IDC: Digital transformation driving IT services spending

The worldwide market for IT services came in just shy of $1 trillion last year with the market outpacing general economic growth.

Figures from IDC showed that year-on-year growth was 4% with the second half of the year totaling $502bn, an increase of 3.6%.

The analyst house pointed to increased business confidence and the digital transformation trend as some of the factors driving spending.

The move towards digital is helping service providers offset the commoditisation of traditional offerings and project-orientated revenues are reaping more that outsourcing, support and training.

"The demand for a wide range of digital solutions continues to drive the steady growth in the services markets, but it is still cloud-related services that are having the biggest revenue impact." said Lisa Nagamine, research manager with IDC's Worldwide Semiannual Services Tracker.

Drilling down into the projects in demand custom application development, It consulting and systems integration are at the top of the lost.

The complex nature of most digital transformation projects means customers have to turn to service providers, which is a positive development for those channel players that can plug the gaps.

"As customers look to digital transformation initiatives to stay relevant in the new economy, vendors face both opportunities and challenges," said Xiao-Fei Zhang, program director, Global Services Markets and Trends at IDC.

"While automation and new cloud delivery models reduce overall price, new digital services will require clients to spend more time and resources to modernize their existing IT environment," he added.

The US continues to dominate the global market for IT services and enjoyed the strongest growth but IDC is expecting Western Europe to come in with a decent 2018 as economies continue to improve and demand increases. Last year saw the region deliver 2.8% growth y-o-y, thanks largely to sales generated in the second half.