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UK outsourcing market to decline, opportunities for SMEs to grow

Cuts in Government spending revue unlikely to worsen vendors' outlook

The UK Software and IT Services (SITS) market will grow 8 percent to £44.3 billion by 2016, but this will represent a decline of 5 percent in real terms since 2011, according to research from analyst TechMarketView.In its "UK Software Market: Trends and Forecasts" report TechMarketView determines that "despite the difficult market", there is a "golden opportunity for SMEs to snatch business from larger players."

According to the accompanying UK SITS Company Rankings report, the top 30 companies in the UK SITS market accounted for £30.4 billion of the 2012 SITS market, amounting to four percent growth, of which half was driven by acquisitions.HP topped the rankings again even though TechMarketView says its sales actually fell 5 percent. HP leads IBM, Capita and BT, which retain their respective second, third and fourth places.

TechMarketView chairman Richard Holway said, "I believe that performance relates to execution, which is predominantly the responsibility of management - often boiling down to the character and abilities of a solitary leader."Compare, for example, the difference in fortunes between Tim Cook and Steve Jobs, Steve Ballmer and Bill Gates and the impact of individuals such as CSC's Mike Lawrie [who is trying to turn a declining CSC around]."Holway said the current market presented good opportunities for SMEs. He said, "Running an established company during sluggish economic growth at the same time as huge changes in the way that software and IT services are delivered is a huge task.

"The challenge facing many larger businesses is how to correct course without destroying the core business, which is under pressure due to the economy."

Said Holway, "The baggage of established businesses makes it a lot harder for them to be agile in today's market, which presents an enormous opportunity for SMEs and start-ups. Just look at the success of Salesforce.com and many other new businesses that have pulled the rug out from under major suppliers by snatching away their customers."

The opportunities for SMEs are set to widen in the public sector as the government continues to promote a procurement framework that seeks to include smaller companies.


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