IT services market remains fragmented: study

While the usual suspects continued to lead the U.S. IT services market in 2000, no one vendor dominated an increasingly fragmented marketplace, according to a study by Gartner Dataquest.

The top ten U.S. vendors in 2000 generated US$122 billion in revenue, with IBM Corp. the top service vendor at $33 billion, according to Gartner. IBM leads with a five per cent market share, slightly lower than last year.

Other top tier performers, such as EDS (US$19 billion), Fujistu (US$12.5 billion), Computer Sciences (US$9.2 billion), Accenture (US$9.1 billion), and Cap Gemini Ernst & Young (US$8.1 billion), shared in this market share decline.

The result is an annual survey of vendor revenue in the IT service industry. Michael Palma, principal analyst for Gartner Dataquest in New York said although the industry was impacted by lockdowns, dot-com failures and e-business hysteria in 2000, things could have been worse.

“The results indicate that 2000 was a challenging year. It shows that market share is fragmented and not concentrated in the hands of a few companies. Some companies did well, some did poorly, and some had marginal years,” said Palma.

Canadian figures fall in line with the U.S., Palma said. IBM again leads the way (US$13 billion), followed by EDS (US$11 billion), CGI Group (US$ 700 million), Moore Corp.( US$300 million), and Oracle (US$250 million).

Palma said the fragmented marketplace is caused by a lower rate of mergers and acquisitions, a static skilled workforce and the diverse needs of today’s customer base. Companies with large resources are in a better position to survive the downturn, Palma added.

In Canada, the market tends to grow at smaller pace and the Canadian organization that can weather a year or so of low margins will prosper when the marketplace eventually rebounds, Palma said.

Gartner Inc. is at