Gartner Research

Market Insight: Relentless Margin Pressure Compromises IT Service Provider Growth

Published: 25 January 2013

ID: G00238303

Analyst(s): Linda Cohen , Sandra Notardonato

Summary

Gartner's 2012 IT services forecast indicates continuing pressure on revenue growth across the IT services market. Service providers who respond by focusing primarily on margin improvement strategies are jeopardizing delivery quality, client satisfaction and future revenue.

Table Of Contents

Analysis

  • The Struggle Between Profit and Quality
    • Buyers Remain Relentlessly Focused on Lowest Price
    • Providers Must Invest to Increase Profitability
    • Compromise Is the Only Way Forward

Background and Context

  • Major Forces Affecting IT Services Providers Profitability
  • Traditional Labor-Intensive Service Delivery Models Hinder Margin Growth
    • Pricing Pressure Continues
    • Globalization Is Impeding Revenue Growth
    • Industrialization Eases the Cost of Switching
    • Investment in Automation Is Imperative

The Impact

Conclusion

  • Recommended Actions

Recommended Reading

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