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NZ IT Services market hits growth rate high

28 Nov 2012

The local IT services market grew 4.4% year-on-year (YoY) for the first six months of 2012 reaching NZ$1.7 billion.

That is according to IDC New Zealand's latest IT Services Tracker, which claims the rise was the largest growth the market has experienced since 2008, prior to the global financial crisis.

Until 2016, the revenue growth is expected to even at a 5 year compound annual growth rate (CAGR) of 4.0%, driven by strong growth in outsourced services particularly hosting services and network management.

IDC says the outsourcing market remained the largest in terms of revenues across the IT services foundation growing by 5.1% YoY, and was the biggest area of IT spending growth in 2012.

Strong growth is still being experienced in hosted services with a significant number of organisations outsourcing datacenter services and harnessing the potential of cloud services.

“Hosting services remain in high demand as both the market understanding and available solution portfolios are maturing," says Louise Francis, Snr Analyst at IDC New Zealand.

"This is shifting the conversation from initial infrastructure discussions to applications and specific business processes and workloads."

In terms of IT Service providers, the market share of the top 10 vendors remained unchanged from last year, accounting for 44.6% of the total IT services market.

IDC says the standings reflect the stability of the upper end of the market in terms of competition, despite being a reshuffle of market shares of the top five competitors in the first six months of 2012.

Ranking IT Servicer Provider Market Share 2012:

1. Gen-i - 13.8%

2. Datacom - 10.2%

3. Hewlett-Packard - 10.0%

4. IBM - 7.4%

5. Dimension Data - 3.2%

"These results demonstrate how dynamic the market is in terms of customer churn and reinforces the need for service providers to be vigilant in maintaining their branding and staying close to their customers," Francis says.

"Even large entrenched service providers are not immune to customer churn. Satisfaction is no longer a determinant of loyalty – instead the focus is on added value above and beyond contracted service level agreements."

IDC's semi-annual IT Services Tracker details the revenues per service provider and provides a forecast update every six months, with the most recent tracker covering the six months ending June 2012.

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