Technology | Media | Telecommunications

Friday, September 12, 2008

European IT Services Market Assessment

According to a recent IDC market study, the top 50 players accounted for 53.4 percent of the IT and business services market in Europe in 2007. Even though most of the largest vendors are still U.S.-based companies, the number of Europe- and India-based companies in the ranking has increased.

Revenue growth was particularly high in the top 21-50 vendors, with rates above 20 percent in dollars, due to a mix of organic growth and market consolidation. The aggressive growth rates of Indian players, three of which are already in the top 21-50 positions, also helped to increase the average growth rate.

The top 20 companies grew at a lower 16.2 percent in constant dollars.

In 2007, 10 players from different categories were the fastest-growing companies across the European services market:

- European service players Logica and Orange Business Services (OBS) grew at 38.6 percent and 48.5 percent, respectively, due to acquisitions. In the past two years, Logica acquired Unilog and WM-data, both of which are Europe-based companies, while OBS purchased the enterprise and managed services divisions of the Indian group GTL Limited, which specializes in IT and telecoms integration services.

- Local players ErgoGroup and Ordina reinforced their presence in the Nordic and Benelux regions, respectively. ErgoGroup strengthened its presence in the Nordics after several acquisitions completed in the last two years, including SYSteam, Allianse, Bekk Consulting, and many other smaller organizations, while Ordina grew strongly due to the acquisition of ITG Consulting Group in Belgium.

- India-based players Tata Consultancy Services (TCS), Infosys, and Wipro continued their aggressive double-digit revenue growth, with 37.4 percent, 42.1 percent, and 48.5 percent, respectively. TCS won a billion-dollar outsourcing deal with the Nielsen media group in the Netherlands. These three offshore companies continue to win in the application development and maintenance areas primarily, but are also beginning to be seen in the infrastructure area.

- Business services vendors, such as Capita, Xchanging, and Teleperformance, also grew rapidly. Growth was predominantly organic for Capita and Xchanging, with major contract wins and renewals, although both companies made small niche acquisitions during the year to build economies of scale. Teleperformance grew strongly thanks to the acquisition of the German group twenty4help Knowledge Service AG and a 62 percent interest in a French services company.