Melbourne, 8th February 2011. IT services deal signings experienced an unexpected boom at the end of 2010 within the Asia Pacific region, beating gloomy predictions to reverse a constant decline in average total contract value (TCV) for Q4 since 2005, according to Ovum.
In a new report* the independent technology analyst reveals research that shows that globally TCV for the last quarter of 2010 soared to more than $49 billion, with the AP region responsible for $2.6 billion of this figure, a 25% increase from the previous year's Q4 signings.
Ed Thomas, Ovum analyst and author of the report, said: "2010 went out with a bang thanks to a number of mega-deals announced during the fourth quarter, and it is thanks to a string of large deals that the IT services market both globally and regionally exploded into life". From an AP perspective, the "services market, though not having such a substantial turnaround when compared to global (mainly due to the region coming through the GFC relatively unscathed) has still managed to put in exceptional figures in the last quarter of 2010 and topping off an exceptionally strong 2010 across the region", according the Jens Butler, Principal Asia Pacific IT Services Analyst.
The final quarter result has driven TCV across the region to over $9.5bn, down on the record breaking 2009 (where over $15bn of contracts were signed), but interestingly, the more than 40 deals signed during the last quarter averaged above $60m and included deals such as the agreements between China Unicom, China Telecom and China Mobile with Alcatel-Lucent, valued at $1.6 billion, and CSC re-signing with Bluescope Steel for another 8 years valued at over $300m.
One of the major trends in both the global and AP markets has been towards smaller deals,and even with the Q4 deals across AP hitting $60m per deal, this did not halt the decline in average deal sizes falling to under $40m per deal for the year, the first time this has happened since 2003.
"It remains to be seen whether the uptick in deals at the end to the year is simply a blip or a sign of better times to come for the IT services industry in 2011," added Thomas. From an Asia Pacific perspective, the increase in deal size may be a sign of the releasing of purse strings, but needs to be considered in the context of an ongoing buying cautiousness across the region with deal lengths dropping below 43 months in the first month of 2011." stated Butler