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​Opportunity for services play heightens as IT infrastructure refresh ends

​Opportunity for services play heightens as IT infrastructure refresh ends

Revenue growth pressure is easing gradually in the IT services segment.

As the pause in IT infrastructure refreshes comes to an end, IT services vendors’ revenues are beginning to improve across the industry.

According to Technology Business Research findings, revenue growth pressure is easing gradually in the IT services segment, with overall growth in 3Q16 now predicted after six consecutive quarters of revenue decline.

Research suggests that this growth will be driven by clients increasingly seeking digital services and transformation to expand their businesses and improve operations and interactions with their customers.

“IT services firms are transforming to help clients incorporate next-generation technologies that address business and infrastructure challenges across industries; however, vendors’ work around digital transformation is typically smaller scale,” TBR professional services senior analyst, Elitsa Bakalova, said.

Bakalova also noted demand for IT infrastructure modernisation and managed services across core verticals continues to increase, providing an opportunity for IT services vendors to capitalise on higher- value engagements such as consulting-led, end-to-end IT and business transformations.

“Partnering is the rule rather than the exception,” Bakalova. “No one vendor is an expert in all legacy and emerging technologies, so TBR expects coopetition between IT services vendors, technology partners, clients and external organisations will increase pressure on vendors that rely on a few partners.”

Looking ahead, Bakalova said systems integrators with holistic transformational capabilities will dominate the IT services market of the future.

“Building an automated service delivery foundation is critical for IT services vendors to stay competitive and lower execution costs,” Bakalova added.

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