IT services growth forecasted to accelerate this year

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IT services growth forecasted to accelerate this year
Bangalore: In its inaugural publication of the semiannual 'Global IT Services Insights' report, Fitch Ratings analyzes the financial and business risks affecting companies in the information technology (IT) services industry.

The 65-page report covers a broad range of worldwide service providers in both the commercial and government sectors of the IT services industry.

As discussed in the report, Fitch believes the IT services industry is poised to resume growth in 2010 led by the commercial sector due to: An improving global economic outlook and resulting rebound in business confidence, strengthening demand in core markets, notably financial services, declining contract restructurings and client losses from bankruptcies or mergers and acquisitions and increasing client interest in transformational and discretionary consulting and systems integration (C&SI) projects that were postponed during the economic crisis.

Fitch believes strength in the commercial IT services market will be partially offset by weakness in the public market primarily attributable to budgetary constraints in developed countries. According to John M. Witt, Director, Fitch Ratings, 'The historical consistency of government IT spending could be undermined by the implementation of cost containment measures necessary to moderate worldwide government spending amid ballooning debt borrowings.'

Furthermore, procurement reforms introduced by U.S. President Barack Obama, including stricter rules governing in-sourcing and organizational conflicts of interest (OCI), have significantly reduced new contract awards, leading SAIC, Inc to reduce its internal revenue and profit growth forecast for fiscal year 2011 (Jan 31).

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