Information Technology Services Industry Overview

Excerpt from Information Technology Services Report

The US information technology (IT) services industry includes about 100,000 companies with combined annual revenue of about $325 billion. Major companies include Computer Sciences Corporation (CSC), Unisys, and the technology consulting arms of IBM and Hewlett-Packard. The computer facilities management segment of the industry is highly concentrated: the 50 largest companies generate about 80 percent of revenue. The rest of the industry is fragmented: the 50 largest companies account for about 40 percent of revenue.

Competitive Landscape

Demand for IT services is driven by rapid technological advances, but spending for these expensive products depends on the health of the US economy. The profitability of companies depends on offering technical expertise, innovative services, and effective marketing. Large companies have advantages in broad service offerings and global reach, which give them the ability to provide outsourcing services to big corporate customers. Small companies can compete effectively by specializing in market niches or by partnering with larger companies that want to broaden their mix of services.

Products, Operations & Technology

IT companies mainly provide consulting, systems integration, data processing, and technology outsourcing services to business customers. Computer systems design, development, and integration services account for about 35 percent of industry revenue; application design and development services, 25 percent; and technical support, 10 percent. These companies help clients use computers, software, and communications systems more efficiently. In addition to providing advice on using computer systems, they frequently recommend hardware and software systems to their customers. Firms provide a variety of associated services, including business function outsourcing, data warehousing, systems planning, enterprise resource planning, and training.