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It was a better year than we had expected for the UK software and IT services (SITS) market in 2014, with headline growth of 2.1% to £43.6b. But excluding the effects of inflation, this equated to growth in real terms of a mere 0.6%, though this is good news compared to the 0.7% real terms decline in 2013.
And things are going to get better—a little bit.
We forecast faster headline market growth this year, at 2.3% which should represent just over 2% growth in real terms. Market growth will remain pretty close to 2% for the next few years, probably till the end of the decade if not beyond.
As in prior years, business process services (BPS) is the fastest growing segment of the UK SITS market at 5.0% cagr, and will reach £8.5b in 2018. In contrast, the UK infrastructure services market—the largest segment—returned to growth in 2014 but we expect only marginal ongoing improvement to reach £14.2b in 2018.
The UK application services market—the second largest segment—is expected to fare little better, with 1.4% cagr to reach £13.8b in 2018. The UK software market is expected to show 3.0% cagr to reach £10.7b in 2018.
The UK public sector SITS market fared better in 2014 than previously forecast as the expected pre-election slowdown in the second half of the year did not come to pass. We now forecast cagr of 1.8%, reaching a market size of £12.4b in 2018. We expect slightly faster growth in the UK private sector SITS market, at 2.1% CAGR, to reach £34.8b at in 2018.
Low-single digit market growth may look unexciting, but it belies tremendous diversity in the performance of the players, some of whom have grown well into double digits and others shrinking by almost as much. The opportunities are there for the taking for those suppliers willing and able to ‘join the dots’ for their customers.
UK Software and IT Services Market Trends & Forecasts 2015, is available for download by subscription clients of the TechMarketView Foundation Service.
Posted by HotViews Editor at '10:08'
