IDC Semiannual Services Tracker Reports Moderate Growth for Services Revenues in 2023 with Stable Growth Forecast for the Next Five Years

The global IT and Business Services market witnessed some softening in 2023 with revenue growing (in constant currency) from $1.17 trillion in 2022 to $1.22 trillion, according to the International Data Corporation (IDC) Worldwide Semiannual Services Tracker. This translates to year-over-year growth of 4.6%, which slightly outperformed IDC's forecast of 4.5% growth. In nominal dollar denominated revenue based on today's exchange rate, the market grew 4.1%.

Despite economic headwinds, enterprise demand for cloud and digital transformation services remained strong, driving an uptick in growth in the second half of 2023 compared to a deceleration seen in the first half of the year. Support Services and Managed Services drove most of this uplift, with the largest improvements seen in managed services. The trend towards cloud-based services continues to be a large driver for markets within managed services, as companies recognize the need to leverage scalable infrastructure while simultaneously reducing costs and improving flexibility; IT Outsourcing, Key Horizontal BPO, and Network and Endpoint Outsourcing Services drove these rebounds in growth. On the flip side, the Project Oriented market (professional services), saw a slight slowdown in 2023.

"Continued delays in decision-making and a tightening of end user spending, particularly on smaller projects, contributed to market softening but there are some bright spots during these uncertain times through migration and modernization service offerings," said Eileen Smith, program vice president, IDC Data and Analytics. "Service providers are emphasizing agility and supporting companies and businesses in their transformation to digitize their operations, with cloud at its core."

Overall, a more stable performance during the second half of 2023 sets the stage for moderate growth in the upcoming year.

Worldwide IT and Business Services revenue is expected to grow to $1.28 trillion in 2024, or 4.7% year-over-year growth (in constant currency). As organizations worldwide navigate digital transformation, the demand for innovative services solutions continues to surge, driving growth and reshaping the landscape. The short- to mid-term outlook for the market has been increased slightly because of stronger than expected vendor performance along with growth indicators from adjacent markets and the five-year compound annual growth rate (CAGR) is now projected to be 5.1%. After strong bounce-backs in 2021 and 2022 followed by moderate growth in 2023, given the current economic conditions, IDC expects a general cool down, especially in the latter years of the forecast.