IT services market will grow 5.2% in 2013: Gartner

Infotech Lead Asia: The overall IT services market will grow 5.2 percent in 2013 and continue strong growth through 2016.

Growth will mainly come from changes and opportunities brought on by the Nexus of Forces and newer delivery models, though not exclusively in the consulting and implementation segments.

Segments will not grow uniformly. Hardware support and software support are among the lower-growth opportunities in the IT services market while cloud-based Infrastructure as a Service (IaaS) and business process as a service (BPaaS) are growing strongly at 13.1 percent and 47.3 percent, respectively, in 2013.

Agility, not cost, will be the primary reason that many organizations adopt cloud computing. Hybrid IT environments will dominate client IT architectures through 2016, underscoring the importance of skills in the old-world legacy environments as well as the new world “as a service” operating models.

The drive of enterprises toward standardization of infrastructure, applications and business processes, combined with expanding and more comprehensive provider ecosystems, shows that service-led solutions will displace traditional sourcing approaches through 2015, according to Gartner.

To remain relevant, IT service providers must bridge legacy offerings and new services based on new technologies, new delivery models and new architectures.

Eric Rocco, managing vice president at Gartner, said: “Growth opportunities certainly exist for service providers with life cycle solutions in relation to the Nexus of Forces (cloud, social, mobile and information). However, this requires IT services providers to adapt to significant changes, including the growing influence of business leaders in technology investment decisions.”

Gartner’s recommendations for IT service providers in 2013:

Stop undifferentiated bland marketing messages

Cost reduction focus ignores opportunities to improve the business. Emphasize business value and modernization/extension to transform clients’ existing operations. Differentiate using value. Reinforce with references, and in doing so establish credibility and build trust to grow relationships with business buyers. Pricing models must also reflect the value being impacted. Providers must evolve unit-based pricing to outcome-based and value-based pricing

Reinvent the service portfolio

Restructure the portfolio of services delivered to heighten focus and impact. Asset-based and Internet Protocol-based service offerings are critical elements of future competitiveness. Assess, prioritize and invest in productizing of existing IP assets. Modernize service delivery factories as fast as possible. Promote the value of process enhancement technologies and services (PETS) to your business process outsourcing (BPO) clients.

Determine if your business model is based on scale or specialization

Services themselves will continue to commoditize. Not all providers need to be business transformation enablers, but only providers focused on operational efficiencies driven by scale and cost discipline should bother committing longer term to services that are clearly more mature and rapidly commoditizing, such as segments of the infrastructure outsourcing marketplace. Gartner research suggests it will be increasingly difficult for scale-based business models and highly specialized, higher-margin business models to successfully coexist within the same provider.

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