International Data Corporation (IDC (News - Alert)), a provider of market intelligence advisory services, has presented a new research report on latest trends pertaining to the worldwide services market.
The ‘Profitability in the Worldwide Services Market’ report monitors recent trends in profitability in the worldwide services market. The new study states that revenue within the services industry increased from 2007 to 2008, decreased from 2008 to 2009, and then steadily increased from 2009 to 2011.
The report found out that profitability peaked in 2009 as vendors slashed payrolls to account for the dip in revenue and has slowly declined as vendors retool their workforce to match the return to revenue growth.
Chad Huston, senior analyst, Worldwide Services, said in a statement, “Given the constraints of limited capital, services vendors must choose where to invest, which is the purpose of this new research, by helping service providers theorize about which segments of the services industry provide the greatest return per amount invested, the study assists in the pursuit of profit maximization.”
The IDC study also touches the factors that are influencing profitability in any given service market, such as use of offshore labor or ownership of intellectual property.
The study says that deployment and support services are estimated to be the most profitable service, followed by business consulting, IT consulting/systems integration/custom application development in aggregate, IT outsourcing and business process outsourcing (BPO).
Huston added, “ Buyers of IT services have sought to decrease the number of service providers they have contracts with, and a shift in the traditional service delivery model has introduced new entrants into the marketplace, the number of vendors must begin to decrease as the already converging traditional IT services vendor playing field has to compete with new entrants. But until that point, price competition will continue to drive down profitability.”
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