Extensive study of true growth (organic, constant currency) across 19 IT services market segments indicates that the market grew by 3.1% YOY in the quarter ending September 2016, a 0.8 percentage point deceleration over the same period in 2015. The segments driving this deceleration were - Application outsourcing; Banking, financial services & insurance, and Europe.

On a QOQ basis (i.e., from June to September 2016), industry growth decelerated by 1.0 percentage points, down from 4.1%. This deceleration occurred across the four major service provider groups we track, and in five of the seven industry verticals, four of the six service types, and two of the four regions.

Our YOY change in growth analysis reveals weakness trending for the large Indian IT services firms and Midsized service providers. The organic, constant currency growth of the large Indian IT services firms has weakened for five consecutive quarters, dropping from 13.2% in the June 2015 quarter to 7.8% in the September 2016 quarter. Similarly, the Midsized players’ growth has decelerated by 1.7 annually. On the other hand, the larger peer groups were more stable – Systems Integration Heritage players accelerated by 0.7 percentage points over the past year, while Infrastructure Heritage service providers were flat in terms of annual 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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IT Services Forecaster