DACH Market Trends: IT services
The DACH region comprises Germany, Austria, Switzerland, and Liechtenstein, all of which sit within the advanced/mature scale in the use of IT in the enterprise and public sectors. Of these, the largest market is Germany, which comprises over 70% of the total DACH market. Trends and growth in Germany tend to be mirrored by Austria, Switzerland, and Liechtenstein, especially in the financial services and public sectors. However, Germany also has a vibrant and well-developed enterprise IT service market, driven mainly by the manufacturing, automotive, telecoms, and retail segments.
Vendors in DACH often use the German market as a test bed for new technologies, solutions, and service delivery models, as enterprises here are often seen as leading edge in terms of awareness and willingness to experiment. However, one major facet of this market is the dominance of local captives such as T-Systems and Siemens IT Solutions and Services (SIS), given the strong preference for localized service providers across major verticals.
Moreover, the mid-market companies, which form a large part of the DACH enterprise segment, also prefer to use vendors with a local presence, as they are considered more attuned to local requirements and capable of offering highly customized services. This has been the reason behind the success of large local providers such as T-Systems, SIS and Bechtle, while global giants such as IBM and HP lag despite having a substantial presence in the region. European vendors such as Atos Origin and Capgemini, and pure play outsourcing vendors such as the India-based ones have found it difficult to establish a strong foothold in the region.
However, skills shortages in the local markets and the resulting increase in labor costs are expected to boost the demand for offshoring in the medium term. Vendors with a sizable local presence and substantial offshore resources would be at an advantage as the ability to offer quality services at lower prices becomes a key differentiator. Vendors operating in the region have to contend with heightened levels of competition, and those incapable of providing high-quality, cost-effective solutions risk losing out on this lucrative IT service market.
For our forecast period (2009–13), we expect the demand for IT services to stem primarily from the manufacturing (including automotive) and public sectors as the push for greater efficiencies and transparency and tighter cost control continues. Healthy demand for services is also anticipated from the banking segment as consolidation in the segment picks up, spurring demand for integration services.
With regard to service lines, demand for infrastructure-led outsourcing (ILO) and application services is anticipated to rebound after an initial decline during 2009 and continue strongly over the rest of the forecast period. BPO remains the strongest growth opportunity among the service lines, with growth rates coursing well above the IT service industry average throughout the forecast period – albeit from a much smaller base.
Vendors in DACH often use the German market as a test bed for new technologies, solutions, and service delivery models, as enterprises here are often seen as leading edge in terms of awareness and willingness to experiment. However, one major facet of this market is the dominance of local captives such as T-Systems and Siemens IT Solutions and Services (SIS), given the strong preference for localized service providers across major verticals.
Moreover, the mid-market companies, which form a large part of the DACH enterprise segment, also prefer to use vendors with a local presence, as they are considered more attuned to local requirements and capable of offering highly customized services. This has been the reason behind the success of large local providers such as T-Systems, SIS and Bechtle, while global giants such as IBM and HP lag despite having a substantial presence in the region. European vendors such as Atos Origin and Capgemini, and pure play outsourcing vendors such as the India-based ones have found it difficult to establish a strong foothold in the region.
However, skills shortages in the local markets and the resulting increase in labor costs are expected to boost the demand for offshoring in the medium term. Vendors with a sizable local presence and substantial offshore resources would be at an advantage as the ability to offer quality services at lower prices becomes a key differentiator. Vendors operating in the region have to contend with heightened levels of competition, and those incapable of providing high-quality, cost-effective solutions risk losing out on this lucrative IT service market.
For our forecast period (2009–13), we expect the demand for IT services to stem primarily from the manufacturing (including automotive) and public sectors as the push for greater efficiencies and transparency and tighter cost control continues. Healthy demand for services is also anticipated from the banking segment as consolidation in the segment picks up, spurring demand for integration services.
With regard to service lines, demand for infrastructure-led outsourcing (ILO) and application services is anticipated to rebound after an initial decline during 2009 and continue strongly over the rest of the forecast period. BPO remains the strongest growth opportunity among the service lines, with growth rates coursing well above the IT service industry average throughout the forecast period – albeit from a much smaller base.
SUMMARY
Impact
Ovum view
Key messages
Market to be worth $47 billion by 2013
FUTURE GROWTH WILL BE DRIVEN BY SELECT VERTICALS
Overview
The top-ten rankings are dominated by local vendors
Competitive analysis of top-five vendors
T-Systems
IBM
Siemens IT Solutions and Services
HP
Accenture
RECOMMENDATIONS
Recommendations for enterprises
Recommendations for suppliers
APPENDIX
Market definitions
Infrastructure-led outsourcing (ILO) and support services
Project services and application-led outsourcing (ALO)
Business process outsourcing (BPO)
Further reading
Methodology
Ask the analyst
Impact
Ovum view
Key messages
Market to be worth $47 billion by 2013
FUTURE GROWTH WILL BE DRIVEN BY SELECT VERTICALS
Overview
The top-ten rankings are dominated by local vendors
Competitive analysis of top-five vendors
T-Systems
IBM
Siemens IT Solutions and Services
HP
Accenture
RECOMMENDATIONS
Recommendations for enterprises
Recommendations for suppliers
APPENDIX
Market definitions
Infrastructure-led outsourcing (ILO) and support services
Project services and application-led outsourcing (ALO)
Business process outsourcing (BPO)
Further reading
Methodology
Ask the analyst
LIST OF TABLES
Table 1: DACH IT service market size and growth data
Table 1: DACH IT service market size and growth data
LIST OF FIGURES
Figure 1: DACH IT service market size and growth to 2013
Figure 2: DACH IT service line growth to 2013
Figure 3: DACH top-ten services vendors and market shares for 2009
Figure 1: DACH IT service market size and growth to 2013
Figure 2: DACH IT service line growth to 2013
Figure 3: DACH top-ten services vendors and market shares for 2009
