Information Technology Services
Companies in this industry provide services such as software support, computer systems design, and data processing facilities management. Major companies include Cognizant, DXC Technology (formed through the 2017 merger of Computer Sciences Corporation and Hewlett Packard Enterprise), and the technology consulting arm of IBM (all based in the US), along with Accenture (Ireland), Cap Gemini (France), HCL Technologies (India), Infosys Technologies (India), and Tata Consultancy (India).
Worldwide spending on IT services is about $935 billion annually, according to Gartner. Among world regions, Europe is the leading exporter of computer services (more than 60% of all exports), followed by Asia (about 24%) and North America (6%), according to the World Trade Organization. A digital divide regarding access to and use of information and communication technologies hinders Africa's participation in exports of IT services.
The US information technology (IT) services industry includes about 142,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $380 billion.
Demand for IT services is driven by rapid technological advances, but spending depends on the health of the economy. The profitability of companies depends on technical expertise, innovative services, and effective marketing. Large companies have advantages in broad service offerings and global reach, which give them the ability to provide outsourcing services to big corporate customers. Small companies can compete effectively by specializing in market niches or by partnering with larger companies that want to broaden their mix of services. The US industry is fragmented: the 50 largest companies account for about 40% of revenue.
Competition comes in multiple forms, including offshore providers, service arms of large global technology firms, niche providers, and companies that rely on their own internal IT resources. Competition may also come from suppliers of hardware or software that provide integration and maintenance services. Some manufacturers may have deeper financial resources and greater capacity to perform IT functions than their traditional IT services counterparts.
Skilled Workforce -- Companies rely on highly skilled employees who know how to configure and maintain computer hardware, software, and networking systems. Finding and keeping such workers is an ongoing concern.
Mastering New Digital Technologies -- Artificial intelligence, analytics, robotic process automation, and cybersecurity are just a few of the technologies that are transforming business models and core processes. No large enterprise can ignore them and still remain competitive.
Extensive Partner Network -- Effective IT functions requires the successful management of relationships with strategic partners and vendors in hardware, networking, cloud, applications, and software.
Companies to Watch:
Accenture consistently ranks as the top multinational provider of IT services. Business from digital, cloud, and security services reached $18 billion, or half of the company's total revenues, in 2017.
DXC Technology was formed when Hewlett Packard Enterprise spun of its Enterprise Services business, which subsequently merged with CSC. The 2017 combination resulted in a global IT services company with $25 billion in annual revenue.
Tata Consultancy Services, one of India's leading technology firms, has been steadily growing capabilities in new digital technologies such as cloud computing and smart, connected devices. More than half of its revenue comes from customers in the US, but the company is expanding in other global markets.
Products, Operations & Technology
Computer systems design, development, and integration services account for about 35% of industry revenue; application design and development services,
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms