Now that all the 2009 results are in from the India-based SIs, we have updated our estimates of their UK performance. We can now confirm that TCS remains the market leader, with £655m in UK revenues last year, firmly cementing its position in the UK SITS Top 20. Across the board, the major-league Indian players saw UK revenues grow by 5% in 2009, clearly winning share in a declining market. HCL grew fastest in headline terms, by over 40%, assisted by the acquisition of Axon and Liberata Financial Services. However, the prize for the fastest organic growth once again went to Cognizant, with a 25% revenue leap to £225m – and just a hint of even more this year!
Also in the latest bumper issue of TechMarketView OffshoreViews, you’ll find some thought-provoking commentary on how to create an onshore/offshore delivery model for Consulting. You thought it can’t be done? Well, so did I until I met GB Prabhat, the founder of Satyam Renaissance Consulting (the predecessor of Satyam’s Consulting & Enterprise Services division) and now founder of ‘second generation’ outsourcing firm, Anantara Solutions. Prabhat is truly one of the great minds in this space and I think you’ll find his thoughts on a blended consulting model quite ‘challenging’!
Also on the Consulting theme in OffshoreViews, I recently met with the European consulting heads of Wipro and Infosys, and found they are building up their practices at quite some pace, as you will read.
And we’ve just completed our latest estimates of the India-based offshore workforce of the leading US and European SIs. There are now well over 250k FTEs in the Indian delivery networks of the leading players alone, besides a considerably growing workforce in other low cost locations (we’ll be looking at these in a future OffshoreViews).
Plus of course, there’s our regular reference chart comparing the key financial and operating metrics of the leading India-based SIs for Q409, along with a handy ‘live-link’ reference to recent UKHotViews postings on the offshore scene.
All this in just seven pages! How does the man do it, I hear you ask?
TechMarketView Foundation Service clients can download OffshoreViews today!
Posted by Anthony Miller at '06:00'
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As you have no doubt noticed, TechMarketView has really been growing! We now have a couple of vacancies. The first is to help on the ‘client services’ side – involving pre sales all the way through to client support. The second is more research oriented covering desk research thus freeing up our analyst team to concentrate on the face-to-face bits.
The glory of both roles is that the hours can be arranged to suit, are flexible and also that they will be predominately home based. Industry knowledge, personal communications skills and impeccable IT skills are ‘musts’. Logistically, being close to Farnham or Wokingham would help too.
If you are interested in working with the best analyst team in the business, then please drop me (email@example.com) an email (with your CV).
Posted by Richard Holway at '12:04'
Just to say that the Making BrITain Great Again Technology Manifesto that we've been working so hard on over the last six months is now available from Intellect in all its glory. Click here and follow the pdf download link. I posted my comments on HotViews on Monday - click here to reread.
We are really pleased to have got some great 'endorsers' like Dr Mike Lynch from Autonomy, Warren East from ARM, Martin Leuw from IRIS, Vin Murria from ACS etc.
There will be a series of events plus special briefings for all the main parties in the run up to the May 6th election. But the real work will start post the election to ensure that the policies are actually adopted and actioned.
Posted by Richard Holway at '11:58'
According to data from corporate finance firm Ascendant, 2009 saw the most rapid decline in VC investment in the UK and Irish SITS (software and IT services) sector since the bursting of the dotcom bubble. Last year there were 194 deals over £500k, 23% fewer than in 2008. Aggregate investment levels fell steeper—by 32% to £626m. Meanwhile, on the private equity side, financial buyers continued to take a greater share of European tech market M&A activity in 2009, according to European tech M&A specialists Regent.
TechMarketView Foundation Service clients can read more about what’s happening in the UK SITS VC/PE world by downloading the latest edition of IndustryViews Private Equity from our website.
Posted by Anthony Miller at '06:00'
Maija Palmer’s article in the FT today – IT companies call for tax relief (in which I was quoted) – effectively launched The Technology Manifesto. I have had a significant role in the drafting of this alongside Adam Hale, Alistair Fulton, Tim Brill (MicroFocus), Steve Kelly and, of course, Intellect and E&Y. We have garnered a large group of 'endorsers' - CEOs from the industry.
The FT article starts as follows:
“The companies argue that the UK’s technology sector, which employs about 1.5m people, could take over from declining manufacturing and financial services as an engine of national economic growth.
“It is now widely recognised that we need to rebalance the UK economy. Rightly, there’s a rush towards engineering and manufacturing. But software and technology are also going to be at the heart of growth in the 21st century,” said John Higgins, director general of Intellect, the trade body that represents more than 750 UK technology companies.
“We ask why, when the UK has world-class science, managers, software engineers and international tech companies working here, there are too few UK tech companies in the FTSE 250?” Mr Higgins said.”
BackgroundIn the last week we have reported on two tech manifestos for the upcoming Election. The Conservative Technology Manifesto and the eskills Manifesto. Readers will also know of my involvement with the launch and subsequent development of The Technology Manifesto – See Making BrITain Great Again. The project was initiated by MicroFocus, launched by a cross-party panel of peers at the House of Lords in July 09 and was subsequently taken over by the trade body Intellect. Ernst & Young have been responsible for the ‘economic impact assessment’. The CEOs of many of the leading players in the UK tech market, like Martin Leuw of Iris and Paul Nichols of Kewill, have now endorsed the manifesto which will be launched this week.
The Technology Manifesto has the simple objective “Significantly to increase the contribution home-grown technology businesses make to UK GDP and create 250,000 new jobs within the sector over the next ten years”.
ProposalsThe proposals are as follows:
Increase the availability of world-class technology talent in the UK
- Increase the availability STEM-related courses to feed industry
- Help STEM graduates with personal debt
- Creation of new courses at Business Schools and Universities specifically designed to help graduates pursue careers with dynamic tech companies
- Review of the immigration and visa regimes to recognise the importance of the home grown tech industry
- Consider the policies of companies towards entry level jobs/graduate recruitment when awarding contracts (Government and private sector) as readers know this is a particular ‘hobby horse’ of mine!
Harness the expertise and goodwill of tech leaders around the world to coach leaders of UK-founded emerging tech businesses
- Establish a tech entrepreneur advice hub based on web 2.0 technologies
- Government sponsored programme to twin tech entrepreneurs/leaders with emerging businesses
- Government sponsored study tours (eg the Silicon Valley tours) to enable UK leaders to learn how global tech leaders run their businesses.
Radically change the tax incentives on companies and individuals investing in growing tech businesses
- Simplification of the EIS system to allow experienced serial entrepreneurs to take advantage of the EIS scheme where they actively participate in these investee companies
- More generous Corporate Venturing relief to encourage corporations to make investments in the UK tech sector.
Implement specific fiscal incentives for UK-HQed tech companies to accelerate R&D
- Simplify the administrative burden for SMEs in applying for R&D tax credits
- Extend the SME R&D tax rate to all tech firms
Proactively encourage international tech companies to invest in a UK hub
- Recognising the importance of tech hubs (like Silicon Valley and those established in specific locations in India, China and Israel – and Cambridge in the UK) by providing tax, planning and other incentives to encourage international tech companies to locate in designated areas.
Deliver the digital infrastructure
- Accelerating the roll out of high speed broadband
- Establishing an ‘Intelligent Transport System’
- Implementing ‘smart grids’
- Implementing the three areas above could alone create 700,000 jobs (50% in the SME sector) In turn the infrastructure would lead to higher UK productivity and also have a ‘multiplier effect’ as the UK gains skills/IP which can be ‘exported’ to other countries.
I’m sure you will read more about the Technology Manifesto in the weeks ahead and I will provide you with a link to the detailed Manifesto as soon as this is available.
FeedbackI’d really appreciate your feedback – indeed even your endorsement – for the Manifesto. Please email me at firstname.lastname@example.org and I will pass your comments to the coordinators at Intellect.
Posted by Richard Holway at '07:00'
In the latest edition of IndustryViews M&A (IVMA) we review acquisition activity in the UK SITS market for the final quarter of 2009 and across the year. According to data from our good friends at Regent, besides a notable pick up in M&A activity in the UK SITS (software and IT services) sector in Q4, we also saw the return of some larger transactions.
Certainly the downturn didn’t dampen the appetite of some of the industry’s well-known serial acquirers, with Capita buying no fewer than 12 companies last year. Vin Murria was also in fine fettle, with four deals at the increasingly diversified Advanced Computer Software, and three at web hosting player, Innovise.
But we fear the window which appears to be opening again for both M&A and IPOs may shut sooner than you might expect. Indeed, latest data from Regent indicates a dip in M&A activity last month, albeit not unexpected for the time of year. TechMarketView Foundation Service clients can form their own judgments by downloading IVMA today.
TechMarketViews publishes latest MarketViews UK SITS Market Size and Forecast
Last Decade...Next Decade?The last decade had hardly got under way when Richard Holway rather stunned the industry with his prediction that the UK IT market would likely end the first decade of the 21st century as a lower proportion of UK GDP than when it started. This was in November 2002 and we were at the tail end of the dotcom downturn with little sign of recovery. Holway’s pronouncement did not fit well with the industry’s hopes and expectations, despite the fact that the UK software and IT services (SITS) market—generally the fastest growing IT segment—was only jogging along at around GDP growth rates, compared to the spectacular 20%+ growth seen in the run-up to Y2K.
Well, Holway was right!
And here we are, just at the beginning of the second decade, and we fear that it will be no different. As best as we can call it, we think the UK IT market will probably grow slower than GDP over this decade too.
2011 ‘double-dip’?We are especially nervous about the prospects for market growth in 2011. Of late, we have been asking the ‘captains of industry’ how business is going this year. Most talk of healthier pipelines and ‘more conversations’ with clients, which they reasonably take as signs of demand returning. None, by the way, are calling it anything like ‘business as usual’ and most are still cautious on their outlook.
But when we ask them whether customer decision-making is getting any faster or easier, the general answer still seems to be no. In other words, the pipeline may well be getting fatter, but there’s still a thin nozzle at the end.
And when we then ask them what’s in the pipeline, it’s very largely projects that had previously been delayed, cancelled or curtailed. In other words, very little genuinely new demand.
Our worry is this. Although the IT ‘tap’ is now being turned back on again, it’s more a dribble than a deluge. Any demand recovery in the second half of this year may be very muted indeed, leading to another year of market decline. Indeed we expect the UK SITS market will contract by nearly 2% this year in real terms, about half the decline in 2009.
Now ask yourselves this. What will happen once the delayed/cancelled/curtailed projects have finally flushed through the pipeline? What’s following on behind them? As yet, not very much. In other words, at current course and speed, there is a real risk we could well be in for a ‘double dip’ in the UK SITS market in 2011.
Read more in our latest MarketViews reportTechMarketView Foundation Service clients can see our full market forecasts, compiled in cooperation with our research partners, PAC, in our MarketViews UK SITS Market Size and Forecast report, available for download now on our website.
Posted by HotViews Editor at '06:00'
Zoo Digital is a great example of a small British software company successfully entering a new and competitive overseas market. Two important decisions about local presence and business model have helped it to success. TechMarketView software research director, Philip Carnelley recently met management to hear how UK innovation is making a mark in Hollywood with Zoo's post-production distribution software. TechMarketView Foundation Service clients can download Zoo Digital - Making it in Hollywood from our website today.
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