With worldwide IT spending forecast to reach $4tn by 2024 (IDC), IT services firms, especially those at the forefront of digital transformation (DX) and cybersecurity, had a tremendously busy 18 months.
Satya Nadella of Microsoft famously said, “We’ve seen two years’ worth of digital transformation in two months”, with budget, resources, and commitments looking very favourable so far.
AMR agrees the market is growing at a phenomenal rate. Below is a snapshot of the trends we have observed through our own work in the past 18 months:
Digital transformation (DX) – surging
- DX will see mid-10% CAGR growth from input technologies that are seen to have increased criticality in delivering digital transformation technologies across all industries
- DX is widely accepted as an ongoing process that will continue with technology evolution. Digitisation to digitalisation to digital acceleration and resilience benefited numerous firms during the pandemic; the digital economy will continue to gain share as part of the global economy
- Emerging technologies (e.g., IoT, AI/ML, RPA, etc.) will play an increasing role as growth drivers and become reality for many enterprises
Cloud – the new foundational layer for mature and emerging regions
- Cloud is expected to see CAGRs to 2024 of over 20% globally and nearly 30% in emerging markets
- Cloud also delivers mobility advantages that is facilitating a remote working culture, accelerated by Covid-19
- Enterprises and industries view a multi-cloud hybrid environment as the future as they increase overall cloud spending
- By Q1 2021, the big three remain Amazon, Microsoft, and Google, with Alibaba now firmly jumping to fourth place and IBM falling back to fifth
- Microsoft grew more quickly than rival Amazon, reaching 20% market share at the end of 2020 for the first time. It has now doubled its share since 2017; Whilst Amazon has plateaued at around 33% for four straight years
Cybersecurity – a top concern for CEOs
- Cyber-attacks, enterprise mobility, and an expertise shortage are driving demand for solutions and services. All have been amplified by Covid; The cost of cybercrime is expected to reach $6tn globally this year
- Cybersecurity has become one of the top concerns for CEOs, who are committed to investing significantly to address this risk
- Managed security services are the largest category of security services spending and will also be the fastest-growing segment
- Microsoft, a vendor that is often overlooked for security products, is now clocking over $10B revenue with 40% y-o-y growth
An abundance of opportunity for IT services firms
The above trends are contributing to vast opportunities for IT services firms as customers increasingly seek guidance and support in transforming their businesses. Examples include:
- Helping customers identify, plan and execute DX
- Service procurement driven by more measurable outcomes
- “X as a Service” becoming standard practice
- Increase in deployment of managed services: Managed security services, managed cloud services, etc.
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About AMR International
AMR is a boutique strategy consultancy with a 30-year track record in buy and sell-side commercial due diligence, specialising in Technology, Information, Media and Events. We are proud that clients turn to us for transaction support and strategies that accelerate company growth.