Nine year low for total contract value in global IT services

The value of contracts in the global IT services market decreased by 33 percent in the third quarter of 2012 and reached its lowest point in nine years.

As well as private sector deals hitting an 11-year-low, total contract value (TCV) in the public sector was at its lowest level in three years, according to analysts Ovum.

Ed Thomas, Senior Analyst at Ovum, said: “The signs of recovery in the IT services market apparent in the second quarter of 2012 were largely conspicuous by their absence in 3Q12.

“There will need to be a significant upturn in both TCV and deal volume if last year’s performance is to be matched in 2012. On current form, both annual TCV and the number of deals are set to hit 10-year lows, as the global economic crisis continues to impact the performance of the IT services industry.”

In Ovum’s analysis, they revealed the value of services deals announced in the three months ending September 2012 was US$18.9 billion, down 33 percent on the same period in 2011.

Of the few private sector deals signed in 3Q12, Europe was most dominant and activity dropped sharply in North America.

The average value of public sector contracts slipped to US$54.6 million, almost half the average public sector total in 2Q12.

Thomas added: “This sharp dip in activity will wipe out any optimism engendered in the previous quarter, when an increase in the number of deals brought to an end seven consecutive quarters of decline.”

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