New figures released by GlobalData reveal collapse in new global IT services contracts in Q2 2020 due to COVID-19
HYDERABAD, India, July 24, 2020 /PRNewswire/ --
COVID-19 has caused companies in Asia and elsewhere around the globe to halt all but the most critical IT projects in the short-to-medium term, reflected in the dramatic 72% fall in global IT services spending, from $14.4bn in Q2 2019 to just $4bn during the same period in 2020, according to the latest research by leading data and analytics company GlobalData.
The global IT services market was worth $1.6 trillion in 2019, with the Asia region contributing around 32% market share. An analysis of GlobalData's IT Contracts Database, which tracks publicly announced IT contracts, reveals that the number of new IT services contracts signed globally in Q2 2020 declined by 77% ear-on-year from 886 in Q2 2019 to 200 in Q2 2020 with total contract values falling by 72% to just $4bn during the same period - reflecting the low number of high-value IT contracts being signed during the quarter with only 7% of contracts above $100m.
Nishant Singh, Director of Technology at GlobalData, comments: "The fall in global IT services contracts volume and the value underscores the global economic uncertainty caused by COVID-19, with IT vendors now having to work hard to rebuild healthy IT contract pipelines. IT vendors from Asia, particularly India, have relied on local skills and labor arbitrage to establish themselves. These IT vendors specialize in IT services, and the fall in IT services contract numbers will greatly impact their short term revenues."
Singh continued: "Q2 2020 saw a fundamental change in the way IT services contracts have been delivered up until now. Clients have accepted remote support and service delivery as opposed to the on-site delivery of services. This has allowed IT services vendors to permanently adopt a remote working model for a large part of their workforce, which will translate into cost savings from reduced real-estate and reduced employee travel expenses."
In the current climate, most IT service vendors are expected to focus their efforts on securing more contracts for digital service applications, including cloud and automation.
Singh adds: "GlobalData now expects an extended period of pricing pressure as IT vendors offer discounts and other concessions, including interest-free credit to secure desperately needed client contracts."
Please contact the GlobalData Press Office for comment, analysts available for interview, Office: +44 (0) 207 936 6400, Email: firstname.lastname@example.org
Utilizing Machine Learning to Predict Public Transportation Times
IoT Evolution #TECHSUPERSHOW Expo Hall Open