European boom for tech service firms

The European market for tech services is on the up with the top 11 suppliers expected to see their revenues exceed €2bn during 2006.

Outsourcing and a resurgence in more traditional IT services were the major factors aiding growth during 2006, according to Pierre Audoin Consultants (PAC).

The company with the largest revenue growth during 2006 was Logica CMG, with an increase of 39 per cent for the first six months of the year, largely due to its acquisition of French services company, Unilog.

Capgemini was second with a 13 per cent increase in revenues during the first nine months of the year. The PAC analysts put this largely down to a 14 per cent increase in revenue with the company's outsourcing activity.

PAC Germany MD, Christophe Châlons, told silicon.com outsourcing is a "normal component of any IT strategy now", and said outsourcing revenue grew by between five and 10 per cent across Europe during 2006.

Capgemini was a big mover in this area after buying US-based Kanbay International in October for $1.25bn, expanding its presence in India significantly.

In general, "small players performed better than big ones", said Châlons, with leading outsourcers busy renegotiating existing deals.

Traditional markets of consulting and software implementation were the other key areas of growth with service-oriented architecture (SOA) and CRM playing a major part.

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Châlons suggested the development of IT for industrial applications was also important. This includes tech such as embedded software used in cars and planes.

Other ongoing sources of revenue during the year included compliance issues (MiFID for example), business intelligence, storage and systems migration.

In 2007, Châlons expects SOA to become increasingly important - along with increased globalisation, and how suppliers deal with this development.

The top 11 list is made up of Accenture, CSC, EDS, HP, IBM (all US-based); Atos Origin, CapGemini, Logica CMG, SBS, T-System (all Europe-based); and Japanese company, Fujitsu Services.