IT services on track to grow 3.6 per cent this year

Gartner tags IT consulting and outsourcing as strong service sectors

Gartner research has forecast IT services spending to pass $14 billion for the calendar year, up 3.6 per cent from 2006.

Gartner vice-president, Rolf Jester, said IT services growth, while not spectacular, was keeping pace if not exceeding that of the Australian economy.

"And Australia's IT services [market] - and in the Asia-Pacific - is growing faster than the global IT services market. That's very healthy," he said.

Notable areas of IT services strength were IT consulting and outsourcing, including business process management and outsourcing, he said. Gartner's figures show consulting as earning $223 million in revenue for 2007, up from $216 million last year.

The market research firm's IT management category, which Jester said included much IT outsourcing, is tipped to earn $500 million this year, up from $486 million for the calendar year 2006. The process management tranche, which included business process outsourcing and the like, should touch $245 million this year, up from $228 million in 2006.

"With consulting, a year or two ago it was in the doldrums. So while it doesn't look like a lot, it is important. Similarly, IT management or outsourcing and process management or business process outsourcing are increasing as a proportion of the total, which is important," Jester said.

Both private and public sector customers were a focus. Government sector projects and long-term deals remained a powerful driver in the Australian market - unlike in the US, Jester said.

Jester had advice for service providers wanting to capitalise on the ongoing demand in what was essentially now a mature market with few surprises.

"IT services are pretty much business as usual now," he said. "But I think there's a message there that individual providers can get in there and get a share of that if they're doing the right things."

The right things, Jester said, might include an improved focus on service delivery that tied in much more tightly to business outcomes.

Some deals and projects, he said, still didn't even start by deciding what the customer needed to achieve. Without that clear focus, Jester said, service providers were unlikely to maximise either their service delivery or profit.

Another Gartner analyst, Michele Caminos, said the resources boom in Australia had helped to support healthy demand for IT services in 2007.

"Demand from governments for upgrading IT infrastructure and building new initiatives will remain pivotal to," Caminos said. "Healthy budgetary surpluses are needed to fund big projects like DIAC's $495 million Systems for People program or the South Australian government's Future ICT project."

According to Gartner's latest forecast, IT services will expand at a compound annual growth rate of 3.7 percent from 2006 to 2011, despite ongoing skills shortages and the popularity of offshoring.

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