Top 50 Vendors Account for More Than Half of the European Services Market in 2007, Says IDC

MADRID — SEPTEMBER 1, 2008 – According to a recent study published by IDC, the top 50 services players accounted for 53.4% of the IT and business services market in Europe in 2007. Even though most of the largest vendors are still U.S.-based companies, the number of Europe- and India-based companies in the ranking has increased. Revenue growth was particularly high in the top 21-50 vendors, with rates above 20% in dollars, due to a mix of organic growth and market consolidation. The aggressive growth rates of Indian players, three of which are already in the top 21-50 positions, also helped to increase the average growth rate. The top 20 companies grew at a lower 16.2% in constant dollars.

In 2007, 10 players from different categories were the fastest-growing companies across the European services market:

–European service players Logica and Orange Business Services (OBS) grew at 38.6% and 48.5%, respectively, due to acquisitions. In the past two years, Logica acquired Unilog and WM-data, both of which are Europe-based companies, while OBS purchased the enterprise and managed services divisions of the Indian group GTL Limited, which specializes in IT and telecoms integration services.

— Local players ErgoGroup and Ordina reinforced their presence in the Nordic and Benelux regions, respectively. ErgoGroup strengthened its presence in the Nordics after several acquisitions completed in the last two years, including SYSteam, Allianse, Bekk Consulting, and many other smaller organizations, while Ordina grew strongly due to the acquisition of ITG Consulting Group in Belgium.

— India-based players Tata Consultancy Services (TCS), Infosys, and Wipro continued their aggressive double-digit revenue growth, with 37.4%, 42.1%, and 48.5%, respectively. TCS won a billion-dollar outsourcing deal with the Nielsen media group in the Netherlands. These three offshore companies continue to win in the application development and maintenance areas primarily, but are also beginning to be seen in the infrastructure area.

— Business services vendors, such as Capita, Xchanging, and Teleperformance, also grew rapidly. Growth was predominantly organic for Capita and Xchanging, with major contract wins and renewals, although both companies made small niche acquisitions during the year to build economies of scale. Teleperformance grew strongly thanks to the acquisition of the German group twenty4help Knowledge Service AG and a 62% interest in a French services company.

The IDC study, Top 50 Western European Service Players in 2007 (IDC #Q05Q, August 2008), provides a competitive analysis of the high end of the Western European IT and business services industry. It presents an overview of the competitive landscape for services companies, examines trends and changes in the marketplace, and helps provide a quantifiable view of the European IT and business services providers. "With few exceptions, acquisition remains the main driver for revenue growth in 2007," said Laura Converso, research manager, European Services Market and Competitive Insights. "However, India-based companies such as TCS, Infosys, and Wipro mainly grew organically. Pure-play offshore vendors already account for 4% of the IT services market and their combined market share is growing fast thanks to increasing acceptance in key European geographies, such as the Nordics, Benelux, and Germany, combined with their need to reduce the dependence on a low-growth U.S. market."

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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