2010 ended in surprise IT-boom

2010 ended in surprise IT-boom

An unanticipated surge in multi-million dollar agreements signed in the last quarter of 2010 brought overall IT spending up for the year in the Asia Pacific, a report from IT analyst Ovum says.

However, analysts with the company are not sure if the last-minute activity was a “blip”, or a sign of better times to come for the regional IT market.

The report, released on February 8, states that globally, total contract value reached more than US$49 billion in the last quarter of the year, with $2.6 billion of that in APAC, a 25 percent increase over the previous year’s Q4 signings.

(Of that $2.6 billion figure, $200 million was in Australia. No figures were available for New Zealand at the time of publication.)

“Last year went out with a bang thanks to a number of mega-deals announced during the fourth quarter,” says Ed Thomas, Ovum analyst and author of the report. “It is thanks to a string of large deals that the IT services market both globally and regionally exploded into life.”

There were more than 40 deals signed during the last quarter in the Asian Pacific region, averaging above $60 million each, according to Ovum. The report points to the market in China as the regional deal-making hotspot, especially Alcatel-Lucent’s agreements with three Chinese telecommunications and infrastucture concerns.

In November, Alcatel-Lucent announced the inking of deals with China Mobile, China Telecom and China Unicom to provide network and application solutions, integration and maintenance services. Together, these deals represented US$1.6 billion in business.

Ovum’s report also cites the renewal of IT services company CSC’s agreement with BlueScope — an international steel company with an APAC presence (including New Zealand.) The eight-year deal was valued at more than $300 million, according to Ovum.

This increase in deal size in the last quarter went against regional and global trends for the rest of the year. Markets saw smaller deals on average in 2010, a trend that was not reversed by the APAC’s end-of-year revival. Globally, the average deal size fell to under $40 million per deal, the lowest since 2003.

“It remains to be seen whether the uptick in deals at the end to the year is simply a blip or a sign of better times to come for the IT services industry in 2011,” Thomas says.

Some distributors, resellers and vendors in the New Zealand channel have been quietly optimistic about IT spending for 2011.

“Clients are investing in refreshes again,” Neil Dwight, operations director at Business Technology group told Reseller Newsin January.

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