The domestic IT services market was valued at $13 billion in 2008 and is expected to grow by four percent per year for at least the next four years, according to analyst firm IDC.
IDC's annual Australian IT Services Forecast and Analysis report, published this morning, found the local market was continuing to grow, especially for products that help companies reduce their operational and capital expenditure.
The report's author, Marina Beale, senior market analyst for IT Services at IDC, said that large firms are still keen to invest in technologies such as virtualisation and unified communications.
"Unified communications, for example, can have a direct effect on travel costs," she said. "Anything that reduces the operating expenditure will win. We certainly haven't seen the same declines [in IT services] that we have seen in hardware spending. Even software has seen a slash."
Beale was keen to point out that the market is far from good. However, spending is continuing to increase.
"That is not to say that some players aren't suffering because Canberra has been very tight so there is no doubt that some local players have a sad story to tell. However, what we are seeing is that those vendors who have a more diverse set of capabilities can address the needs of the market," she said.
Smaller players in the market are also getting a chance take contracts from the top end of the market, according to Beale, who said that many large firms (and government departments) are breaking up their requirements and seeking a multi-sourcing opportunities.
"I have watched a few small players go head to head, in some cases, with big blue (IBM) for example. Companies need to feel they will not get stung if there is a slight change, that is an intimacy that smaller vendors can offer."