30 Nov 2022
IDC Says IT Services Are Proving Resilient to Market Turbulence Across Europe
The latest update of the Semiannual IT Services Tracker published by International Data Corporation (IDC) showed that IT services spending in 2023 is expected to prove resilient in the face of market turbulence caused by the Russian invasion of Ukraine, rising gas prices, and general inflation. The European IT services market had marginal regional differences, with Western Europe (WE) posting year-on-year growth of 5.7% and Central and Eastern Europe (CEE) growing by 4.5% in constant currency terms. For comparison, year-on-year growth in 2022 was 7.1% and 3.5%, respectively.
Managed services will continue to be the fastest-growing part of the ITS market in Western Europe, driven mainly by digitalization and security initiatives. Hosting/data center services will also see high demand, particularly infrastructure and application management services.
In CEE, spending on application management is being boosted by the need to keep critical infrastructure operational. The fastest-growing segment of IT services in CEE will be in the shorter-term project-oriented services, including custom application development and system integration, influenced by a tax reform in Poland which requires updates and upgrades of all business applications. In Russia, investments will be driven by urgent import substitution, as international vendors left the country.
Despite the current unfavorable macroeconomic environment, spending on IT services in Europe is expected to stay stable over the next few years, mainly due to long-term contracts for services that are essential for organizations' day-to-day operations. Digitalization, security, and other services that help organizations remain competitive will also contribute to market stability, if not significant growth.
European governments are launching recovery and resilience plans to support their economies and meet the urgent need for digitalization. In Western Europe, climate preserving objectives are also contributing to digitally-related IT services spending. In WE, the IT services market is expected to record a compound annual growth rate (CAGR) of 5.5% over the 2022-2026 period, while the CAGR in CEE will be slightly higher, at 5.7%.
“While the pandemic accelerated digital transformation and despite the current circumstances, most companies are still trying to implement their plans to improve IT systems and processes. However not all of them can afford to increase their budgets, and therefore some projects will be delayed or even cancelled completely,” notes Veronika Paal, senior research analyst at IDC.
Worldwide Semiannual Services Tracker
IDC's Worldwide Semiannual Services Tracker® provides detailed, timely, and accurate information on the global IT and business services markets. It provides vendor revenue share and annual forecast data on semiannual basis across 53 geographies and 14 market segments. It helps global and local players to assess services market dynamics and benchmark themselves. There are two core deliverables. The first allows flexible viewing of five years of historical vendor revenue by country and service line, highlighting market size and market share for each firm. The second provides a five-year forecast of annual data updated semiannually, allowing one to evaluate enterprises' and government agencies' services spending across different service markets, regions, and countries. Essentially, the services tracker provides a holistic view of the past, present, and future of the services world. Also included are add-ons as well as a qualitative summary of "what has changed" (i.e., vendor "historical changes"), market forecast updates, and so forth.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading tech media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights: http://bit.ly/IDCBlog_Subscribe.
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Central and Eastern Europe, Western Europe
Life-cycle services, Outsourcing engagement services, Project-oriented engagement services, Solution services
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