Management Toolkit

Services market puts squeeze on IT departments

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Gartner

Andrew Donoghue ZDNet.co.uk

Published: 25 Apr 2005 17:35 BST

The UK is leading a modest recovery in the European IT services market which will generate around €163bn (£111bn) by the end of this year, according to analyst group Gartner which on Monday also warned that some of these increases will come at the expense of internal IT departments.

"Following a tough time in the IT services industry over the last four years, we are seeing some concrete signs of market recovery in all segments with overall market growth rates finally turning positive again," said Gartner principal analyst Nicola France.

But according to the analyst company, the way companies use and source IT is undergoing a process of "industrialisation" which is having an impact on the way both IT services companies and internal IT departments operate.

"Despite the recovery there is no easy money to be made in IT services — especially for internal IT departments. They are increasingly being asked to compete with external companies for projects within their own companies," explained France.

France said that IT departments are facing a period of transition around how big they need to be and how they interact with the rest of the organisation. She claimed that while the internal IT department will not disappear it must increasingly compete with external services and consulting companies.

Rather than providing actual technology services directly to the company, the IT department is adopting the role of understanding the organisation's business priorities and finding the best technology tools to help achieve this — regardless of they are sourced from, said France.