Demand for digitalization create changes in the Nordic IT Services Sector

November 16, 2017

A combination of technologies that integrate and evolve makes us reach technological milestones at a higher and higher pace. The IT services sector has not been the most exciting one in terms of growth, innovation or even valuation, but more of a support system for the other industries. In a new report from Beringer Finance, analyst Nicoleta Rosu takes a deeper look at the growing sector.

– Younger generations which have been born in the Internet era feed the society with higher expectations and demands. This is the reality in which today’s corporate organizations, public institutions and entire industries must operate. Therefore, the imperative to become digital in a digital consumer world will force businesses to accelerate their transformation journey by getting support from outside specialists, explains Nicoleta Rosu.

Although the digitalization of businesses creates exciting opportunities for the IT services vendors, according to Beringer Finance we can not expect to see any dramatic change in the overall Nordic IT services market in terms of growth.
-This is because specific subsegments such as BPO, cloud and application services will grow at the expense of other more traditional IT services such as hardware maintenance or legacy systems services. We expect that the tilt in services will continue to drive the consolidation of the IT services space, says Nicoleta Rosu.

The purpose of an IT services vendor is to offer application and technical expertise to organizations that need help with the development, management and optimization of information and business processes. Depending on the type of skills that are requested to deliver specific services we can segment the market into design, build, and run.
– We will see further in the report that the design, build, and run model, which is a transactional model, is fading out in favour of a relationship model. IT services can support business processes, applications or infrastructure. All of these areas can also be managed remotely or outsourced. These segmentations opened the gate for many players, which have chosen to cover either one or more of the above, or integrate the entire offering. Since the number of employees is one of the main revenue drivers for IT services companies, the availability of skilled resources in the market is essential. The rate at which new skills should be acquired is ridiculously high, mostly among global players. Hiring people with new skills is difficult, thus many companies end up training them in-house, says Nicoleta Rosu.

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