SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Yeshim Deniz, Roger Strukhoff, Jason Bloomberg

News Feed Item

Worldwide Services Revenue Crossed $1 Trillion Mark in 2018, According to IDC

Worldwide revenues for IT Services and Business Services totaled $513 billion in the second half of 2018 (2H18), an increase of 4.5% year over year (in constant currency), according to the International Data Corporation (IDC) Worldwide Semiannual Services Tracker.

For the entire year, worldwide services revenues crossed the $1 trillion mark in 2018. Annual growth accelerated slightly to 4.3%, outstripping the worldwide GDP growth by more than half a percentage point. This largely reflects overall healthy corporate IT spending sustained by large enterprises' cautious yet optimistic business outlook.

Looking at different services markets, project-oriented revenues (i.e. consulting, integration, application development, etc.) continued to outpace outsourcing and support & training. They grew by 6.4% year over year in 2H18 to $194 billion and 5.8% to $380 billion for the entire year. The growth was led largely by business consulting and application development markets. Business consulting grew 9.1% to $63 billion in 2H18 and 8.3% to $123 billion for the year. Custom application development (CAD) grew 8.3% to almost $24 billion in 2H18 and 7.5% to $46 billion for 2018 (compared with only 5.1% in 2017). Market growth was largely due to strong results in the United States. As traditional U.S. enterprises and government agencies continue to tackle and adopt digital transformation, strategic consulting remains critical in larger projects. Digital transformation is also driving up new application development work – not just "new apps" but also upgrading "legacy apps." The accelerated growth in CAD coincides with the strong rebound on the software side.

In managed services, revenues grew 3.8% to $240 million in 2H18 and 3.6% to $473 million for 2018, which is on par with real worldwide GDP growth. Application-related managed services revenues (hosted and on-premise application management) outpaced infrastructure and business process outsourcing (BPO), growing by 5.8% to $41 billion in 2H18 and 5.6% to $80 billion for 2018. Like application project work (CAD), application outsourcing serves as a vehicle for buyers to access new app skills (i.e. cloud, analytics, machine learning, etc.), as well as modernizing legacy apps via external providers. IDC expects application-related managed services to continue to out perform other outsourcing segments.

IT Outsourcing (ITO) continued to decline due to flat or negative growth in the mature geographic markets. This was offset somewhat by moderate growth in horizontal business process outsourcing (BPO).

On a geographic basis, the United States, the largest services market, grew by 4.8% to $233 million in 2H18 and 4.6% to $459 million for 2018, a moderate acceleration. Strong economic growth in the U.S. despite policy uncertainties, coupled with moderate but steady government spending increases, have kept both corporate and government IT spending robust. Funding for new projects to acquire new capabilities and tools offset continuing downward pressure on commodity services.

Western Europe, the second largest market, grew by almost 3% to $266 billion for 2018, much slower than the U.S. but in-line with IDC's previous estimate and more than twice as fast as real GDP growth for the region. This was driven largely more application-related activities in the region, notably CAD and application outsourcing.

Asia/Pacific (excluding Japan) (APeJ) growth cooled slightly to 6.2% with revenues of $110 billion, partially reflecting economic angst over the impending trade war between the U.S. and China, and the economic slow-down in key mature markets (i.e. Australia/New Zealand, South Korea). Japan enjoyed a slight growth uptick, as business results from the major Japanese services vendors posted slightly higher than expected in 2H18, mainly due to continuing demands for system renewal. Other emerging markets in the region continued to show robust growth (i.e. India, the Philippines, Indonesia, Vietnam, etc.) However, their impact on growth was limited by their size. Overall growth for the entire APeJ region remains at around 5% for 2018.

In other emerging markets, both Latin America and Central & Eastern Europe (CEE) saw faster growth in 2018 than the previous year. Except for Venezuela and Argentina, and to some degree Colombia, major Latin American markets are in economic recovery, which drove both corporate and government IT spending. All foundation markets showed better growth last year. In CEE, most major geographic markets grew between 6% and 15%, mainly boosted by dynamic economic growth and increased tax revenues. However, in sheer revenue size, CEE is still the smallest geographic market.

 

Global Regional Services 2H18 Revenue and Year-Over-Year Growth
(revenues in $US billions)

Global Region    

2H18
Revenue

   

2H18/2H17
Growth

Americas     $267.6     4.9%
Asia/Pacific     $87.6     5.8%
EMEA     $158.6     3.3%
Total     $513.9     4.5%
Source: IDC Worldwide Semiannual Services Tracker 2H 2018
 

"Steady growth in the services markets are driven by a continued demand for digital solutions across the regions with the Americas continuing to contribute to the bulk of the revenue growth," said Lisa Nagamine, research manager, IDC's Worldwide Semiannual Services Tracker. "2018 surpassed the trillion-dollar mark, as we had forecasted at the end of 2017. We expect future growth in many geographies worldwide in coming years."

"More sustained U.S. economic growth, at least compared to other mature economies, allowed large government agencies and traditional businesses to spend more on new projects in recent years," said Xiao-Fei Zhang, program director, Global Services Markets and Trends. "Additionally, digital disruption and global competition have also stoked their digital fear – go digital or go broke."

About IDC Trackers
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools.

For more information about IDC's Worldwide Semiannual Services Tracker, please contact Kathy Nagamine at 650-350-6423 or [email protected].

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading media, data and marketing services company that activates and engages the most influential technology buyers. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Tapping into blockchain revolution early enough translates into a substantial business competitiveness advantage. Codete comprehensively develops custom, blockchain-based business solutions, founded on the most advanced cryptographic innovations, and striking a balance point between complexity of the technologies used in quickly-changing stack building, business impact, and cost-effectiveness. Codete researches and provides business consultancy in the field of single most thrilling innovative te...
Atmosera delivers modern cloud services that maximize the advantages of cloud-based infrastructures. Offering private, hybrid, and public cloud solutions, Atmosera works closely with customers to engineer, deploy, and operate cloud architectures with advanced services that deliver strategic business outcomes. Atmosera's expertise simplifies the process of cloud transformation and our 20+ years of experience managing complex IT environments provides our customers with the confidence and trust tha...
CloudEXPO has been the M&A capital for Cloud companies for more than a decade with memorable acquisition news stories which came out of CloudEXPO expo floor. DevOpsSUMMIT New York faculty member Greg Bledsoe shared his views on IBM's Red Hat acquisition live from NASDAQ floor. Acquisition news was announced during CloudEXPO New York which took place November 12-13, 2019 in New York City. Our Silicon Valley 2019 schedule will showcase 200 keynotes, sessions, general sessions, power panels, and...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
ShieldX's CEO and Founder, Ratinder Ahuja, believes that traditional security solutions are not designed to be effective in the cloud. The role of Data Loss Prevention must evolve in order to combat the challenges of changing infrastructure associated with modernized cloud environments. Ratinder will call out the notion that security processes and controls must be equally dynamic and able to adapt for the cloud. Utilizing four key factors of automation, enterprises can remediate issues and impro...
Intel is an American multinational corporation and technology company headquartered in Santa Clara, California, in the Silicon Valley. It is the world's second largest and second highest valued semiconductor chip maker based on revenue after being overtaken by Samsung, and is the inventor of the x86 series of microprocessors, the processors found in most personal computers (PCs). Intel supplies processors for computer system manufacturers such as Apple, Lenovo, HP, and Dell. Intel also manufactu...
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understa...
As you know, enterprise IT conversation over the past year have often centered upon the open-source Kubernetes container orchestration system. In fact, Kubernetes has emerged as the key technology -- and even primary platform -- of cloud migrations for a wide variety of organizations. Kubernetes is critical to forward-looking enterprises that continue to push their IT infrastructures toward maximum functionality, scalability, and flexibility. As they do so, IT professionals are also embr...
The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete at launch. DevOps may be disruptive, but it is essential. DevOpsSUMMIT at CloudEXPO expands the DevOps community, enable a wide sharing of knowledge, and educate delegates and technology providers alike.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Industry after industry is under siege as companies embrace digital transformation (DX) to disrupt existing business models and disintermediate their competitor’s customer relationships. But what do we mean by “Digital Transformation”? The coupling of granular, real-time data (e.g., smartphones, connected devices, smart appliances, wearables, mobile commerce, video surveillance) with modern technologies (e.g., cloud native apps, big data architectures, hyper-converged technologies, artificial in...
OpsRamp is an enterprise IT operation platform provided by US-based OpsRamp, Inc. It provides SaaS services through support for increasingly complex cloud and hybrid computing environments from system operation to service management. The OpsRamp platform is a SaaS-based, multi-tenant solution that enables enterprise IT organizations and cloud service providers like JBS the flexibility and control they need to manage and monitor today's hybrid, multi-cloud infrastructure, applications, and wor...
The Master of Science in Artificial Intelligence (MSAI) provides a comprehensive framework of theory and practice in the emerging field of AI. The program delivers the foundational knowledge needed to explore both key contextual areas and complex technical applications of AI systems. Curriculum incorporates elements of data science, robotics, and machine learning-enabling you to pursue a holistic and interdisciplinary course of study while preparing for a position in AI research, operations, ...
CloudEXPO has been the M&A capital for Cloud companies for more than a decade with memorable acquisition news stories which came out of CloudEXPO expo floor. DevOpsSUMMIT New York faculty member Greg Bledsoe shared his views on IBM's Red Hat acquisition live from NASDAQ floor. Acquisition news was announced during CloudEXPO New York which took place November 12-13, 2019 in New York City.
Codete accelerates their clients growth through technological expertise and experience. Codite team works with organizations to meet the challenges that digitalization presents. Their clients include digital start-ups as well as established enterprises in the IT industry. To stay competitive in a highly innovative IT industry, strong R&D departments and bold spin-off initiatives is a must. Codete Data Science and Software Architects teams help corporate clients to stay up to date with the mod...