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Strong dollar drives IT services decline

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IT services and business services revenues are expected to decline -4,8% and -0,2% year-over-year in 2015 in US current currency. However, both categories are expected to return to positive growth in 2016.
This is according to a new forecast from the International Data Corporation (IDC) Worldwide Semi-annual Services Tracker.
On a geographic basis, the regions impacted most by currency exchange rate movements in 2015 have been Europe, the Middle East and Africa (EMEA) and Asia/Pacific (including Japan), while the Americas have experienced positive growth. Looking ahead to 2016, the Asia/Pacific region is expected to grow at a faster rate than other regions.
Within the services categories, hosting infrastructure services and business consulting services are expected to grow 8,2% and 7,7% respectively in 2016, an indication that more cloud-related changes and developments are expected to continue driving the IT and business services industries.
“While hosting infrastructure services and business consulting services are expected to see the largest revenue growth in the near term, key horizontal Business Process Outsourcing (BPO) and Systems Integration services are expected to retain the largest revenue pools in the long term. These are $100-plus billion dollar markets respectively,” says Lisa Nagamine, research manager with IDC’s Worldwide Semiannual Services Tracker.
“Even though worldwide services growth was negative in 2015 in US dollar terms (-3,4%), when controlling for exchange rate volatility the 2015 growth rate was around 3,9%. Moreover, the long-term trend has returned to a growth trajectory through the end of the forecast period (2019). This is compared to expectations from three months ago, which expected worldwide services growth rates to peak in 2016,” says Chad Huston, research manager with IDC’s Worldwide Services group.