A rising percentage of business services conducted online will increase demand for IT consulting services, resulting in rising prices during the next three years.
Los Angeles, California (PRWEB) February 19, 2014
IT consulting services have a buyer power score of 3.5 out of 5.0. The higher the score, the more negotiating power buyers have. This moderately high score reflects the market's price growth for the three years to 2013, which is expected to be stable due to increased technological integration in businesses. However, the market's large number of suppliers is expected to somewhat mitigate any price growth due to price competition. “The market's price-based competition has resulted in better purchasing power for buyers because vendors typically lower prices to compete,” says IBISWorld procurement analyst Andrew Krabeepetcharat. Therefore, this high degree of competition is beneficial for buyer negotiating power.
During the past decade, the price of IT consulting services has generally been rising steadily. Rising prices during this time have largely been due to growing demand from businesses looking to integrate technology with operations. During the three years to 2013, growing private investment in computers and software and higher corporate profit are expected to increase demand for IT consulting services, allowing suppliers to charge higher prices. However, the high number of market suppliers has prevented prices from increasing too quickly. “At the same time, growing technological innovation has increased the percentage of services conducted online,” says Krabeepetcharat. This is estimated to boost demand from businesses that want their IT consulting services to be integrated with the internet and cloud services.
Buyers do not need to enter into any long-term contracts because any price growth is forecast to be minor, benefiting buyer power. The low level of supply chain risks also benefits buyers because there is little chance of consulting service disruptions. However, due to the high number of suppliers being nonemployers, buyers face risks of supplier bankruptcy; buyers can choose to purchase services from a large, multinational firm, but these firms are generally more expensive. Switching costs for buyers are also high, reducing buyer negotiating power and forcing buyers to spend more time selecting the best supplier. Major vendors in this market include Booz Allen Hamilton Inc., EMC Corporation, Hewlett-Packard Development Company LP and International Business Machines Corporation.
For more information, visit IBISWorld’s IT Consulting Services procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of IT consulting services. IT consulting firms focus on providing the following services to clients: 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 report does not include staffing services related to the hiring of IT staff.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.