggest that bigger contracts are on the way back, and it is interesting to note that the size of the average contract in the first half of 2012 was 20 percent higher than in the same period of the previous year. However, Ovum’s data shows that there were actually fewer megadeals tracked in 1H12 than in the first six months of both 2010 and 2011.