Extensive study of true growth (organic, constant currency) across 19 IT services market segments indicates that the market grew by 2.1% Y/Y in the quarter ending March 2017, which is 2.4 percentage points lower than same period in 2016. The Y/Y deceleration was driven by growth deceleration in Infrastructure Outsourcing service line, Public sector vertical and Europe region.
Based on market analysis, we are revising up our next 12-months (NTM) forecast by 0.1% to 2.9%. We are keeping our following two years forecast unchanged at 1.9% ahead of the upcoming earnings season. The main reason for raising our NTM industry growth forecast is essentially near term signs of cyclical easing in banking, financial services, and insurance; healthcare and energy verticals. However, our near and long term forecasts are based on our ongoing premise that services industry growth is being pressured primarily by significant revenue compression on existing deals in the traditional services segments (i.e., Applications outsourcing, Infrastructure outsourcing, and Business process outsourcing).
The IT services industry is buffeted by ongoing changes, but the “black-box” nature of the industry makes it difficult for key stakeholders to answer basic – yet crucial – questions. To address these challenges, Everest Group has partnered with DeepDive to develop a systematic methodology to examine detailed industry growth trends, forecast industry & market segment growth rates, and measure & compare performance among major IT services providers.
