IDC Semiannual Services Tracker Reports Moderate Growth for Services Revenues in 2023 with Stable Growth Forecast for the Next Five Years
April 30 2024 - 11:55AM
Business Wire
The global IT and Business Services market witnessed some
softening in 2023 with revenue growing (in constant currency) from
$1.17 trillion in 2022 to $1.22 trillion, according to the
International Data Corporation (IDC) Worldwide Semiannual Services
Tracker. This translates to year-over-year growth of 4.6%, which
slightly outperformed IDC's forecast of 4.5% growth. In nominal
dollar denominated revenue based on today's exchange rate, the
market grew 4.1%.
Despite economic headwinds, enterprise demand for cloud and
digital transformation services remained strong, driving an uptick
in growth in the second half of 2023 compared to a deceleration
seen in the first half of the year. Support Services and Managed
Services drove most of this uplift, with the largest improvements
seen in managed services. The trend towards cloud-based services
continues to be a large driver for markets within managed services,
as companies recognize the need to leverage scalable infrastructure
while simultaneously reducing costs and improving flexibility; IT
Outsourcing, Key Horizontal BPO, and Network and Endpoint
Outsourcing Services drove these rebounds in growth. On the flip
side, the Project Oriented market (professional services), saw a
slight slowdown in 2023.
"Continued delays in decision-making and a tightening of end
user spending, particularly on smaller projects, contributed to
market softening but there are some bright spots during these
uncertain times through migration and modernization service
offerings," said Eileen Smith, program vice president, IDC Data and
Analytics. "Service providers are emphasizing agility and
supporting companies and businesses in their transformation to
digitize their operations, with cloud at its core."
Overall, a more stable performance during the second half of
2023 sets the stage for moderate growth in the upcoming year.
Worldwide IT and Business Services revenue is expected to grow
to $1.28 trillion in 2024, or 4.7% year-over-year growth (in
constant currency). As organizations worldwide navigate digital
transformation, the demand for innovative services solutions
continues to surge, driving growth and reshaping the landscape. The
short- to mid-term outlook for the market has been increased
slightly because of stronger than expected vendor performance along
with growth indicators from adjacent markets and the five-year
compound annual growth rate (CAGR) is now projected to be 5.1%.
After strong bounce-backs in 2021 and 2022 followed by moderate
growth in 2023, given the current economic conditions, IDC expects
a general cool down, especially in the latter years of the
forecast.
In terms of primary markets, while the Project Oriented market
is still expected to outperform Managed Services and Support
Services, achieving a 6.1% CAGR across the observed period, its
momentum is expected to slow down, especially compared to the
robust growth seen in 2022.
Geographically, IDC has raised its outlook for the Asia/Pacific
region and the Americas while growth was adjusted downward mainly
for Europe, the Middle East, and Africa (EMEA).
"Organizations continue to recognize the value of technology
investments even amidst uncertainties and continue to turn to
service providers to enhance operational efficiencies, streamline
processes, and improve customer experiences," said Stacey Soohoo,
research director, IDC Worldwide Services Tracker. "In the short
term, service providers will focus on personalized offerings as
organizations recognize that one-size-fits-all approaches no longer
suffice. It is therefore no surprise that we see overall services
growth driven by foundation markets like Custom Application
Development and Hosting Infrastructure Services, where
customization and flexibility are key, allowing businesses to
tailor tools and infrastructure to their unique requirements."
"Greater spending on security, cloud, and intelligent automation
technologies combined with the global shortage of IT skills are
increasing spending on business and IT services as organizations
invest in applications and infrastructure to compete in the digital
business era more effectively," said Jason Bremner, research vice
president, Worldwide Services. "The outlook for spending growth in
the worldwide services market over the next five years will be
higher than the average spending growth we saw in the past 15
years, indicating the underlying market drivers for business and IT
services remain strong."
A graphic illustrating IDC's 2024-2028 worldwide services
forecast by geographic region is available by viewing this press
release on IDC.com.
IDC's Worldwide Semiannual Services Tracker provides detailed,
timely, and accurate information on the global IT and business
services markets. It provides vendor revenue share and annual
forecast data on semiannual basis across 53 geographies and 14
market segments.
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.
Click here to learn about IDC's full suite of data products and
how you can leverage them to grow your business.
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 1,300 analysts worldwide, IDC
offers global, regional, and local expertise on technology, IT
benchmarking and sourcing, 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
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Michael Shirer 508-935-4200 press@idc.com