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TOP
50 SERVICES VENDORS FAIL TO MATCH MARKET GROWTH
RATE
Market
Analyst Datamonitor research 'Global IT Services Top 50 Rankings,'
ranked the top 50 suppliers based on their revenue figures reported
in their most recent fiscal years. The numbers used are the 'as
reported' figures in annual results statements, and are not adjusted
for foreign exchange movements, disposals or acquisitions. The list
excludes companies that make the bulk of their revenues from
reselling products, and captive IT operations that make the majority
of their revenue from their parent
organizations.
Results
from Datamonitor's research add weight to the belief of many
industry watchers that some of the sector's larger players are
losing out to smaller, more focused vendors. Datamonitor estimates
the size of the global IT services market at $513bn in 2005, the
world's 50 largest IT services vendors booked combined revenue of
$262bn last year, meaning that the 50 largest vendors claimed a
share of 51%, but grew at a slower rate than the overall market. The
largest player, IBM Global Services accounted for a 9% share,
highlighting the relatively fragmented state of the
marketplace.
There
was little change at the top of the rankings, with IBM, EDS, Fujitsu
and Accenture again placed one to four, although BT Global Services
overtook its German peer T-Systems to take eighth spot. However,
India's five largest
players all made significant moves up the league table, growing
their combined sales by 35% to $9.3bn.
The
vendors, which ranged from IBM Global Services with sales of $47bn
to Patni Computer Systems with $450m, increased their combined sales
by 1.9% over the previous year. But this is well below the 8% growth
in the overall market for external IT services expenditure recorded
by Datamonitor. The ten fastest-growing IT services vendors in the
top 50 rankings last year were either specialists in low-cost
offshore delivery (Cognizant, Satyam, Patni, TCS, Infosys, HCL and
Wipro), or focused on the lucrative US central government and
defence sector (SRA, CACI and SAIC).
India's big
IT services companies also ranked as the most profitable suppliers
in the top 50 rankings in terms of both net and operating profit
margin. This is due to the lower salary costs in India, which can be as much as 50%
lower for some skills over comparable rates in the US. Infosys was the most
profitable supplier in terms of net profit margin with a 26% in its
most recent fiscal year.
The
combined headcount of the top 50 vendors grew 18% to 1.58 million
last year, driven by aggressive recruitment in low-cost countries
such as India. India's biggest player,
Tata Consultancy Services, added more than 27,000 new staff last
year to take its total workforce to 66,480, while EDS Corp plans to
increase its offshore headcount from 14,500 in 2005 to 21,100 this
year.
Nick
Mayes, Principal Analyst for Global Computing Services at
Datamonitor, noted: 'The game has changed for many of the
traditional powerhouses in the IT services market. Pricing pressure
is sweeping through infrastructure and applications services, and
clients are opting for smaller outsourcing engagements rather than
mega-deals. Bigger suppliers are becoming increasingly reliant on
M&A activity to improve their top line
growth.' |
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Miscommunication,
misunderstanding and mis-targeted investment block the strategic
value achieved from IT outsourcing- Study
According to a study
by PA Consulting, the lack of sufficient planning as well as proper
understanding of the objectives of an IT outsourcing (ITO) agreement
are the main factors hampering the achievement of strategic value
from IT outsourcing.
Financial
Services Outsourcing Still in the Nascent Stage -
Study
Hackett's study
found that companies today outsource only 4% of all finance
processes, while they turn to onshore or offshore shared service
centres 65% of the time. Companies said they expected their use of
outsourcing to more than double in the next three years, but
reliance on shared service centres will increase slightly as well,
and shared services is expected to remain the preferred sourcing
alternative for finance by a wide
margin.
Global
Sourcing and BPO Now Mainstream among US and UK Mortgage Lenders,
Says TowerGroup
TowerGroup estimates
that as of December 2005, 15 of the top 20 US mortgage lenders and five of the
top 10 UK lenders
had captive or BPO offshore operations in India, the Philippines, or
elsewhere.
ClariVest
Asset Management signs for Mellon back office
services
Mellon, the
Pennsylvania-based financial outsourcing services provider, has been
selected by ClariVest, a California-based asset management firm, for
providing support to its US and global back-office
operation.
Bankhaus
Lampe Signs Long-Term Outsourcing
Agreement
Kordoba, a German
subsidiary of Fidelity Information Services, has been awarded a USD
50 million contract renewal with Bankhaus Lampe, a German bank.
Under the multi-year, $50 million agreement, KORDOBA will provide IT
hosting, application management and distributed computing support
services.
UK
Pearl finalises deal with TCS
Tata
Consultancy Services Ltd. has signed a 12-year, 486-million-pound
($868.6 million) deal to take over claims processing from British
firm Pearl Group Ltd.
Prudential
U.K. may export jobs to India
The
life insurer plans to close its sites in Belfast, Northern
Ireland, Bristol
and Holborn Bars in London. The closings will involve
the transfer of about 700 jobs -- some to other locations within the
United Kingdom
and others to India.
ING Signs MoU
With LogicaCMG
LogicaCMG and ING
have signed an MoU for outsourcing activities in the field of
application development, application maintenance and testing of IT
systems mainly relating to ING’s banking operations. The six-year
agreement is estimated at over 200 million
Euro.
San
Diego paying $174M for IT services
San Diego County let a 7-year, $170 million contract
to a U.S. consortium for
information technology and telecommunications services. The
consortium includes Northrop Grumman Corp., Electronic Data Systems
Corp., BearingPoint and AT&T.
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EDS to launch Software
Outsourcing centres in China
The
spoke person of the company said that they are planning to launch
the first Software Outsourcing centre with this year in
China as EDS
already has similar facilities and services in Malaysia and India for a long. So it would not be that much challenging task
for the company to establish IT Outsourcing centre here. As far as
staffing these centres is concerned, company is planning to hire
further 2,000 employees within newt two years. Company at present
employs staff of 100 employees in China.
IBM
Selected to Transform Merchandising and Supply Chain Systems for
Circuit City Stores
IBM
will work with Circuit City Stores, Inc. to comprehensively
transform the consumer electronics retailer's merchandising and
supply chain systems, under a new consulting and services contract
IBM announced today. In addition, IBM has won a seven-year, EUR 13
million IT outsourcing contract with Rheinmetall, a German
automotive part manufacturer. The contract is an extension of scope
of an existing IT agreement between the two
companies.
Unisys Signs Malmo
Aviation to Five-Year IT Outsourcing
Agreement
Swedish airline
Malmo Aviation has signed a five-year contract for Unisys to provide
outsourced management of the company's IT operations. The five-year
agreement has a value to Unisys of 24 million Swedish crowns ($2.9
million).
EDS
New Zealand Wins $100Mn Check Processing
Deal
EDS New Zealand, a
subsidiary of US-headquartered IT services provider, EDS, has won
check processing contracts worth USD 100 million with the four major
New Zealand banks.
Fujitsu Wins
7-Yr, GBP 41Mn UK NHS Service Desk
Contract
Fujitsu Services was
awarded a contract last month (April) by Connecting for Health (CfH)
to provide a national front-line service desk for both the National
Programme for IT (NPfIT) and local NHS trusts, in a deal worth over
£41m.
TCS
bags $500 Mn Citigroup contract
Tata Consultancy
Services (TCS) has acquired a mega $500 million outsourcing deal
from global financial services Citigroup Inc. The deal would be an
application, maintenance and development contract, based on a
'take-or-pay-order’ system.
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