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TECH SUPPLIER Jul 2019 - Market Perspective - Doc # US43464118

2018 Profitability in the Worldwide Services Market

By: Chad HustonResearch Manager, Worldwide Services

Abstract

This IDC Market Perspective is an update to 2017 Profitability in the Worldwide Services Market (IDC #US42017517, December 2017). It begins by analyzing profitability trends in the services market as a whole and then provides quantitative metrics and commentary for profitability by service line, vertical, and region. This information is geared toward readers who wish to find benchmarks to measure their own profitability when compared with the market average. However, any person who seeks to gain a better understanding of both how profitability is differently based on the type of service, vertical, or region and the factors that drive the varying levels of profitability will find this information valuable.

"2018 saw services profitability growth reach a new high, at 14.2% (operating income), for the market as a whole. Vendors most often cited revenue/sales growth as the driving factor behind their profitability increases, and further research into vendor financial statements supports this view as "selling, general, and administrative" costs declined substantially as a percentage of revenue, indicating vendors were able to scale their revenue without increasing their SG&A costs as much, while also keeping labor cost increases at a manageable level," said Chad Huston, research manager, Global Services Markets and Trends.


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