IT Services Forecaster™ Growth Trends Report for C4Q 2016 (October – December 2016)

Extensive study of true growth (organic, constant currency) across 19 IT services market segments indicates that the market grew by 3.3% YOY in the quarter ending December 2016, which is equal to same period in 2015. The YOY deceleration experienced in Consulting & Systems Integration service line, Banking, Financial Services & Insurance vertical and Europe region were offset by YOY acceleration in Infrastructure Outsourcing service line, Public Sector vertical and Americas region.

On a QOQ basis (i.e., from September to December 2016), industry growth accelerated by 0.2 percentage point, up from 3.1%. This acceleration occurred across two of four major service provider groups we track, and in six of the seven industry verticals, four of the six service types, and two of the four regions.

Our YOY change in growth analysis reveals main weakness trending for the large Indian IT services firms. The organic, constant currency growth of the large Indian IT services firms has weakened for six consecutive quarters, dropping from 13.2% in the June 2015 quarter to 7.7% in the December 2016 quarter. Similarly, the Midsized players’ growth has decelerated by 0.7 percentage point annually and Systems Integration Heritage players decelerated by 0.1 percentage point. On the other hand, the largest peer group, Infrastructure Heritage, showed a solid 1.3 percentage point YOY acceleration.

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.

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