Extensive study of true growth (organic, constant currency) across 19 IT services market segments indicates that the market grew by 4.1% year-over-year in the quarter ending June 2016, a 1.1 percentage point improvement over the same period in 2015. This growth was based on “less poor” growth in the traditional IT infrastructure outsourcing market.

Based on market analysis, we are revising our industry growth forecast ahead of the upcoming earnings season; while we previously forecast industry growth at 3.3% over the next 12 months, we are downgrading that forecast to 3.0% based on both secular and cyclical challenges. Our revised growth forecast is based on deteriorating leading indicators as well as changes in buyers’ behavior and their approaches to contracting with service providers. We should note that this forecast reduction is not due to widely recognized demand changes, such as BREXIT and banks’ spending softness; those demand changes were already largely accounted for in our earlier industry growth forecast.

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 and market segment growth rates, and measure and compare performance among major IT services providers.