The news that India, Asia’s third-largest economy, posted its slowest GDP growth in 6 quarters needs to be seen in the context that we’re still talking about 7.7% annual growth for the June quarter. Meanwhile, the India-centric IT/BP services saw their revenues in Europe grow by an aggregate 29% in the first six month of this year, and by 20% in the UK. It truly is a different world out there!
In our mid-term edition of OffshoreViews you will be able to see who among the ‘Indian majors’ are growing fastest in Europe and in the UK and read our views on whether the rankings are likely to change by year’s end.
Plus, we bring you our latest analysis of the organisational changes that almost all the players have recently undertaken, and what this may mean for their operations in the UK and in Europe.
And there’s more! We have scoured the archives to bring you what we believe to be a reasonably complete list of all the (non-outsourcing) acquisitions that the Indian majors have done in recent years. We were surprised and you may be too!
Plus, of course, there’s our regular summary of the key quarterly metrics.
All this in just 5 pages of good stuff! TechMarketView subscription service clients can download OffshoreViews right here, right now.
Posted by HotViews Editor at '08:30'
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The UK healthcare software and IT services (SITS) market has been subject to significant disruption in recent years. In 2003/4, the £12 billion+ National Programme for IT in the NHS (NPfIT) put the major deals in the hands of a few large system integrators – BT, CSC, Accenture, Fujitsu, Atos – and their key application providers, notably iSOFT (now part of CSC) and Cerner. Centralisation of ICT spending in the sector promised to turn the cosy application-led market on its head – the writing was on the wall for many innovative SMEs.
Seven years on and NPfIT is a shadow of its original self. Key contracts are still in place but the deals that were supposed to deliver electronic patient records are (still) under review by the coalition government and the remaining SIs – BT & CSC – face an uncertain future in the sector. Localisation is now the order of the day and the ethos is one of making the most of what you’ve got, connecting existing systems rather than ripping them out and replacing them with untested alternatives. There are opportunities for SMEs once more.
What does this mean for the supplier landscape? Software is still very important to the sector – 12 of the top 20 players are predominantly software providers, including some strong healthcare application specialists – but it is very different from the world pre-NPfIT. National Programme suppliers BT, CSC, Atos, iSOFT and Cerner are all in our 2011 Top 10 and key subcontractors on the Programme, Logica and Dell (thanks to its Perot Systems acquisition) are also in the Top 20. Business process outsourcers are also rising up the ranks. The Top 10 now includes both Capita, which has set its strategic sights on the sector and grown both organically and via acquisitions; and Steria, which runs the largest business process services deal in the sector, the NHS Shared Business Services joint venture with the Department of Health.
Perhaps unsurprisingly for a historically application-led market characterised by small and medium-sized providers, there remain plenty of acquisition opportunities and consolidation looks set to continue apace. Many of the companies from the second half of the top 20 and a host of players below that could be potential acquisition targets were they willing to sell.
To access our in-depth analysis of the UK healthcare SITS supplier landscape, including our 2011 rankings for the sector, subscribers to TechMarketView’s PublicSectorViews research stream can download the UK Healthcare SITS Supplier Landscape 2011 report from today. If you have yet to join our growing customer base and you’d like further details on subscriptions Deborah Seth will be only too happy to oblige.
Posted by Tola Sargeant at '11:36'
What a busy week! HP’s proposed acquisition of Automony and its dereliction of the PC and Palm businesses dominated the tech headlines on Friday. TechMarketView posted four articles on the day and the stories generated a record number of quotes in the media. These included an interview with our Chairman Richard Holway on Radio 5 Live; quotes from Richard and our Managing Partner, Anthony Miller, in The Independent; and a comment from Richard in The Irish Times. We were also widely quoted in Computer Weekly, Microscope, Computing, Information Age and Computer Business Review amongst others. We will have much more to say about this farrago. In fact we're thinking of starting a countdown clock for Leo's tenure as HP's CEO. With FY results currently scheduled for 21st November, will he still be there in the new year?
Meanwhile, two other UK software giants - indeed the only two remaining - failed again with M&A in different ways (see today's posts). Sage was once again left minding its own business as MYOB was snatched from its grasp by Bain; and Micro Focus failed to find matrimonial harmony and decided instead to spread its dowry among its many wellwishers in lieu of a wedding banquet.
The previous week had seen Director Tola Sargeant’s views on CSC’s performance under the National Programme for IT in the NHS quoted in Computer World, and Angela Eager, Research Director for Enterprise Software and Application Services, commenting on Microsoft’s BPOS outage in The Register and CRN.
Once you’ve had a chance to digest all our HotViews, subscribers to TechMarketView’s Foundation Service can tuck into our latest research reports. John O’Brien, Research Director, compares and contrasts the first half performance of the major European systems integrators – Atos, Capgemini, Logica and Steria – in European SIs grow slightly ahead of UK market in H111. And our Managing Partner, Anthony Miller, analyses the best and worst stock market performers in IndustryViews Quoted Sector.
If you’re not yet a subscriber to our full research services (and if you are reading this you should be!) and you’d like to know more, our Client Services Manager Deborah Seth will be only too pleased to provide details.
Posted by HotViews Editor at '07:59'
And it caught us all by surprise. As we started writing the Q2 edition of IndustryViews Quoted Sector suddenly the markets went terribly pear-shaped. Nonetheless, if you want to see the figures behind the ‘calm before the storm’, they are there. You’ll also find an intriguing snippet on the recent re-listing of a venture headed by Robert Terry, the founding chairman and CEO of The Innovation Group.
TechMarketView subscription service clients can download the latest edition of IndustryViews Quoted Sector here.
Posted by HotViews Editor at '13:58'
Now the first half numbers for 2011 are in from the major European SI’s (Atos, Capgemini, Logica and Steria) we have had chance to assess how the UK fared during the period against the major European markets. UK revenues were fairly buoyant although margins came under real pressure. Unfortunately, we expect things to get worse in H211.
TechMarketView Foundation Service clients can read the full analysis in our Analyst Views note here.
Posted by John O'Brien at '16:56'
TechMarketView’s latest report, our biannual analysis of market trends and forecasts for the UK SITS sector, was hot off the press last week. We’re pleased to say it has been very well received by both our clients and the media. If you missed it you can get a flavour of the report from our UKHotViews write up, Two more years of market misery, while subscribers to TechMarketView’s Foundation Service can of course digest the full report - UK Software and IT Services Market Trends & Forecasts -July 2011 - at their leisure.
The report has been widely covered in the press. The influential US publication Forbes, for example, focused on our findings in UK Tech Market is Shrinking Slightly and Very Dynamic. Meanwhile, ComputerWeekly wrote the report up in ‘UK software and IT services market to shrink’ and Microscope focused on the news that the Software market was set for continued decline. CRN carried the story under the concise heading ‘TechMarketView SITS down’, whilst The Register wins the prize for the most colourful headline with ‘UK software and services market wedged in U-bend’.
In other news, our Managing Partner Anthony Miller’s analysis of the Brazilian IT market continued to make the headlines - his latest report on the topic was covered in detail by Brazilian publication IT decisions. Back in the UK, TechMarketView Director Tola Sargeant’s views on CSC’s acquisition of healthcare application provider iSOFT were sought by ComputerWeekly and her fellow Director Georgina O’Toole’s thoughts on Capita’s latest acquisition were quoted by The Register in Capita coughs up £29m for financial services house.
If you’re not yet a fully paid up subscriber to TechMarketView’s research and analysis services and you’d like to know more, do please contact Deborah Seth for details.
Posted by HotViews Editor at '20:40'
We don’t like to blow our own trumpet too loudly (OK, maybe a little) but we think we read the market pretty well last year. We had forecast that the UK software and IT services (SITS) market would shrink in real terms (i.e. excluding inflation) by 2.5% in 2010. By the time all the numbers were in, we reckoned it was actually down 2.8%. Please forgive us the difference. Headline market growth was up—but only just—at 0.6%, but that was buoyed by unexpectedly high inflation.
We think 2011 could be even slightly worse than 2010. We are now forecasting that the UK SITS market will shrink again in real terms—by 3.0%—although headline growth including inflation will look better than last year’s, at 1.3%. And then one more year of decline in 2012, of just under 1%.
But it’s the medium term that concerns us.
As you read through our new UK SITS Market Trends & Forecasts report, you will see that we are increasingly of the view that the uptick we saw in the UK SITS market last year was more likely due to the release of pent-up demand, rather than a return to ‘business as usual’. This is why we have reduced our growth forecasts from 2012 onwards.
Our concerns are exacerbated by distinctly moribund GDP growth, which seems to have most economy-watchers downgrading their forecasts. If nothing else, this injects even more uncertainty into capex decision-making. Indeed, very few of the captains of industry we regularly talk to are telling us that IT spending decisions are getting any quicker or any easier. We still belive that we remain in the midst of a 5 year market decline in real terms, with growth remaining below GDP indefinitely!
That’s not to say the market is not ‘dynamic’. The disruptive effect of new technologies, especially cloud computing, but also mobile apps, social media, and what is generally referred to as the consumerisation of enterprise IT, is dramatically affecting enterprise buying behaviour. As a result, the diversification of supplier financial performance—a theme we revived when the downturn hit—remains a defining feature of the marketplace. Just look at our recent UK SITS Rankings 2011 report—the winners and the losers are clear for all to see.
Of these disruptive technologies, undoubtedly cloud computing is having the deepest and most fundamental impact on the UK SITS market. Depending on how you wish to define it (and we have our own views on this, of course), cloud computing could represent nearly 30% of the UK SITS market by 2014. Even using conservative definitions, cloud computing should reach nearly 20% of the UK SITS market over the same period. Whichever way you wish to look at it, cloud is the fastest growing segment of the UK SITS market.
Let us leave you with what we believe to be the crucial ‘take-away’ from this report.
Cloud computing is especially disruptive because it requires both software publishers and IT and business process services suppliers to completely reconstruct their operating and business models. This is why we believe that the ‘winners’ in the cloud computing market—if indeed winners there be—will not necessarily be those suppliers whose cloud ‘proposition’ is the most agile/accessible/elastic/scalable etc. It will be those who are able to adapt their operating model the quickest. Because those that don’t—or can’t—will simply not make money from the cloud!
The UK Software and IT Services market Trends & Forecasts July 2011 report is available for download now – but of course you need to be a TechMarketView subscription service client to see it. Contact our Deborah Seth (email@example.com) when you can resist the temptation no more!
Posted by HotViews Editor at '05:00'
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