IT Services

Back to growth in 2021 amid tech-driven economic recovery

Low RISK for entreprises

Fragmentation
Internationalization
Capital Intensity
Profitability

Fragmentation
Internationalization
Capital Intensity
Profitability

High value added, high margins in IT consulting, software, cloud computing
Significant share of recurring revenues
Broad customer base (industries, retail, banking, insurance, transport, etc.)
Powerful long term growth drivers (digitization of the economy)
Positive legacy of the Covid-19 outbreak on future IT investment

Low barriers to entry
Sensitivity to cuts in corporate IT investment

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What to watch ?

Greater price pressure as clients look to slash costs
IT content of possible stimulus packages
Positive fallout of prolonged lockdown on future demand for remote, cloud-based professional solutions.

The global IT services industry generated about USD2,150bn in revenue in 2020, down -1% amid lower economic growth and IT spending across most major markets. The Covid-19 outbreak has had a generally adverse but mixed impact on the industry, driving demand for software and services catering to specific needs (communications, collaborative work, etc.) while cuts and delays in projects among large corporate clients have been announced. The industry will see growth resume as early 2021 on the back of the wider macroeconomic recovery and the necessity for businesses and administrations to adapt to a more IT-driven post-Covid environment. From a sector point of view, healthcare, government and retail clients are expected to accelerate significantly their transition to digital solutions. Across sectors, mobility, security and automation solutions should see the strongest increase in demand.

The industry can be divided into five main subsegments - companies generally operate across many segments. While IT consulting and programming is a fragmented activity , the managed services, software and data processing segments are far more concentrated with regional and global players.
- Consulting is about helping organisations make the best possible use of digital technologies to operate more efficiently.
- Programming is about developing custom digital tools to help organisations reach their business objectives.
- Managed services is about outsourcing the management of the IT infrastructure to a third-party company.
- Software are complex, generic programmes that can are made available to a variety of corporate customers.
- Data processing, including cloud computing, is about collecting and treating large quantities of data for corporate customers.

Key players

Country	Role	Sector risk
United States	#1 market by revenue	A Low risk
UK	#2 market by revenue	B Medium risk
Japan	#3 market by revenue	A Low risk
Germany	#4 market by revenue	B Medium risk
China	#5 market by revenue	A Low risk