Dismal wrap-up for IT services market in 2012

Ovum statistics confirm world market in the doldrums in Q4

A "dismal" performance in Q4 made 2012 the worst year for IT services globally in contract and value terms since 2002, according to market watcher Ovum.

The global IT services market saw performance stagnate in the three months ending December 2012, falling well below the levels seen in the same quarter in 2011.

This meant that the analyst firm's statistics recorded that annual IT services contract activity fell to its lowest level for 10 years, both in terms of total contract value (TCV) and deal volume.

Ed Thomas, senior analyst for IT services at Ovum, blamed the "ongoing economic uncertainty" in both the US and Europe.

"Our research suggests that many enterprises remain wary of committing to major projects, with issues such as the eurozone crisis having a particularly significant impact.

"In addition, public sector activity has reduced as many governments come under pressure to cut public spending in the face of high debt levels, leading to a general reluctance to get involved in large-scale IT services deals," Thomas said in a statement.

Overall, the services sector saw deal numbers halved. In healthcare and financial services, contract volumes were down 39 per cent and 18 per cent respectively.

However, contracts with telecoms and technology firms rose, Thomas said.

Europe did the best with private sector deals, although TCV fell 31 per cent to $16.7bn (£11.1bn). The TCV of deals announced in Q4 2012 was $20.8bn (£13.8bn), down 34 per cent on the same period in 2011, although it was up 10 per cent on Q3.

The private sector, globally, endured its worst year since 1998 in terms of TCV, Ovum said.

The number of deals fell 17 per cent in the same period and "there was a notable lack of megadeals" (contracts valued at $1bn or more), according to Ovum.