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The Global IT Services

Industry: the Market

Market Analysis – 2018-2023 Trends –


Corporate Strategies

Publication date: July 2018

Analyst: Petra FRENT

Report code: 8XSAE01

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XERFI 13-15 rue de Calais, 75009 Paris, France Tel: +33 1 53 21 81 51 Fax: +33 1 42 81 42 14 E-mail: etudes@xerfi.com Website: www.xerfi.com (full catalogue)
Table of Contents

0. Conclusions 4
1. Market Fundamentals 15
1.1. Overview 16
1.2. The Sector 19
2. Market Environment and Prospects 26
2.1. Market Overview 27
2.2. Demand 35
2.3. Supply 48
3. Corporate Strategies and Competition 51
3.1. Competitive Environment 52
3.2. Leaders’ Recent Performances 59
3.3. Business Strategies 65
4. Case Studies 77
5. Statistical Appendix 84
6. Sources 93
7. Annexes 96

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The Global IT Services Industry: the Market – July 2018 2


The 5 phases of Xerfi Global’s Global Markets And Competition reports

Identification of the playing field


At Xerfi Global, we believe that international classifications are not the only valid definition of a market. It
is the companies that make the sector and not vice-versa. During our first brainstorming session, we strive
to give a clear-cut definition of the scope of the report.

Identification of market leaders


During the second phase, Xerfi Global’s analysts identify the players who will be studied in the report. Our
aim is not only to classify by total sales, but also to detect tomorrow’s movers and shakers, especially those
from emerging markets.

Identification of the main market indicators


Using the best and most up to date international sources, Xerfi Global’s experts handpick the most
relevant indicators pertaining to both supply and demand.

Identification of corporate strategies


During a further brainstorming session, the Xerfi Global team aims to decipher the main corporate
strategies and key future trends.

Identification of the key conclusions


Thanks to a final brainstorming session, drawing on the knowledge of all the members of Xerfi Global, the
main conclusions are debated and ultimately summed up in no more than a dozen slides. Concision,
precision and accurate forecasts are our main aims.

This is a collective report written Other contributors include: Kathryn McFarland


under the supervision of: Alberto Balboni
Petra FRENT Alessandro Schiliro
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The Global IT Services Industry: the Market – July 2018 3


0. Conclusions

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The Global IT Services Industry: the Market – July 2018 4


Key trends 2018-2023
• Worldwide IT spending topped €825bn in 2017 and is expected to expand in the range of 5% per year
over the medium term. Mature economies continue to account for the bulk of IT investments, but growth
will stem from the Asia-Pacific.

• Across the globe, future demand will reflect a shift in IT spending patterns, as customers’ efforts to
harness the potential of new technologies to enhance business value will translate into higher
investments in IoT, data analytics, artificial intelligence, and cybersecurity, providing subsequent benefits
for IT service providers. The sustained rise in connectivity and digital commerce means that an increasing
number of projects will make use of AI and/or data analytics. At the same time, national governments
have made AI a key development priority and have embarked on a global race to lead in this space, with
China and the US at the forefront of the industry’s advances.

• Moreover, an increasing share of the innovation budgets of Chief Marketing Officers (CMOs) and Chief
Operating Officers (COOs) and/or manufacturing executives is spent on digital marketing and industrial
automation (Industry 4.0). This has expanded the scope of IT service provision to new industry verticals
and horizontals (e.g. online marketing, an area dominated by advertising specialists).

• IT service providers are therefore fine-tuning their portfolios to tap evolving market trends by setting up
digital centers in-house or in collaboration with customers and relevant technology leaders. The
proliferation of a great number of new, constantly evolving technologies as well as specific solutions for
each industry means that the market is highly fragmented. This therefore puts emphasis on external
collaboration and inorganic investments (acquisitions).

• However, while the massive, ongoing shift towards cloud and data analytics is fuelling new revenue
streams for IT services firms, a greater share of value-added services is shifting towards tech companies
such as Google, Microsoft and Amazon, or other players (GE, Baidu, Alibaba, Tencent, etc.). Amazon, for
instance, continues to cement its leadership in cloud, well ahead of traditional IT service providers.
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The Global IT Services Industry: the Market – July 2018 5


The global IT services market is set to top €1 trillion beyond 2020

Global ICT spending and the IT services market (2017-2021)


units: billion euros; % share

GLOBAL ICT MARKET IT SERVICES MARKET GROWTH

1 000
18,9%
10,1%
800
Data centre systems
5,0%

Enterprise software Global ICT 600

spending:
Devices 26,5%
€3,121bn 400
IT services

200
Telecom services
39,5%

0
2017 2018E 2019F 2020F 2021F

Source: Xerfi Global with Gartner and companies


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The Global IT Services Industry: the Market – July 2018 6


North America accounts for the bulk of IT services expenditure

Breakdown of IT services spending by region (2017)


unit: % share

EMEA
30.4%

Americas
52.5% Asia
Pacific
17.1%

Source: Xerfi Global with IDC


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The Global IT Services Industry: the Market – July 2018 7


Several major trends are driving demand for IT services

Overarching technology trends underpinning growth in the IT services sector

Growing AI
Cloud migration
deployment

Companies will continue to make


significant investments in new
Increasing technologies such as cloud
computing, Internet of Things, data
demand for analytics and artificial intelligence in Explosion of IoT
(near) real-time order to build digital business endpoints
models.
data / analytics This will boost global spending on IT
services.

Shift towards an
API economy

Source: Xerfi Global with Gartner and companies


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The Global IT Services Industry: the Market – July 2018 8


Cloud & AI are reshaping firms’ efforts to boost digital transformation

Public cloud services market (2017-2021F) Global AI market revenue (2016-2021F)


units: billion euros; CAGR in % units: billion euros; CAGR in %

300 9

8
250
7

200 6

5
150
4

100 3

2
50
1

0
0
2017 2018E 2019F 2020F 2021F
2016 2017 2018E 2019F 2020F 2021F

Companies’ intention to achieve significant business value (in terms of customer experience, revenue growth from existing
products or the launch of new products/services, and cost optimisation) with AI will drive widespread adoption of AI technology.
Likewise, cloud services are set to enjoy significant demand growth over the medium term.
Source: Xerfi Global with Gartner (cloud) and Credit Suisse (AI)
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The Global IT Services Industry: the Market – July 2018 9


The strategic AI ecosystem is complex and highly fragmented

Overview of the AI ecosystem: major business segments and IT services players

SOFTWARE DEVELOPMENT
Platforms

ROBOTICS

AUTONOMOUS VEHICLES

IMAGE, VOICE & VIDEO RECOGNITION

SOLUTIONS FOR SPECIFIC INDUSTRY VERTICALS


(HEALTH, FINTECH, ETC.)
System Integrators

CROSS-INDUSTRY SOLUTIONS
(MARKETING, INDUSTRIAL IOT, SECURITY)

DATA ANALYTICS (TEXT, SPEECH)

MACHINE LEARNING

CHATBOTS & VIRTUAL ASSISTANTS

Source: Xerfi Global with companies


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The Global IT Services Industry: the Market – July 2018 10


Leaders aim to build one-stop service platforms to extract value from data

Medium term focus of leading IT service providers

INFRASTRUCTURE

(CLOUD) SECURITY

MACHINE LEARNING

DATA APPLICATION
DATA PROCESSING
EDGE COMPUTING

DATA ANAYTICS
DATA CAPTURE
ENTERPRISE SERVICES

AI

IOT

Source: Xerfi Global with companies


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The Global IT Services Industry: the Market – July 2018 11


Despite having scaled back operations, IBM remains in the driver’s seat

Key performance indicators and main growth drivers of IT services groups analysed in the report
units: million euros, growth rate of sales in percentage, operating profit as a percentage of sales
key: colours related to average industry performance (green: above average; orange: within average; red: below average)

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•IBM’s revenue dropped 1% yoy in 2017, reflecting lower


demand across Global Business Services and Technology
Services & Cloud Platforms.
IBM 70.05 -5.3% 14.4% 18.5%
•Nonetheless, the group enjoyed double-digit expansion in key
areas such as cloud, security, analytics, and mobile – transversal
technologies across all of IBM’s business units.

•Consumer Goods, Retail & Travel Services, as well as Life


Sciences and Industrial, bundled under the Products division,
have been the company’s fastest-growing market verticals,
Accenture 30.85 5.1% 13.3% 14.3% recording double-digit annual growth over 2015-2017.
•Regionally, Accenture has seen faster expansion outside
Europe and North America, with Growth Markets (including
Japan and Australia) accounting for 19% of net sales in 2017.

•Fujitsu Technology Solutions, the IT services business of


Fujitsu, accounted for 71.4% of the company’s consolidated
Fujitsu - sales in 2017.
Technology 24.12 -1.5% 6.2% 6.4% •Technology Solutions revenue was down 2.4% yoy in 2017,
Solutions marking a third consecutive year of falling sales. Weak demand
in its home market, Japan, which accounts for the lion’s share of
sales, weighed on results.

Source: Xerfi Global with company reports


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The Global IT Services Industry: the Market – July 2018 12


New mega player, DXC, has emerged from the CSC and HP Enterprise merger

Key performance indicators and main growth drivers of IT services groups analysed in the report
units: million euros, growth rate of sales in percentage, operating profit as a percentage of sales
key: colours related to average industry performance (green: above average; orange: within average; red: below average)

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•Following the absorption of HP’s Enterprise Services unit by


CSC (Computer Sciences Corp) and the creation of DXC,
revenue rose from €6.73bn in 2016 to €21.74bn in 2017.
DXC Technology 21.74 28.9% 6.8% 3.0%
•Ongoing restructuring plans are already bearing fruit, with
group operating margin standing at 6.8% in 2017, as opposed
to -0.2% the previous year.

•TCS’ largest market vertical, banking and insurance, accounted


for roughly 40% of revenue but saw the weakest pace of
TCS - Tata growth (1.9% yoy) in the last fiscal year. Conversely, IT services
Consultancy 16.74 10.8% 24.8% 26.4% demand was highest in media and technology (revenue up
Services 8.2% yoy).
•TCS’ years of double-digit annual growth ended in 2015, with
revenue rising just 8.6% yoy in 2016 and 4.4% in 2017.

•Increased demand from the financial sector in Japan, as well as


the acquisition of Dell’s IT services arm, bolstered revenue by
22.2% in FY2017.
NTT Data 16.73 12.0% 5.8% 5.9% •The effect of the Dell IT arm acquisition was felt overseas,
especially in North America, where net sales jumped 93.1% yoy,
from €1.91 in FY2016 to €3.68bn in FY2017. Revenue in Europe
rose by 28.1% yoy to €3.31bn.

Source: Xerfi Global with company reports


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The Global IT Services Industry: the Market – July 2018 13


Amazon continues to see spectacular growth in cloud services

Key performance indicators and main growth drivers of IT services groups analysed in the report
units: million euros, growth rate of sales in percentage, operating profit as a percentage of sales
key: colours related to average industry performance (green: above average; orange: within average; red: below average)

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•AWS has been reaping the benefits of its aggressive pricing


strategy. A growing take-up of the AWS cloud has translated
AWS - Amazon into annual revenue growth of 55% in 2017, on par with 2016
15.45 54.0% 24.8% 23.5% levels.
Web Services
•Despite promotional pricing and continued growth
investments, AWS operating income has been on the rise.
•Overall turnover expanded by just 2% yoy in 2017. However,
revenue in high-growth areas such as digital and cloud rose
Capgemini 12.79 6.1% 9.2% 8.5% 24% yoy, representing 38% of Capgemini’s net sales.
•Higher profitability in Europe has led to an overall
improvement in the group’s operating margin in recent years.
•2017 annual growth of 4.6% was driven by digital offerings,
which encompassed 23% of net sales (13% in 2016).
Atos 12.69 10.2% 10.2% 8.7%
•The Big Data & Cybersecurity unit enjoyed the highest growth
(10.9% yoy), but represented only 5.9% of the group’s turnover.
•Wipro’s revenue contracted for the first time in years in FY2017
(-1% yoy), with weaker demand in India and the US weighing
on performance.
Wipro 7.41 5.8% 15.5% 18.3%
•Industry-wise, demand for the company’s services dropped
considerably across healthcare/life sciences and
media/communications, although it remained strong in finance.

Source: Xerfi Global with company reports


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The Global IT Services Industry: the Market – July 2018 14


1. Market Fundamentals

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The Global IT Services Industry: the Market – July 2018 15


1.1. Overview Key figures

North America accounts for roughly half of IT services spending

Global ICT expenditures in 2017. The market comprises five main areas: data centre systems,
€3,121 billion
enterprise software, devices, IT services, and telecom services.

Global IT services expenditure in 2017, according to Gartner. It represented 26.5% of total


€826 billion
global ICT spending in 2017.

The weight of implementation and IT outsourcing services in the total global IT services
56%
market.

46% Share of North America in IT services spending worldwide in 2017.

Share of finance companies (banking and insurance) in total IT services expenditure. The
25%
financial sector is the industry’s largest vertical market.

Source: Xerfi Global with Gartner and companies


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The Global IT Services Industry: the Market – July 2018 16


1.1. Overview Key Characteristics

IT services is an expanding/evolving +€820 billion market

IT services was a €823.2 billion (+4.3% yoy) industry in 2017. It comprises three main segments:
-Consulting, a market worth approx. €143.6 billion;
-Implementation and IT outsourcing, a market worth €460.3 billion;
Scope of the report
-Business process management, hardware and custom software support, a €221.3billion market.
Geographically, North America is the largest IT services market with a 46% share (€371.8bn), followed
by Western Europe (26%). Japan encompasses roughly 10% of global IT services spending.

While traditional services associated with the upgrading/maintenance of legacy IT systems continue
to decline, emerging technologies such as cloud computing, artificial intelligence, industrial
automation, blockchain, and cybersecurity are opening new windows of growth for existing IT service
providers, who are adjusting their portfolios (by setting up digital centers or making acquisitions) to
A growing addressable market
new market demands. Moreover, the scope of the IT services market is expanding as an increasing
share of the innovation budgets of Chief Marketing Officers (CMOs) and Chief Operating Officers
(COOs) and/or Manufacturing Executives is spent on digital marketing and industrial automation
(Industry 4.0).

The IT services marketplace is highly fragmented, with main categories of players including:
-global companies (e.g. Accenture, IBM, Atos and DXC);
-advisory specialists (e.g. Deloitte, KPMG, PwC and EY);
-offshore players mainly based in India (e.g. TCS, Wipro, Infosys, Cognizant, HCL);
A fragmented competition
-regional players (e.g. Sopra Steria, Tieto);
landscape
-specialist, small-scale players (Mighty AI, NexusEdge, FinCha Bot, Neura, etc.).
As the scope of the market has expanded, IT service providers that have established digital
marketing agencies, such as Accenture and Capgemini, are becoming rivals of traditional advertising
agencies.

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The Global IT Services Industry: the Market – July 2018 17


1.1. Overview Key Characteristics

IT services are part of the overarching €3,121 billion ICT market


Breakdown of worldwide ICT market by main segment (2017)
unit: billion euros

THE GLOBAL INFORMATION AND COMMUNICATION


TECHNOLOGIES (ICT) MARKET
DATA CENTRE SYSTEMS
€157.57 billion

ENTERPRISE SOFTWARE
€314.25 billion

DEVICES
€590.43 billion

IT SERVICES
€825.89 billion

TELECOM SERVICES
€1,233.08 billion

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 18


1.2. The Sector What is the business?

Three main areas of IT service provision


Primary IT services markets

Business
process
IT services was a €823.2 billion (+4.3% Implementation
management &
yoy) industry in 2017. The market can and Consulting
hardware and
be split into three main segments: outsourcing
software
-consulting, a segment worth support
approximately €143.6 billion;
-implementation and IT outsourcing,
worth €460.3 billion;
-business process management &
hardware and custom software
support, a €221.3 billion segment.

IT SERVICES

Source: Xerfi Global with Capgemini


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The Global IT Services Industry: the Market – July 2018 19


1.2. The Sector What is the business?

Revenues and margins vary according to the type of contract signed


Main types of contracts in the IT services industry

FIXED-PRICE Includes the payment of a negotiated amount, regardless of


CONTRACT the level of costs incurred by the service operator.

Covers all costs incurred by the service operator (up to a


COST-PLUS
negotiated limit) and includes an additional amount to allow
CONTRACT for a profit.

INCENTIVE-TYPE Sets a fixed payment and provides additional, performance-


CONTRACT related revenues.

Source: Xerfi Global with Capgemini


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The Global IT Services Industry: the Market – July 2018 20


1.2. The Sector Who are the customers?

The financial sector is the industry’s largest customer


Global IT spending across vertical industries
unit: percentage share of total global ICT spending

Financial: banking & insurance

Manufacturing & natural resources

Communications & media

Public sector

Retail

Utilities

Transportation

Healthcare

Other

0% 5% 10% 15% 20% 25%

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 21


1.2. The Sector Who are the key players?

Leading players are concentrated in India and mature economies


Overview of leading global IT services companies analysed
unit: 2017 revenues in billion euros

Name Country Revenues Main activities

IBM 70.05 End-to-end IT services

Accenture 30.85 End-to-end IT services

Fujitsu - Technology Solutions 24.12 End-to-end IT services

DXC Technology 21.74 End-to-end IT services

TCS - Tata Consultancy Services 16.74 End-to-end IT services

NTT Data 16.73 End-to-end IT services

AWS - Amazon Web services 15.45 Could-related services and solutions

Capgemini 12.79 End-to-end IT services

Atos 12.69 End-to-end IT services

Wipro 7.41 End-to-end IT services

Source: Xerfi Global with company reports

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The Global IT Services Industry: the Market – July 2018 22


1.2. The Sector Who are the key players?

A highly fragmented market where competitors vary in size and expertise…


Main types of competitors in the IT services industry
Types of competitors Competitive advantages Examples
Integration (hardware, software,
Global diversified corporations IBM, Fujitsu, etc.
services, etc.)

Specialisation within specific


Small to medium-sized
geographic markets, industry Atos, SopraSteria, etc.
specialised providers segments or service types

Telecom operators and


Insourcing, integration BT, T-Systems, Ericsson, etc.
equipment vendors

Offshore service providers


Lower costs for similar services TCS, Cognizant, Wipro, etc.
from India

Know-how and capabilities related to


Consulting firms Accenture, Capgemini, etc.
consulting services

Strong positions in areas such as cloud


Technology groups Google, Microsoft, Amazon, etc.
and big data

Source: Xerfi Global with companies

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The Global IT Services Industry: the Market – July 2018 23


1.2. The Sector Who are the key players?

…with myriad small players positioned across specific areas/applications


Examples of small-sized, IT service-focused groups across markets

HEALTHCARE FINTECH TRAVEL CONSUMER GOODS


Industry
verticals

MARKETING/E-COMMERCE

INDUSTRIAL & IOT

Cross-
industry
SECURITY

MACHINE GESTURE &


AI CLOUD ETC.
LEARNING MOTION

Source: Xerfi Global with companies and TechCrunch

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The Global IT Services Industry: the Market – July 2018 24


1.2. The Sector Where are activities located?

Geographically, North America is the largest IT services market


Breakdown of IT services spending by region (2017)
unit: % share

EMEA
30.4%

Americas
52.5% Asia
Pacific
17.1%

Source: Xerfi Global with IDC


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The Global IT Services Industry: the Market – July 2018 25


2. Market Environment
and Prospects

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The Global IT Services Industry: the Market – July 2018 26


2.1. Market Overview PESTEL analysis

Technology development, backed by policy, is the main growth engine


PESTEL analysis of the global IT services market environment
POSITIVE NEGATIVE IMPACT

P
-Government policies promote/support the

- +
industry’s development
-Stricter privacy legislation
OLITICS -An ongoing race to achieve AI leadership
among mature countries

E
-Growing e-commerce in all regions

CONOMY
-Economic growth in emerging markets
-Sluggish digital investments in Europe
compared to the US and China - +
and recovery in mature ones

S
-A digital/mobile society -Low Internet speeds in emerging markets

OCIETY
-Connectivity means more data is being
collected and used
-Limited infrastructure in emerging
countries
- +

T
-Growing complexity and fragmentation of
-Adoption of new technologies such as AI

ECHNOLOGY
and cloud expands the scope of the market
technologies
-New technologies will reduce demand for - +
-Growing threat of cyberattacks
traditional IT services

E NVIRONMENT
- - - +

L EGISLATION
-Policy efforts to create digital markets in
various countries
-Restrictions related to data location weigh
on cloud development - +
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The Global IT Services Industry: the Market – July 2018 27


2.1. Market Overview PESTEL: politics

Supporting digital transformation is a priority for governments worldwide


Main areas of governments’ ICT development strategies

BUILDING A DATA ECONOMY

CYBERSECURITY; SECURITY OF INFORMATION SYSTEMS AND NETWORKS; CONSUMER


AND PRIVACY PROTECTION

Governments’ EXPANSION OF BROADBAND INFRASTRUCTURE


main priorities
with regard to ICT
development DEVELOPMENT OF INNOVATION NETWORKS AND CLUSTERS

PROMOTION OF ICT SKILLS AND EMPLOYMENT

SUPPORT FOR ICT VENTURE FINANCING

Source: Xerfi Global with the OECD


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The Global IT Services Industry: the Market – July 2018 28


2.1. Market Overview PESTEL: economy

GDP has been ticking upwards since 2017…


Global GDP growth (2005-2018)
unit: percentage annual change at constant prices and exchange rates

6%

4%

2%

0%

-2%

-4%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018F

Sources: Feri (historical data) and Xerfi Global (estimates and forecasts). 2016 consumer spending is an estimate.

After a marked rebound in 2010, global GDP growth markedly slowed, although it has kept an upward trajectory since 2013. In
2017, GDP expanded at a pace of 2.9%, and this trend has intensified in 2018, providing the basis for growth in IT services
spending. Since IT tasks are a major component of “back office” operations for most organisations, IT services are generally
outsourced for cost-optimisation purposes. This makes IT services spending vulnerable to economic fluctuations, as companies
first look for savings in IT services budgets when economic conditions tighten. Conversely, IT spending rises in times of
economic prosperity.

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The Global IT Services Industry: the Market – July 2018 29


2.1. Market Overview PESTEL: economy

…in both mature and emerging markets


Global GDP growth in selected regions (2005-2018)
unit: percentage annual change at constant prices and exchange rates

North America Western Europe Eastern Europe Asia Latin America & the
Caribbean

3,0% 3,0% 5% 5% 3%

2,5% 2,5%
4%
2%
2,0% 2,0%
3%
1,5% 1,5% 4% 1%
2%
1,0% 1,0%
0%
0,5% 0,5% 1%

0,0% 0,0% 0% 3% -1%

Sources: Feri (historical data) and Xerfi Global (estimates and forecasts). 2017 consumer spending figures are estimates.

After the financial and economic crisis of 2009, GDP bounced back more strongly in emerging regions. Over 2013-2016,
however, emerging economies in Asia and, particularly, Latin America have seen GDP growth slow down, while, conversely,
mature economies, including those in Western Europe, have been progressively returning to growth, albeit at moderate rates.
GDP expansion in mature economies and stabilisation and/or recovery in emerging markets, provide strong fundamentals for
increased business investment, which includes the development of IT services.

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The Global IT Services Industry: the Market – July 2018 30


2.1. Market Overview PESTEL: technology

New technologies are a double-edged sword for IT services…

With digital technologies such as cloud computing and artificial intelligence becoming
increasingly embedded in the fabric of virtually every business sector, IT services companies stand
to benefit from this increasing reliance on / demand for cloud platforms, mobile systems and data
analytics.

Technologies such as cloud, data analytics, mobile systems, social media, and cybersecurity, as
well as services required to integrate these technologies with legacy IT systems, will account for
80% of growth in the IT services sector by 2025.

New technologies are increasingly This means that a greater share of value-added services will go to tech companies such as
displacing traditional IT services Microsoft and Amazon, which are way ahead of traditional IT firms in the cloud marketplace. At
the same time, the shift to cloud-based ecosystems will negatively impact the IT services sector as
markets
automation and cloud computing provide flexible and cost-efficient data storage and processing
services, reducing the need for on-site data centre-related maintenance, as well as other services
traditionally supplied by IT companies.

This trend is even more of a threat to Indian-based companies, which have relied on skilled but
low-cost labour to become preferred outsourcing partners for computer installation and
maintenance and customer call centre operations. Leading IT service providers in India have
therefore already begun to adjust their business mix by building expertise in future-oriented
technology markets such as AI and analytics.

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The Global IT Services Industry: the Market – July 2018 31


2.1. Market Overview PESTEL: technology

…however, growing digital investments are set to boost IT services spending


The expanding scope of the IT services market

CLOUD SERVICES,
TRADITIONAL IT
CYBERSECURITY APPLICATIONS AND
SERVICES
INFRASTRUCTURE

In line with higher


connectivity and
widespread digital
As many traditional IT technology adoption
DIGITAL services become
redundant in the cloud
ONLINE by consumer
businesses, IT firms are
TRANSFORMATION age, new IT services MARKETING even moving into
digital marketing,
are emerging around: becoming rivals of
traditional advertising
agencies.

DATA SCIENCE / AI /
IOT / M2M
ANALYTICS MACHINE LEARNING

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The Global IT Services Industry: the Market – July 2018 32


2.1. Market Overview Technology

Higher Internet penetration means more data for machine learning


Individuals using the Internet worldwide (2006-2017)
units: number of Internet users in billions, annual % change, percentage of worldwide population (penetration rate)

Internet users (bn, left scale) Annual change (%, right scale) Worldwide Internet penetration rate (%, right scale)

4,0 60%
Growing Internet penetration worldwide will result in
3,5 larger, digitally-connected populations, therefore allowing
for more extensive data collection and processing. Data is 50%

3,0 the fuel of machine learning and deep learning


applications (AI).
40%
2,5

2,0 30%

1,5
20%

1,0

10%
0,5

0,0 0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Xerfi Global with ITU


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The Global IT Services Industry: the Market – July 2018 33


2.1. Market Overview Technology

Improved/faster Internet infrastructure favours IT services growth


Deployment of 3G and 4G networks (2010-2020)
unit: coverage as a % of the entire population

4G 3G
The world is transitioning to higher
speed networks, with 3G and 4G 100%
coverage worldwide projected to
reach 86% and 63%, respectively, by 90%
2020.
80%
4G networks are being deployed at a
quicker pace than 3G. The growing 70%
adoption of 4G networks will bolster
mobility and should therefore 60%
translate into higher services revenues
for IT firms positioned in this 50%
segment. Across the globe, more
companies will gain access to high- 40%
speed Internet, further bolstering
demand for cloud systems and 30%
associated applications.
This scenario will be further amplified 20%
by super-fast 5G networks, which are
10%
already being trialled worldwide.
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

Source: Xerfi Global with GSMA


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The Global IT Services Industry: the Market – July 2018 34


2.2. Demand Cloud services

Cloud computing is set to account for 27% of IT services spend by 2021


Public cloud services market (2017-2021F)
units: billion euros; CAGR in %

300

The worldwide public cloud services


250
market is anticipated to expand at an
average annual rate of 18.5% over
2017-2021, going from €135 billion in
2017 to over €267 billion in 2021. 200
Public cloud made up 16.3% of the
total IT services spend in 2017, and its
share is projected to rise to 27% over 150
the next four years.
Software as a Service (SaaS) is the
biggest cloud segment, with €53.29
100
billion in revenue in 2017. The
business is driven by demand for
solutions that deliver specific business
outcomes. 50

0
2017 2018E 2019F 2020F 2021F

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 35


2.2. Demand Cloud services

SaaS (Software as a Service) is the largest cloud market…


Public cloud services market by segment (2017-2021F)
units: billion euros; % share; 2017-2021 CAGR in %

2017-2021 CAGR

8.2% Cloud Business Process Services (BPaaS) 26,56


19,6% 37,71
27,8%
23.1% Cloud Application Infrastructure Services
(PaaS)
7,70
Cloud Application Services (SaaS) 5,7%
18.1%

Cloud Management and Security 10,53


16.6% Services 7,8%

Cloud System Infrastructure Services


29.2% (IaaS) 53,29
39,2%

Source: Xerfi Global with Gartner; BPaaS = Business Process as a Service; IaaS = Infrastructure as a Service; SaaS = Software as a Service; PaaS = Platform as a Service

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The Global IT Services Industry: the Market – July 2018 36


2.2. Demand Cloud computing

…but IaaS (Infrastructure as a Service) is the fastest-growing


Types of cloud computing services

SaaS - the vendor manages:


APPLICATIONS

DATA

MIDDLEWARE

OPERATING SYSTEMS

PaaS VIRTUALISATION
The vendor IaaS SERVERS
manages: The vendor
STORAGE
manages:
NETWORKING

Source: Xerfi Global with companies

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The Global IT Services Industry: the Market – July 2018 37


2.2. Demand Software services

Rising cloud adoption spurs demand for middleware software


Application integration and middleware software market (2016-2020)
The market for Application and units: billion euros; CAGR in %
Infrastructure Middleware (AIM)
software is outpacing expansion of 35
the overall infrastructure software
market. This has been supported by
growth in mobile systems, data 30
analytics, the Internet of Things and
other digital business initiatives that
involve AIM technologies. 25
The AIM software market comprises
both large and concentrated mature
markets, such as application servers 20
and business process management
suites, as well as new, smaller but
rapidly growing segments, such as 15
mobile app development platforms,
Platform as a Service, application
10
programmable interface
management, etc. These emerging
areas are more fragmented.
5
The biggest AIM players are IBM,
Oracle, Salesforce, Microsoft and
Amazon. IBM encompassed a 21.5% 0
share of the AIM market in 2017,
2016 2017 2018E 2019F 2020F
while Amazon garnered 2.9%.

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 38


2.2. Demand Cybersecurity

The higher frequency and costs of cyberattacks make security a key market
The impact of cybercrime – estimated cost of cybercrime for businesses (2017-2020)
unit: billion euros per year

Cybercrime is estimated to cost


businesses around €350
billion per year, and this figure is
expected to reach a whopping €885 €885 billion
billion in 2020, according to Atos. An
increasing number of companies are €350
likely to be impacted by cyberattacks. billion
This is why investments in cybersecurity
solutions are a top business priority.
With the advent of AI, services are
shifting from prescriptive to predictive
solutions. Emerging security-as-a-
service offerings detect and block
threats even before they happen.
2017E 2020E

Source: Xerfi Global with Atos


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The Global IT Services Industry: the Market – July 2018 39


2.2. Demand Cybersecurity

As the number of connected objects increases exponentially…


Overview of connected devices 2012 vs. 2020
unit: billion connected devices

2012 2020
With growing connectivity and
greater broadband investments, more
devices are being connected to the
Internet.
The last decade saw the rise of
smartphones, while, more recently,
smart TVs and wearables, smart
meters, security cameras and
connected
proliferating.
cars have been 30bn
10bn
The explosion of IoT devices will connected connected
translate into growing IoT-related
services spending across professional,
devices devices
consumer and connectivity sub-
segments. IT services firms will benefit
from increased demand for the
design, implementation and
operation of IoT-related systems as
well as associated security solutions.

Source: ARM
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The Global IT Services Industry: the Market – July 2018 40


2.2. Demand Cybersecurity

…so does the risk of cyberattacks, thus supporting cybersecurity investment


Worldwide IoT security spending (2016-2021F)
unit: million euros

3 000

2 500
With the growing deployment of
smart devices such as sensors and
robots by industries, a trend often 2 000
referred to as Industry 4.0, verticals
such as energy, transportation, and
manufacturing are set to increase 1 500
spending on security solutions.
This means that worldwide spending
on IoT security will nearly treble by
1 000
2021, from approximately €1bn in
2017.

500

0
2016 2017 2018E 2019F 2020F 2021F

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 41


2.2. Demand Cybersecurity

Despite significant growth ahead, the market is still in its infancy


Worldwide IoT security spending by category (2017-2021F)
units: million euros; % share; 2017-2021 CAGR in %

2017-2021 CAGR
267,33
25,7%
20.2% Endpoint Security

31.7% Gateway Security

649,74 122,16
29.6% Professional Services
62,5% 11,8%

Source: Xerfi Global with Gartner

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The Global IT Services Industry: the Market – July 2018 42


2.2. Demand Artificial Intelligence

AI, the next big thing in IT, is an umbrella term for a number of technologies
Overview of the core components of Artificial Intelligence (AI)

Neural
networks
The term AI refers to self-learning systems
(deep learning, cognitive computing, natural
language understanding and processing,
neural networks, etc.) that leverage a
multitude of data (text, speech, video and
image) to recognize patterns. Deep Machine
learning learning
The development of AI has been accelerating
thanks to greater computational power,
volume, speed and variety of data, as well as ARTIFICIAL
advances in deep neural networks. INTELLIGENCE
AI holds the potential to drive significant
value for businesses, especially for customer
interaction, growth and retention; process
efficiency (lower operational costs);
enhanced decision making; and
automatization.
Cognitive Pattern
computing recognition

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 43


2.2. Demand Artificial Intelligence

AI applications are numerous and will keep growing


Overview of the current scope of AI applications

VIRTUAL HOME ROBOTS


ASSISTANTS

VOICE ASSISTANTS GAMING

ARTIFICIAL
INTELLIGENCE
AUTONOMOUS CONTEXTUAL
VEHICLES RECOMMENDATIONS

MEDICAL
VR/AR
DIAGNOSTICS

Source: Xerfi Global with companies


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The Global IT Services Industry: the Market – July 2018 44


2.2. Demand Artificial Intelligence

IT services firms will benefit from growing AI implementation investments…


AI-derived business value (2017-2021F) Global AI market revenue (2016-2022F)
units: billion euros; CAGR in % units: billion euros; CAGR in %

3 000 14

12
2 500

10
2 000

8
1 500
6

1 000
4

500
2

0 0
2017 2018E 2019F 2020F 2021F 2016 2017 2018E 2019F 2020F 2021F 2022F

Source: Xerfi Global with Gartner Source: Xerfi Global with Credit Suisse
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The Global IT Services Industry: the Market – July 2018 45


2.2. Demand Artificial Intelligence

…but barriers to AI adoption must be resolved in the medium to long term


Obstacles that hamper the deployment of AI

AI adoption

!
The market for AI technologies is at an embryonic
Businesses are ramping-up investments in AI to build stage
digital capabilities

Security threats

AI is already playing a role in enhancing customer


Complexity: difficult to implement and assess the
services, process optimisation, and new business
economic benefits
development

Full AI deployment entails high costs, which can


Continued breakthroughs in machine learning, be a significant barrier for small companies
computer vision, data science, and other related
technologies are increasing the commercial potential
and attractiveness of AI
Lack of skilled personnel

Source: Xerfi Global with companies


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The Global IT Services Industry: the Market – July 2018 46


2.2. Demand Blockchain

Blockchain technology is also on the radar but still in its infancy


Blockchain technology adoption status worldwide (May 2018)
unit: % share of total respondents

Although it has emerged as one of


On the radar, but no action planned
the potentially disrupting
technologies in payments, logistics,
trading, and finance, blockchain
adoption has yet to materialise, with
No interest
most companies showing no interest
in nor plans to deploy blockchain
technology, according to Gartner.
Nonetheless, financial and insurance
companies have been early adopters. In the medium to long term
They are increasingly experimenting
in blockchain applications and are
actively involved in blockchain-related In short term planning/actively
R&D consortia. experimenting
Blockchain use cases are also
increasing across the transportation,
supply chain and logistics, and utilities
sectors. Already invested and deployed

0% 10% 20% 30% 40% 50%

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 47


2.3. Supply Global ICT spending

IT services is the second largest segment of the wider ICT space


Global ICT spending by segment (2017)
units: billion euros; % share

In 2017, global ICT spending, 18,9%


including software, services, as well as 10,1%
hardware (consumer devices such as
Data centre systems
mobile phones and PCs, data centres 5,0%
for businesses, etc.), stood at
Enterprise software
€3,121bn.
IT services is the second largest
component of the ICT space, with a
Devices 26,5%
26.5% slice of global information IT services
communication and technology
spending. Telecom services
39,5%

Source: Xerfi Global with Gartner


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The Global IT Services Industry: the Market – July 2018 48


2.3. Supply Global IT services spending

The global IT services market is set to top €1 trillion beyond 2020


Global ICT spending and the IT services market (2017-2021)
units: billion euros; % share

1 000

In 2017, global IT services revenues


amounted to €825.9bn, accounting 800
for more than a quarter of worldwide
spending on ICT.
IT services expenditure grew by an
average of 0.8% per year between 600
2014 and 2017, and at a particularly
fast pace, +4.3% yoy, in 2017.
In coming years, growth in the IT
services sector is expected to 400
accelerate, since digital capabilities
have become an imperative for
businesses, while the scope of the
market is also expanding. 200

0
2014 2015 2016 2017 2018E 2019F 2020F 2021F

Source: Xerfi Global with Gartner and companies


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The Global IT Services Industry: the Market – July 2018 49


2.3. Supply India’s offshore market

The offshore IT market in India aims to meet growing digital demand


The offshore IT and BPO export market in India (2010-2025F)
units: billion euros; % share

350

300
Digital technologies are projected to
represent 23% of India’s IT and BPO export
value in 2020, and 28% in 2025.
250
The Indian offshoring market therefore
continues to benefit from strong growth
200 fundamentals.

150

100

50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2020F 2025F

Source: Xerfi Global with NASSCOM


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The Global IT Services Industry: the Market – July 2018 50


3. Corporate Strategies
and Competition

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The Global IT Services Industry: the Market – July 2018 51


3.1. Competitive Environment Driving forces of the industry

The industry is highly fragmented and competitive


Competitive forces of the global IT services industry

New entrants Governments


++ +

Suppliers +++ Customers


- Rivalry +++

Substitutes How to read this chart:


- The darker the shading, the
stronger the force

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The Global IT Services Industry: the Market – July 2018 52


3.1. Competitive Environment Competitive rivalry

While incumbents have generally succeeded in enhancing their positions…

New entrants Governments


++ +

Suppliers Customers
- +++ +++
Rivalry

Substitutes
-

• Rivalry is intense in the IT services industry, with several types of large and small players competing for a bigger slice of the
market.

• While IBM is, by far, the leading player by revenue, and is cementing its position in budding technology markets in line with
its four “strategic imperatives” (data and analytics, cloud, mobile, social, and security), the rise of Amazon – whose cloud
revenues topped €15.45bn in 2017, making it the #1 player in cloud ahead of its main rival, IBM, which reported cloud
revenue of €15.05bn that same year – underscores the profound effects of technology. Microsoft and Google have also
established themselves as major cloud systems providers and are major players/investors in AI.

• Meanwhile, competitive pressure is mounting with rising consolidation at the top: DXC Technology was created in April 2017
via the merger of CSC (Computer Sciences Corp) and the Enterprise Services business division that was spun off from HP.
This, along with the growing internationalisation of NTT Data of Japan, as well as the broad-based expansion of India-based
IT service providers such as TCS and Wipro, increases pressure on other global players such as Capgemini, Accenture and
Fujitsu.

• Nevertheless, the sector remains highly fragmented and the emergence of digital technologies has led to the mushrooming
of many categories of niche players specialising in either one specific technology or focused on a certain industry vertical.
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The Global IT Services Industry: the Market – July 2018 53


3.1. Competitive Environment Competitive rivalry

…the spread of new technology has led to the rise and growth of new firms
Main characteristics of the competitive landscape of the IT services market

Offshore
service Consulting
providers firms with IT
Employee skills capabilities
Technology Brand value,
and
and innovation reputation
capabilities

Security and Multi-faceted …and diverse types of Digital service


safety
Price COMPETITION… competitors companies

Service quality,
Breadth of Scale, global
product
services reach
reliability Specialised
firms: data
Diversified
analytics,
technology
software, etc.
multinationals

Source: Xerfi Global


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The Global IT Services Industry: the Market – July 2018 54


3.1. Competitive Environment New entrants

A series of sizeable industrial and Internet players are now present in cloud…
The emergence of industrial and Internet/e-commerce groups as major cloud service providers

Mainstream cloud/AI platforms

Emerging cloud/AI platforms


Industrial players such as GE and Hitachi and
digital players such as Baidu, Tencent and
Alibaba are major cloud platform players, with
GE and Hitachi employing more focused
strategies (IoT/Industrie 4.0), while Internet
groups adopt a more broad-based approach
(AI, autonomous driving, machine intelligence,
etc.).

Source: Xerfi Global


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The Global IT Services Industry: the Market – July 2018 55


3.1. Competitive Environment New entrants

…however, leaders are bound to consolidate their cloud market share..


Concentration in the cloud Infrastructure as a Service (IaaS) market, 2016 versus 2021
unit: market share in % unit: market share in %

In IaaS (cloud system infrastructure services), the fastest growing segment of the cloud market, the top 10
players (with the top 5 being AWS, Microsoft, IBM, Alibaba and Google, in descending order) are expected to
increase their market share from 50% in 2016 to 70% by 2021. This is possible due to the effects of scaling.

30,0%
Top 10 Top 10

50,0% 2016 50,0% 2021F


Others Others

70,0%

Source: Xerfi Global with Gartner Source: Xerfi Global with Gartner
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The Global IT Services Industry: the Market – July 2018 56


3.1. Competitive Environment New entrants

…and presence in related software markets


Application infrastructure and middleware market (2017)
unit: market share in % unit: annual growth in %

Increasing deployment of cloud, IoT, analytics, and AI is boosting investments in the infrastructure and middleware
market. Amazon recorded the fastest revenue growth, +119.6% yoy, in 2017. However, big players such as Microsoft,
IBM and Oracle appear to have lost some momentum to smaller vendors, who enjoyed faster growth in 2017.

Amazon

IBM
Salesforce
21,5%
Oracle

Salesforce Other vendors


2017
Microsoft middleware
53,5% 11,1% Microsoft
market
Amazon

Other 6,3% IBM


vendors
4,7%
2,9%
Oracle

0% 30% 60% 90% 120%


Source: Xerfi Global with Gartner Source: Xerfi Global with Gartner
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The Global IT Services Industry: the Market – July 2018 57


3.1. Competitive Environment Government

Governments are actively involved in the global race to develop AI

New entrants Governments


++ +

Suppliers Customers
- +++ +++
Rivalry

Substitutes
-

• Governments of major economic powers, including China, Japan, Canada, the US, and Europe, have unveiled comprehensive
programmes to foster AI development, with a view to taking the lead in the market.

• Initiatives include research programmes on individual rights protection, ethics, policy and legal implications, as well as
funding strategies. In France, the government has created a special task force (‘’mission Villani’’) to formulate
recommendations.

• China is establishing itself as a major global player in AI and machine learning, which the government has designated as the
“next big areas of innovation”. In China, where data protection laws are loose, the country’s Internet giants (Tencent, Baidu
and Alibaba) are building on the availability of massive amounts of data to rapidly develop various AI applications (machine
learning, autonomous driving, etc.) and thereby expand the scope of their operations. In 2017, the State Council made public
a national development plan for AI, which aims to promote research and technology adoption across a wide array of sectors
to build an “intelligent economy” and an “intelligent society” by 2030. AI is also seen as playing a key role in achieving
China's goal of becoming a major economic power by 2030.

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The Global IT Services Industry: the Market – July 2018 58


3.2. Leaders’ Recent Performances Growth and profitability

Despite having scaled back operations, IBM remains in the driver’s seat
Key performance indicators and main growth drivers of leading global IT services companies analysed
units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•IBM’s revenue dropped 1% yoy in 2017, reflecting lower demand


across Global Business Services and Technology Services & Cloud
Platforms.
IBM 70.05 -5.3% 14.4% 18.5% •Nonetheless, the group enjoyed double-digit expansion in key
areas such as cloud, security, analytics, and mobile – transversal
technologies across all of IBM’s business units.

•Consumer Goods, Retail & Travel Services, as well as Life Sciences


and Industrial, bundled under the Products division, have been the
company’s fastest-growing market verticals, recording double-digit
Accenture 30.85 5.1% 13.3% 14.3% annual growth over 2015-2017.
•Regionally, Accenture has seen faster expansion outside Europe
and North America, with Growth Markets (including Japan and
Australia) accounting for 19% of net sales in 2017.

•Fujitsu Technology Solutions, the IT services business of Fujitsu,


accounted for 71.4% of the company’s consolidated sales in 2017.
Fujitsu -
•Technology Solutions revenue was down 2.4% yoy in 2017,
Technology 24.12 -1.5% 6.2% 6.4% marking a third consecutive year of falling sales. Weak demand in
Solutions its home market, Japan, which accounts for the lion’s share of
sales, weighed on results.

Key: colours related to average industry performance (green: above average; orange: within average; red: below average);
Source: Xerfi Global with companies’ reports
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The Global IT Services Industry: the Market – July 2018 59


3.2. Leaders’ Recent Performances Growth and profitability

New mega player, DXC, has emerged from the CSC and HP Enterprise merger
Key performance indicators and main growth drivers of leading global IT services companies analysed
units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•Following the absorption of HP’s Enterprise Services unit by CSC


(Computer Sciences Corp) and the creation of DXC, revenue rose
from €6.73bn in 2016 to €21.74bn in 2017.
DXC Technology 21.74 28.9% 6.8% 3.0% •Ongoing restructuring plans are already bearing fruit, with group
operating margin standing at 6.8% in 2017, as opposed to -0.2%
the previous year.

•TCS’ largest market vertical, banking and insurance, accounted for


roughly 40% of revenue but saw the weakest pace of growth (1.9%
TCS - Tata
yoy) in the last fiscal year. Conversely, IT services demand was
Consultancy 16.74 10.8% 24.8% 26.4% highest in media and technology (revenue up 8.2% yoy).
Services •TCS’ years of double-digit annual growth ended in 2015, with
revenue rising just 8.6% yoy in 2016 and 4.4% in 2017.

•Increased demand from the financial sector in Japan, as well as


the acquisition of Dell’s IT services arm, bolstered revenue by
22.2% in FY2017.
NTT Data 16.73 12.0% 5.8% 5.9% •The effect of the Dell IT arm acquisition was felt overseas,
especially in North America, where net sales jumped 93.1% yoy,
from €1.91 in FY2016 to €3.68bn in FY2017. Revenue in Europe
rose by 28.1% yoy to €3.31bn.

Key: colours related to average industry performance (green: above average; orange: within average; red: below average);
Source: Xerfi Global with companies’ reports
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3.2. Leaders’ Recent Performances Growth and profitability

Amazon continues to see spectacular growth in cloud services


Key performance indicators and main growth drivers of leading global IT services companies analysed
units: billion euros, compound annual growth rate (CAGR) of sales in percentage, operating profit as a percentage of sales

2013-2017 2017 2013-17


COMPANY 2017 SALES SALES OPERATING AVERAGE OP. KEY GROWTH AND PROFITABILITY DRIVERS
TREND MARGIN MARGIN

•AWS has been reaping the benefits of its aggressive pricing


strategy. A growing take-up of the AWS cloud has translated into
AWS - Amazon
15.45 54.0% 24.8% 23.5% annual revenue growth of 55% in 2017, on par with 2016 levels.
Web Services •Despite promotional pricing and continued growth investments,
AWS operating income has been on the rise.
•Overall turnover expanded by just 2% yoy in 2017. However,
revenue in high-growth areas such as digital and cloud rose 24%
Capgemini 12.79 6.1% 9.2% 8.5% yoy, representing 38% of Capgemini’s net sales.
•Higher profitability in Europe has led to an overall improvement in
the group’s operating margin in recent years.
•2017 annual growth of 4.6% was driven by digital offerings, which
encompassed 23% of net sales (13% in 2016).
Atos 12.69 10.2% 10.2% 8.7% •The Big Data & Cybersecurity unit enjoyed the highest growth
(10.9% yoy), but represented only 5.9% of the group’s turnover.
•Wipro’s revenue contracted for the first time in years in FY2017 (-
1% yoy), with weaker demand in India and the US weighing on
performance.
Wipro 7.41 5.8% 15.5% 18.3% •Industry-wise, demand for the company’s services dropped
considerably across healthcare/life sciences and
media/communications, although it remained strong in finance.

Key: colours related to average industry performance (green: above average; orange: within average; red: below average);
Source: Xerfi Global with companies’ reports
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3.2. Leaders’ Recent Performances Ranking by revenue

IBM is in a league of its own in terms of revenue size…


IT services revenue of leading companies analysed (2017)
unit: billion euros

IBM

Accenture

Fujitsu*

DXC

TCS IBM’s revenue is equal to the combined revenues of


its next three competitors. Its vertical integration
NTT Data
and double-digit growth in analytics, cloud, mobile,
AWS and security (‘’strategic imperatives”) over the past
few years, has cemented its position at the top of
Capgemini the industry.

Atos

Wipro

0 11 22 33 44 55 66 77

Calculations: Xerfi Global with company reports; *revenue from Technology Solutions (IT services division) only
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3.2. Leaders’ Recent Performances Net sales growth of leading players

…while Amazon leads in terms of revenue expansion


Revenue growth of selected IT services groups (2013-2017)
unit: index 2013=100

IBM Accenture
AWS - Amazon Web services
Fujitsu - Technology Solutions TCS
NTT Data Capgemini
Atos Wipro
600
160

500

400

120
300

200

80 100
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

Source: Xerfi Global with companies

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3.2. Leaders’ Recent Performances Ranking by profitability

Tata Consultancy Services and AWS are the most lucrative among top players
Operating profitability of leading IT services companies analysed (2017 and 2013-2017 averages)
unit: operating income over net sales in %

2013-2017 AVERAGE OPERATING MARGIN 2017 OPERATING MARGIN

TCS

AWS

IBM

Wipro

Accenture

Atos

Capgemini

Fujitsu - Technology Sol.

NTT Data

DXC

0% 5% 10% 15% 20% 25% 30%

Source: Xerfi Global, with companies


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3.3. Business Strategies Medium term strategy overview

Leaders aim to build one-stop service platforms…


Medium term focus of leading IT service providers

INFRASTRUCTURE

(CLOUD) SECURITY

MACHINE LEARNING

DATA APPLICATION
DATA PROCESSING
EDGE COMPUTING

DATA ANAYTICS
DATA CAPTURE
ENTERPRISE SERVICES

AI

IOT

Source: Xerfi Global with companies


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3.3. Business Strategies Medium term strategy overview

…and this will entail forming extensive partnerships and acquisitions


Medium term strategies of leading IT service providers and ways to achieve them

International expansion,
Technology and service Expansion in key verticals,
particularly in high-growth
innovation creating new businesses
markets

As the IT services landscape is


being disrupted by
simultaneous innovation in
hardware, software and
applications across various Build broad partnership
Strategic acquisitions of: digital fields, IT service networks with:
providers must rely more on
inorganic growth initiatives to
provide end-to-end solutions

Competitors /
Research
technology Start-ups Customers Universities
institutions
groups

Source: Xerfi Global with companies


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3.3. Business Strategies Growth in new areas

Groups have been investing in start-ups…


Global AI financing (2012-2017) and start-up financing programmes of leading IT service providers
unit: billion euros

12

Over the past five years, Accenture has added skills


in “new” business fields such as Cloud, Mobility and
10 Security (blockchain-oriented) thanks to over 90
bolt-on acquisitions, primarily of start-ups.

8
In order to further enhance know-how in
blockchain and AI, TCS relies on start-up
6 incubators, programming competitions (e.g. TCS
CodeVita), and venture funds such as the TCS Co-
Innovation Network (dubbed COIN).
4

In line with industry trends, NTT Data has also been


accelerating inorganic growth, acquiring
2
complementary capabilities by investing in start-
ups (it organises an Open Innovation Contest
annually).
0
2012 2013 2014 2015 2016 2017

Source: Xerfi Global with the European Commission and companies


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3.3. Business Strategies Growth in new areas

…and entering into partnerships with customers and competitors alike


Major partnerships recently concluded by leading IT service providers

IBM has been looking to build leadership in the emerging blockchain sector via partnerships with
customers across various industry verticals: with Suncorp New Zealand in insurance; with Maersk
in global trade digitalisation; with banks to develop Batavia, a blockchain trade finance platform.
IBM has also strengthened its AI-based technology partnership with Salesforce, becoming the
preferred cloud services provider of Salesforce.

Fujitsu is currently running 123 open innovation projects in Japan and a further 44 across 14
overseas countries. On top of partnerships with research institutions and universities (e.g. with
Kyushu University to develop AI for enhanced agricultural yields), customers, and start-ups (e.g.
with Blue Prism), Fujitsu is seeking to ramp up its go-to-market strategies in Asia with the
establishment of a JV in China for smart city and smart manufacturing solutions.

Capgemini has increased its reliance on third-party innovation, partnering with major technology
companies (IBM, Microsoft, Oracle, and SAP are among Capgemini’s “strategic partners”) while
nurturing relationships with companies/start-ups that have a more narrow set of skills. Moreover,
it continues to multiply the number of Applied Innovation Exchanges – R&D hubs where it
develops innovative business ideas together with customers.

Source: Xerfi Global with the European Commission and companies


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3.3. Business Strategies Growth in new areas

As the industry’s scope evolves, so does the R&D focus and service offerings
New services launched by leading IT services groups (2017-2018)

Atos is establishing three new In 2018, IBM unveiled Watson Data Kits,
R&D centres focused on machine a data and AI-based solution designed
learning and AI in France, the UK Atos IBM to bolster business insights for travel,
and the US over the coming years. transportation and food.

Innovation
TCS, a major player in the Accenture deployed its first
financial sector vertical, Tata blockchain-based solution with
rolled out the Quartz Consultancy Accenture the launch of a travel rewards
Blockchain Solution for Services programme for the Cathay
banking. Pacific Group.

Recently launched services Fujitsu launches the Fujitsu


include DXC Bionics (smart Intelligent Society Solution
DXC
automation), DXC Open Health Fujitsu Blockchain Asset Service, a cloud-
Connect, and DXC Agile Process Technology enabled, blockchain-based service
Automation. for retailers.

Source: Xerfi Global with companies


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3.3. Business Strategies Growth in new areas

Amazon has the highest budget for product innovation


R&D budgets of leading IT services companies analysed (2017 and 2013-2017 averages)
unit: R&D expenditure over net sales in %

2013-2017 average R&D ratio 2017 R&D ratio

AWS - Amazon Web services

IBM

Fujitsu - Technology Solutions

Atos

Accenture

NTT Data

Wipro

0% 2% 4% 6% 8% 10% 12% 14%

Source: Xerfi Global with companies


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3.3. Business Strategies Diversification

Major IT service providers have established bespoke digital agencies


Overview of main IT service providers’ dedicated digital marketing agencies

Dedicated digital marketing


IT service provider
entity

Accenture Interactive

Wipro Digital

IMB iX

Source: Xerfi Global with companies


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3.3. Business Strategies Focus on China

China’s AI strategy is part of a wider innovation and development push


R&D spending as a share of GDP in selected countries (2001-2016)
unit: R&D share of GDP in %

France Germany Japan S. Korea USA China EU 28

4,5%

4,0%

3,5%

3,0%

2,5%

2,0%

1,5%

1,0%

0,5%
2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: World Bank


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3.3. Business Strategies Focus on China

AI has become the cornerstone of China’s economic strategy


China’s strategic targets for AI industry development in the coming decades (2020-2030)
unit: industry revenue in billion euros

Core AI industry Targeted relevant industries


1 400

1 200

1 000

800

600

400

200

0
2020 2025 2030

Source: Xerfi Global with the China State Council


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3.3. Business Strategies Focus on China

The number of AI-related patents China has is second only to the US…
China’s AI ecosystem: number of patents in AI (cumulative number of patents up to 2016)
unit: number of patents

US

China

Japan

Germany

Korea

Canada

Australia

UK

Russia

Austria

0 3 000 6 000 9 000 12 000 15 000 18 000 21 000 24 000 27 000

Source: Wuzhen Institute


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3.3. Business Strategies Focus on China

…and its AI scale tops other major economies in Europe and elsewhere
China’s AI ecosystems, key indicators (2016)
unit: billion euros

Investment in AI start-ups, 2016 Number of AI companies, 2016

US US

China China

UK UK

Canada India

Germany Canada

Israel Israel

Japan Germany

France France

Spain Spain

Switzerland Switzerland

0 4 8 12 16 0 500 1 000 1 500 2 000 2 500 3 000

Source: Wuzhen Institute


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3.3. Business Strategies Focus on China

An AI engineer’s salary in China is on a par with US levels


Comparison of gross average annual salaries of machine learning scientists (as of May 2018)
unit: thousand euros

COMPANY AMAZON GOOGLE MICROSOFT APPLE FACEBOOK BAIDU

Base 123.0 105.3 139.9 126.6 141.6 111.5

Annual bonus 25.7 22.1 35.4 20.4 22.1 17.7

Annual equity 34.5 62.8 40.7 31.0 77.9 65.5

TOTAL 183.2 190.3 216.0 177.9 241.7 194.7

Signing bonus 35.4 22.1 19.5 29.2 37.2 21.2

China attracts global talent. This was underscored by the appointment in 2014 of Dr. Andrew Ng, a
professor at Stanford University and co-founder of Coursera, as Chief Scientist of Baidu (he left the
company in 2017).

Source: Paysa via Goldman Sachs


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4. Case Studies

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Europe’s digital gap

Europe lags behind in AI and data analytics adoption…


Level of adoption of digital technologies in the EU (2017)
unit: %

Digital investments have been at the


heart of corporations’ growth
strategies across the globe, with
service providers based in China or
the US, such as IBM, AWS, Baidu, and
Google, establishing themselves as
25%
leaders in AI and cloud computing. 10%
However, no digital champion comes
from Europe, where the adoption of
cloud and AI has been slow.
The old continent lags far behind Asia
and North America in terms of AI
financing outlays, and has yet to of EU SMEs used of large EU companies
establish AI ecosystems comparable big data analytics in used big data analytics in
to those of the US and China.
2017 2017

Source: The European Commission’s “The Age of Artificial Intelligence” report


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Europe’s digital gap

…and is far behind North America and Asia in terms of AI investment


Investment in artificial intelligence across key regions (2016)
unit: billion euros

Europe
€2.7bn

North
America
€13.3bn Asia
€7.1bn

Source: Xerfi Global with the European Commission - The Age of Artificial Intelligence; includes both internal corporate investments and external investments (venture capital,
private equity, M&A)
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Europe’s digital gap

Atos, a European leader, derives 23% of its revenue from digital services
Atos’ digital revenue (2016-2019)
unit: billion euros; % share of total

Canopy hybrid cloud SAP Hana - SAP integrated services


Atos Digital Workplace (digital solutions) Codex (data analytics)
40%
Atos, whose footprint is
predominantly in Europe (82% of
2017 IT services revenues,
30% excluding Worldline, its payments
arm), estimates that the share of
digital services will amount to
40% of total group turnover by
2019.
20% By comparison, IBM’s digital
businesses contributed 46% of
net revenue in 2017.

10%

0%
2016 2017 2019

Source: Xerfi Global with Atos


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Europe’s digital gap

AWS has surpassed IBM to become the leader in cloud by revenue


Cloud revenue of Amazon Web services (2011 vs. 2017)
units: billion euros; CAGR

Over the past few years, Amazon has


established itself as a leading global
vendor of cost-effective, cloud-based
infrastructure and applications.
Amazon was consistently ranked first
or among the top 3 cloud
infrastructure vendors. The group has €15.45
IaaS and PaaS expertise, and its
offerings include a comprehensive
selection of third-party software and
services.
In 2017, AWS’ cloud business €1.43
outpaced that of IBM. AWS revenue
reached €15.45bn in 2017, making it
the global leader in cloud services. 2011 2017
IBM, its main rival, reported cloud
computing revenue of €15.05bn.

CAGR: 48.7%
Source: Xerfi Global with Amazon
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NTT Data’s expansion outside Japan

While in decline at home, NTT Data has gained clout overseas thanks to M&A
NTT Data’s revenue across Europe and North America (2008-2017)
units: million euros; CAGR in %

Confronted with stagnant spending in the Japanese IT market, NTT


8
Data has implemented an aggressive international growth programme,
driven primarily by acquisitions. Since 2008, the group has gained
control of a dozen medium-sized IT services firms across Europe and €7,000m
7 North America. In 2016, it closed the buyout of Dell’s IT services
business for €2.8 billion, thereby adding scale to its overseas M&A
6 strategy.

2 €481
m

0
2008 2010 2012 2014 2017

Source: Xerfi Global with NTT Data


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Fujitsu’s vertical and horizontal integration

Fujitsu is focusing its R&D on building end-to-end IT service solutions


Fujitsu’s strategic R&D focus and budget breakdown (2017)

SOLUTIONS
Web services

SYSTEMS Big data


Cloud
NETWORKS
Optical Data centres
DEVICES 5G
communication
Sensors Artificial intelligence
ADVANCED
MATERIALS SDN Domain-specific
computers
API Operating
system Quantum Security
SOFTWARE OSS computers

Media processing

Applied
Basic research Commercialisation
Advanced research innovation
10% research Deployment
50% research
30%
10%

Source: Xerfi Global with Fujitsu


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5. Statistical Appendix

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World GDP and consumer spending

Global consumer spending and GDP (2005-2018)


unit: percentage annual change at constant prices and exchange rates

Year World GDP World Consumer Spending

2005 3.6% 3.6%

2006 3.8% 3.5%

2007 3.7% 3.4%

2008 1.2% 1.2%

2009 -2.3% -0.5%

2010 4.1% 3.1%

2011 2.8% 2.7%

2012 2.2% 2.2%

2013 2.4% 1.4%

2014 2.6% 3.2%

2015 2.8% 2.7%

2016 2.3% 2.7%

2017E 2.9% 2.9%

2018F 3.0% 3.1%

Sources: Feri (historical data) and Xerfi Global (estimates and forecasts)

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Regional GDP and consumer spending growth

Consumer spending and GDP in selected regions (2005-2018)


unit: annual percentage change at constant prices and exchange rates

NORTH AMERICA WESTERN EUROPE EASTERN EUROPE


Year/period
GDP Consumer spending GDP Consumer spending GDP Consumer spending

2005-08 1.9% 2.2% 2.1% 1.6% 6.3% 8.7%

2009 -2.8% -1.5% -4.3% -1.3% -5.6% -4.4%

2010-15 2.2% 2.3% 1.2% 0.6% 2.2% 2.1%

2016 1.5% 2.7% 1.8% 2.1% 2.2% 0.7%

2017E 2.3% 2.3% 2.2% 2.0% 3.9% 3.9%

2018F 2.5% 2.4% 2.4% 2.3% 4.1% 4.0%

ASIA LATIN AMERICA & THE CARIBBEAN MIDDLE-EAST & AFRICA


Year/period
GDP Consumer spending GDP Consumer spending GDP Consumer spending

2005-08 4.6% 3.7% 4.9% 5.9% 5.3% 5.6%

2009 0.02% 2.5% -2.6% -1.7% 1.3% 0.9%

2010-15 4.7% 4.3% 2.8% 3.4% 2.6% 4.2%

2016 3.9% 4.3% -0.5% -0.3% 2.1% 2.4%

2017E 4.2% 4.3% 1.7% 3.1% 3.1% 2.5%

2018F 4.0% 4.3% 1.6% 3.3% 4.0% 4.0%


Sources: Feri (historical data) and Xerfi Global (estimates and forecasts)

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Digital

Individuals using the Internet worldwide (2006-2017)


units: number of Internet users in billions, annual % change, percentage of worldwide population (penetration rate)

Worldwide Internet penetration rate


Year Internet users (bn) Annual change (%)
(%)

2006 1.2 12.4% 17.6%

2007 1.4 18.6% 20.5%

2008 1.6 14.4% 23.1%

2009 1.8 12.2% 25.5%

2010 2.0 15.1% 28.9%

2011 2.2 10.0% 31.3%

2012 2.4 9.4% 34.3%

2013 2.6 8.5% 36.9%

2014 2.9 9.5% 39.9%

2015 3.2 9.4% 43.2%

2016 3.4 7.5% 45.9%

2017 3.6 5.7% 48.0%

Source: ITU

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Global ICT budgets

Global ICT spending (2017)


unit: billion euros

Segment Global ICT market breakdown

Data centre systems 157.57

Enterprise software 314.25

Devices 590.43

IT services 825.89

Telecom services 1,233.08

Source: Gartner

Global IT services spending (2017-2012)


unit: billion euros

Year IT services spend

2017 825.9

2018E 871.9

2019F 911.8

2020F 952.8

2021F 995.7

Source: Gartner

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Cloud and AI markets

Public cloud services market (2017-2021F)


unit: billion euros

Year Public cloud revenue

2017 135.9

2018E 165.0

2019F 195.7

2020F 230.3

2021F 267.8

Source: Gartner

Global AI market revenue (2017-2021F)


unit: billion euros

Year AI revenue

2017 1.1
2018E 1.9

2019F 3.3

2020F 5.4

2021F 8.5

Source: Gartner

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India’s offshore industry

The offshore IT and BPO export market in India (2010-2025F)


unit: billion euros

Year Market size

2010 43.99

2011 52.32

2012 60.90

2013 67.36

2014 77.63

2015 87.19

2016 95.60

2017 103.57

2018 111.54

2020F 177.04

2025F 309.82

Source: NASSCOM

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Leading players

Ranking of leading players by revenue (2017)


unit: billion euros

Company Revenue

IBM 70.05

Accenture 30.85

Fujitsu - Technology Solutions 24.12

DXC Technology 21.74

TCS - Tata Consultancy Services 16.74

NTT Data 16.73

AWS - Amazon Web services 15.45

Capgemini 12.79

Atos 12.69

Wipro 7.41

Source: company reports

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Leading players

Ranking of leading players by operating margin (2017)


unit: share of operating income over net sales

Company 2017 operating margin 2013-2017 average operating margin

IBM 14.4% 18.5%

Accenture 13.3% 14.3%

Fujitsu - Technology Solutions 6.2% 6.4%

DXC Technology 6.8% 3.0%

TCS - Tata Consultancy Services 24.8% 26.4%

NTT Data 5.8% 5.9%

AWS - Amazon Web services 24.8% 23.5%

Capgemini 9.2% 8.5%

Atos 10.2% 8.7%

Wipro 15.5% 18.3%

Source: company reports

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6. Sources

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Industry organisations and datasources

Technology research consultancy


Gartner
www.gartner.com/technology/home.jsp

International Data Corporation (IT and telecommunications consultancy)


IDC
www.iab.net

Information Technology Association of America


ITAA
www.itaa.org

National Association of Software and Services Company


NASSCOM Indian IT trade association
www.nasscom.org

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Business press

Weekly newspaper
The Economist
www.economist.com

Financial Times
Financial Times
www.ft.com

Business news and financial information


Forbes Magazine
www.forbes.com

Multinational news agency


Thomson Reuters
www.thomsonreuters.com

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7. Annexes

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5. Glossary

ENGLISH FRENCH
CATEGORY
ITEM DEFINITION ITEM DEFINITION

Assets encompass all the economic resources owned by a L'actif regroupe toutes les ressources économiques détenues
Assets company. They are commonly divided into short term (cash, Actif par une entreprise. On distingue généralement actifs
trade receivables, etc.) and long term assets. circulants (trésorerie, créances, stocks) et actifs immobilisés.

CAGR Acronym for Compound Annual Growth Rate. TCAM Acronyme de Taux de Croissance Annuel Moyen.

Short for "Capital Expenditure", an item of the cash-flow Abréviation de "Capital Expenditure", un élément du tableau
statement used as a proxy for investment in property, plant and de trésorerie mesurant l'investissement dans les
Capex CAPEX
equipment (PPE). Generally entails physical assets used immobilisations corporelles. Il sert à évaluer l'effort consenti
to maintain or increase operation capacities. pour maintenir ou développer les capacités de production.

Capex ratio The percentage ratio between capital expenditures and net sales. Ratio CAPEX/CA Ratio entre dépenses d’investissement et chiffre d’affaires.

The current ratio is found by dividing current assets by current Le ratio de liquidité générale exprime le rapport entre actifs
Ratio de liquidité
Current ratio liabilities and indicates whether the company has enough circulants et passifs circulants et reflète la capacité de
générale
resources to pay its short term debt (12 months). l’entreprise à couvrir sa dette de court terme (12 mois).

Ratio entre la dette totale et le total des actifs. Un ratio au-


The ratio between total liabilities and total equity, reflecting the Ratio
Debt-to-equity delà de 80% est généralement perçu comme un niveau
company’s relative amount of debt. d’endettement
Basic d’endettement alarmant pour l’entreprise.
financial
Le Free Cash Flow, ou Cash Flow disponible en français,
analysis Free The cash that a company is able to generate after subtracting Cash flow
correspond à la trésorerie générée par une entreprise après
cash flow expenses needed to maintain its asset base. disponible
déduction des dotations aux immobilisations.

La marge brute correspond à la différence entre le chiffre


Gross profit is the result of the difference between total sales
d'affaires et le coût de fabrication du produit ou de la
Gross profit and the cost of making products or providing services. Payroll Marge brute
fourniture de services. Les salaires, les intérêts, les taxes, etc.
and interest costs as well as taxes are not taken into account.
n'entrent pas dans le calcul de la marge brute.

Impairment charges occur when a company has found that the


Impairment Une perte de valeur se produit lorsqu'une entreprise est
value of its goodwill has been overestimated and needs to be Perte de valeur
charge amenée à revoir à la baisse la valeur de son goodwill.
revised.

Interest coverage is calculated by dividing operating income by Ratio entre le résultat opérationnel (EBIT ou EBITDA) et les
Ratio de
Interest net interest expenses and reflects the company's debt burden, dépenses nettes d’intérêt; reflète la charge de la dette pour
couverture des
coverage i.e. its ability to pay interest on outstanding debt. The lower this l’entreprise (capacité à payer les intérêts annuels). Plus le
intérêts
ratio, the more the company is burdened by interest expenses. ratio est faible, plus l’entreprise est à risque de faire défaut.

Liabilities encompass all obligations arising from a company's Le passif comprend toutes les obligations contractées par
past operations and which will result in an outflow of resources une entreprise dans l'exercice passé de ses activités et qui se
Liabilities in the future. Liabilities are divided into short term and long Passif matérialiseront par des décaissements à terme. Le passif
liabilities, and represent the debt a company owes to its peut être courant ou non-courant, et représente l'ensemble
creditors. des créances d'une entreprise.
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The Global IT Services Industry: the Market – July 2018 97


5. Glossary

ENGLISH FRENCH
CATEGORY
ITEM DEFINITION ITEM DEFINITION

Net debt is calculated by subtracting a company's cash Endettement L'endettement net se calcule en déduisant le cash disponible
Net debt
from its total debt. net d'une entreprise du montant total de ses dettes.

Net profit refers to a company's total earnings. It is the Le résultat net est le bénéfice net d'une entreprise. Il correspond
Net profit/ result of the difference between net sales and all à la différence entre le chiffre d'affaires et toutes les dépenses
Résultat net
net margin operating and non-operating expenses such as taxes, opérationnelles et non-opérationnelles comme les impôts, les
interests, depreciation and amortisation expenditures. intérêts, les charges de dépréciation et d'amortissement.

Operating profit refers to the earnings generated by the Le résultat opérationnel désigne le bénéfice dégagé par une
normal business operations of a company. Operating Résultat entreprise grâce à l'exercice de ses activités traditionnelles. Le
Operating profit/ profit is the result of the difference between sales and opérationnel/ résultat opérationnel est obtenu en déduisant les dépenses
operating margin total operating expenses. Operating margin is expressed marge d'exploitation du chiffre d'affaires. La marge opérationnelle,
in % and is computed by dividing operating profit by net opérationnelle exprimée en %, est obtenue en divisant le résultat opérationnel
sales. par le chiffre d'affaires.

Expenses associated with the research and development Dépenses associées au processus de recherche et de
Dépenses de
R&D expenditure process of creating new products or services; it is often développement de nouveaux produits et de nouveaux services.
R&D
used as a proxy for innovation. C'est un indicateur de la capacité d'innovation d'une entreprise.

Return on assets is calculated by dividing a company's Le retour sur actif est calculé en divisant le résultat net d'une
Basic Return on assets
net income by its total assets. It measures the ability of Retour sur actif entreprise par le total de son actif. Il mesure la capacité d'une
financial (ROA)
the company to generate profits from its assets. entreprise à créer de la richesse à partir de ce dont elle dispose.
analysis
Return on equity is calculated by dividing a company's Le retour sur fonds propre est calculé en divisant le résultat net
Return on equity net income by its shareholder equity. It measures the Retour sur d'une entreprise par le total de ses fonds propres. Il mesure la
(ROE) ability of a company to generate profits from its fonds propres capacité d'une entreprise à créer de la richesse à partir des
investment funds. capitaux apportés par ses actionnaires.

Le chiffre d'affaires correspond au total des ventes hors taxes de


Earnings made from the sales of goods and services,
Chiffre biens et de services. Il est le reflet des volumes écoulés, mais
Sales excluding VAT and other taxes. Reflects, total volumes
d'affaires aussi du prix de vente moyen, des taux de change et des
sold, selling prices, exchange rates and product mixes.
variations du mix produit.

The quick ratio is calculated by dividing current assets Le quick ratio équivaut au rapport entre actifs circulant
net from inventories by current liabilities and measures (diminués des stocks) et passifs circulants. Similaire au ratio de
Quick ratio Quick ratio
the company’s immediate capacity to repay its short term liquidité générale, il exprime la capacité immédiate de
debt. l’entreprise à couvrir sa dette de court terme.

Le fonds de roulement est la différence avec l'actif courant et le


Working capital is the difference between currents assets
Fonds de passif courant. Un fonds de roulement positif signale que
Working capital and current liabilities. When positive, working capitals
roulement l'entreprise pourrait honorer ses créances à court terme avec ses
means a company would able to pay its short term debt.
actifs à court terme.

Etude strictement réservée à EM LYON BUSINESS SCHOOL ( 400339 ). Diffusion interdite Paris, le 04/02/2020

The Global IT Services Industry: the Market – July 2018 98

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