Gartner: Upturn for global IT services

Taking into account the decline of the U.S. dollar, the market for global IT services grew 2.2 percent last year, but even that modest increase is a positive sign, according to analyst firm Gartner.

“It’s a turn to optimism,” said analyst Kathryn Hale who predicts continued growth this year. “It is hard to drive any business without information technology, improving information technology.”

The market grew 6.7 percent to $607.8 billion last year, up from $569.6 billion in 2003. IBM is still on the top of the market with a 7.6 percent share of global sales in U.S. dollars.

However, total growth in real terms in 2004 was 2.2 percent because of the decline of the U.S., according to Hale, principal analyst for Gartner’s worldwide IT services group. “The growth in constant currencies was a modest upturn. In 2003, the real-term growth was 0 percent.” she said.

Gartner complemented its study of market growth in U.S. dollars with constant currencies since 2003.

Outsourcing was the main growth driver for the market in 2003, according to Gartner. “But it wasn’t only a one horse show in 2004,” Hale said. “There was a modest resurgence in system integration during the year. It’s fundamentally a better environment now.”

Accenture Ltd., one of the top five companies in 2004, experienced equivalent increases in both its outsourcing and consulting segments, according to Gartner’s report. The increase of sales for IBM and Hewlett-Packard was based on outsourcing both in 2003 and 2004.

In 2005, Gartner forecasts a continued improvement of 4.7 percent compared with the year before. “There is still a lot of pent-up demand. The dollar decline is predicted to be 0. So again, we see a slight upturn in real terms.”

The Gartner analysis was based on public statements from the companies in the market, and the estimates are preliminary.