Profit will steady as major companies shift toward higher value-added offerings.
Los Angeles, CA (PRWEB) December 09, 2013
The IT Consulting industry is comprised of firms that help companies design and implement information technology (IT) systems and software. “Due to the low capital requirements of the industry, the majority of operators are small, nonemploying firms and independent contractors,” according to IBISWorld Industry Analyst Jeremy Edwards. In the five years to 2013, demand for all-inclusive consulting services has inspired a rash of merger and acquisition (M&A) activity among larger players, with smaller, specialized companies still entering the industry. As a result, the number of industry enterprises is growing at a slower rate than the number of establishments.
In the five years to 2013, the industry has performed well in a challenging economic climate. Strong performance from major markets, such as financial services and insurance providers, allowed the IT Consulting industry to expand until 2009, when revenue fell by 3.8% as the effects of the recession caught up with the industry. Falling corporate profit and demand from major markets resulted in many firms tightening budgets to improve profit margins, including slashing expenditure on IT systems and consulting. “Greater demand from the public sector assisted the industry during this period; however, it was not enough to prevent losses,” says Edwards. Rising corporate profit in 2010 triggered new demand for IT consulting, as many firms looked to improve efficiencies through better computer systems. These factors contributed to an annualized 2.2% growth rate in industry revenue in the five years through 2013. The IT Consulting industry is expected to grow further by 1.2% to reach $337.0 billion in 2013.
As the economy recovers, improving business sentiment and corporate profit levels will further drive industry performance. Increasing M&A activity in other industries will spur demand for IT consultants, and with more consolidations, companies will require assistance in the integration of accounting, information storage and other systems. Additionally, profit is projected to grow only slightly during this time as major companies continue to shift the balance of their services toward higher value-added offerings; however, this will be somewhat mitigated by increasing price competition.
For more information, visit IBISWorld’s IT Consulting in the US industry report page.
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IBISWorld industry Report Key Topics
The IT Consulting industry includes firms that provide the following services to client companies: writing, testing and supporting custom software; planning and designing integrated hardware, software and communication infrastructure; and on-site management of computer systems and data processing facilities. This industry excludes packaged software publishers and off-site data processing and hosting services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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