In its latest report on the worldwide IT services market, analyst firm Ovum says that after a slow start to the year, there were signs in the second quarter of 2012 that the sector is “finally emerging from its recent torpor”, with the total contract value of deals announced in the quarter at $34.8 billion, up 82 percent on the same period last year and the highest quarterly figure since the fourth quarter of 2010.
According to Ed Thomas, Ovum analyst and author of the report, the market was bolstered by a number of megadeals with contracts valued at $1billion or more, including two significant awards by US defence agencies.
In all, six megadeals were recorded during the quarter, one more than in the previous four quarters combined, and Thomas says that, although the growth in total contract value was driven by public sector megadeals, there was also significant activity in the private sector, with the key North American market building on its improved performance in the first quarter of this year.
"North America once again dominated public sector contract activity, with 90 percent of quarterly TCV derived from the region. In comparison, Europe and Asia Pacific contributed six percent and four percent respectively.
“Conversely, Europe led the way in the private sector with a 38 percent share of TCV in 2Q12, with North America accounting for 33 percent, South and Central America 18 percent, Asia Pacific 10 percent and MEA one percent.”
Thomas says that the spike in the number of megadeals tracked in the second quarter of 2012 might suggest that “bigger contracts are on the way back.”
“It is interesting to note that the size of the average contract in the first half of 2012 was 20 percent higher than in the same period of the previous year. However, Ovum’s data shows that there were actually fewer megadeals tracked in 1H12 than in the first six months of both 2010 and 2011."