IT services deals — in terms of the number of deals and total contract value (TCV) – fell significantly in 2017.
IT services’ total contract value dipped 33.3 percent to $61.4 billion in 2017.
The number of deals announced dropped 25.6 percent to 4,099.
Analyst firm GlobalData said the average IT contract duration posted 2 percent increase in 2017, showing that companies are willing to enter into long term contracts with IT services providers.
Application outsourcing accounted for 38.4 percent of the total number of deals signed in 2017.
Infrastructure outsourcing contracts dominated the IT service contracts with contract value of $31.8 billion. North American enterprises signed $16 billion IT contracts in the infrastructure outsourcing segment. Enterprises in Europe signed infrastructure outsourcing deal worth $10.6 billion.
BPO segment received three large deals worth over $100 million in 2017, compared to only one large deal each in the last two years. TCS dominated the BPO segment in terms of deal value – thanks to its mega renewal deal with Nielsen Holdings. Hays dominated the BPO segment on the basis of the number of deals in 2017.
The systems integration and consulting segments experienced a considerable decline in their contract value due to the absence of large value deals compared to nine and 15 large deals in these segments in 2016 and 2015, respectively.
“Within IT solution areas, cloud computing and information management/analytics segments dominated the IT services segment in 2017, as enterprises are looking to reduce their capital and operation costs and enhance their decision making process,” said Piyush Sharma, lead technology analyst at GlobalData.