Global IT Growth

According to preliminary data released this week by Gartner, the global IT
services market expanded by 6.2 percent last year with India-based vendors
increasing their revenues by 29 percent. The data also revealed that IBM
leads the pack while HP has slipped a notch and fallen in market share.

India still only represents a small fraction of worldwide revenues at 1.4
percent of the total, with the United States dominating with 59 percent of total spending
in the global $569 billion market. U.S.-based IT services growth, however, was
reported only at 4 percent. Of particular note in light of the ever-present
offshoring debate in this election year is the fact that, according to
Gartner’s research, 92 percent of India-based vendors’ growth came from
outside of India.

Gartner attributed the decline of the U.S. dollar, compared with international
currencies, as one of the principal reasons for the overall revenue growth
in the sector.

“Although the growth of the services industry improved compared with the
decline of 0.3 percent in 2002, growth rates were inflated by changes in
the exchange rate of the U.S. dollar,” Kathryn Hale, principal analyst
for Gartner’s worldwide IT services group said in a statement. “Vendors
operating extensively outside the United States reported inflated growth
after converting local currencies into dollars.”

That said, Gartner still believes that outsourcing will drive overall growth.

“Through 2004, outsourcing will continue to drive the growth in the
worldwide IT services market, with IT management and process management
growing faster than consulting services, and development and integration
services,” Hale said.

A recent study from Meta Group specifically targeting IT found that
20 percent
of its survey respondents engage in the practice of offshoring IT jobs.
In March, Gartner Group released
a report
indicating that only 5 percent of U.S. IT jobs were currently
offshored with an estimated 25 percent to be offshored by 2010.

IT management is expected to grow at a rate of 10 percent per year,
while process management is forecasted at 9.3 percent growth.
According to Gartner, those segments benefit from companies’ desire to control costs.
On the other end of the spectrum, consulting services only
grew at a meager 0.1 percent.

IBM remains the top worldwide IT services vendor according to Gartner’s
research, with a 7.5 percent share that hasn’t changed from 2002. Big Blue’s
growth has kept pace with overall industry growth of 6.2 percent, as
its revenues grew to approximately $43 billion in 2003 from $40 billion the previous years.

Rounding out the top five worldwide IT vendors are EDS at number two
with a 3.7 percent share and 0.6 percent growth. Fujitsu had the
highest growth rate at 11.3 percent that was enough to help it
secure the number three position globally with a 2.8 percent market share.
Computer Sciences (CSC) had the second highest growth rate at 4.6
percent, which put it in the number 4 spot with a 2.2 percent share.

About $133 million dollars behind CSC, HP slipped a notch to number
five with 2.7 percent growth and only a 2.2 percent market share, down
marginally from 2.3 percent market share in 2002.