In the IT services sector, scale is essential.  These businesses provide a range of outsourced services, not only running clients’ IT infrastructures but operating key, technology-dependent business processes, and supplying allied services such as disaster recovery and defences against hostile activity.  As volumes increase, so do the opportunities for efficiencies and innovation.

Current growth in the industry is being driven by four clear trends:

• Telecoms companies are returning to their core businesses.  At one stage, major telcos saw IT services as an attractive addition to their portfolio but increasingly they’re retrenching to core activities and selling off non-core divisions.
• In-house IT service suppliers are entering the open market.  Organisations with highly-efficient in-house IT operations are seeing the value they can realise by spinning off the divisions as stand-alone operations, able to offer their services to the wider market.
• The industry is ripe for consolidation.  As more IT service providers emerge from larger organisations, opportunities to consolidate are created.  In a market where size is king, there is an inescapable logic to mergers and acquisitions that deliver economies of scale.
• Offshoring is here to stay.  Despite some well-publicised issues, the business and financial logic of offshoring to Asia and central Europe remains strong.  IT services companies that can deliver client satisfaction as well as cost benefits will reap high returns.