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20 April 2022

IT services revenue poised for growth but expect the unexpected says IDC

‘On the heels of a global pandemic, enterprise buyers face another black swan event in 2022, which will accelerate global trends’

Global IT and business services revenue is set to grow this year by 5.6 per cent (in constant currency), according to a projection by IDC.

The research firm said the 2022 market growth represents an increase of 160 basis points from IDC’s October 2021 forecast.

It claims the improved market view reflects “robust 2021 bookings” and pipelines by several large services providers, an improved economic outlook (compared to the previous forecast cycle), and inflationary impact on the services market, offset slightly by the negative impact of the Ukraine/Russia conflict.

Moreover, IDC believes the market will continue to expand throughout the next few years at a rate of four to five per cent, representing an overall increase of 40 to 80 basis points each year, pushing the market’s long-term growth rate to 4.6 per cent, up slightly from the previous forecast of 4.3 per cent.

However, program director for IDC’s Worldwide Services Tracker program, Xiao-Fei Zhang, warned that at the individual vendor level, services providers will need to brace for more volatility.

“On the heels of a global pandemic, enterprise buyers face another black swan event in 2022, which will accelerate large global trends, such as remaking the global supply chain and value chain and exacerbating the talent crunch by changing demographics,” Zhang said.

“We should expect more of ‘the unexpected’ in the years to come. During the last two years, the services providers who succeeded were the ones who have proven to be resilient partners helping their clients thrive in change. This has always been the constant force to drive growth in the services market.”

Europe optimistic despite Russia Ukraine conflict

IDC predicts the Americas services market to grow by 5.3 per cent in 2022, up 150 basis points from the October 2021 forecast.

This is attributed to a faster economic rebound and the impact of inflation. IDC believes that the trend will continue in the short-term: 2022 and 2023 growth rates were adjusted up by 150 and 100 basis points, or around four per cent year on year growth for the next five years.

The outlook for the US market has also been also adjusted up by 160 and 80 basis points for 2022 and 2023, respectively.

IDC explained the adjustments were made across all markets. The improved economic outlook and vendors’ strong bookings and pipelines in the world’s largest services market partially drove this upward change, while the rest can be attributed to inflation impact assumptions.

The 2022 growth forecast for EMEA was raised by more than 220 basis points.

The analyst said that while Europe is the most impacted region by the ongoing Ukraine/Russia conflict, IDC remains optimistic on the region.

It said it has reduced the Central & Eastern Europe forecast significantly due to the conflict in the Ukraine.

While IDC expects Western Europe to grow by more than six per cent in 2022, up by 280 basis points from its last forecast.

It said the improved outlook is largely due to the EU’s revised 2022 GDP outlook at the end of the end of 2021 (prior to the Ukraine/Russian crisis).

IDC continues to see EU-funded investments driving services spending. Inflation also contributed to nominal growth, although to a smaller degree.


Source:  Channel Partner Insight