IT sector sees more deals, less value in Q2’10

by CXOtoday Staff    Aug 16, 2010

After a slow start to 2010, the number of deals announced in the IT services sector bounced back in Q2, with an increase of 14% on Q1, according to Ovum. However, total contract value (TCV) fell 14% to $30.8 billion

In the new report, analyst firm – Ovum, reveals that the second quarter of 2010 was the best for 12 months for the sector in terms of the number of deals announced. This was after it fell to its lowest level since 2007 in the first three months of the year, the report states.

Ovum’s IT Services Contracts Analytics tracked a total of 457 deals in the second quarter of 2010, an increase of 56 on Q1.

Ed Thomas, Ovum analyst and report author said, “While the surge in the number of contracts announced for IT services in Q2 is good news for the sector, concerns remain about the scale of outsourcing in the private sector, where TCV for Q2 slipped to only $10 billion as clients shied away from signing large deals.

“However, analysis of both IT services deal signings and TCV in the first six months of 2010 reveals an extremely difficult start to the year for vendors. A total of 858 deals have been announced, down 13 per cent on the same period of the previous year and the lowest figure since the first half of 2007 when only 778 deals were tracked,” he added.

Interestingly, it seems that the drop in TCV between H1 2009 and H2 2010 is not solely due to the poor performance of the private sector, but is also the result a decrease in spending by the public sector. In fact, a 20% drop in TCV was recorded in the public sector in the first half of 2010, compared to the same period last year.