North America IT Services Market

[240 Pages Report] The North America IT services market size is expected to grow from USD 500.0 billion in 2022 to USD 700.6 billion by 2027 at a Compound Annual Growth Rate (CAGR) of 7.0% during the forecast period. Among other services, IT services companies offer software development, application operations, maintenance, systems integration, data storage, and recovery, as well as consulting, hardware deployment, cloud computing, and cybersecurity. Organizations that choose IT services can guarantee a constant supply of services at lower labor and IT expenditures. They can become more competitive by implementing the most recent technologies and taking advantage of increased resources.

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Recession impact on the North America IT services market

The growth of the North America IT services market is anticipated to slow down due to concerns about a possible recession. The US economy's output of goods and services, or gross domestic product, shrank by 0.6 percent in the 3rd quarter after declining by 1.6 percent in 1st quarter of 2022. Two consecutive quarters of declining GDP are the usual threshold for a recession. According to a recent survey by the accounting company KPMG in 2022, more than eight out of ten CEOs believe a recession will occur within the next 12 months. 73% of the 1,300 CEOs of the largest corporations in the world surveyed agreed that a recession would restrict growth. A hiring freeze has been established by about 39% of CEOs, and 46% of them are thinking about reducing their workforce during the next six months. It is anticipated that Meta will eliminate thousands of jobs; about half of Twitter's employees were fired. They joined other organizations that recently announced layoffs, including Microsoft, Netflix, Snap, Lyft, Stripe, Peloton, and Shopify. Therefore, the North America IT services market will experience a transformation as it moves away from broad-based upgrading toward a focus on producing specific business value.

Market Dynamics

Driver: New connectivity complications increase demand for IT services

The most recent technology advancements, such as big data and analytics, the Internet of Things (IoT), Artificial Intelligence (AI), and Machine Learning (ML), have increased the connectivity and complexity of systems and network demands. Businesses lack the knowledge required to incorporate such technology into their operations. Additionally, they also lack the necessary infrastructure for implementing these technologies. As a result, purchasing new technology and maintaining it internally become more expensive. Therefore, businesses have become more open to establishing Bring-Your-Own-Device (BYOD) guidelines as the number of employees utilizing mobile applications has increased. Employees who use BYOD access to the corporate database using their own mobile devices. Although businesses quickly adopt new technology, creating more accessible and secure networks is still the main obstacle. The quality of the BYOD user experience is heavily reliant on the availability of consistent and powerful Wi-Fi connections. Customers are using bandwidth-intensive cloud-based services in their businesses, putting more strain on the network. Engaging managed service providers is a smart move for organizations looking to achieve business agility. The IT specialists at the organization thus have a huge opportunity. IT specialists use the most up-to-date tools and technology and offer strategic counsel to keep firms moving forward. They even use platforms for managed services to remotely administer enterprise systems, which aids in the expansion of businesses.

Restraint: Concerns over privacy and security

The main causes of cyber breaches and security issues are the rising use of mobile devices and the acceptance of the BYOD idea in numerous businesses. According to secondary data, cyber threat alerts are rising by 14% year over year, and the market lacks security features. Thus, it can be concluded that security-related worries are greatly increasing. Businesses must strive for stronger privacy and security services as they quickly adopt IT platforms and solutions. Despite the benefits, businesses believe that implementing cloud services will result in a loss of infrastructure control and a compromise on privacy. There are numerous third-party outsourcing arrangements used in IT services, which may raise security and confidentiality issues for the infrastructures used by web applications, databases, networks, endpoints, and virtualization. Thus, the biggest barrier to the adoption of cloud IT services continues to worry about security and privacy. Businesses that switch from internal services to outsourced cloud services confront numerous difficulties in keeping operational efficiencies, including network problems and expensive bandwidth. The provision of IT services in the cloud depends heavily on network maintenance, yet the high cost of bandwidth hampers efficient network management. Critical operations, including managed security services, managed data centers, and unified communications, may have delay problems as a result of insufficient bandwidth.

Opportunity: Increasing demand for managed services among SMEs

Managed services give SMEs a lot of space to grow and accomplish their goals. The massive increase in SMEs IT spending helps SMEs to expand by installing new and improved IT services. The demand for the North America IT services industry will rise as a result of SMEs spending rises on IT due to the adoption of the cloud, service automation, and investigation of cutting-edge digital technologies. Small companies have received IT-managed services from these technologies efficiently and affordably. Managed service providers offer various benefits, such as options for reducing CAPEX and OPEX, decreasing Total Cost of Ownership (TCO), utilizing highly modern applications that are in demand, communicating efficiently with customers and partners, and maintaining corporate operations. SMEs rely on these service providers to connect to numerous sites and maintain their services robustly. Managed service vendors offer dependable, cheap services that preserve network operations, supporting SMEs in growing and focusing more on their core businesses. These service providers are giving SMEs great opportunities to grow, expand, and stay competitive.

Challenge: Risk of vendor lock-in

Due to a lack of industry standards, vendor lock-in is a significant barrier to adopting IT services. Most initiatives and solutions with a technological foundation target the vendor lock-in problem. The limited studies that have been conducted have only partially put a spotlight on the complexity of the vendor lock-in problem in the context of the cloud. For this, when utilizing vendor services, the majority of clients are not aware of the proprietary standards that obstruct the portability and interoperability of applications. For instance, when migrating data from one data center to another, it can be difficult to carry out the migration process successfully since it is likely that the data was altered in the system of the original provider for compatibility. In this highly competitive market, businesses rely on several suppliers to give them a competitive edge over their competitors. Companies are constantly seeking improvements and are prepared to switch to better IT services to serve customers successfully. A variety of factors, including incompatible technologies, expensive switching costs, inefficient business procedures, and legal limitations, can bring on vendor lock-ins. These problems are hindering the uptake of IT services and making it harder for vendors to survive the intense competition in the North America IT services market.

US to account for largest market size during forecast period

The geographic analysis of the North America IT services market is segmented into country, including US and Canada. The US is estimated to hold the largest market share in 2022 in the North America IT services market, and the trend is expected to continue until 2027. Further, the demand for IT cloud services is rising due to massive cloud installations across end-user industries. For instance, most of the world's leading cloud providers are based in the US, and the nation has a considerable share of cloud storage. The amount of data generated in the nation is now a key factor in adopting the cloud. As the Industrial Internet of Things (IIoT) develops inside the industry 4.0 platform, IT services are becoming increasingly popular within the hybrid IT-managed environment. During the projected period, demand for IT services will increase as Artificial Intelligence (AI) usage spreads throughout the healthcare and BFSI industries. Owing to the presence of big companies, such as IBM, Cisco, and HPE, IT services are easily available at competitive prices. End users in the US are also well versed with the technology; this boosts its adoption significantly. The US is a very competitive market, and it is anticipated that this will continue throughout the forecast period. Businesses are using effective competitive tactics to stay competitive in the market and keep their customers satisfied. According to secondary data, the US consultancy and program management company “Convergence Acceleration Solutions” (CAS Group), which specializes in business and technology transformation for significant communications service providers, has been acquired by Wipro. From strategy creation and planning through execution and deployment, the joint venture will offer clients services.

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As per organization size, SMEs segment to hold highest CAGR during forecast period

The North America IT services market organization size segment is subsegmented into SMEs and large enterprises. As per organization size, the SMEs segment is expected to hold the highest CAGR of 9.1% during the forecast period. The need for IT services is rising along with the number of SMEs around the world. Due to their adaptability and usability, IT services have taken on a major role in company operations and are predicted to continue expanding in the years to come. Small businesses are benefiting greatly from the implementation of managed services, including security and compliance and downtime reduction. By utilizing these IT services, SMEs can concentrate more on daily operations than on IT expenditure. According to secondary data, small firms were anticipated to spend almost USD 645 billion on IT services. Further, the demand for managed services to fulfill network specifications and security compliance is also being driven by the increase in SMEs globally. SMEs problems include unplanned downtime, cybersecurity threats, and a lack of experienced IT workers. SMEs can get assistance from managed service providers in overcoming these obstacles while controlling their IT expenses.

Key Market Players

Some of the major North America IT services market vendors are IBM (US), Hewlett Packard Enterprise (US), Accenture (Ireland), Cisco (US), Wipro (India), HCL Technologies (India), Cognizant (US), Infosys (US), Rackspace (US), TCS (India), Fujitsu (Japan), Capgemini (France), Ericsson (Sweden), Huawei Technologies Co. Ltd. (US), Nokia Networks (Finland), GTT Communications (US), SAP (Germany), DXC Technology (US), NTT Data (Japan), and NEC Corporation (US).

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Scope of the Report

This research report categorizes the North America IT services market based on service types, organization sizes, deployment modes, business functions, verticals, and regions.

Based on the service types:

• Professional services
  • System integration
    • Application Integration
      • Application Development
      • Application Testing
      • Application Lifecycle Management
    • Infrastructure Integration
      • Datacenter
      • Mobility
      • Network
      • Other Infrastructure Integration
  • Training and education
  • Consulting
• Managed services
  • Managed security
  • Managed network
  • Managed data center and IT infrastructure
  • Managed communication and collaboration service
  • Managed mobility
  • Managed information
• Telecom services

Based on the deployment modes:

• On-premises
• Cloud

Based on the organization sizes:

• Large enterprises
• Small and Medium Enterprises (SMEs)

Based on the business functions:

• Human Resources
• Finance and Accounting
• Sales and Marketing
• Supply Chain Management
• Operations and Support
• Manufacturing

Based on the verticals:

• Government and defense
• Banking, Financial Services, and Insurance (BFSI)
• Healthcare
• Media and entertainment
• Consumer goods and retail
• IT and telecom
• Other verticals (education, chemicals, energy and utilities, and travel and hospitality)

Based on the country:

• US
• Canada

Recent Developments:

• In November 2022, HCLTech launched Cloud Security As A Service On AWS. The foundation of this crucial capability is CSaaS, which uses the Borderless Security Reference Framework from HCLTech to better safeguard workloads both on-premises and on AWS. AWS customers can take advantage of a comprehensive solutions strategy based on industry best practices by using CSaaS. This strategy is based on benchmarks from the Center for Internet Security (CIS) and the AWS Well-Architected Framework. Both are used to set standards and practices for defending against cyber threats.
• In October 2022, IBM Consulting will now offer additional services and in-depth expertise to upgrade and manage the banking group's key banking systems and applications in an open, secure manner to support compliance with industry rules. This includes implementing the built-in security and compliance controls from IBM Cloud for Financial Services to assist businesses in overcoming regulatory obstacles impeding the modernization of their IT infrastructure and applications as well as lowering third and fourth-party risk across the entire supply chain.
• In August 2022, Wipro announced Modern Compute and Managed Applications Security Services accreditation setting Wipro’s AWS Managed Security Services apart for their continual protection, observation, and improvement of the security posture of the AWS environment. It enabled AWS clients to quickly obtain ongoing security management and monitoring approved by AWS.
• In September 2021, after noticing an increase in demand from companies in the public sector and the health industry, Cognizant built its new delivery center in Leeds to boost its services for clients. The action solidifies Cognizant's dedication to fostering the careers of young technologists and aligns it with the UK's levelling-up and North shoring agenda.
• In February 2021, Accenture launched a new business group with VMware to help organizations move to the cloud faster. The new business group aimed to bring together dedicated professionals with deep expertise in hybrid cloud and cloud migrations, cloud-native and application modernization, and security across key industries.

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